-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UbS73HrE8C7jxAx3Qu43YSioS9kqe90RjqcY5BMgCWHcBnPtCfg5r4ZBH7SpQvCa pTZXWLZTrAKK1R+DtVG9cw== 0000922907-00-000113.txt : 20000412 0000922907-00-000113.hdr.sgml : 20000412 ACCESSION NUMBER: 0000922907-00-000113 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 33 FILED AS OF DATE: 20000410 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLUE VALLEY BAN CORP CENTRAL INDEX KEY: 0000901842 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 481070996 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-34328 FILM NUMBER: 598344 BUSINESS ADDRESS: STREET 1: 11935 RILEY CITY: OVERLAND PARK STATE: KS ZIP: 66225 BUSINESS PHONE: 9133381000 MAIL ADDRESS: STREET 1: 11935 RILEY CITY: OVERLAND PARK STATE: KS ZIP: 66225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BVBC CAPITAL TRUST I CENTRAL INDEX KEY: 0001110171 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-34328-01 FILM NUMBER: 598345 BUSINESS ADDRESS: STREET 1: C/O BLUE VALLEY BAN CORP STREET 2: 11935 RILEY CITY: OVERLAND PARK STATE: KS ZIP: 66225 BUSINESS PHONE: 9133381000 MAIL ADDRESS: STREET 1: C/O BLUE VALLEY BAN CORP STREET 2: 11935 RILEY CITY: OVERLAND PARK STATE: KS ZIP: 66225 S-1/A 1
As filed with the Securities and Exchange Commission on April 10, 2000 Registration Nos. 333-34328 333-34328-01 Securities & Exchange Commission Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Blue Valley Ban Corp -------------------- (Exact name of registrant as specified in its charter) Kansas (State or other jurisdiction of incorporation or organization) 6022 (Primary Standard Industrial Classification Code Number) 48-1070996 (I.R.S. Employer Identification No.) BVBC Capital Trust I -------------------- (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 6022 (Primary Standard Industrial Classification Code Number) Applied for (I.R.S. Employer Identification No.) 11935 Riley, Overland Park, Kansas 66225-6128; (913) 338-1000 ------------------------------------------------------------- (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Robert D. Regnier, Chief Executive Officer Blue Valley Ban Corp 11935 Riley Overland Park, Kansas 66225-6128 (913) 338-1000 with copies to: Steven F. Carman, Esq. Thomas C. Erb,Esq. Blackwell Sanders Peper Martin LLP Lewis, Rice & Fingersh, L.C. Two Pershing Square 500 North Broadway 2300 Main Street, Suite 1000 St. Louis, Missouri 63102 Kansas City, Missouri 64108 (314) 444-7600 (816) 983-8000 - ------------------------------------------------------------------------------------------------------------------------ (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. [__] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [__] _______________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [__] ______________ If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [__] ______________ If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [__] The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. Subject To Completion, Dated , 2000 PROSPECTUS 1,250,000 TRUST PREFERRED SECURITIES BVBC CAPITAL TRUST I % CUMULATIVE TRUST PREFERRED SECURITIES FULLY, IRREVOCABLY AND UNCONDITIONALLY GUARANTEED ON A SUBORDINATED BASIS BY BLUE VALLEY BAN CORP -------------------- BVBC Capital Trust I is offering 1,250,000 trust preferred securities. No public market currently exists for the trust preferred securities. The trust preferred securities generally consist of an indirect beneficial interest in our % junior subordinated debentures. The junior subordinated debentures have the same payment terms as the trust preferred securities and will be purchased and held by BVBC Capital Trust I using the proceeds of this offering. A brief description of the trust preferred securities can be found under "Prospectus Summary - The Offering" in this prospectus. We have applied to have the trust preferred securities listed for trading on the American Stock Exchange under the symbol " ." -------------------- YOU SHOULD CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 10 BEFORE INVESTING IN THE TRUST PREFERRED SECURITIES. -------------------- THE TRUST PREFERRED SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS, OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE BANK INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY. -------------------- Per Trust Preferred Security Total -------- ----- Public Offering Price............... $ 8.00 $10,000,000 Proceeds to BVBC Capital Trust I ... $ 8.00 $10,000,000 This is a firm commitment underwriting. We will pay underwriting commissions of $ per trust preferred security, or a total of $ , for arranging the investment in our junior subordinated debentures. We have granted the underwriter the right to purchase up to an additional 187,500 trust preferred securities to cover over-allotments, if any. - -------------------------------------------------------------------------------- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - -------------------------------------------------------------------------------- STIFEL, NICOLAUS & COMPANY INCORPORATED Date of this Prospectus is , 2000 [GRAPH OMITTED] CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS This prospectus may contain forward-looking statements based on our current expectations, assumptions, estimates and projections about us and our industry. Forward-looking statements relate to future events or to our future financial performance. In some cases, you can identify forward-looking statements by terminology like "may," "will," "should," "expects," "plans," "intends," "anticipates," "could," "believes," "estimates," "predicts," "objective," "potential," "projection," "forecast," "goal" or similar expressions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of factors more fully described in the "Risk Factors" section and elsewhere in this prospectus. Although we believe that the expectations reflected in any forward-looking statements are reasonable, we cannot guarantee future events or results. We undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur. PROSPECTUS SUMMARY YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED INFORMATION REGARDING OUR COMPANY AND THE TRUST PREFERRED SECURITIES BEING SOLD IN THIS OFFERING AND OTHER CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS WE INDICATE OTHERWISE, (A) ALL INFORMATION IN THIS PROSPECTUS (1) REFLECTS THE FOUR-FOR-ONE STOCK SPLIT OF OUR COMMON STOCK EFFECTIVE AS OF JANUARY 20, 2000, AND (2) ASSUMES NO EXERCISE OF THE UNDERWRITER'S OVER-ALLOTMENT OPTION TO PURCHASE UP TO AN ADDITIONAL 187,500 TRUST PREFERRED SECURITIES FROM BVBC CAPITAL TRUST I, AND (B) REFERENCES IN THIS PROSPECTUS TO "WE," "US," "OUR" AND "BLUE VALLEY" INCLUDE BLUE VALLEY BAN CORP, BANK OF BLUE VALLEY, BLUE VALLEY BUILDING CORP., AND BLUE VALLEY INVESTMENT CORP., BUT NOT BVBC CAPITAL TRUST I. BLUE VALLEY We organized Blue Valley and our wholly-owned subsidiary, Bank of Blue Valley, in 1989 to provide banking services to closely-held businesses, their owners, professionals and individuals in Johnson County, Kansas, a high growth, demographically attractive area within the Kansas City, Missouri - Kansas Metropolitan Statistical Area. Our focus has been to take advantage of the current and anticipated growth in our market area as well as to serve the needs of small and mid-sized commercial borrowers - customers that we believe currently are underserved as a result of banking consolidation in the industry generally and within our market specifically. We have experienced significant internal growth since our inception. In addition, in 1994, we acquired the deposits of a branch of a failed savings and loan institution to augment our internal growth and expand into an additional market which management believed was attractive. In 1994, we also completed the construction of our current headquarters in Overland Park, Kansas. We currently have three banking locations in Johnson County, Kansas, including our main office in Overland Park, a full-service office in Olathe, Kansas, and a supermarket banking facility in Shawnee, Kansas. We plan to open an additional full-service office in Shawnee, Kansas in the third quarter of 2000. FINANCIAL SUMMARY
FIVE YEARS ENDED YEAR ENDED DECEMBER 31, ------------------- --------------------------------------------------------------- DECEMBER 31, 1999 1999 1998 1997 1996 1995 (1) ------------------- ------------ ------------ ----------- ---------- ------------ (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Net income............................. 39.91% $ 3,083 $ 2,816 $ 2,286 $ 1,622 $ 1,049 Earnings per share (diluted)........... 27.59% 1.42 1.35 1.22 0.85 0.70 Total assets........................... 26.82% 332,613 253,724 201,644 162,739 132,794 Total loans............................ 36.65% 250,410 161,444 127,308 101,323 71,791 Total deposits......................... 25.70% 268,145 209,824 170,792 139,929 112,614 Total stockholders' equity............. 30.08% 18,869 17,016 13,464 10,100 8,761 Return on average total assets......... 1.14% 1.08% 1.28% 1.30% 1.13% 0.89% Return on average total stockholders' equity................................. 18.46% 17.43% 18.98% 20.62% 17.79% 17.46%
[FN] (1) For the period indicated, these figures represent compound annual growth rate of net income, earnings per share (diluted), total assets, total loans, total deposits and total stockholders' equity, and average annual return on average total assets and average total stockholders' equity. 1 BUSINESS STRATEGY Since our founding, we have strived to increase stockholder value by executing a community banking strategy tailored to provide our customers with competitive financial products and services, our employees with the opportunity to share in our financial success and our community with a stable, growth oriented employer. To further our primary business objectives, we have identified several business strategies designed to increase and diversify our loan portfolio, generate non-interest income, control non-interest expense and create new markets for our existing and developing products. o GROW AND DIVERSIFY OUR LOAN PORTFOLIO. Our lending strategy emphasizes commercial and residential lending and, to a lesser extent, consumer lending. To grow our portfolio, we actively pursue businesses and professionals within our target market area as well as utilize our existing client relationships to identify and develop a network of potential referrals. We have also placed an increasing emphasis on cross-marketing our lending products and services to existing and new customers for our deposit and other services. With the advent of new technology for delivering financial products and services, we have identified several techniques to market our lending products. For example, our customers are now able to use our electronic banking services to apply for residential and personal loans over the Internet. Throughout our history, we have continually broadened our product offerings in order to decrease our reliance on any one source of lending activity and to generate additional income. To further diversify our loan portfolio, we intend to continue to identify and invest in new lines of business that provide an acceptable rate of return on a risk-adjusted basis. o PURSUE OPPORTUNITIES TO INCREASE OUR NON-INTEREST INCOME. In order to increase stockholder value, we believe that traditional community banks must identify and develop products which generate fee-based income in order to augment traditional sources of interest income. Our residential mortgage loan originations and our trust, investment brokerage and other services provide these sources of non-interest income. Although our trust and investment brokerage operations do not currently represent a material source of income, we anticipate the income resulting from these activities to increase in the future. We also seek to deploy programs and employ individuals capable of anticipating and meeting the many financial service needs of our relatively affluent customer base. The experience of our management team is critical to understanding and providing the high level of customer service which we believe is essential in competing for these customers. o CONTROL THE EXPENSES NECESSARY TO FACILITATE OUR GROWTH. As a high-growth community bank with diversified and developing lines of business, we continue to place emphasis on controlling costs. Each of our prospective lines of business, as well as our current activities, are reviewed to determine the potential contribution to net income and earnings per share. 2 o EXPAND OUR PRESENCE WITHIN OUR MARKET AREA. We operate as a community bank, serving the banking needs of small and medium-sized companies and individuals in the Kansas City, Missouri - Kansas Metropolitan Statistical Area generally, and suburban Johnson County, Kansas in particular. We will consider opening new branches and establishing new ATMs in high growth areas within our market area to grow our deposit base and to expand our ability to provide lending and other services to new and existing customers. To the extent that opportunities present themselves, we will consider acquisition opportunities within our market area and in contiguous areas. Our management team expects to build upon our reputation as a community bank capable of responding promptly to customer needs, thereby distinguishing ourselves from many regional and national banks. We also expect to continue to respond to changes in technology to enable us to enhance our level of customer service. For example, through our "Blue Wave" Internet banking service, our deposit customers can check balances, transfer funds, pay bills and order new checks electronically around the clock. By offering these services to our customers, we believe we have distinguished ourselves from many community banks in our market area. We believe that our primary strengths are our: o high level of customer service standards, o growth opportunities in our primary market area, o market perception as an independent community bank focused on serving the needs of our market, as compared to a regional or national bank, and o experienced senior management team. BVBC TRUST BVBC Trust is a newly created Delaware business trust. We created BVBC Trust to offer the trust preferred securities and to purchase our junior subordinated debentures. BVBC Trust has a term of 35 years, but may dissolve earlier as provided in its trust agreement. The principal executive offices of Blue Valley and BVBC Trust are located at 11935 Riley, Overland Park, Kansas 66225-6128. The main telephone number for both Blue Valley and BVBC Trust is (913) 338-1000. Our Internet address is http://www.bankbv.com. 3 THE OFFERING Trust preferred securities issuer .................... BVBC Trust. Securities offered............ BVBC Trust is offering 1,250,000 of its trust preferred securities, which represent an indirect beneficial interest in junior subordinated debentures issued by Blue Valley and held by BVBC Trust. BVBC Trust will sell its trust preferred securities to the public and its common securities to Blue Valley. Together, the trust preferred securities and the common securities are referred to as trust securities. BVBC Trust will use the proceeds from the sale of trust securities to buy from Blue Valley a series of % junior subordinated debentures due June 30, 2030. The junior subordinated debentures will have the same payment terms as the trust preferred securities. Quarterly distributions are payable to you on the trust preferred securities....... The distributions payable on each preferred security will: o be fixed at a rate per year of %; o accrue from the date of issuance of the trust preferred securities; and o be payable quarterly on March 31, June 30, September 30 and December 31 of each year that the trust preferred securities are outstanding, beginning on June 30, 2000, subject to our right to defer distributions on the trust preferred securities. Blue Valley and BVBC Trust have rights to defer distributions to you on the trust preferred securities................. BVBC Trust will defer distributions on the trust preferred securities if Blue Valley defers interest payments on the junior subordinated debentures. Blue Valley generally has the right to defer interest payments on the junior subordinated debentures for up to 20 consecutive quarters. During any deferral period, you will still accumulate the right to receive 4 distributions when subsequently made at the annual rate of %, plus you will earn interest at the annual rate of %, compounded quarterly, on any unpaid distributions. You will still be taxed, even if distributions on the trust preferred securities are deferred................... If distributions on the trust preferred securities are deferred, you will be required to accrue interest income in the form of original issue discount and include it in your gross income for United States federal income tax purposes for as long as the junior subordinated debentures remain outstanding, even if you are a cash basis taxpayer. For further information on deferrals and their tax consequences, see "Risk Factors - Distributions on the trust preferred securities may be deferred; you may have to include interest in your taxable income before you receive cash," "Description of the Junior Subordinated Debentures - Option to Extend Interest Payment Period" and "Material Federal Income Tax Consequences - Interest Income and Original Issue Discount." Your trust preferred securities will be redeemed by BVBC Trust when the junior subordinated debentures mature.......... The junior subordinated debentures will mature on June 30, 2030. BVBC Trust will redeem your trust preferred securities upon the stated maturity date of the junior subordinated debentures or earlier if they are prepaid. If the junior subordinated debentures are prepaid, your trust preferred securities will be redeemed........... If Blue Valley receives the prior approval of the Board of Governors of the Federal Reserve System, if then required, Blue Valley may prepay the junior subordinated debentures prior to maturity: o on or after June 30, 2005; or o at any time upon events occurring that may have a significant adverse effect on the benefits to Blue Valley of having the trust preferred securities outstanding. 5 Upon any prepayment of the junior subordinated debentures, your trust preferred securities will be redeemed at the liquidation amount of $8 per preferred security plus any accrued and unpaid distributions to the date of redemption. For further information on redemptions, see "Description of the Trust Preferred Securities - Redemption - Mandatory and Optional Rights of Blue Valley" and "Description of the Junior Subordinated Debentures - Redemption." At its option, Blue Valley may require you to exchange your trust preferred securities for its junior subordinated debentures................. Blue Valley has the right at any time to dissolve BVBC Trust and distribute the junior subordinated debentures to you in exchange for your trust preferred securities. However, Blue Valley would likely have to first receive prior approval of the Federal Reserve and must first pay the creditors, if any, of BVBC Trust. Upon a dissolution of BVBC Trust, after satisfaction of liabilities to creditors, if any, of BVBC Trust, you will receive junior subordinated debentures in exchange for the principal amount of your holdings in trust preferred securities, plus accrued and unpaid interest equal to the accrued and unpaid distributions on the trust preferred securities. For further information concerning distribution of the junior subordinated debentures, see "Description of the Trust Preferred Securities - Distribution of Junior Subordinated Debentures." Your trust preferred securities are fully and unconditionally guaranteed by Blue Valley on a subordinated basis......... Blue Valley will fully, irrevocably and unconditionally guarantee the trust preferred securities on a subordinated basis. If Blue Valley does not make a payment on the junior subordinated debentures, BVBC Trust will not have sufficient funds to make payments on the trust preferred securities. The trust preferred securities guarantee does not guarantee payments by BVBC Trust when it has not received sufficient funds. For further information concerning our guarantee of the trust preferred securities, see "Description of the Trust Preferred Securities Guarantee." 6 Your trust preferred securities rank lower in payment priority compared to other obligations of Blue Valley............. Blue Valley's obligations under its trust preferred securities guarantee, the junior subordinated debentures and other governing documents described in this prospectus are unsecured and rank junior in right of payment to all current and future senior and subordinated debt of Blue Valley. In addition, because Blue Valley is a holding company, all existing and future liabilities of any Blue Valley subsidiary will rank prior to all obligations of Blue Valley relating to the trust preferred securities and the junior subordinated debentures. There is no limit on the amount of these liabilities or the amount of other trust preferred securities or other junior subordinated debentures of Blue Valley or its subsidiaries that may be issued in the future. Future issuances of this type will rank equally with Blue Valley's obligations under the junior subordinated debentures and its trust preferred securities guarantee described in this prospectus. The trust preferred securities will generally rank equally and payments on them will be made proportionately, with the common securities of BVBC Trust, which will be held by Blue Valley. You will have limited voting As a holder of trust preferred securities, rights........................ you have only limited voting rights. These rights relate only to the dissolution of BVBC Trust, the modification of the trust preferred securities and removal of the property trustee and the indenture trustee of BVBC Trust upon selected events described in this prospectus. See "Description of the Trust Preferred Securities - Voting Rights; Amendment of the Trust Agreement." The trust preferred securities will be in book entry form only.................. You will not receive a certificate for your trust preferred securities. Instead, the trust preferred securities will be represented by a global security that will be deposited with and registered in the name of The Depository Trust Company or its nominee. 7 There is no established market for the trust preferred securities................. No public trading market currently exists for the trust preferred securities. We have applied to have the trust preferred securities approved for listing on the American Stock Exchange under the trading symbol " ." We can not give any assurance as to the liquidity of any trading market for the trust preferred securities. See "Market for the Trust Preferred Securities." No rating..................... The trust preferred securities have not been rated by any nationally recognized statistical rating organization. Use of proceeds............... We will receive proceeds from the sale of our junior subordinated debentures to BVBC Trust. BVBC Trust will purchase our junior subordinated debentures with proceeds from the sale of the trust preferred securities. We intend to use the net proceeds as follows: o repay approximately $7.3 million of debt outstanding as of February 29, 2000, under our bank stock loan; and o retain the remainder for general corporate purposes, including investments from time to time in the Bank in the form of additional capital and possible future acquisitions. We have no agreements or understandings at this time for any acquisitions, and we cannot be sure whether any acquisitions will ever occur. Risk factors.................. You should review the "Risk Factors" section of this prospectus for a discussion of some of the risks inherent in an investment in the trust preferred securities. 8
RATIO OF EARNINGS TO FIXED CHARGES YEAR ENDED DECEMBER 31, ---------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ------------- ------------- ------------- -------------- -------------- Ratio of Earnings to Fixed Charges (1) Including interest on deposits...... 1.41x 1.46x 1.47x 1.44x 1.33x Excluding interest on deposits...... 4.36x 5.32x 6.50x 5.20x 3.25x Pro Forma Ratio of Earnings to Fixed Charges (2) Including interest on deposits...... 1.39x -- -- -- -- Excluding interest on deposits...... 3.26x -- -- -- --
[FN] (1) For purposes of calculating the ratio of earnings to fixed charges, earnings consists of income before taxes plus interest expense. Fixed charges consist of interest expense. (2) For purposes of calculating the pro forma ratio of earnings to fixed charges, earnings consists of income before taxes plus pro forma interest expense. Pro forma interest expense consists of historical interest expense plus (1) interest expense on the junior subordinated debentures assuming that we issued a total principal amount of $10 million at 10.0% at the beginning of the period minus (2) historical interest expense on the $7.3 million of our debt under our bank stock loan that we intend to retire with the proceeds from this offering. 9 RISK FACTORS In addition to the other information in this prospectus, you should carefully consider the following factors before investing in the common stock or the trust preferred securities. RISK FACTORS RELATING TO BLUE VALLEY WE MAY NOT BE ABLE TO IMPLEMENT ASPECTS OF OUR GROWTH STRATEGY. We may not be able to implement aspects of our growth strategy. The key components of our growth strategy are growing and diversifying our loan portfolio, increasing our non-interest income and expanding our presence within our market area. Our ability to achieve each of the components of our growth strategy is subject to a number of risks, and our failure to execute successfully any or all of these components could adversely affect our financial performance and our ability to meet our strategic objectives. To grow our loan portfolio, we plan to aggressively cross-market our lending products and services to existing and new customers of our deposit and other services. The business of lending is extremely competitive, and we cannot be sure whether we will be able to successfully cross-market our lending products and services to our other customers. See "- We are in a very competitive industry." To diversify our loan portfolio, me must be able to correctly identify new lending products that will provide us with an acceptable return on a risk-adjusted basis. Our senior management may not be able to successfully identify these products or effectively manage the integration of products that we have not previously offered. We also plan to increase our non-interest income by expanding our mortgage, trust and investment brokerage businesses. In a rising interest rate environment, our ability to increase our fee income from mortgage originations is likely to be adversely affected because fewer customers will refinance their existing residential mortgage loans. We have offered trust services since 1996 and investment brokerage services since 1999. These lines of our business are still in the formative stages of their growth, their present contributions to our revenues and net income are currently minimal, and we cannot be sure whether we will ever derive significant revenues from these areas. In order to expand our presence within our market area through the establishment of new branches or ATMs, we must be able to correctly identify profitable or growing markets. If we attempt to implement our strategy by acquiring existing branches of other institutions, our success will depend on our ability to identify acquisition opportunities that will complement our banking operations, and our ability to successfully integrate their operations with ours. In either case, we cannot be sure whether we will be able to identify suitable opportunities for further expansion or to successfully execute our expansion plans. OUR OPERATIONS MAY BE ADVERSELY AFFECTED IF WE ARE UNABLE TO MAINTAIN AND INCREASE OUR DEPOSIT BASE AND SECURE ADEQUATE FUNDING. Our operations may be adversely affected if we are unable to maintain and increase our deposit base and secure adequate funding. We fund our banking and lending activities primarily 10 through demand, savings and time deposits and, to a lesser extent, lines of credit, sale/repurchase facilities from various financial institutions, and Federal Home Loan Bank borrowings. The success of our business plan depends in part on our ability to maintain and increase our deposit base and our ability to maintain access to other funding sources. Our inability to obtain funding on favorable terms, on a timely basis, or at all, would adversely affect our operations and financial condition. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." WE DEPEND ON OUR KEY PERSONNEL. We are a relatively small organization and depend on the services of all of our employees. Our growth and development to date has depended in a large part on a few key employees who have primary responsibility for maintaining personal relationships with our largest customers. The unexpected loss of services of one or more of these key employees could have a material adverse effect on our operations. Our key employees are Robert D. Regnier, John K. Doull, Mark A. Fortino, Nancy A. Taylor, Penny T. Hershman and Bonnie M. McConnaughy. Each of these persons are officers of the Bank. We do not have employment or non-compete agreements with any of these key employees. We carry a $1 million "key person" life insurance policy on the life of Mr. Regnier. CHANGES IN INTEREST RATES MAY ADVERSELY AFFECT OUR EARNINGS AND COST OF FUNDS. Changes in interest rates affect our operating performance and financial condition in diverse ways. A substantial part of our profitability depends on the difference between the rates we receive on loans and investments and the rates we pay for deposits and other sources of funds. Our net interest spread will depend on many factors that are partly or entirely outside our control, including competition, federal monetary and fiscal policies, and economic conditions generally. Historically, net interest spreads for many financial institutions have widened and narrowed in response to these and other factors, which are often collectively referred to as "interest rate risk." We intend to try to minimize our exposure to interest rate risk, but we will be unable to eliminate it. In our banking operations, we are subject to interest rate risk on loans held in our portfolio arising from mismatches between the dollar amount of repricing or maturing assets and liabilities. These mismatches are referred to as the "interest rate sensitivity gap," which is measured in terms of the ratio of the interest rate sensitivity gap to total assets. A higher level of assets repricing or maturing than liabilities over a given time frame is considered asset-sensitive and is reflected as a positive gap. In contrast, a higher level of liabilities repricing or maturing than assets over a given time frame is considered liability-sensitive and is reflected as a negative gap. As of December 31, 1999, we had a positive interest rate sensitivity gap. A positive gap will generally enhance earnings in a rising interest rate environment and will negatively impact earnings in a falling interest rate environment. A negative gap will generally enhance earnings in a falling interest rate environment and negatively impact earnings in a rising interest rate environment. Although we currently have a positive gap, in a rising interest rate environment, our fee income is likely to be adversely affected because fewer residential mortgage loans will be refinanced. Fluctuations in interest rates are not predictable or controllable. Although we have attempted to structure our asset and liability management strategies to mitigate the impact on net 11 interest income of changes in market interest rates, we can not give any assurance that a sudden or significant change in prevailing interest rates will not have a material adverse effect on our operating results. BECAUSE OUR BUSINESS IS CONCENTRATED IN THE KANSAS CITY METROPOLITAN AREA, A DOWNTURN IN THE KANSAS CITY ECONOMY MAY ADVERSELY AFFECT OUR BUSINESS. Because our business is concentrated in the Kansas City metropolitan area, a downturn in the Kansas City economy may adversely affect our business. Our success is dependent to a significant extent upon the general economic conditions in the Kansas City metropolitan area, including Johnson County, Kansas, and, in particular, the conditions for the medium-sized and small-sized businesses that are the focus of our customer base. Although currently the economy in these areas is favorable, we do not know whether these conditions will continue. Adverse changes in economic conditions in the Kansas City metropolitan area, including Johnson County, Kansas, could impair our ability to collect loans, reduce our growth rate and have a negative effect on our overall financial condition. A DECREASE IN THE DEMAND FOR HOUSING IN OUR MARKET AREA MAY ADVERSELY AFFECT OUR EARNINGS. A decrease in the demand for housing in our market area may adversely affect our earnings. As of December 31, 1999, approximately $74.3 million, or 29.66%, of our loan portfolio consisted of residential mortgage loans and construction loans for residential builders, primarily in Johnson County, Kansas. The demand for housing in Johnson County is influenced by a number of factors, including prevailing interest rates, inflation, levels of regional commercial activity, consumer preferences for suburban housing, and the continuing presence of significant employers in the Johnson County region. A change in any of these factors, or in factors that we do not anticipate, could cause the demand for housing in Johnson County to decline. Because of our focus on residential mortgage loans and construction loans for residential builders, if this occurs we could experience significant losses in our loan portfolio and a material decrease in our earnings. IF OUR BORROWERS DEFAULT ON THEIR LOANS, IT WILL ADVERSELY AFFECT OUR OPERATING RESULTS. If our borrowers default on their loans, it will adversely affect our operating results. Some borrowers may not repay loans that we make to them. This risk is inherent in the banking business. If a significant amount of loans are not repaid, it would have an adverse effect on our earnings and overall financial condition, and could cause us to become insolvent. Approximately $36.2 million, or 14.46%, of our loan portfolio consists of indirect automobile loans. Because these types of loans are secured by automobiles, which depreciate rapidly, our indirect automobile loans may present a greater risk of loss than other types of secured loans, like loans secured by residential real estate. We cannot be sure whether our level of charge-offs for indirect automobile loans in future periods will be consistent with our historical levels of indirect automobile loan charge-offs. Approximately $4.0 million, or 6.20%, of our commercial loans are Small Business Administration loans, of which $3.0 million is guaranteed by the SBA. SBA lending exposes us 12 to the risk that the SBA will not honor its guarantee in addition to the risk of loss on the portion that is not guaranteed. In the event of default by the borrower, the SBA may seek to recover the amount of the guarantee from us if the SBA establishes that any portion of the loss is attributable to significant technical difficulties in the manner in which we originated, documented or funded the loan. Like all financial institutions, we maintain an allowance for loan losses to provide for loan defaults and nonperformance. The allowance for loan losses is maintained at a level management feels is adequate to absorb losses inherent in the loan portfolio, an evaluation that is primarily based upon a review of our historical loan loss experience and that of other banks in our market area with similar loan portfolios, and known and inherent risks contained in the loan portfolio including, composition, growth of the loan portfolio, and current and projected economic factors. However, our allowance for loan losses may not be adequate to cover actual losses, and future provisions for loan losses may adversely affect our earnings. In addition, various regulatory agencies, as an integral part of the examination process, periodically review our loan portfolio. These agencies may require us to add to the allowance for loan losses based on their judgments and interpretations of information available to them at the time of their examinations. WE MAY INCUR SIGNIFICANT COSTS IF WE FORECLOSE ON ENVIRONMENTALLY CONTAMINATED REAL ESTATE. If we foreclose on a defaulted real estate loan to recover our investment, we may be subject to environmental liabilities in connection with the underlying real property. It is also possible that hazardous substances or wastes may be discovered on these properties during our ownership or after they are sold to a third party. If they are discovered on a property that we have acquired through foreclosure or otherwise, we may be required to remove those substances and clean up the property. We may have to pay for the entire cost of any removal and clean-up without the contribution of any other third parties. We may also be liable to tenants and other users of neighboring properties. These costs or liabilities may exceed the fair value of the property. In addition, we may find it difficult or impossible to sell the property prior to or following any environmental clean-up. WE ARE IN A VERY COMPETITIVE INDUSTRY. Our business is extremely competitive. Many of our competitors are, or are affiliates of, enterprises that have greater resources, name recognition and market presence than we do. We compete with a number of different institutions, including: other banks and thrift institutions; automobile financing companies; mortgage companies; investment companies, mutual funds and money market funds; full service and discount broker dealers; insurance companies; and credit unions. Some of our competitors are not regulated as extensively as we are and, therefore, may have greater flexibility in competing for business. Some of these competitors are subject to similar regulation but have the advantages of established customer bases, higher lending limits, extensive branch networks, numerous ATMs, and more ability to absorb the costs of maintaining technology or other factors. 13 WE OPERATE IN A BUSINESS THAT IS SUBJECT TO SIGNIFICANT GOVERNMENT REGULATION. The banking industry is heavily regulated. Our success depends not only on competitive factors but also on the cost of complying with state and federal regulations affecting banks and bank holding companies. We are subject to regulation by the Federal Deposit Insurance Corporation, the Kansas Banking Department and the Board of Governors of the Federal Reserve System. These regulations put us at a competitive disadvantage compared to less regulated competitors like finance companies, mortgage banking companies and leasing companies. Banking industry regulations are primarily intended to protect depositors, not shareholders, and are subject to continuous change. We cannot predict the ultimate effect of regulatory change with certainty. Additional laws affecting financial institutions may be proposed and enacted in the future. We are currently subject to regulations which may change at any time. We cannot assure you that the cost of complying with laws and regulations will not adversely affect our business or economic performance. See "Regulation and Supervision." RISK FACTORS RELATING TO THE TRUST PREFERRED SECURITIES OUR OBLIGATIONS UNDER THE TRUST PREFERRED SECURITIES GUARANTEE AND THE JUNIOR SUBORDINATED DEBENTURES RANK LOWER THAN OUR OTHER OBLIGATIONS. Our obligations under the trust preferred securities guarantee and the junior subordinated debentures are unsecured and will rank junior in priority of payment to any senior and subordinated debt we may incur, which generally includes indebtedness, liabilities or obligations we may have, contingent or otherwise. As of February 29, 2000, we had approximately $9.1 million in indebtedness that would rank senior in priority of payment to the junior subordinated debentures. Our obligations under the junior subordinated debentures will also be effectively subordinated to all existing and future liabilities and obligations of the Bank. The trust preferred securities, the junior subordinated debentures and the trust preferred securities guarantee do not limit our ability or the ability of the Bank to incur unlimited future indebtedness, liabilities and obligations, which may rank senior to the junior subordinated debentures and the trust preferred securities guarantee. For more information on our obligations under the trust preferred securities guarantee and the junior subordinated debentures, see "Description of the Trust Preferred Securities Guarantee - Status of the Trust Preferred Securities Guarantee" and "Description of the Junior Subordinated Debentures - Subordination of Junior Subordinated Debentures to Senior and Subordinated Debt of Blue Valley." IF WE DO NOT MAKE PAYMENTS UNDER THE JUNIOR SUBORDINATED DEBENTURES, BVBC TRUST WILL BE UNABLE TO PAY DISTRIBUTIONS AND LIQUIDATION AMOUNTS AND THE TRUST PREFERRED SECURITIES GUARANTEE WILL NOT APPLY. The ability of BVBC Trust to pay distributions and, upon redemption, the liquidation amount of $8 per trust preferred security is solely dependent upon our ability to make the related payments on the junior subordinated debentures when due. If we default on our obligation to pay principal of or interest on the junior subordinated debentures, BVBC Trust will not have sufficient funds to pay distributions or the liquidation amount. 14 In that case, you will not be able to rely upon the trust preferred securities guarantee for payment of these amounts because the trust preferred securities guarantee only applies if we make a payment of principal or interest on the junior subordinated debentures. For more information on our obligations under the trust preferred securities guarantee and the junior subordinated debentures, see "Description of the Trust Preferred Securities Guarantee - Status of the Trust Preferred Securities Guarantee" and "Description of the Junior Subordinated Debentures - Subordination of Junior Subordinated Debentures to Senior and Subordinated Debt of Blue Valley." OUR INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES ARE DEPENDENT ON OUR RECEIPT OF DIVIDENDS FROM THE BANK. Substantially all of our assets consist of our investment in the Bank. Thus, our ability to pay interest and principal on the junior subordinated debentures to BVBC Trust depends primarily upon our receipt of cash dividends from the Bank. Dividend payments from the Bank to us are subject to, among other things: o regulatory limitations, generally based on current and retained earnings and capital maintenance requirements, imposed by various bank regulatory agencies; o profitability, financial condition and capital expenditures and other cash flow requirements of the Bank; and o prior claims of creditors of the Bank. IF WE ELECT TO DEFER INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES, YOU MAY HAVE TO INCLUDE INTEREST IN YOUR TAXABLE INCOME BEFORE YOU RECEIVE CASH. It is possible that you will not receive cash distributions on the trust preferred securities for up to 20 consecutive quarters. This will occur if we elect to defer interest payments on the junior subordinated debentures. These periods during which we defer interest payments are referred to as "extension periods." Because you will be required to include interest in your income for United States federal income tax purposes during an extension period irrespective of whether interest is actually paid, you may have to pay taxes before you actually receive the cash distributions. In addition, the market price of the trust preferred securities is likely to be adversely affected if we elect to defer the interest payments. An extension period may last for up to 20 consecutive quarters, but not beyond the maturity date of the junior subordinated debentures. We must make payments of all deferred interest upon the earlier of the end of the extension period or the maturity date. This right exists only if no event of default under the junior subordinated debentures has occurred and is continuing. If we exercise this right, BVBC Trust would defer distributions on the trust preferred securities during any extension period. However, you would still accumulate distributions at the annual rate of % of the liquidation amount of $8 per trust preferred security, plus you will earn interest at the annual rate of %, compounded quarterly, on any unpaid distributions. When we pay all the accumulated amounts due to you during an extension period, the extension period will terminate. However, we have the right to begin another extension period under the 15 same terms outlined above. You will also not receive the cash distributions related to any accrued and unpaid interest from BVBC Trust if you sell the trust preferred securities before the end of an extension period. However, you will be required to include accrued interest income as original issue discount for United States federal income tax purposes in respect of your pro rata share of the junior subordinated debentures held by BVBC Trust. While we will take the position that original issue discount will not arise before the first extension period, it is possible that all interest on the junior subordinated debentures would be required to be accounted for as original issue discount. In these circumstances, the receipt of interest would not separately be reported as taxable income. See "Material Federal Income Tax Consequences - Interest Income and Original Issue Discount" for more information regarding the tax consequences of the trust preferred securities. In the event that we exercise our right to defer interest payments on the junior subordinated debentures, we will be prohibited from paying dividends on our common stock during the extension period. Because we have no history of paying dividends on our common stock, and no intention to do so in the immediate future, the prohibition against paying dividends during an extension period may have less of a deterrent effect on us than on a company with a history of paying dividends on its common stock. Nevertheless, we have no current intention of exercising our right to defer interest payments on the junior subordinated debentures. However, if we exercise our right in the future, the market price of the trust preferred securities is likely to be adversely affected. IF WE REDEEM THE JUNIOR SUBORDINATED DEBENTURES, IT WILL CAUSE A REDEMPTION OF THE TRUST PREFERRED SECURITIES AND YOU MAY NOT BE ABLE TO REINVEST THE PROCEEDS AT THE SAME OR HIGHER RATE OF RETURN. You are subject to the risk that we will redeem the trust preferred securities. If the trust preferred securities are redeemed, you may not be able to reinvest the money you receive upon redemption at a rate that is equal to or higher than the rate of return you receive on the trust preferred securities. Although the junior subordinated debentures have a stated maturity date of June 30, 2030, they may be redeemed by us prior to maturity in the following circumstances: o in whole or in part, beginning on June 30, 2005, at our option; o in whole upon a change in the federal tax laws or a change in the interpretation of the tax laws by the courts or the Internal Revenue Service, which would result in a risk that (1) BVBC Trust may be subject to federal income tax, (2) the interest we pay on the junior subordinated debentures will not be deductible by us for federal income tax purposes, or (3) BVBC Trust is or will be subject to more than a minimal amount of other taxes or governmental charges; o in whole upon a change in the laws or regulations to the effect that BVBC Trust is or will be considered to be an investment company that is required to be registered under the Investment Company Act of 1940; or 16 o in whole upon a change in the laws or regulations if there is a risk that we will not be able to treat all or a substantial portion of the trust preferred securities as Tier 1 (core) capital for purposes of federal banking guidelines. Our exercise of these redemption rights is subject to our receipt of prior approval of federal banking regulators, if required, and would cause an early redemption of the trust preferred securities. For further information concerning tax or regulatory events that may trigger redemption of the junior subordinated debentures, resulting in redemption of the trust preferred securities, see "Description of the Trust Preferred Securities - Redemption." YOU ARE SUBJECT TO REPAYMENT RISK BECAUSE POSSIBLE TAX LAW CHANGES COULD RESULT IN A REDEMPTION OF THE TRUST PREFERRED SECURITIES. Future legislation may be enacted that could adversely affect our ability to deduct our interest payments on the junior subordinated debentures for federal income tax purposes, making redemption of the junior subordinated debentures likely and resulting in a redemption of the trust preferred securities. From time to time, the current administration has proposed federal income tax law changes that would, among other things, generally deny interest deductions to a corporate issuer if the debt instrument has a term exceeding 15 years and if the debt instrument is not reflected as indebtedness on the issuer's consolidated balance sheet. Other proposed tax law changes would have denied interest deductions if the debt instrument had a term exceeding 20 years. These proposals were not enacted into law. Although it is impossible to predict future proposals, if a future proposal of this sort were to become effective in a form applicable to already issued and outstanding securities, we could be precluded from deducting interest on the junior subordinated debentures. Enactment of this type of proposal might in turn give rise to a tax event as described under "Description of the Trust Preferred Securities - Redemption - Mandatory and Optional Rights of Blue Valley." You should also be aware that a petition was filed during 1998 in the United States Tax Court as a result of a challenge by the Internal Revenue Service ("IRS") of a taxpayer's treatment as indebtedness of a security issued with characteristics similar to the junior subordinated debentures. Although the IRS agreed to dismissal of the adjustments related to this issue, it could assert similar adjustments against other taxpayers. If these adjustments were proposed and the issue were litigated to a conclusion in which the IRS's position on this matter were sustained, this judicial determination could constitute a tax event that could result in an early redemption of the trust preferred securities. For further information, see "Description of the Trust Preferred Securities - Redemption - Mandatory and Optional Rights of Blue Valley," "Description of the Junior Subordinated Debentures - Redemption" and "Material Federal Income Tax Consequences." DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF TRUST PREFERRED SECURITIES MAY HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OF YOUR INVESTMENT. Your investment in the trust preferred securities may decrease in value if the junior subordinated debentures are distributed to you in exchange for your trust preferred securities. If 17 the junior subordinated debentures are distributed to you in exchange for your trust preferred securities and we exercise our right to redeem less than all of the junior subordinated debentures, the junior subordinated debentures may not qualify for listing on The American Stock Exchange or another exchange. Although the indenture requires us to use our best efforts to list the junior subordinated debentures on an exchange in the event that they are distributed to you, this requirement will not prevent us from partially redeeming the junior subordinated debentures. Accordingly, we cannot predict the liquidity or market prices for the junior subordinated debentures that may be distributed. The junior subordinated debentures that you receive upon a distribution, or the trust preferred securities you hold pending a distribution, may trade at a discount to the price that you paid to purchase the trust preferred securities, or if the junior subordinated debentures are not listed on an exchange, they may not be actively traded at all. Because you may receive junior subordinated debentures, you must also make an investment decision with regard to these securities. You should carefully review all the information regarding the junior subordinated debentures contained in this prospectus. Under "Material Federal Income Tax Consequences" we discuss applicable United States federal income tax consequences of a distribution of the junior subordinated debentures. IN THE EVENT OF A DEFAULT UNDER THE TRUST PREFERRED SECURITIES, YOU MAY BE REQUIRED TO RELY ON THE PROPERTY TRUSTEE OF BVBC TRUST TO ENFORCE YOUR RIGHTS. You may not be able to directly enforce rights against us if an event of default occurs with respect to the junior subordinated debentures. For a listing of events that are events of default, see "Description of the Trust Preferred Securities - Events of Default; Notice" and "Description of the Junior Subordinated Debentures - Indenture Events of Default." If an event of default under the junior subordinated debentures occurs and is continuing, this event will also be an event of default under the trust preferred securities. In that case, you generally would first have to rely on the property trustee's enforcement of its rights as holder of the junior subordinated debentures against us. If the property trustee fails to exercise its rights under the junior subordinated debentures, you will then be able to exercise any other remedies available under the junior subordinated debentures. However, if the default arises because we fail to pay interest or principal, except during an extension period, on the junior subordinated debentures, you may proceed directly against us without first relying on the property trustee. LIMITED COVENANTS RELATING TO THE TRUST PREFERRED SECURITIES AND THE JUNIOR SUBORDINATED DEBENTURES WILL NOT NECESSARILY PROTECT YOU. Our obligations as set forth in the governing documents relating to the trust preferred securities and the junior subordinated debentures are limited. As a result, the governing documents will not necessarily protect you in the event of an adverse change in our financial condition or results of operations. The governing documents do not limit our ability or the ability of any of our subsidiaries to incur additional debt. You should not consider the terms of the governing documents to be a significant factor in evaluating whether we will be able to comply 18 with our obligations under the junior subordinated debentures or the trust preferred securities guarantee. WE WILL CONTROL BVBC TRUST AND YOU WILL HAVE LIMITED VOTING RIGHTS. As a holder of trust preferred securities, you have limited voting rights. These rights relate only to the dissolution or termination of BVBC Trust, the modification of the trust preferred securities and removal of the property and indenture trustees of BVBC Trust upon the occurrence of a limited number of events. You will not have any voting rights regarding Blue Valley's business or any matters regarding the administrative trustees. See "Description of the Trust Preferred Securities - Voting Rights; Amendment of the Trust Agreement" for more information on your limited voting rights. THERE HAS NOT BEEN A PRIOR MARKET FOR THE TRUST PREFERRED SECURITIES, AND AN ACTIVE TRADING MARKET FOR THE TRUST PREFERRED SECURITIES MAY NOT DEVELOP. The trust preferred securities are a new issue of securities with no established trading market. Although we have applied to have the trust preferred securities listed on the American Stock Exchange, a listing does not guarantee that an active trading market for the trust preferred securities will develop. We can give no assurance of the depth of that market or that holders of trust preferred securities will be able to sell their trust preferred securities easily. An inactive or illiquid trading market could adversely affect the price of your trust preferred securities. IF WE EXERCISE OUR RIGHT TO REDEEM LESS THAN ALL OF THE JUNIOR SUBORDINATED DEBENTURES, THE TRUST PREFERRED SECURITIES MAY CEASE TO BE LISTED ON AN EXCHANGE. Beginning June 30, 2005, we have the right to redeem the junior subordinated debentures in whole or in part. If we elect to redeem less than all of the junior subordinated debentures, BVBC Trust will redeem a proportionate part of the trust preferred securities. The trust preferred securities may cease to qualify for listing on the American Stock Exchange and may not qualify for listing on another exchange or The Nasdaq Stock Market in the event of a partial redemption. Although the trust agreement requires the administrative trustees to use their best efforts to maintain the listing of the trust preferred securities on the American Stock Exchange or another exchange, this requirement will not prevent us from causing a partial redemption of the trust preferred securities. TRADING CHARACTERISTICS OF THE TRUST PREFERRED SECURITIES MAY CREATE ADVERSE TAX CONSEQUENCES FOR YOU. The trust preferred securities may trade at a price that does not reflect the value of accrued but unpaid interest on the underlying junior subordinated debentures. If you dispose of your trust preferred securities between record dates for payments on the trust preferred securities, you may have adverse tax consequences. Under these circumstances, you will be required to include accrued but unpaid interest on the junior subordinated debentures allocable to the trust preferred securities through the date of disposition in your income as ordinary income if you use the accrual method of accounting or if this interest represents original issue discount. 19 If interest on the junior subordinated debentures is included in income under the original issue discount provisions, you would add this amount to your adjusted tax basis in your share of the underlying junior subordinated debentures deemed disposed. If your selling price is less than your adjusted tax basis, which will include all accrued but unpaid original issue discount interest included in your income, you could recognize a capital loss which, subject to limited exceptions, cannot be applied to offset ordinary income for federal income tax purposes. See "Material Federal Income Tax Consequences" for more information on possible adverse tax consequences to you. THE TRUST PREFERRED SECURITIES AND THE JUNIOR SUBORDINATED DEBENTURES ARE NOT INSURED. Neither the trust preferred securities nor the junior subordinated debentures are insured by the Bank Insurance Fund, the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation or any other governmental agency. USE OF PROCEEDS We will receive proceeds from the sale of our junior subordinated debentures to BVBC Trust. BVBC Trust will purchase our junior subordinated debentures with proceeds from the sale of the trust preferred securities. The net proceeds to us from the sale of the junior subordinated debentures, after deducting underwriting commissions and estimated offering expenses, will be approximately $9.2 million, or $10.6 million if the underwriter's over-allotment option is exercised in full. We intend to use the net proceeds as follows: o repay approximately $7.3 million of debt outstanding as of February 29, 2000 under our bank stock loan, which accrues interest at the rate of prime minus 1%, and matures on July 31, 2000; and o retain the remainder for general corporate purposes, including investments from time to time in the Bank in the form of additional capital and possible future acquisitions. We have no agreements or understandings at this time for any acquisitions, and we cannot be sure whether any acquisitions will ever occur. MARKET FOR THE TRUST PREFERRED SECURITIES We have applied to have the trust preferred securities listed on the American Stock Exchange under the symbol " ." We are not sure, however, whether an active and liquid trading market will develop, or if developed, will continue. The public offering price and distribution rate have been determined by negotiations among our representatives and the underwriters, and the public offering price of the trust preferred securities may not be indicative of the market price following the offering. See "Underwriting." ACCOUNTING TREATMENT For financial reporting purposes, we will treat BVBC Trust as our subsidiary. Accordingly, we will include the accounts of BVBC Trust in our consolidated financial 20 statements. We will include the trust preferred securities as debt in our consolidated balance sheets, and will include appropriate disclosures about the trust preferred securities, the trust preferred securities guarantee and the junior subordinated debentures in the notes to our consolidated financial statements. For financial reporting purposes, we will record distributions on the trust preferred securities as interest expense in our consolidated statements of income. Future reports of Blue Valley filed under the Securities Exchange Act of 1934 will include a footnote to the consolidated financial statements stating that: o BVBC Trust is a wholly-owned subsidiary of Blue Valley; o the sole asset of BVBC Trust is the junior subordinated debentures, specifying the principal amount, interest rate and maturity date of the junior subordinated debentures; and o the obligations of Blue Valley described in this prospectus, in the aggregate, constitute a full, irrevocable and unconditional guarantee on a subordinated basis by Blue Valley of the obligations of BVBC Trust under the trust preferred securities. BVBC Trust will not file separate reports under the Securities Exchange Act. 21 CAPITALIZATION The following table sets forth (a) our historical capitalization at December 31, 1999; and (b) our adjusted capitalization after giving effect to this offering and the use of net proceeds as described in "Use of Proceeds" above, and assuming the underwriter's over-allotment option was not exercised.
DECEMBER 31, 1999 AS ADJUSTED ACTUAL FOR THIS OFFERING ---------------- --------------------- (DOLLARS IN THOUSANDS) SHORT-TERM AND LONG-TERM DEBT: Borrowed money (1)............................................... $ 9,358 $ 1,908 Guaranteed preferred beneficial interests in Blue Valley's junior subordinated debentures (2)........................... -- 10,000 Total short-term and long-term debt ..................... 9,358 11,908 STOCKHOLDERS' EQUITY: Common stock, par value $1.00 per share; 15,000,000 shares authorized; 2,137,720 shares issued and outstanding .......... 2,138 2,138 Additional paid-in capital ...................................... 5,230 5,230 Retained earnings ............................................... 12,458 12,458 Unrealized depreciation on available-for-sale securities, net ... (957) (957) Total stockholders' equity .............................. 18,869 18,869 Total capitalization .................................... 28,227 30,777 CAPITAL RATIOS: (3)(4)(5) Ratio of equity to total assets.................................. 5.67% 5.64% Risk-based capital ratios: Total capital to risk-weighted assets ratio................... 8.07 11.77 Tier 1 capital to risk-weighted assets ratio.................. 6.82 9.09 Tier 1 capital to average assets ratio (leverage ratio)....... 5.80 7.73
.................. [FN] (1) Does not include deposits, Federal Home Loan Bank borrowings or securities sold under agreements to repurchase. (2) In connection with the issuance of the guaranteed preferred beneficial interest in Blue Valley's junior subordinated debentures, we estimate we will incur expenses of $800,000 (including underwriter's commissions of $500,000). (3) The capital ratios, as adjusted, are computed including the total estimated net proceeds from the sale of the trust preferred securities, in a manner consistent with Federal Reserve guidelines. (4) Federal Reserve guidelines for calculation of Tier 1 capital limits the amount of cumulative trust preferred securities which can be included in Tier 1 capital to 25% of total Tier 1 capital. Approximately $6.1 million of the trust preferred securities offered hereby will be included as Tier 1 capital for Blue Valley. The balance of the trust preferred securities offered hereby will be included as Tier 2 capital for Blue Valley. (5) Unrealized depreciation on available-for-sale securities, net, is not included in calculating regulatory capital ratios. 22 SELECTED CONSOLIDATED FINANCIAL DATA The following table presents our consolidated financial data as of and for the five years ended December 31, 1999, and should be read in conjunction with the consolidated financial statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations," each of which is included elsewhere in this prospectus.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, ---------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ------------- ------------- ------------- -------------- -------------- (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) SELECTED STATEMENT OF INCOME DATA Interest income: Loans, including fees ................. $ 20,422 $ 14,608 $ 12,000 $ 9,100 $ 6,689 Federal funds sold and interest-bearing deposits............ 431 396 276 315 822 Securities ............................ 2,755 2,814 2,275 2,231 1,682 ---------- ----------- ---------- ----------- ---------- Total interest income .............. 23,608 17,818 14,551 11,646 9,193 ---------- ----------- ---------- ----------- ---------- Interest expense: Interest-bearing demand deposits ...... 644 348 296 267 235 Savings and money market deposit accounts ............................ 3,156 1,637 1,353 1,256 1,081 Other time deposits ................... 6,032 6,247 4,985 3,668 2,859 Funds borrowed ........................ 1,372 973 624 605 720 ---------- ----------- ---------- ----------- ---------- Total interest expense ............. 11,204 9,205 7,258 5,796 4,895 ---------- ----------- ---------- ----------- ---------- Net interest income................. 12,404 8,613 7,293 5,850 4,298 Provision for loan losses ................ 2,144 1,061 660 648 370 ---------- ----------- ---------- ----------- ---------- Net interest income after provision for loan losses ............... 10,260 7,552 6,633 5,202 3,928 ---------- ----------- ---------- ----------- ---------- Non-interest income: Loans held for sale fee income......... 1,623 1,329 439 232 129 NSF charges & service fees............. 553 598 499 402 327 Other service charges.................. 659 157 107 79 60 Realized gain on securities available-for-sale................... 3 112 8 71 - Other income .......................... 186 450 401 424 344 ---------- ----------- ---------- ----------- ---------- Total non-interest income .......... 3,024 2,646 1,454 1,208 860 Non-interest expense: Salaries and employee benefits ........ 4,578 3,312 2,304 1,803 1,444 Occupancy ............................. 894 748 663 581 508 FDIC and other insurance............... 113 121 86 290 163 General & administrative .............. 3,095 1,815 1,603 1,196 1,053 ---------- ----------- ---------- ----------- ---------- Total non-interest expense.......... 8,680 5,996 4,656 3,870 3,168 ---------- ----------- ---------- ----------- ---------- Income before income taxes ............ 4,604 4,202 3,431 2,540 1,620 Income tax provision................ 1,521 1,386 1,145 918 571 ---------- ----------- ---------- ----------- ---------- Net income.......................... $ 3,083 $ 2,816 $ 2,286 $ 1,622 $ 1,049 ========== =========== ========== =========== ========== PER SHARE DATA Basic earnings ........................ $ 1.45 $ 1.36 $ 1.24 $ 0.88 $ 0.72 Diluted earnings ...................... 1.42 1.35 1.22 0.85 0.70 Dividends.............................. - - - - - Book value basic (at end of period) ... 8.83 7.99 6.64 5.49 4.77 Weighted average common shares outstanding: Basic.............................. 2,131,372 2,065,400 1,843,288 1,836,796 1,447,300 Diluted............................ 2,166,008 2,084,088 1,867,844 1,912,876 1,494,324
23
AS OF AND FOR THE YEAR ENDED DECEMBER 31, ---------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ------------- ------------- ------------- -------------- -------------- (DOLLARS IN THOUSANDS) SELECTED FINANCIAL CONDITION DATA (AT END OF PERIOD): Total securities ......................... $ 48,646 $ 53,427 $ 40,247 $ 36,588 $ 35,496 Total loans............................... 250,410 161,444 127,308 101,323 71,791 Total assets ............................. 332,613 253,724 201,644 162,739 132,794 Total deposits .......................... 268,145 209,824 170,792 139,929 112,614 Funds borrowed ........................... 43,177 25,142 16,298 11,904 10,423 Total stockholders' equity................ 18,869 17,016 13,464 10,100 8,761 Trust assets under administration......... 19,436 13,099 8,241 3,081 - SELECTED FINANCIAL RATIOS AND OTHER DATA : PERFORMANCE RATIOS: Net interest margin (1) ............ 4.77 % 4.30 % 4.66 % 4.57 % 4.13 % Non-interest income to average assets assets ........................... 1.06 1.20 0.83 0.84 0.73 Non-interest expense to average assets ........................... 3.04 2.72 2.66 2.69 2.68 Net overhead ratio (2) ............. 1.98 1.52 1.83 1.85 1.95 Efficiency ratio (3) ............... 56.26 53.26 53.23 54.83 61.42 Return on average assets (4) ....... 1.08 1.28 1.30 1.13 0.89 Return on average equity (5) ....... 17.43 18.98 20.62 17.79 17.46 ASSET QUALITY RATIOS: Non-performing loans to total loans. 0.21% 0.84% 0.33% 0.40% 0.68% Allowance for possible loan losses to: Total loans ..................... 1.52 1.45 1.27 1.26 1.16 Non-performing loans ............ 710.80 171.88 380.71 312.50 172.37 Net charge-offs to average total loans ........................... 0.32 0.23 0.27 0.24 0.23 Non-performing assets to total assets .......................... 0.22 0.55 0.61 0.28 0.64 BALANCE SHEET RATIOS: Loans to deposits .................. 93.39% 76.94% 74.54% 72.41% 63.75% Average interest-earning assets to average interest-bearing liabilities ...................... 116.11 116.57 114.55 114.76 110.84 CAPITAL RATIOS: Total equity to total assets ....... 5.67% 6.71% 6.68% 6.21% 6.60% Total capital to risk-weighted assets ratio ..................... 8.07 9.62 9.87 8.91 9.58 Tier 1 capital to risk-weighted assets ratio ..................... 6.82 8.37 8.65 7.72 8.48 Tier 1 capital to average assets ratio ............................ 5.80 6.13 6.28 5.57 5.50 RATIO OF EARNINGS TO FIXED CHARGES (6) Including interest on deposits...... 1.41x 1.46x 1.47x 1.44x 1.33x Excluding interest on deposits...... 4.36 5.32 6.50 5.20 3.25 PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES (7) Including interest on deposits...... 1.39 -- -- -- -- Excluding interest on deposits...... 3.26 -- -- -- -- ..................
[FN] (1) Net interest income divided by average interest-earning assets. (2) Non-interest expense less non-interest income divided by average total assets. (3) Non-interest expense divided by the sum of net interest income plus non-interest income. (4) Net income divided by average total assets. (5) Net income divided by average common equity. (6) For purposes of calculating the ratio of earnings to fixed charges, earnings consist of income before taxes plus interest expense. Fixed charges consist of interest expense. (7) For purposes of calculating the pro forma ratio of earnings to fixed charges, earnings consists of income before taxes plus pro forma interest expense. Pro forma interest expense consists of historical interest expense plus (1) interest expense on the junior subordinated debentures assuming that we issued a total principal amount of $10 million at 10.0% at the beginning of such period minus (2) historical interest expense on the $7.3 million of our debt under our bank stock loan that we intend to retire with the proceeds from this offering. 24 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following presents management's discussion and analysis of our financial condition and results of operations as of the dates and for the periods indicated. You should read this discussion in conjunction with our "Selected Consolidated Financial Data," our consolidated financial statements and the accompanying notes, and the other financial data contained elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of various factors, including those discussed in "Risk Factors" contained elsewhere in this prospectus. See "Cautionary Note on Forward-Looking Statements." GENERAL Over the past five years, we have achieved significant growth in assets, increased our deposit base, and increased earnings. Our focus has primarily been on real estate development, home construction, indirect consumer lending and small business lending, with an emphasis on customer service so as to attract and retain core deposits. This strategy, paired with rapid population growth in Johnson County, Kansas, has been key to our success. From 1995 through 1999: o our loans grew at a 36.65% compound annual rate; o our net income grew at a 39.91% compound annual rate and our earnings per share grew at a 27.59% compound annual rate; o our annual return on average equity has averaged 18.46%; o our annual return on average assets has averaged 1.14%; o our ratio of non-performing assets to total assets declined from 0.64% to 0.22%; and o our ratio of net charge-offs to average total loans has averaged less than 0.26%. The population of Johnson County, Kansas has grown from approximately 327,000 to 417,000, or 28%, between 1987 and 1997. This represents 55% of the total increase in the 11-county Kansas City, Missouri-Kansas Metropolitan Statistical Area (the "Kansas City MSA") and 61% of the increase in the entire State of Kansas. Between 1986 and 1996, Johnson County's economy created 99,000 jobs and added over 4,000 businesses, representing over half of the Kansas City MSA's total growth. In addition, we believe that the recent consolidation in the banking industry that has occurred in our market area has generated significant opportunities for the remaining independent community banks, including the Bank, to serve those customers who still desire the level of customer service that we believe is not available at many larger regional and national banks. 25 A major contributor to our asset growth over the past five years has been strong growth in all of our major loan categories. Our growth is not attributable to any single loan category, but has come from a number of diverse loan products. We have become less concentrated in any one area with commercial loans, being our largest portfolio, decreasing from 46.40% of our portfolio at December 31, 1995, to 25.78% at December 31, 1999. This diversification has occurred through growth in commercial real estate loans and residential real estate loans, as well as personal/consumer loans. Our growth in profitability over the past five years reflects conservative loan underwriting practices resulting in net charge-off ratios averaging less than 0.26%. Our efficiency ratios have averaged below 56% for the past five years. In addition, strong growth of non-interest income to average assets from 0.73% in 1995 to 1.06% in 1999 has significantly contributed to our profitability over the past five years. Our net interest margin has remained between 4.13% and 4.77% from 1995 to 1999. Our net interest income and net interest margin have also benefited from a ratio of loans to deposits that has increased from a low of 63.75% in 1995 to a high of 93.39% in 1999, and a growing number of non-interest bearing deposits. Our funding philosophy has been to increase deposits from retail and commercial deposit sources as necessary to fund loans within the limits of the Bank's capital base. Although a higher loan-to-deposit ratio potentially limits the Bank's liquidity, our portfolio of available-for-sale securities and various lines of credit have provided adequate sources of liquidity when needed. Our level of non-performing assets reflects the Bank's conservative underwriting policies, has resulted in low levels of nonaccrual loans, and has reduced the costs of resolving non-performing assets. Over the past five years, non-performing loans to total loans has averaged below 0.50%, net charge-offs to average total loans has averaged below 0.26%, and non-performing assets to total assets has averaged below 0.46%. Generally, banks benefit from lower levels of non-performing loans by realizing more of the interest income accrued on the loan portfolio and enjoying a greater ability to rely on internal growth to fund new loans. Our philosophy has been to value non-performing loans at their estimated collectible value and to aggressively manage these situations. Generally, the Bank maintains its allowance for loan losses in excess of its non-performing loans. Over the five years from 1995 to 1999, our ratio of allowance for loan losses to non-performing loans averaged 349.65%. We fund our operations primarily through demand, savings and time deposits and, to a lesser extent, lines of credit, sale/repurchase facilities from various financial institutions, and Federal Home Loan Bank borrowings. In 1999, our total deposits increased by $58 million to $268 million from $210 million. A significant portion of this increase was a result of a new deposit product, our "short-term parking account," introduced by the Bank in the fourth quarter of 1998. This account, which pays a higher yield than our other money market account, requires a minimum balance of $10,000 and allows depositors to access their funds only on the 15th and last day of each month. NET INCOME Net income for 1999 was $3.1 million, a 9.48% increase over the $2.8 million earned in 1998. The principal contributors to our increase in net income during 1999 were an increase of 26 $3.8 million, or 44.01%, in additional net interest income and an increase of $294,000, or 22.12%, in additional fee income from loans held for sale that we originated and sold in the secondary market. Diluted earnings per share increased 5.19% to $1.42 in 1999 from $1.35 in 1998. The growth of diluted earnings per share of 5.19% was less than the growth of net income of 9.48% due to 81,920 more diluted shares being outstanding at December 31, 1999 compared with December 31, 1998. We had more diluted shares as a result of stock options being exercised as well as 64,000 additional options being granted in 1999. Net income for 1998 was $2.8 million, a 23.18% increase over the $2.3 million earned in 1997. The improvement in 1998 net income was primarily the result of an increase of $1.3 million, or 18.10%, in net interest income and an increase of $890,000, or 202.73%, in loans held for sale fee income. As a result, diluted earnings per share increased 10.66% to $1.35 in 1998 from $1.22, in 1997. The growth of diluted earnings per share of 10.66% was less than the growth of net income of 18.10% due to 216,244 more diluted shares being outstanding at December 31, 1998 compared with December 31, 1997. We had more diluted shares as a result of stock options being exercised as well as 65,516 additional options being granted in 1998. Two industry measures of the performance by a banking institution are its return on average assets, referred to as "ROA," and return on average stockholders' equity, referred to as "ROE." ROA measures net income in relation to average total assets and indicates a company's ability to employ its resources profitably. During 1999 our ROA was 1.08%, compared to 1.28% for 1998 and 1.30% for 1997. This decrease in ROA is partially attributable to our increased investment in infrastructure during this period to support our future growth. In addition, the strong asset growth rate of Blue Valley, with assets increasing at a 26.91% compound annual rate for this time period which exceeded the compound annual growth rate in net income during the same period, contributed to the decrease in ROA. ROE is determined by dividing net income by average stockholders' equity and indicates how effectively a company can generate net income on the capital invested by its stockholders. During 1999 our ROE was 17.43%, compared to 18.98% for 1998 and 20.62% for 1997. While earnings increased in 1999 and in 1998, ROE decreased in 1999 and 1998. This decrease in ROE is partially attributable to our increased investment in infrastructure during this period. In addition, the $5.9 million of additional equity added through earnings, as well as $723,000 added through 109,660 options being exercised during the same time period, contributed to the decrease in ROE. NET INTEREST INCOME The primary component of our net income is our net interest income. Net interest income is determined by the spread between the yields we earn on our interest-earning assets and the rates we pay on our interest-bearing liabilities, as well as the relative amounts of such assets and liabilities. Net interest margin is determined by dividing net interest income by average interest-earning assets. YEARS ENDED DECEMBER 31, 1999 AND 1998. Net interest income for 1999 increased to $12.4 million from $8.6 million in 1998, a $3.8 million, or 44.01%, increase. This increase was primarily the result of a $59.7 million increase in average interest-earning assets, which more 27 than offset a $52.1 million increase in average interest-bearing liabilities. Additionally, the decline in our cost of funds was greater than the decline in the average rate we received on our average interest-earning assets. Our net interest margin improved to 4.77%, from 4.30% during 1998. One of the major contributors to the improvement in our net interest margin was interest of $2.0 million earned on a purchased lease portfolio on average outstanding leases of $8.2 million, for a yield of 26.72%. We expect our interest income from these purchased leases to decline over the next two years as the portfolio matures. Without the interest income generated from this portfolio, the net interest margin would have been 4.14%. Interest income for 1999 was $23.6 million, an increase of $5.8 million, or 32.50%, from $17.8 million in 1998, primarily as a result of a $59.7 million, or 29.05%, growth in interest-earning assets. Excluding the interest income generated from the purchased lease portfolio discussed above, the yield on average interest-earning assets declined from 8.78% in 1998 to 8.50%. However, the increase in volume more than offset this 28 basis point decline in yield, resulting in the $5.8 million increase in interest income from 1998 to 1999. Interest income on available-for-sale securities decreased by $59,000, and the tax-equivalent yield on our investment portfolio decreased 15 basis points in 1999 as compared to 1998. This resulted from our sale in 1998 of higher-yielding, callable debt securities, which appeared to us likely to be called due to the then-prevailing interest rate environment. Interest expense for 1999 was $11.2 million, up $2.0 million, or 21.72%, from $9.2 million in 1998. We attribute the increase to a $42.4 million, or 26.88%, increase in our average balances of interest-bearing deposits as well as a $9.7 million, or 52.57%, increase in other interest-bearing liabilities, including FHLB borrowings and increased borrowings under our bank stock loan. Overall, rates paid on average interest-bearing liabilities decreased to 4.91% in 1999 from 5.22% in 1998, a decline of 31 basis points. The additional deposits generated by the introduction of our short-term parking account were used to fund a portion of our loan growth. The remaining funds were obtained from other deposit products, as well as advances from the FHLB. YEARS ENDED DECEMBER 31, 1998 AND 1997. Net interest income for 1998 increased to $8.6 million from $7.3 million in 1997, a $1.3 million, or 18.10%, increase. This increase was primarily the result of a $45.7 million increase in average interest-earning assets, which offset a $36.8 million increase in average interest-bearing liabilities. Although the net interest margin decreased to 4.30% in 1998 from 4.66% in 1997, the additional volume generated more net interest income. Interest income for 1998 was $17.8 million, an increase of $3.2 million, or 22.45%, up from $14.6 million in 1997, primarily as a result of growth in interest-earning assets. Yields on interest-earning assets declined 42 basis points to 8.78% from 9.20% in 1997. Loan interest and fee income increased to $14.6 million from $12.0 million because of the greater volume of loans outstanding. These additional loans were funded by deposit growth as well as advances from the FHLB. The tax-equivalent yield on our investment portfolio remained constant at 6.39% for both 1998 and 1997. However, interest income on available-for-sale securities increased by $539,000 as a result of growth in the portfolio. 28 Interest expense for 1998 was $9.2 million, up $1.9 million, or 26.83%, from $7.3 million in 1997. We attribute the increase to growth in our deposit base, as well as increases in other funding sources such as the FHLB. Overall, rates paid on average interest-bearing liabilities remained constant at 5.22% in 1998 compared with 5.21% in 1997, or 1 basis point difference. AVERAGE BALANCE SHEETS. The following table sets forth for the periods and as of the dates indicated, information regarding our average balances of assets and liabilities as well as the dollar amounts of interest income from interest-earning assets and interest expense on interest-bearing liabilities and the resultant yields or costs. Ratio, yield and rate information are based on average daily balances where available; otherwise, average monthly balances have been used. Nonaccrual loans are included in the calculation of average balances for loans for the periods indicated.
AVERAGE BALANCES, YIELDS AND RATES YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------------------- 1999 1998 1997 --------------------------- --------------------------- --------------------------- AVERAGE AVERAGE AVERAGE AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/ BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE --------- -------- -------- --------- -------- -------- -------- -------- ------- (DOLLARS IN THOUSANDS) ASSETS Federal funds sold...................... $ 9,482 $ 431 4.55 % $ 7,786 $ 396 5.09% $ 5,063 $ 276 5.45 % Investment securities - taxable......... 33,422 2,087 6.24 33,836 2,191 6.48 28,834 1,846 6.40 Investment securities - non-taxable (1). 14,399 895 6.22 13,502 835 6.18 9,080 575 6.33 Mortgage loans held for sale............ 1,413 112 7.93 2,026 138 6.81 795 56 7.04 Loans, net of unearned discount and fees 206,310 20,310 9.84 148,221 14,470 9.76 115,939 11,944 10.30 --------- -------- --------- ------- ---------- ------- Total earning assets............ 265,026 23,835 8.99 205,371 18,030 8.78 159,711 14,697 9.20 --------- -------- --------- ------- ---------- ------- Cash and due from banks - non-interest bearing............................... 9,883 7,689 6,425 Allowance for possible loan losses...... (2,842) (2,069) (1,516) Premises and equipment, net............. 5,505 4,776 4,408 Other assets............................ 7,723 4,491 6,163 --------- ---------- ---------- Total assets.................... $ 285,295 $ 220,258 $ 175,191 ========= ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits-interest bearing: Interest-bearing demand accounts..... $ 19,260 $ 644 3.34 % $ 12,620 $ 348 2.76% $ 10,661 $ 296 2.78 % Savings and money market deposits........................... 74,535 3,156 4.23 41,001 1,637 3.99 34,490 1,353 3.92 Time deposits........................ 106,366 6,032 5.67 104,141 6,247 6.00 82,683 4,985 6.03 --------- -------- ---------- ------- ---------- ------- Total interest-bearing deposits. 200,161 9,832 4.91 157,762 8,232 5.22 127,834 6,634 5.19 --------- -------- ---------- ------- ---------- ------- Short-term borrowings .................. 16,122 690 4.28 12,192 591 4.85 9,372 458 4.89 Long-term debt ......................... 11,973 682 5.70 6,223 382 6.14 2,215 166 7.50 Total interest-bearing liabilities .................. 228,256 11,204 4.91 176,177 9,205 5.22 139,421 7,258 5.21 --------- -------- ---------- ------- ---------- ------- Non-interest bearing deposits........... 37,314 27,567 22,098 Other liabilities ...................... 2,034 1,678 2,588 Stockholders' equity.................... 17,691 14,836 11,084 --------- ---------- ---------- Total liabilities and stockholders' equity.......... $ 285,295 $ 220,258 $ 175,191 ========= ========== ========== Net interest income/spread ............. $ 12,631 4.08 % $ 8,825 3.56% $ 7,439 3.99 % ======== ===== ======== ======== ======== Net interest margin..................... 4.77 % 4.30% 4.66 % ====== ======== ========
___________________________ [FN] (1) Presented on a full tax-equivalent basis assuming a tax rate of 34%. ANALYSIS OF CHANGES IN NET INTEREST INCOME DUE TO CHANGES IN INTEREST RATES AND VOLUMES. The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the increase or decrease related to changes in balances and changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to: o changes in volume, reflecting changes in volume multiplied by the prior period rate; and 29 o changes in rate, reflecting changes in rate multiplied by the prior period volume. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.
CHANGES IN INTEREST INCOME AND EXPENSE VOLUME AND RATE VARIANCES YEAR ENDED DECEMBER 31, -------------------------------------------------------------------------------- 1999 COMPARED TO 1998 1998 COMPARED TO 1997 ---------------------------------------- -------------------------------------- CHANGE CHANGE CHANGE CHANGE DUE TO DUE TO TOTAL DUE TO DUE TO TOTAL RATE VOLUME CHANGE RATE VOLUME CHANGE ------------ ------------ ------------ ---------- ------------ ------------ (IN THOUSANDS) Federal funds sold....................... $ (33) $ 68 $ 35 $ (17) $ 137 $ 120 Investment securities - taxable.......... (78) (26) (104) 23 322 345 Investment securities - non-taxable (1).. 5 55 60 (13) 273 260 Mortgage loans held for sale............. 31 (57) (26) (2) 84 82 Loans, net of unearned discount ......... 120 5,720 5,840 (586) 3,112 2,526 --------- ---------- ---------- --------- ---------- ---------- Total interest income.............. 45 5,760 5,805 (595) 3,928 3,333 --------- ---------- ---------- --------- ---------- ---------- Interest-bearing demand accounts......... 84 212 296 (2) 54 52 Savings and money market deposits........ 104 1,415 1,519 25 259 284 Time deposits............................ (352) 137 (215) (25) 1,287 1,262 Short-term borrowings.................... (56) 155 99 (4) 137 133 Long-term debt........................... (25) 325 300 (24) 240 216 --------- ---------- ---------- --------- ---------- ---------- Total interest expense ............ (245) 2,244 1,999 (30) 1,977 1,947 --------- ---------- ---------- --------- ---------- ---------- Net interest income...................... $ 290 $ 3,516 $ 3,806 $ (565) $ 1,951 $ 1,386 ========= ========== ========== ========= ========== ==========
___________________ [FN] (1) Presented on a fully tax-equivalent basis assuming a tax rate of 34%. PROVISION FOR LOAN LOSSES We make provisions for loan losses in amounts management deems necessary to maintain the allowance for loan losses at an appropriate level. The provision for loan losses increased to $2.1 million in 1999 from $1.1 million in 1998, or 102.07%, while the loan portfolio increased to $250.4 million in 1999 from $161.4 million in 1998, or 55.11%. The provision for loan losses increased to $1.1 million in 1998 from $660,000 in 1997, or 60.76%, while the loan portfolio increased to $161.4 million in 1998 from $127.3 million in 1997, or 26.81%. The allowance for loan losses as a percentage of loans increased to 1.52% in 1999 and 1.45% in 1998, as compared to 1.27% and 1.26% in 1997 and 1996, respectively. We increased the allowance for loan losses in 1999 and 1998 based upon an analysis of several factors, including the changing loan mix and overall growth in the loan portfolio. We believe that a ratio of between 1.45 and 1.55 is consistent with the level maintained by banks that are similar to the Bank in both size and market served. Based upon our future business and lending plans, and depending upon specific facts and circumstances with respect to our loans and general economic conditions, management expects to maintain its allowance, as a percentage of total loans, in a range generally consistent with our reserves over the past five years, which has varied between 1.16% and 1.52%. NON-INTEREST INCOME The following table describes the items of our non-interest income for the periods indicated: 30 NON-INTEREST INCOME YEAR ENDED DECEMBER 31, ----------------------------------- 1999 1998 1997 ---------- ----------- --------- (IN THOUSANDS) Loans held for sale fee income............ $ 1,623 $ 1,329 $ 439 NSF charges and service fees.............. 553 598 499 Other service charges..................... 659 157 107 Realized gain on sales of investment 3 112 8 securities................................ Other income ............................. 186 450 401 ---------- ----------- ------------ Total non-interest income............. $ 3,024 $ 2,646 $ 1,454 ========== =========== ============ Non-interest income increased to $3.0 million in 1999, from $2.6 million in 1998 and $1.5 million in 1997, increases of 14.29% and 81.98%, respectively. These increases were primarily attributable to the increase in origination fees resulting from the higher level of residential mortgage loans which we originated and sold in the secondary market in 1999 and 1998. The increase in loans held for sale fee income is the result of $82.4 million of residential mortgage loans that we originated and sold in the secondary market in 1999, as compared to $75.6 million in 1998 and $31.1 million in 1997. Although our practice has been to hold substantially all of our investment securities to maturity, in 1998 we recognized a substantial increase in gain on sales of investment securities when we sold a number of debt securities in our portfolio that were subject to call. Due to the interest rate environment, it appeared likely that these securities would be called. By selling the securities and reinvesting the proceeds, we were able to maintain a comparable yield while extending the maturity of the dollars invested. Other service charge income increased by $502,000 in 1999. This increase is a result of the Bank developing new products which are beginning to generate fee-based income. Our investment brokerage, commercial mortgage brokerage and brokered lease services generated an additional $208,000 in 1999 over 1998. In addition a rental fleet of tanker equipment purchased as part of a portfolio of leases during 1999 generated rental income of $127,000 before it was eventually liquidated. The remainder of the increase is a result of the growth in the Bank, and increases in general customer relationship/retail fee based products, such as ATM, check orders, and various other retail products. Other service charge income was fairly constant in 1998 compared with 1997. Other income has declined over the past two years because as we have grown and expanded our number of employees, we have leased less of our corporate headquarters to outside parties, which decreased our rental income by $133,000 in 1999 and $79,000 in 1998. NON-INTEREST EXPENSE The following table describes the items of our non-interest expense for the periods indicated. 31 NON-INTEREST EXPENSE YEAR ENDED DECEMBER 31, ------------------------------------ 1999 1998 1997 ---------- ----------- ---------- (IN THOUSANDS) Salaries and employee benefits............ $ 4,578 $ 3,312 $ 2,304 Occupancy................................. 894 748 663 FDIC and other insurance expense.......... 113 121 86 General and administrative................ 3,095 1,815 1,603 ---------- ----------- ------------ Total non-interest expenses........... $ 8,680 $ 5,996 $ 4,656 ========== =========== ============ Non-interest expense increased to $8.7 million in 1999, from $6.0 million in 1998, and $4.7 million in 1997, increases of 44.76% and 28.78%, respectively. These increases were primarily the result of increases in salaries and employee benefits and general and administrative expenses. Our salaries and employee benefits expenses increased to $4.6 million in 1999, from $3.3 million in 1998, and $2.3 million in 1997, as we hired additional staff to facilitate our growth. We had 112, 83 and 61 full-time employees at the end of 1999, 1998 and 1997, respectively. General and administrative expense increased to $3.1 million in 1999, from $1.8 million in 1998, and $1.6 million in 1997, which is a direct result of our growth, as well as our increased advertising and marketing efforts. Advertising and marketing expenditures increased to $476,000 in 1999, from $269,000 in 1998, and $119,000 in 1997. A lease portfolio was purchased during 1999 with the assistance of a third party. A referral fee is due to a third party based on performance of the portfolio. The referral fee accrued in 1999 was $305,000 and is included in general and administrative expenses. INCOME TAXES Income taxes for fiscal years 1999, 1998 and 1997 were $1.5 million, $1.4 million and $1.1 million, respectively. The increases in taxes in 1999 and 1998 reflect our higher earnings. Our consolidated income tax rate varies from the statutory rate principally due to the effects of state income taxes and interest income earned on our municipal securities portfolio which is tax-exempt for federal income tax purposes. FINANCIAL CONDITION LENDING ACTIVITIES. Our loan portfolio is our main source of income, and has been the principal component of our revenue growth. Our loan portfolio reflects an emphasis on commercial, residential real estate, construction, and personal lending and leasing. We emphasize commercial lending to professionals, businesses and their owners. Commercial loans and loans secured by commercial real estate accounted for 36.41% of our total loans at December 31, 1999, and represented over 40% of our total loans at year end 1998, 1997, 1996, and 1995. These loans increased at more than a 26.04% compound annual rate during the four-year period ended December 31, 1999. However, as the Bank's portfolio has become more diversified, these loans have decreased as a percentage of the total portfolio from 50.31% at year-end 1995 to 36.41% at December 31, 1999. Loans were $250.4 million at December 31, 1999, an increase of $89.0 million, or 55.11%, compared to December 31, 1998. We experienced increases in each of our loan categories, with the most significant increases occurring in commercial real estate, personal, 32 construction and leasing. Over the last five years, we have expanded our personal lending lines of business in an effort to more broadly diversify our risk across multiple lines of business. A significant portion of the growth in our personal lending lines over the last five years is attributable to growth in our indirect automobile loan portfolio. As a result of the significant growth over the past five years in our indirect automobile loan portfolio and management's belief that our current level of investment in indirect automobile loans as a percentage of our overall loan portfolio is appropriate, we do not anticipate significant additional growth in our indirect automobile loan portfolio in future periods. The growth of our commercial real estate portfolio is a result of the natural economic growth and development of our market area, coupled with the addition of experienced construction and development lenders. The following table sets forth the composition of our loan portfolio by loan type as of the dates indicated. The amounts in the following table are shown net of discounts and other deductions.
LOAN PORTFOLIO AS OF DECEMBER 31, --------------------------------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ------------------- --------------------- ------------------- ------------------- ----------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ------------------- ------------ -------- ---------- -------- ---------- -------- --------- ------- (DOLLARS IN THOUSANDS) Commercial real estate... $ 26,617 10.63 % $ 15,457 9.57 % $ 7,878 6.19 % 7,300 7.20 % $ 2,810 3.91 % Residential real estate.. 33,251 13.28 28,367 17.57 24,075 18.91 14,253 14.07 8,429 11.74 Commercial............... 64,552 25.78 52,310 32.41 45,969 36.11 41,514 40.97 33,311 46.40 Personal................. 44,747 17.87 19,751 12.23 14,590 11.46 9,507 9.38 4,680 6.52 Home equity.............. 9,820 3.92 6,170 3.82 7,030 5.52 5,267 5.20 3,176 4.42 Construction............. 41,007 16.38 25,624 15.87 16,273 12.78 12,747 12.58 10,048 14.00 Leases................... 30,416 12.14 13,765 8.53 11,493 9.03 10,735 10.60 9,337 13.01 ------ ----- ------ ---- ------ ---- ------ ----- ----- ----- Total loans and leases........... 250,410 100.00 % 161,444 100.00 % 127,308 100.00 %101,323 100.00 % 71,791 100.00 % ======== ========= ======== ========= ======== Less allowance for loan losses............... 3,817 2,341 1,618 1,275 836 -------- ---------- -------- -------- -------- Loans receivable, net.... $ 246,593 $ 159,103 $ 125,690 $ 100,048 $ 70,955 ======== ========== ======== ======== ========
COLLATERAL AND CONCENTRATION. At December 31, 1999, 1998, and 1997, substantially all of our loans were collateralized with real estate, inventory, accounts receivable and/or other assets or were guaranteed by the Small Business Administration. Loans to individuals and businesses in the construction industry totaled $49.1 million, or 19.62%, of total loans, as of December 31, 1999. The Bank does not have any other concentrations of loans to individuals or businesses involved in a single industry totaling 5% of total loans. The Bank's lending limit under federal law to any one borrower was $6.8 million at December 31, 1999. The Bank's largest single borrower, net of participations, at December 31, 1999 had outstanding loans of $4.8 million. The following table presents the aggregate maturities of loans in each major category of our loan portfolio as of December 31, 1999, excluding the allowance for loan and valuation losses. Additionally, the table presents the dollar amount of all loans due more than one year after December 31, 1999 which have predetermined interest rates (fixed) or adjustable interest rates (variable). Actual maturities may differ from the contractual maturities shown below as a result of renewals and prepayments or the timing of loan sales. 33
MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES AS OF DECEMBER 31, 1999 ------------------------------------------------------------------------------------- MORE THAN ONE YEAR --------------------------- LESS THAN ONE TO OVER FIVE ONE YEAR FIVE YEARS YEARS TOTAL FIXED VARIABLE ------------- ------------- ------------- ------------- ------------- ------------- (IN THOUSANDS) Commercial Real Estate..... $ 2,190 $ 16,523 $ 7,904 $ 26,617 $ 8,614 $ 15,813 Commercial................. 34,973 22,214 7,365 64,552 10,450 19,129 Construction............... 18,746 21,544 1,046 41,336 2,735 19,855
NON-PERFORMING ASSETS Non-performing assets consist primarily of loans past due 90 days or more and nonaccrual loans and foreclosed real estate. The following table sets forth our non-performing assets as of the dates indicated:
NON-PERFORMING ASSETS AS OF DECEMBER 31, -------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ----------- ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) Real estate loans: Past due 90 days or more.................. $ - $ - $ - $ - $ 134 Nonaccrual................................ - - - - - Installment loans: Past due 90 days or more.................. - 7 - - 202 Nonaccrual................................ 87 38 - 89 57 Credit cards and related plans: Past due 90 days or more.................. - - - - - Nonaccrual................................ - - - - - Commercial and all other loans: Past due 90 days or more.................. 50 319 - 163 68 Nonaccrual................................ 375 650 367 156 24 Lease financing receivables: Past due 90 days or more.................. - 121 - - - Nonaccrual................................ 25 227 58 - - Debt securities and other assets (excluding other real estate owned and other repossessed assets): Past due 90 days or more.................. - - - - - Nonaccrual................................ - - - - - ----------- ----------- ----------- ----------- ----------- Total non-performing loans .............. 537 1,362 425 408 485 ----------- ----------- ----------- ----------- ----------- Foreclosed assets held for sale ................ 186 46 795 40 370 ----------- ----------- ----------- ----------- ----------- Total non-performing assets ............. $ 723 $ 1,408 $ 1,220 $ 448 $ 855 =========== =========== =========== =========== =========== Total non-performing loans to total loans....... 0.21 % 0.84 % 0.33 % 0.40 % 0.68 % Total non-performing loans to total assets...... 0.16 0.54 0.21 0.25 0.37 Allowance for loan losses to non-performing loans 710.80 171.88 380.71 312.50 172.37 Non-performing assets to loans and foreclosed assets held for sale ......................... 0.29 0.87 0.95 0.44 1.18
IMPAIRED LOANS. A loan is considered impaired when it is probable that we will not receive all amounts due according to the contractual terms of the loan. This includes loans that are delinquent 90 days or more, nonaccrual loans, and certain other loans identified by management. Accrual of interest is discontinued, and interest accrued and unpaid is removed, at the time the loans are delinquent 90 days. Interest is recognized for nonaccrual loans only upon receipt, and only after all principal amounts are current according to the terms of the contract. 34 Impaired loans totaled $5.2 million at December 31, 1999 and 1998, with related allowances for loan losses of $825,000 and $747,000, respectively. Interest of $713,000 and $600,000 was recognized on average impaired loans of $4.1 million and $3.5 million for 1999 and 1998, respectively. Interest of $140,000 and $85,000 was recognized on impaired loans on a cash basis during 1999 and 1998, respectively. ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is increased by provisions charged to expense and reduced by loans charged off, net of recoveries. The allowance is maintained at a level considered adequate to provide for potential loan losses, based on management's evaluation of the loan portfolio. Management assesses the adequacy of the allowance for loan losses based upon a number of factors including, among others: o analytical reviews of loan loss experience in relationship to outstanding loans and commitments; o unfunded loan commitments; o problem and non-performing loans and other loans presenting credit concerns; o trends in loan growth, portfolio composition and quality; o appraisals of the value of collateral; and o management's judgement with respect to current and expected economic conditions and their impact on the existing loan portfolio. General allowances have been established, based upon the aforementioned factors, and allocated to the individual loan categories. Allowances are accrued on specific loans evaluated for impairment for which the basis of each loan, including accrued interest, exceeds the discounted amount of expected future collections of interest and principal or, alternatively, the fair value of loan collateral. The following table sets forth information regarding changes in our allowance for loan and valuation losses for the periods indicated. 35
SUMMARY OF LOAN LOSS EXPERIENCE AND RELATED INFORMATION AS OF AND FOR THE YEAR ENDED DECEMBER 31, -------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ----------- ----------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) Balance at beginning of period.............. $ 2,341 $ 1,618 $ 1,275 $ 836 $ 611 LOANS CHARGED-OFF: Commercial real estate................... - - - - - Residential real estate.................. - - - - - Commercial .............................. 567 310 357 216 198 Personal ................................ 47 49 19 7 60 Home equity ............................. - - - - - Construction ............................ - - - - 24 Leases .................................. 158 27 83 91 37 ------------- ----------- ----------- ------------ --------- Total loans charged-off............... 772 386 459 314 319 RECOVERIES: Commercial real estate................... - - - - - Residential real estate.................. - - - - - Commercial............................... 90 38 84 78 138 Personal................................. 2 6 1 11 32 Home equity.............................. - - - - - Construction............................. - - - - - Leases................................... 12 4 57 16 4 ------------- ----------- ----------- ------------ --------- Total recoveries............................ 104 48 142 105 174 ------------- ----------- ----------- ------------ --------- Net loans charged-off....................... 668 338 317 209 145 Provision for loan losses................... 2,144 1,061 660 648 370 ------------- ----------- ----------- ------------ --------- Balance at end of period.................... $ 3,817 $ 2,341 $ 1,618 $ 1,275 $ 836 ============= =========== =========== ============ ========= Loans outstanding: Average............................ $ 206,310 $ 148,221 $ 115,939 $ 87,501 $ 63,155 End of period...................... 250,410 161,444 127,308 101,323 71,791 Ratio of allowance for loan losses to loans outstanding: Average............................ 1.85 % 1.58% 1.40% 1.46% 1.32% End of period...................... 1.52 1.45 1.27 1.26 1.16 Ratio of net charge-offs to: Average loans ..................... 0.32 0.23 0.27 0.24 0.23 End of period loans................ 0.27 0.21 0.25 0.21 0.20
The following table shows our allocation of the allowance for loan losses by specific category at the end of each of the periods shown. Management attempts to allocate specific portions of the allowance for loan losses based on specifically identifiable problem loans. However, the allocation of the allowance to each category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any category. 36
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES AS OF DECEMBER 31, --------------------------------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ------------------- ------------------- -------------------- ------------------- ----------------- % OF % OF % OF % OF % OF TOTAL TOTAL TOTAL TOTAL TOTAL AMOUNT ALLOWANCE AMOUNT ALLOWANCE AMOUNT ALLOWANCE AMOUNT ALLOWANCE AMOUNT ALLOWANCE -------- ------------ -------- ------------ -------- ----------- ------- ---------- ------- --------- (DOLLARS IN THOUSANDS) Commercial real estate.. $ 268 7.02 % $ 155 6.62 % $ 75 4.63 % $ 72 5.65 % $ 68 8.13 % Residential real estate. 364 9.53 340 14.52 298 18.42 231 18.12 93 11.12 Commercial ............. 1,206 31.60 1,013 43.27 648 40.05 564 44.23 370 44.26 Personal ............... 843 22.09 215 9.19 153 9.46 95 7.45 52 6.22 Home equity ............ 123 3.22 69 2.95 83 5.13 60 4.71 35 4.19 Construction............ 454 11.89 302 12.90 223 13.78 127 9.96 112 13.40 Leases ................. 559 14.65 247 10.55 138 8.53 126 9.88 106 12.68 Unallocated............. - - - - - - - - - - ------ ----------- ------ ---------- ------ ----------- ------ ----------- ------ -------- Total............. $ 3,817 100.00 % $ 2,341 100.00 % $ 1,618 100.00 % $ 1,275 100.00 % $ 836 100.00 % ====== =========== ====== ========== ====== =========== ====== =========== ====== ========
INVESTMENT SECURITIES. The primary objectives of our investment portfolio are to secure the adequacy of principal, to provide adequate liquidity and to provide securities for use in pledging for public funds or repurchase agreements. Income is a secondary consideration. As a result, we generally do not invest in mortgage-backed securities and other higher yielding investments. All securities in our investment portfolio are classified as available for sale in order to provide us with an additional source of liquidity when necessary. The balance of the investment portfolio at December 31, 1998 was higher than either the 1999 or 1997 balance due to a 90-day, $5 million security we purchased in December 1998 to cover a pledging requirement for one of the Bank's customers. With the exception of this pledged security, the composition of our investment portfolio has remained virtually unchanged over the last three years. The following table presents the composition of our investment portfolio by major category at the dates indicated.
INVESTMENT SECURITIES PORTFOLIO COMPOSITION AT DECEMBER 31, ------------------------------------------------------ 1999 1998 1997 ---------------------------------- ------------------- (IN THOUSANDS) U.S. government and agency securities......................... $ 34,175 $ 38,859 $ 28,688 State and municipal obligations............................... 14,471 14,568 11,559 Mortgage-backed securities.................................... - - - Other securities.............................................. - - - --------------- --------------- ----------------- Total................................................... $ 48,646 $ 53,427 $ 40,247 =============== =============== ================= Available for sale (fair value)............................... $ 48,646 $ 53,427 $ 40,247 Held to maturity (amortized cost)............................. - - - --------------- --------------- ----------------- Total................................................... $ 48,646 $ 53,427 $ 40,247 =============== =============== =================
The following table sets forth the maturities, carrying value or fair value (in the case of investment securities available for sale), and average yields for our investment portfolio at December 31, 1999. Yields are presented on a tax equivalent basis. Expected maturities will differ from contractual maturities due to unscheduled repayments and because borrowers on the underlying mortgages may have the right to call or prepay obligations with or without prepayment penalties. 37 Under our investment policy, not more than 10% of the Bank's capital may be invested in the bonds of any single issuer, other than the United States or its agencies.
MATURITY OF INVESTMENT SECURITIES PORTFOLIO ONE YEAR OR LESS ONE TO FIVE YEARS FIVE TO TEN YEARS MORE THAN TEN TOTAL INVESTMENT SECURITIES YEARS ------------------- ------------------- ------------------ ------------------- --------------------------- CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING FAIR AVERAGE VALUE YIELD VALUE YIELD VALUE YIELD VALUE YIELD VALUE VALUE YIELD --------- --------- --------- ------- -------- -------- -------- -------- --------- ---------------- (DOLLARS IN THOUSANDS) AVAILABLE FOR SALE U.S. government and agency securities..$ 2,999 5.35 % $ 11,785 5.98 % $ 19,391 6.55 % $ -- -- % $ 34,175 $ 34,175 6.25 % State and municipal obligations........ 256 4.50 3,240 4.63 10,975 4.78 -- -- 14,471 14,471 4.74 Mortgage-backed securities......... -- -- -- -- -- -- -- -- -- -- -- Other securities...... -- -- -- -- -- -- -- -- -- -- -- -------- ------- ------- -------- -------- ------ ------- ------- ------- -------- ------- Total available for sale............ $3,255 5.29 % $ 15,025 5.69 % $ 30,366 5.91 % $ -- -- % $ 48,646 $ 48,646 5.80 % ======== ======= ======= ======== ======== ====== ======= ======= ======= ======== ======= Total investment securities.......$3,255 5.29 % $ 15,025 5.69 % $ 30,366 5.91 % $ -- -- % $ 48,646 $ 48,646 5.80 % ======= ======= ======= ======== ======== ====== ======= ======= ======= ========= =======
DEPOSITS. A significant portion of our deposit growth during 1999 is attributable to a new money market deposit product, our money management account, or "short-term parking account," introduced by the Bank in the fourth quarter of 1998. The money management account provides a hybrid of the features available from a traditional money market account and a traditional time deposit. The account requires a minimum balance of $10,000 and allows for daily deposits but limits withdrawals to the 15th and last days of each month. This account pays a rate of interest which is higher than a customer could receive on a traditional money market account but lower than the rates generally available on certificates of deposit. We believe that the trade-off to depositors between higher interest rates but more limited access to withdrawals has proven to be an attractive product in our market areas and provides us with a more attractive source of funds than other alternatives such as Federal Home Loan Bank borrowings, due to our ability to cross-sell additional services to these account holders. The following two tables set forth the balances for each major category of our deposit accounts and the weighted-average interest rates paid for interest-bearing deposits for the periods indicated:
DEPOSITS YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------------------------------------ 1999 1998 1997 ------------------------------- --------------------------------- ----------------------------------- (DOLLARS IN THOUSANDS) PERCENT WEIGHTED PERCENT WEIGHTED PERCENT WEIGHTED OF AVERAGE OF AVERAGE OF AVERAGE BALANCE DEPOSITS RATE BALANCE DEPOSITS RATE BALANCE DEPOSITS RATE --------- ---------- ---------- ---------- ------------- --------- ----------- ----------- ----------- Demand....................... $ 36,950 13.78 % -- % $ 33,752 16.09 % -- % $ 27,275 15.97 % -- % Savings...................... 3,385 1.26 2.93 3,491 1.66 2.94 3,072 1.80 2.90 Interest-bearing demand...... 26,800 9.99 3.34 13,982 6.66 2.76 12,728 7.45 2.78 Money Market................. 35,764 13.34 3.51 35,911 17.11 4.00 35,030 20.51 4.02 Money Management............. 60,449 22.55 5.15 9,831 4.69 5.08 -- -- -- Time Deposits................ 104,797 39.08 5.67 112,857 53.79 6.00 92,687 54.27 6.03 -------- --------- -------- -------- --------- ---------- Total deposits......... $ 268,145 100.00 % $ 209,824 100.00 % $ 170,792 100.00 % ======== ========= ========= ========= ========= ==========
38 The following table sets forth the amount of our certificates of deposit that are greater than $100,000 by time remaining until maturity as of December 31, 1999: AMOUNTS AND MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE AS OF DECEMBER 31, 1999 -------------------------- WEIGHTED AMOUNT AVERAGE RATE PAID ------------ ------------- (DOLLARS IN THOUSANDS) Three months or less............................ $ 12,614 5.29 % Over three months through six months............ 8,720 5.57 Over six months through twelve months........... 6,316 5.70 Over twelve months.............................. 7,307 6.19 ---------- ----------- Total....................................... $ 34,957 5.62 % ========== =========== LIQUIDITY AND CAPITAL RESOURCES LIQUIDITY. Liquidity is measured by a financial institution's ability to raise funds through deposits, borrowed funds, capital, or the sale of marketable assets, such as residential mortgage loans or a portfolio of SBA loans. Other sources of liquidity, including cash flow from the repayment of loans, are also considered in determining whether liquidity is satisfactory. Liquidity is also achieved through growth of core deposits and liquid assets, and accessibility to the money and capital markets. The funds are used to meet deposit withdrawals, maintain reserve requirements, fund loans and operate the organization. Core deposits, defined as demand deposits, interest-bearing transaction accounts, savings deposits and certificates of deposit less than $100,000, were 70.11%, 68.57% and 73.98% of total assets at December 31, 1999, 1998 and 1997, respectively. We use various forms of short-term borrowings for cash management and liquidity purposes on a limited basis. These forms of borrowings include federal funds purchased, revolving lines of credit and Federal Home Loan Bank borrowings. We also have a bank stock loan. The amount outstanding under the amended bank stock loan agreement is due July 31, 2000. We intend to repay the full amount outstanding under our bank stock loan with the proceeds from this offering. See "Use of Proceeds." As of February 29, 2000, the balance outstanding under the bank stock loan was $7.3 million. The amended bank stock loan agreement: o prohibits us from paying dividends or making other distributions on our common stock; o prohibits us from incurring additional indebtedness other than the junior subordinated debentures and our obligations under the trust preferred securities guarantee; and o is secured by all of the stock of the Bank. The Bank is a member of the Federal Home Loan Bank System, which consists of 12 regional Federal Home Loan Banks governed and regulated by the Federal Housing Finance 39 Board. The Federal Home Loan Banks provide a central credit facility for member institutions. The Bank, as a member of the FHLB of Topeka, is required to acquire and hold shares of capital stock in the FHLB of Topeka in an amount at least equal to 0.30% of total assets or 1.00% of the aggregate principal amount of its unpaid residential mortgage loans. The Bank is currently in compliance with this requirement, with a $1.0 million investment in stock of the FHLB of Topeka as of December 31, 1999. In 1998, the Bank took advantage of some special advances from the FHLB to supplement its funding base. Outstanding advances from the FHLB of Topeka to the Bank totaled $20.0 million at December 31, 1999. The following table sets forth a summary of our short-term borrowings during 1999, 1998 and 1997 and as of the end of each period.
SHORT-TERM BORROWINGS AVERAGE WEIGHTED AMOUNT AMOUNT MAXIMUM AVERAGE WEIGHTED OUTSTANDING OUTSTANDING OUTSTANDING INTEREST AVERAGE AT DURING THE AT ANY RATE INTEREST YEAR END YEAR (1) MONTH END DURING THE RATE YEAR AT YEAR END ------------- ------------- ------------ ------------- ------------ (DOLLARS IN THOUSANDS) At or for the year ended December 31, 1999: Federal Home Loan Bank borrowings. $ 10,000 $ 461 $ 10,000 4.50 % 5.98% Bank Stock Loan................... 7,450 4,763 7,450 7.03 7.50 Revolving lines of credit......... -- -- -- -- -- Repurchase agreements............. 11,260 9,500 13,056 3.00 3.00 ----------- ----------- ---------- ----------- --------- Total.......................... 28,710 14,724 30,506 4.35 5.21 At or for the year ended December 31, 1998: Federal Home Loan Bank borrowings. -- -- -- -- -- Bank Stock Loan................... 3,575 3,800 4,038 7.97 7.25 Revolving lines of credit......... -- -- -- -- -- Repurchase agreements............. 8,817 7,040 8,886 3.00 3.00 ----------- ----------- ---------- ----------- --------- Total.......................... 12,392 10,840 12,924 4.74 4.23 At or for the year ended December 31, 1997: Federal Home Loan Bank borrowings. -- -- -- -- -- Bank Stock Loan................... 4,038 2,801 4,038 8.28 8.50 Revolving lines of credit......... -- -- -- -- -- Repurchase agreements............. 8,114 5,549 8,114 3.00 3.00 ----------- ----------- ---------- ----------- --------- Total.......................... 12,152 8,350 12,152 4.77 4.83
- ----------- [FN] (1) Calculations are based on daily averages where available and monthly averages otherwise. CAPITAL RESOURCES. At December 31, 1999, our total stockholders' equity was $18.9 million. At year-end 1999, our equity to asset ratio was 5.67%, as compared to 6.71% at year-end 1998, and 6.68% at year-end 1997. The Federal Reserve Board's risk-based guidelines establish a risk-adjusted ratio, relating capital to different categories of assets and off-balance sheet exposures, such as loan commitments and standby letters of credit. These guidelines place a strong emphasis on tangible stockholder's equity as the core element of the capital base, with appropriate recognition of other components of capital. At December 31, 1999, our Tier 1 capital ratio was 6.82%, while our total risk-based capital ratio was 8.07%, both of which exceed the capital minimums established in the risk-based capital requirements. 40 Our risk-based capital ratios at December 31, 1999, 1998 and 1997 are presented below. RISK-BASED CAPITAL DECEMBER 31, ----------------------------------- 1999 1998 1997 ---------- ----------- ------------ (DOLLARS IN THOUSANDS) Tier 1 capital Stockholder's equity.................... $ 18,869 $ 17,016 $ 13,464 Intangible assets....................... (1,448) (1,600) (1,753) Unrealized appreciation on available-for-sale securities........... 957 (352) (260) Other................................... - - - ---------- ----------- ------------ Total Tier 1 capital................... 18,378 15,064 11,451 ---------- ----------- ------------ Tier 2 capital Qualifying allowance for loan losses.... 3,371 2,255 1,618 ---------- ----------- ------------ Total Tier 2 capital................... 3,371 2,255 1,618 ---------- ----------- ------------ Total risk-based capital...............$ 21,749 $ 17,319 $ 13,069 ========== =========== ============ Risk weighted assets...................... $ 269,660 $ 180,077 $ 132,394 ========== =========== ============ Ratios at end of year Total capital to risk-weighted assets ratio................................... 8.07 % 9.62 % 9.87 % Tier 1 capital to average assets ratio (leverage ratio)........................ 5.80 % 6.13 % 6.28 % Tier 1 capital to risk-weighted assets ratio................................... 6.82 % 8.37 % 8.65 % Minimum guidelines Total capital to risk-weighted assets ratio................................... 8.00 % 8.00 % 8.00 % Tier 1 capital to average assets ratio (leverage ratio)........................ 4.00 % 4.00 % 4.00 % Tier 1 capital to risk-weighted assets ratio................................... 4.00 % 4.00 % 4.00 % QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK As a continuing part of our financial strategy, we attempt to manage the impact of fluctuations in market interest rates on our net interest income. This effort entails providing a reasonable balance between interest rate risk, credit risk, liquidity risk and maintenance of yield. Our funds management policy is established by our Board of Directors and monitored by our Risk Management Committee. Our funds management policy sets standards within which we are expected to operate. These standards include guidelines for exposure to interest rate fluctuations, liquidity, loan limits as a percentage of funding sources, exposure to correspondent banks and brokers, and reliance on non-core deposits. Our funds management policy also establishes the reporting requirements to our Board of Directors. Our investment policy complements our asset/liability policy by establishing criteria by which we may purchase securities. These criteria include approved types of securities, brokerage sources, terms of investment, quality standards, and diversification. 41 The following table sets forth our interest-rate sensitivity as of December 31, 1999:
INTEREST-RATE SENSITIVITY ANALYSIS TIME TO MATURITY OR REPRICING ---------------------------------------------------------------- 0-90 DAYS 91-365 DAYS 1-5 YEARS OVER 5 YEARS TOTAL --------------- ------------- -------------- ------------- ------------ (DOLLARS IN THOUSANDS) INTEREST-EARNING ASSETS: Loans................................. $ 129,414 $ 35,278 $ 82,039 $ 3,679 $ 250,410 Investments........................... 105 3,150 15,025 30,366 48,646 Federal funds sold.................... 8,000 - - - 8,000 ------------- ----------- ------------ ----------- ========== Total interest-earning assets...... $ 137,519 $ 38,428 $ 97,064 $ 34,045 $ 307,056 ============= =========== ============ =========== ========== INTEREST-BEARING LIABILITIES: Interest-bearing demand............... $ 26,800 $ - $ - $ - $ 26,800 Savings and money market.............. 99,598 - - - 99,598 Time deposits......................... 26,465 40,027 35,997 2,308 104,797 Funds borrowed........................ 23,819 7,450 - 11,908 43,177 ------------- ----------- ------------ ----------- ========== Total interest-bearing liabilities. $ 176,682 $ 47,477 $ 35,997 $ 14,216 $ 274,372 ============= =========== ============ =========== ========== CUMULATIVE: Rate sensitive assets (RSA)........... $ 137,519 $ 175,947 $ 273,011 $ 307,056 $ 307,056 Rate sensitive liabilities (RSL)...... 176,682 224,159 260,156 274,372 274,372 GAP (GAP = RSA - RSL).............. (39,163) (48,212) 12,855 32,684 32,684 RSA/RSL..................................... 77.83 % 78.49 % 104.94 % 111.91 % - RSA/Total assets............................ 0.41 0.53 0.82 0.92 - RSL/Total assets ........................... 0.53 0.67 0.78 0.83 - GAP/Total assets ........................... (11.77) % (14.50) % 3.87 % 9.83 % - GAP/RSA .................................... (0.28) (0.27) 0.05 0.11
We measure the impact of interest rate changes on our income statement through the use of gap analysis. The gap represents the net position of assets and liabilities subject to repricing in specified time periods. During any given time period, if the amount of rate sensitive liabilities exceeds the amount of rate sensitive assets, a company would generally be considered negatively gapped and would benefit from falling rates over that period of time. Conversely, a positively gapped company would generally benefit from rising rates. We have structured the assets and liabilities of our company to mitigate the risk of either a rising or falling interest rate environment. We manage our gap position at a 90-day horizon. Depending upon our assessment of economic factors such as the magnitude and direction of projected interest rates over the short- and long-term, we generally operate within guidelines set by our funds management policy and attempt to maximize our returns within an acceptable degree of risk. Our policy states that we should maintain a gap position at a 90-day horizon of between 0.60 and 1.40. Our position at December 31, 1999 was 0.78. Interest rate changes do not affect all categories of assets and liabilities equally or simultaneously. There are other factors which are difficult to measure and predict that would influence the effect of interest rate fluctuations on our income statement. For example, a rapid drop in interest rates might cause our loans to repay at a more rapid pace and some mortgage-related investments to prepay more quickly than projected. This could mitigate some of the benefits of falling rates that are expected when negatively gapped. Conversely, a rapid rise in 42 rates might cause the mortgage-related loans to repay at a slower pace, which could give us an opportunity to increase our margins. In addition to the gap analysis currently required under our funds management policy, our Board of Directors and Risk Management Committee continue to evaluate additional methods of managing the impact of fluctuations in market interest rates on our net interest income. Disclosures about fair values of financial instruments, which reflect changes in market prices and rates, can be found in note 16 to the consolidated financial statements included in this prospectus. INFLATION The consolidated financial statements and related data presented in this prospectus have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, substantially all of our assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as prices of goods and services. We disclose the estimated fair market value of our financial instruments in accordance with Statement of Financial Accounting Standards No. 107. See Note 16 to the consolidated financial statements included in this prospectus. YEAR 2000 We have not experienced any Year 2000-related problems with our internal data processing systems and software or those of any third parties with whom we do business. It is possible, however, that Year 2000 compliance problems exist that we cannot yet identify. If problems arise and we fail to address them on a timely basis, it could result in lost revenue, increased operating costs, the loss of customers and suppliers and other business interruptions. As of December 31, 1999, we had incurred total costs of not more than $20,000 that we believe are allocable to our efforts to address the Year 2000 problem, of which not more than $6,000 were incurred and expensed in 1999. FUTURE ACCOUNTING REQUIREMENTS The Financial Accounting Standards Board ("FASB") has issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities ("SFAS 133")." This statement, as amended by SFAS No. 137, requires all derivatives to be recorded on the balance sheet at fair value and establishes standard accounting methodologies for hedging activities. The standard will result in the recognition of offsetting changes in value or cash flows of both the hedge and the hedged item in earnings or comprehensive income in the same period. The statement is effective for Blue Valley's fiscal year ending December 31, 2001. Because Blue Valley generally does not hold derivative instruments, the adoption of this statement is not expected to have a material impact on the financial statements. 43 FASB also has issued Statement of Financial Accounting Standards No. 134, "Accounting for Mortgage-Backed Securities retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Entity ("SFAS 134")." This statement amends SFAS No. 65 allowing mortgage-backed securities or other retained interests arising from the securitization of mortgage loans to be classified based on the mortgage banking entities' ability and intent to sell or hold those securities. Previously, these securities had to be held within a trading account. This statement was effective for Blue Valley's fiscal year ending December 31, 1999. The adoption of this standard did not have a material impact on the financial statements. BUSINESS OVERVIEW We organized Blue Valley and our wholly-owned subsidiary, Bank of Blue Valley, in 1989 to provide banking services to closely-held businesses, their owners, professionals and individuals in Johnson County, Kansas, a high growth, demographically attractive area within the Kansas City MSA. Our focus has been to take advantage of the current and anticipated growth in our market area as well as to serve the needs of small and mid-sized commercial borrowers - customers that we believe currently are underserved as a result of banking consolidation in the industry generally and within our market specifically. We have experienced significant internal growth since our inception. In addition, in 1994, we acquired the deposits of a branch of a failed savings and loan institution to augment our internal growth and we expanded into an additional market which management believed was attractive. In 1994, we also completed the construction of our current headquarters in Overland Park, Kansas. We currently have three banking locations in Johnson County, Kansas, including our main office in Overland Park, a full-service office in Olathe, Kansas, and a supermarket banking facility in Shawnee, Kansas. For the five-year period ended December 31, 1999, our compound annual growth rate in loans was 36.65%, in assets was 26.82%, and in deposits was 25.70%. At December 31, 1999, we had total loans of $250.4 million, total assets of $332.6 million, total deposits of $268.1 million and total stockholders' equity of $18.9 million. Our lending strategy focuses on commercial lending, and, to a lesser extent, residential and consumer lending. We strive to identify, develop and maintain diversified lines of business which provide acceptable returns on a risk adjusted basis. Our primary lines of business consist of commercial and industrial lending, commercial real estate lending, construction lending, indirect lending, leasing and residential mortgage lending. As a complement to our lending activities, we seek to develop lines of business which diversify our revenue sources and increase our non-interest income. In addition to fees generated in conjunction with our loan and lease portfolios, we derive non-interest income by providing investment brokerage services and trust services. In addition to the Bank, we have one direct wholly-owned subsidiary, Blue Valley Building Corp., which owns the building and property that comprises our headquarters in 44 Overland Park, Kansas. The Bank has one wholly-owned subsidiary, Blue Valley Investment Corp., which owns and services a portion of a commercial lease portfolio that we purchased in 1999. OUR MARKET AREA We operate as a community bank, serving the banking needs of small and medium-sized companies and individuals in the Kansas City MSA generally, and in suburban Johnson County, in particular. Our trade area generally consists of Johnson County, Kansas. We believe that coupling our strategy of providing exceptional customer service and local decision making with attractive market demographics has led to a rate of growth which exceeds the natural growth rate of the banking industry as well as the internal growth experienced locally by our peers. The income levels and growth rate of Johnson County, Kansas compare favorably to national averages. Johnson County's population growth rate ranks in the top 2% of counties nationally, and its per capita income ranks in the top 1% of counties nationally. Johnson County is also a significant banking market in the State of Kansas and in the Kansas City MSA. According to available industry data, as of June 30, 1999, total deposits in Johnson County, including those of banks, thrifts and credit unions, were approximately $7.8 billion which represented 19.23% of total deposits in the State of Kansas and 29.54% of total deposits in the Kansas City MSA. As our founders anticipated, the trade area surrounding our main banking facility in Overland Park has become one of the most developed retail areas in the Kansas City MSA. Our Olathe, Kansas branch is located approximately 10 miles west of our main office. We opened our Olathe branch in 1994 when we acquired the deposits of the Olathe branch of a failed savings and loan association. We made this acquisition because it was located in a contiguous market area and we believed that it represented a stable deposit base. The Shawnee, Kansas supermarket banking facility is approximately 20 miles northwest of our headquarters location. We opened our Shawnee branch for the convenience of our existing customers in Shawnee, and to expand our market presence in Shawnee. We are in the process of building a free-standing banking facility in Shawnee, Kansas and expect to commence operations in the new facility during the third quarter of 2000. After Overland Park, Shawnee is the second fastest growing area in Johnson County, Kansas. BUSINESS STRATEGY Since our founding, we have strived to increase stockholder value by executing a community banking strategy tailored to provide our customers with competitive financial products and services, our employees with the opportunity to share in our financial success and our community with a stable, growth oriented employer. To further our primary business objectives, we have identified several business strategies designed to increase and diversify our loan portfolio, generate non-interest income, control non-interest expense and create new markets for our existing and developing products. o GROW AND DIVERSIFY OUR LOAN PORTFOLIO. Our lending strategy emphasizes commercial and residential lending and, to a lesser extent, consumer lending. To 45 grow our portfolio, we actively pursue businesses and professionals within our target market area as well as utilize our existing client relationships to identify and develop a network of potential referrals. We have also placed an increasing emphasis on cross-marketing our lending products and services to existing and new customers for our deposit and other services. With the advent of new technology for delivering financial products and services, we have identified several techniques to market our lending products. For example, our customers are now able to use our electronic banking services to apply for residential and personal loans over the Internet. Throughout our history, we have continually broadened our product offerings in order to decrease our reliance on any one source of lending activity and to generate additional income. To further diversify our loan portfolio, we intend to continue to identify and invest in new lines of business that provide an acceptable rate of return on a risk-adjusted basis. o PURSUE OPPORTUNITIES TO INCREASE OUR NON-INTEREST INCOME. In order to increase stockholder value, we believe that traditional community banks must identify and develop products which generate fee-based income in order to augment traditional sources of interest income. Our residential mortgage loan originations and our trust, investment brokerage and other services provide these sources of non-interest income. Although our trust and investment brokerage operations do not currently represent a material source of income, we anticipate the income resulting from these activities to increase in the future. We also seek to deploy programs and employ individuals capable of anticipating and meeting the many financial service needs of our relatively affluent customer base. The experience of our management team is critical to understanding and providing the high level of customer service which we believe is essential in competing for these customers. o CONTROL THE EXPENSES NECESSARY TO FACILITATE OUR GROWTH. As a high-growth community bank with diversified and developing lines of business, we continue to place emphasis on controlling costs. Each of our prospective lines of business, as well as our current activities, are reviewed to determine the potential contribution to net income and earnings per share. o EXPAND OUR PRESENCE WITHIN OUR MARKET AREA. We operate as a community bank, serving the banking needs of small and medium-sized companies and individuals in the Kansas City MSA generally, and suburban Johnson County, Kansas in particular. We will consider opening new branches and establishing new ATMs in high growth areas within our market area to grow our deposit base and to expand our ability to provide lending and other services to new and existing customers. To the extent that opportunities present themselves, we will consider acquisition opportunities within our market area and in contiguous areas. Our management team expects to build upon our reputation as a community bank capable of responding promptly to customer needs, thereby distinguishing ourselves from many regional and national banks. We also expect to continue to respond to changes in technology to enable us to enhance our level of customer service. For example, through our "Blue Wave" Internet banking service, our 46 deposit customers can check balances, transfer funds, pay bills and order new checks electronically around the clock. By offering these services to our customers, we believe we have distinguished ourselves from many community banks in our market area. In order to successfully execute our strategies and achieve our primary business objectives we rely upon what we believe to be our primary strengths, including: o CUSTOMER SERVICE STANDARDS. We believe that our emphasis on local relationship banking, our high level of customer service standards and our employees' commitment to customer satisfaction have been important factors in the success and growth of the Bank. o GROWTH OPPORTUNITIES. As of December 31, 1999, our total loan portfolio had grown to approximately $250.4 million. We believe our Johnson County location presents significant opportunities to grow our loan portfolio and deposit base. The U.S. Census Bureau recently reported that the job growth in Johnson County, Kansas in 1998 was greater than in any other county in the United States. We believe that our operating strategy, the continued increase in the local employment base, the relatively affluent residential population, and the banking needs in our market areas have positioned us to facilitate further growth in our assets and deposit base. o INDEPENDENT COMMUNITY BANK. As a Johnson County-headquartered, independent community bank, we believe we have certain competitive advantages in our market area over many banks with a regional or national focus, particularly during the current period of industry consolidation. We continue to market our local decision-making structure to customers who have become dissatisfied with larger banks that fail to address their service expectations. o EXPERIENCED MANAGEMENT TEAM. Each member of our six-person senior management team has significant banking or banking-related experience. In 1998, our President and Chief Executive Officer was named the "1998 Financial Entrepreneur of the Year - Midwest Region" by Ernst & Young LLP. LENDING ACTIVITIES OVERVIEW. Our principal loan categories include commercial, commercial real estate, construction, indirect, leasing and residential mortgages. We also offer a variety of consumer loans. Our primary source of income is interest earned on our loan portfolio. As of December 31, 1999, our loans represented approximately 75.29% of our total assets. Although our legal lending limit to any one borrower was $6.8 million at December 31, 1999, our largest single borrower as of that date had outstanding loans of $4.8 million. We have been successful in expanding our loan portfolio because of the commitment of our staff and the economic growth in our area of operation. Our staff has significant experience in lending and has been successful in offering our products to potential customers and existing 47 customers. We believe that we have been successful in maintaining our customers because of our staff's attentiveness to the banking needs of our customers and the development of personal relationships with them. We strive to become a strategic business partner with our customers, not just a source of funds. We conduct our lending activities pursuant to the loan policies adopted by our board of directors. These policies currently require the approval of our loan committee of all credits in excess of $300,000. Credits up to $300,000 can be approved by the President or by the joint signatures of our Executive Vice President and Chief Lending Officer, and Senior Vice President - Mortgage Banking. Our management information systems and loan review policies are designed to monitor lending sufficiently to ensure adherence to our loan policies. The following table shows the composition of our loan portfolio at December 31, 1999. LOAN PORTFOLIO AS OF DECEMBER 31, 1999 ------------------------- AMOUNT PERCENT (DOLLARS IN THOUSANDS) Commercial real estate........... $ 26,617 10.63 % Residential real estate.......... 33,251 13.28 Commercial....................... 64,552 25.78 Personal......................... 44,747 17.87 Home equity...................... 9,820 3.92 Construction..................... 41,007 16.38 Leases........................... 30,416 12.14 --------- --------- Total loans and leases....... 250,410 100.00 % Less allowance for loan losses... 3,817 --------- Loans receivable, net............ $ 246,593 --------- COMMERCIAL LOANS. As of December 31, 1999, approximately $64.6 million, or 25.78%, of our loan portfolio represented commercial loans. The Bank has developed a strong reputation in the servicing of small business and commercial loans. We have expanded this portfolio through the addition of commercial lending staff and as a result of our reputation. Commercial loans have historically been a significant portion of our loan portfolio and we expect to continue our emphasis on this loan category. The Bank's commercial lending activities historically have been directed to small and medium-sized companies in the Kansas City MSA, focusing on Johnson County, Kansas, with annual sales of between $100,000 and $20 million. The Bank's commercial customers are primarily firms engaged in manufacturing, service, retail, construction, distribution and sales with significant operations in our market areas. The Bank's commercial loans are primarily secured by real estate, accounts receivable, inventory and equipment, and the Bank generally seeks to obtain personal guarantees for its commercial loans. As of December 31, 1999, approximately 5.44% of the number of our commercial loans had outstanding balances in excess of $300,000, and these loans accounted for 47.68% of the total carrying value of our commercial loan portfolio. The Bank primarily underwrites its commercial loans on the basis of the borrowers' cash flow and ability to service the debt, as well as the value of any underlying collateral and the financial strength of any guarantors. 48 Approximately $4.0 million, or 6.20%, of our commercial loans are Small Business Administration loans, of which $3.0 million is government guaranteed. The SBA guarantees the repayment of a portion of the principal on these loans, plus accrued interest on the guaranteed portion of the loan. Under the federal Small Business Act, the SBA may guarantee up to 80% of qualified loans of $100,000 or less and up to 75% of qualified loans in excess of $100,000, up to a maximum guarantee of $750,000. We are an active SBA lender in our market area and have been approved to participate in the SBA Certified Lender Program. COMMERCIAL REAL ESTATE LOANS. The Bank also makes loans to provide permanent financing for retail and office buildings, multi-family buildings and churches. As of December 31, 1999, approximately $26.6 million, or 10.63%, of our loan portfolio represented commercial real estate mortgage loans. Our commercial real estate mortgage loans are underwritten on the basis of the appraised value of the property, the cash flow of the underlying property, and the financial strength of any guarantors. In 1999, the bank hired a full-time loan officer to focus on the origination of permanent commercial real estate mortgage loans, the majority of which are sold to third-party investors. We earn fee income on commercial real estate mortgage loans that we originate for sale to third-party investors. CONSTRUCTION LOANS. Our construction loans include loans to developers, home building contractors and other companies and consumers for the construction of single family homes, land development, and commercial buildings, such as retail and office buildings and multi-family properties. As of December 31, 1999, approximately $41.0 million, or 16.38%, of our loan portfolio represented real estate construction loans. The builder and developer loan portfolio has been a consistent and profitable component of our loan portfolio over our ten-year history. We attribute this success to our availability and prompt service. The Bank's experience and reputation in this area have enabled it to focus on relationships with a smaller number of larger builders. The Bank's focus on larger and more established builders has permitted it to increase the total value of its real estate construction portfolio. Construction loans are made to qualified builders to build houses to be sold following construction, pre-sold houses and model houses. These loans are generally underwritten based upon several factors, including the experience and current financial condition of the borrowing entity, amount of the loan to appraised value, and general conditions of the housing market. Construction loans are also made to individuals for whom houses are being constructed by builders with whom the Bank has an existing relationship. Those loans are made on the basis of the individual's financial condition, the loan to value ratio, the reputation of the builder, and whether the individual will be pre-qualified for permanent financing. INDIRECT LOANS. A significant portion of our consumer loan portfolio consists of indirect automobile loans offered through automobile dealerships located primarily in our immediate market. The indirect loan portfolio consists of approximately 2,800 loans. At December 31, 1999, loans representing 99.70% of the portfolio balance were current, and the historical loss experience of this portfolio is significantly lower than industry averages. At the period ended December 31, 1999, the indirect loan portfolio had an overall loss experience of 0.09%, which is lower than the overall bank loss experience of 0.32% in 1999. We cannot be sure whether our level of charge-offs for indirect automobile loans in future periods will be consistent with our 49 historical levels of indirect automobile loan charge-offs. Much of the growth in our indirect loan portfolio in 1999 resulted from the increase in the number of loan officers and administrative staff. This allowed us to expand our dealer relationships and expand our territory slightly. There are currently 23 dealerships participating in this program. As a result of the significant growth over the past five years in our indirect automobile loan portfolio and management's belief that our current level of investment in indirect automobile loans as a percentage of our overall loan portfolio is appropriate, we do not anticipate significant growth in this loan category in future periods. Our loans made through this program generally represent loans to purchase new cars. Our indirect loans are underwritten based on the borrower's income, current debt, past credit history, collateral, and the reputation of the originating dealership. LEASE FINANCING. Our lease portfolio includes capital leases that we have originated and leases that we have acquired from brokers or third parties. As of December 31, 1999, our lease portfolio totaled $30.4 million, or 12.14% of our total loan portfolio, consisting of $10.2 million principal amount of leases originated by us and $20.2 million principal amount of leases that we purchased. We provide lease financing for a variety of equipment and machinery, including office equipment, heavy equipment, telephone systems, tractor trailers and computers. Lease terms are generally from three to five years. In 1999, we expanded our lease financing sales staff and administrative staff. As a result, we have been able to acquire additional brokers and direct relationships. Management believes this area is attractive because of its ability to provide a source of both interest and fee income. Our leases are generally underwritten based upon several factors, including the experience and current financial condition of the lessee, amount of the financing to appraised value, and general conditions of the market. Of our lease portfolio at December 31, 1999, $5.9 million, or 19.44%, represented leases that Blue Valley Investment acquired on February 1, 1999 for approximately $12 million from National Retailer Leasing ("NRL"), a tanker truck leasing company involved in bankruptcy proceedings. These leases represent leases of tanker trucks used to transport fuel. Many of these tanker trucks are used at airports and similar locations. Of the total number of leases acquired by Blue Valley Investment, approximately $8.7 million in principal amount represented leases that satisfied the Bank's underwriting criteria for leases, and were purchased by the Bank from Blue Valley Investment. The remaining NRL assets held by Blue Valley Investment totaling $3.3 million represented leases that had defaults or delinquencies at the time of purchase. However, as of December 31, 1999, the total amount of these leases reflected on the balance sheet of Blue Valley Investment has been paid down to $1.1 million and is supported by lease paper which is now current. In 1999, interest income from these leases was $1.4 million. We expect our interest income from the NRL leases to decline over the next two years as the portfolio matures. RESIDENTIAL MORTGAGE LOANS. Our residential mortgage loan portfolio consists primarily of first and second mortgage loans on residential properties. As of December 31, 1999, $43.1 million, or 17.20%, of our loan portfolio represented residential mortgage loans. In 1999, we originated approximately $85.6 million of residential mortgage loans, of which we sold approximately $82.4 million, or 96.26%, in the secondary market. The terms of these loans are for 15, 20 or 30 years, and accrue interest at a fixed or variable rate. Due to interest rate risk considerations, we generally sell our fixed rate residential mortgage loans in the secondary market. For our own portfolio, we typically originate fixed-rate loans with a balloon payment in 2-5 years with 15 to 30 year amortizations. By offering these products, we can offer credit to individuals who are self-employed or have significant income from partnerships or investments, 50 who are often unable to satisfy the underwriting criteria permitting the sale of their mortgages into the secondary market. We originate conventional first mortgage loans primarily through referrals from real estate brokers, builders, developers, prior customers and media advertising. In addition, since 1999, we have offered customers the ability to apply for mortgage loans and to pre-qualify for mortgage loans over the Internet through our electronic banking service. To date, mortgage loans originated over the Internet have not represented a material amount of our mortgage loan originations. However, we expect Internet mortgage loan originations to increase over the next several years at a more rapid rate than our overall mortgage loan originations. The origination of a mortgage loan from the date of initial application through closing normally takes 15 to 60 days. We acquire forward commitments to sell mortgage loans on those that we intend to sell into the secondary market to reduce market risk on mortgage loans in the process of origination and those held for sale. Our mortgage loan credit review process is consistent with the standards set by traditional secondary market sources. We review appraised value and debt service ratios, and we gather data during the underwriting process in accordance with various laws and regulations governing real estate lending. We require pre-approval from secondary market sources before we approve loans to be sold into the secondary market. Our internal approval process is less stringent for loans pre-approved by our secondary market sources, which we believe allows us to be more responsive to the tight time commitments necessary for locking in interest rates in the secondary market. Loans originated by the Bank are sold with servicing released to increase current income and reduce the costs associated with retaining servicing rights. Commitments are obtained from the appropriate investor on a loan-by-loan basis on a 30, 45 or 60 day delivery commitment. Interest rates are committed to the borrower when a rate commitment is obtained from the investor. Loans are funded by the Bank and purchased by the investor within 30 days following closing pursuant to commitments obtained at the time of origination. We sell conventional conforming loans and all loans that are non-conforming as to credit quality to secondary market investors for cash on a non-recourse basis. Consequently, foreclosure losses on all sold loans are generally the responsibility of the investor and not that of the Bank. CONSUMER AND OTHER LOANS. As of December 31, 1999, our consumer and other loans totaled $44.7 million, or 17.90%, of our total loan portfolio. Substantially all of this amount consisted of installment loans to individuals in our market area. Installment lending offered directly by the Bank in our market area includes automobile loans, recreational vehicle loans, home improvement loans and unsecured lines of credit and other loans, to professionals, people in education, industry and government, as well as retired individuals and others. Since 1999, we have offered customers the ability to apply for consumer loans, personal lines of credit and overdraft protection lines of credit over the Internet through our electronic banking services. To date, consumer loans originated over the Internet have not represented a material amount of our consumer loan portfolio. Our consumer and other loans are underwritten based on the borrower's income, current debt, past credit history and collateral. 51 INVESTMENT ACTIVITIES The objectives of our investment policy are to: o secure the safety of principal; o provide adequate liquidity; o provide securities for use in pledging for public funds or repurchase agreements; and o maximize after-tax income consistent with servicing the Bank's customers' needs. We invest primarily in direct obligations of the United States, obligations guaranteed as to principal and interest by the United States, obligations of agencies of the United States and bank-qualified obligations of state and local political subdivisions. In order to ensure the safety of principal, we typically do not invest in mortgage-backed securities and other higher-yielding instruments. We also may invest from time to time in corporate debt or other securities as permitted by our investment policy. In addition, we enter into federal funds transactions with our principal correspondent banks, and primarily act as a net seller of these funds. The sale of federal funds are effectively short-term loans from us to other banks. Our investment accounts also include minimal equity investments in the Federal Home Loan Bank ("FHLB"). We invest in FHLB in order to be a member, which qualifies us to use their services, including FHLB borrowings. See "Management's Discussion and Analysis of Financial Condition and Results of Operation - Liquidity and Capital Resources." DEPOSIT SERVICES The principal sources of funds for the Bank are core deposits from the local market areas surrounding the Bank's offices, including demand deposits, interest-bearing transaction accounts, money market accounts, savings deposits and certificates of deposit of less than $100,000. Transaction accounts include interest-bearing and non-interest-bearing accounts which provide the Bank with a source of fee income and cross-marketing opportunities as well as a low-cost source of funds. The Bank also offers two types of short-term investment accounts. The Bank's money market account is a daily access account that has a higher rate than a personal interest-bearing checking account and allows for limited check-writing ability. A significant portion of our deposit growth during 1999 is attributable to a new money market deposit product, our money management account, or "short-term parking account," introduced by the Bank in the fourth quarter of 1998. The money management account provides a hybrid of the features available from a traditional money market account and a traditional time deposit. The account requires a minimum balance of $10,000 and allows for daily deposits but limits withdrawals to the 15th and last days of each month. This account pays a rate of interest which is higher than a customer could receive on a traditional money market account but lower than the rates generally available on certificates of deposit. We believe that the trade-off to depositors between higher interest rates but more limited access to withdrawals has proven to be an attractive product in our market areas and provides us with a more attractive source of funds than other alternatives such 52 as Federal Home Loan Bank borrowings, due to our ability to cross-sell additional services to these account holders. Time and savings accounts also provide a relatively stable and low cost source of funding. In 1999, the Bank changed its policy to allow for acceptance of brokered deposits which can be utilized to support the growth of the Bank. As of December 31, 1999, the Bank had $812,000 in brokered deposits, and the Bank does not anticipate brokered deposits becoming a meaningful percentage of its deposit base. In pricing deposit rates, management considers profitability, the matching of term lengths with assets, the attractiveness to customers and rates offered by our competitors. INVESTMENT BROKERAGE SERVICES In 1999, the Bank began offering investment brokerage services through an unrelated broker-dealer. These services are currently offered at our Overland Park, Shawnee and Olathe offices and will be offered at our full-service, free-standing facility in Shawnee when it opens in the third quarter of 2000. One of the individuals responsible for providing these services is a joint employee of the Bank and the registered broker-dealer, and the second individual is employed by the broker-dealer under contract to the Bank. Investment brokerage services provide a source of fee income for the Bank. In 1999, the amount of our fee income generated from investment brokerage services was $30,000, but management anticipates that this will increase significantly in future years. TRUST SERVICES We began offering trust services in 1996. Until 1999, the Bank's trust services were offered exclusively through the employees of an unaffiliated trust company. The Bank hired a full-time officer in 1999 to develop the Bank's trust business. Trust customers are both existing Bank customers and new customers. We believe that the ability to offer trust services as a part of our complement of financial services to new customers of the Bank presents a significant cross-marketing opportunity. The services currently offered by the Bank's trust department include the administration of self-directed individual retirement accounts, qualified retirement plans, custodial and directed trust accounts. The Bank also offers investment advisory services with the assistance of the unaffiliated trust company. As of December 31, 1999, the Bank's trust department administered 85 accounts, with assets under management of approximately $19.4 million. Trust services provide the Bank with a source of fee income and additional deposits. In 1999, the amount of our fee income from trust services was $103,000, but management anticipates that this will increase significantly in future years. COMPETITION We encounter competition primarily in seeking deposits and in obtaining loan customers. The level of competition for deposits in our market area and nationally is quite high. Our principal competitors for deposits are other financial institutions within a few miles of our locations, including other banks, savings institutions and credit unions. Competition among these institutions is based primarily on interest rates offered, the quality of service provided, and the convenience of banking facilities. Additional competition for depositors' funds comes from U.S. government securities, private issuers of debt obligations and suppliers of other investment alternatives for depositors. 53 We compete in our lending, investment brokerage and trust activities with other financial institutions, such as banks and thrift institutions, credit unions, automobile financing companies, mortgage companies, securities firms, investment companies and other finance companies. Many of our competitors are not subject to the same extensive federal regulations that govern bank holding companies and federally insured banks and state regulations governing state chartered banks. As a result, these non-bank competitors have advantages over us in providing certain services. Many of the financial institutions with which we compete are larger than us with greater financial resources, name recognition and market presence. EMPLOYEES As of December 31, 1999, the Bank had approximately 112 full-time employees. Blue Valley, Blue Valley Building and Blue Valley Investment do not have any full-time employees. None of the employees of the Bank is subject to a collective bargaining agreement. We consider the Bank's relationship with its employees to be excellent. LEGAL PROCEEDINGS We are involved from time to time in routine litigation incidental to our business. We do not believe that we are a party to any material pending litigation that in our opinion is likely to have a material adverse effect on our consolidated financial condition, results of operations or cash flows. PROPERTIES The Bank's principal office occupies 2.87 acres of ground on the corner of 119th and Riley streets in Overland Park, Kansas. The construction of the building was completed in 1994 and consists of 38,660 square feet. The building and land are subject to third-party mortgage indebtedness in the original principal amount of $2.5 million. As of December 31, 1999, the outstanding principal amount of this indebtedness was $1.9 million. The Bank's Olathe, Kansas office occupies 0.93 acres of ground on the corner of Santa Fe and Ridgeview Streets. The construction of the building was completed in 1973, and consists of 4,116 square feet. The Bank's Shawnee, Kansas office currently occupies 425 square feet in a grocery store located at Highway K-7 and 55th Street. The Bank leases this space from CMI, Inc. under a lease with a primary term through January 18, 2002. The Bank expects that its permanent facility in Shawnee, Kansas will be completed during the third quarter of 2000. When completed, the building will consist of 4,000 square feet and will occupy 0.85 acres of land. In 1998, the Bank purchased approximately 1.30 acres of undeveloped land on the corners of K68 and US 69 Highway in Louisburg, Kansas, just south of Johnson County for potential future development as a full-service branch. 54 BVBC CAPITAL TRUST I BVBC Trust is a Delaware business trust. BVBC Trust will exist solely to: o issue and sell its common securities to us; o issue and sell its trust preferred securities to the public; o use the proceeds from the sale of its common securities and trust preferred securities to purchase the junior subordinated debentures from us; o distribute the cash payments it receives on the junior subordinated debentures it owns to the holders of the preferred and common securities; and o engage in other activities that are necessary or incidental to these purposes. REGULATION AND SUPERVISION Blue Valley and its subsidiaries are extensively regulated under both federal and state laws. Laws and regulations to which Blue Valley and the Bank are subject govern, among other things, the scope of business, investments, reserve levels, capital levels relative to operations, the nature and amount of collateral for loans, the establishment of branches, mergers and consolidations and the payment of dividends. These laws and regulations are intended to protect depositors, not stockholders. Any change in applicable laws or regulations may have a material effect on Blue Valley's business and prospects, and legislative and policy changes may affect Blue Valley's operations. Blue Valley cannot predict the nature or the extent of the effects on its business and earnings that fiscal or monetary policies, economic controls or new federal or state legislation may have in the future. The following references to statutes and regulations affecting Blue Valley and the Bank are brief summaries only and do not purport to be complete and are qualified in their entirety by reference to the statutes and regulations. RECENT LEGISLATION The enactment of legislation described below has significantly affected the banking industry generally and will have an on-going effect on Blue Valley and its subsidiaries in the future. GRAMM-LEACH-BLILEY ACT. The President signed the Gramm-Leach-Bliley Act into law on November 12, 1999. This major banking legislation expands the permissible activities of bank holding companies such as Blue Valley by permitting them to engage in activities, or affiliate with entities that engage in activities, that are "financial in nature." Activities that the Act expressly deems to be financial in nature include, among other things, securities and insurance underwriting and agency, investment management and merchant banking. The Federal Reserve and the Treasury Department, in cooperation with one another, must determine what additional activities are "financial in nature." With certain exceptions, the Gramm-Leach-Blilely Act similarly expands the authorized activities of subsidiaries of national banks. The provisions of 55 the Gramm-Leach-Bliley Act authorizing the expanded powers became effective March 11, 2000. Bank holding companies that intend to engage in the newly authorized activities must elect to become "financial holding companies." Financial holding company status is only available to a bank holding company if all of its affiliated depository institutions are "well capitalized" and "well managed," based on applicable banking regulations, and have a Community Reinvestment Act rating of at least "a satisfactory record of meeting community credit needs." Financial holding companies and banks may continue to engage in activities that are financial in nature only if they continue to satisfy the well capitalized and well managed requirements. Bank holding companies that do not elect to be financial holding companies or that do not qualify for financial holding company status may engage only in non-banking activities deemed "closely related to banking" prior to adoption of the Gramm-Leach-Blilely Act. The Act also calls for "functional regulation" of financial services businesses in which functionally regulated subsidiaries of bank holding companies will continue to be regulated by the regulator that ordinarily has supervised their activities. As a result, state insurance regulators will continue to oversee the activities of insurance companies and agencies, and the Securities and Exchange Commission will continue to regulate the activities of broker-dealers and investment advisers, even where the companies or agencies are affiliated with a bank holding company. Federal Reserve authority to examine and adopt rules regarding functionally regulated subsidiaries is limited. The Act repeals some of the exemptions enjoyed by banks under federal securities laws relating to securities offered by banks and licensing of broker-dealers and investment advisers. The Gramm-Leach-Bliley Act imposes a new "affirmative and continuing" obligation on all financial service providers (not just banks and their affiliates) to safeguard consumer privacy and requires federal and state regulators, including the Federal Reserve and the FDIC, to establish standards to implement this privacy obligation. With certain exceptions, the Act prohibits banks from disclosing to non-affiliated parties any non-public personal information about customers unless the bank has provided the customer with certain information and the customer has had the opportunity to prohibit the bank from sharing the information with non-affiliates. The new privacy obligations become effective six months after the federal banking agencies adopt regulations establishing the privacy standards. Finally, the Act prevents companies engaged in commercial activities from acquiring savings institutions, requires public disclosure of any agreements between a depository institution and community groups regarding the institution's Community Reinvestment Act record, adopts amendments designed to modernize the Federal Home Loan Bank System and requires operators of automatic teller machines to disclose any fees charged to non-customers that use the machines. The Gramm-Leach-Bliley Act will be the subject of extensive rule making by federal banking regulators and others. The effects of this legislation will only begin to be understood over the next several years and at this time cannot be predicted with any certainty. 56 ECONOMIC GROWTH AND REGULATORY PAPERWORK REDUCTION ACT OF 1996. The Economic Growth and Regulatory Paperwork Reduction Act of 1996 became law on September 30, 1996. This Act streamlined the non-banking activities application process for well-capitalized and well-managed bank holding companies by permitting qualified bank holding companies to commence an approved non-banking activity without prior notice to the Federal Reserve, although written notice is required within 10 days after commencing the activity. Also, the Act reduced the prior notice period to 12 days in the event of any non-banking acquisition or share purchase, assuming the size of the acquisition does not exceed 10% of risk-weighted assets of the acquiring bank holding company and the consideration does not exceed 15% of a bank holding company's Tier 1 capital. Among other matters, the Economic Growth and Regulatory Paperwork Reduction Act also: o Provided for the recapitalization of the Savings Association Insurance Fund of the FDIC (most of the members of which are, or were formerly, savings associations or savings banks) in order to bring it into parity with the FDIC's Bank Insurance Fund; o Amended the Federal Fair Credit Reporting Act; o Eliminated prior federal regulatory approval requirements for new officers and directors for recently organized banks and banks that have recently undergone a change of control; o Amended the laws governing loans to bank insiders to permit them to participate in employee-wide programs offered by the bank; and o Amended laws governing officer and director interlocks among unaffiliated depository institutions to permit such interlocks under a greater number of circumstances. RIEGLE-NEAL INTERSTATE BANKING AND BRANCHING EFFICIENCY ACT OF 1994. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 authorized bank holding companies to expand, by acquiring existing banks, into all states, even those which had theretofore restricted entry. The legislation also provides that a holding company may convert the banks it owns in different states to branches of a single bank, unless a state has elected to prohibit these interstate transactions. Statewide branching is permitted under Kansas law, however, out of state banks may establish branches in Kansas only through mergers with banks already located in Kansas. The federal legislation also establishes limits on acquisitions by large banking organizations, providing that no acquisition may be undertaken if it would result in the organization having deposits exceeding either 10% of all bank deposits in the United States or 30% of the bank deposits in the state in which the acquisition would occur. BANK HOLDING COMPANY REGULATION Blue Valley is a bank holding company registered under the Bank Holding Company Act of 1956. Under the Bank Holding Company Act, Blue Valley is subject to periodic examination 57 by the Federal Reserve and is required to file periodic reports of its operations and such additional information as the Federal Reserve may require. INVESTMENTS AND ACTIVITIES. A bank holding company must obtain approval from the Federal Reserve before: o Acquiring, directly or indirectly, ownership or control of any voting shares of another bank or bank holding company if, after the acquisition, it would own or control more than 5% of the shares of the bank or bank holding company (unless it already owns or controls the majority of the shares); o Acquiring all or substantially all of the assets of another bank or bank holding company; or o Merging or consolidating with another bank holding company. The Federal Reserve will not approve any acquisition, merger or consolidation that would have a substantially anticompetitive result unless the anticompetitive effects of the proposed transaction are clearly outweighed by a greater public interest in meeting the convenience and needs of the community to be served. The Federal Reserve also considers capital adequacy and other financial and managerial factors in reviewing acquisitions or mergers. With certain exceptions, a bank holding company is also prohibited from: o Acquiring or retaining direct or indirect ownership or control of more than 5% of the voting shares of any company that is not a bank or bank holding company; and o Engaging, directly or indirectly, in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries. Bank holding companies may, however, engage in businesses found by the Federal Reserve to be closely related to the business of banking or of managing or controlling banks. These activities include making or servicing loans and certain types of leases, engaging in certain insurance and discount brokerage activities, performing certain data processing services, acting in certain circumstances as a fiduciary or investment or financial advisor, owning savings associations and making investments in corporations or projects designed to promote community welfare. Blue Valley would be authorized to engage in the expanded activities permitted under the Gramm-Leach-Blilely Act if it elects to become a "financial holding company" and otherwise qualifies for financial holding company status. Finally, subject to certain exceptions, the Bank Holding Company Act and the Change in Bank Control Act, and the Federal Reserve's implementing regulations, require Federal Reserve approval prior to any acquisition of "control" of a bank holding company, such as Blue Valley. In general, a person or company is presumed to have acquired control if it acquires 10% of the outstanding shares of a bank or bank holding company and is conclusively determined to have 58 acquired control if it acquires 25% or more of the outstanding shares of a bank or bank holding company. SOURCE OF STRENGTH. The Federal Reserve expects Blue Valley to act as a source of financial strength and support for the Bank and to take measures to preserve and protect the Bank in situations where additional investments in the Bank may not otherwise be warranted. The Federal Reserve may require a bank holding company to terminate any activity or relinquish control of a non-bank subsidiary (other than a non-bank subsidiary of a bank) upon the Federal Reserve's determination that the activity or control constitutes a serious risk to the financial soundness or stability of any subsidiary depository institution of the bank holding company. Further, federal bank regulatory authorities have additional discretion to require a bank holding company to divest itself of any bank or non-bank subsidiary if the agency determines that divestiture may aid the depository institution's financial condition. Blue Valley Building is Blue Valley's only direct subsidiary that is not a bank. CAPITAL REQUIREMENTS. The Federal Reserve uses capital adequacy guidelines in its examination and regulation of bank holding companies and banks. If the capital falls below minimum guideline levels, a bank holding company, among other things, may be denied approval to acquire or establish additional banks or non-bank businesses. The Federal Reserve's capital guidelines establish a risk-based requirement expressed as a percentage of total risk-weighted assets and a leverage requirement expressed as a percentage of total assets. The risk-based requirement consists of a minimum ratio of total capital to total risk-weighted assets of 8%, of which at least one-half must be Tier 1 capital (which consists principally of stockholders' equity). The leverage requirement consists of a minimum ratio of Tier 1 capital to total assets of 3%. The risk-based and leverage standards presently used by the Federal Reserve are minimum requirements, and higher capital levels may be required if warranted by the particular circumstances or risk profiles of individual banking organizations. Further, any banking organization experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions, which is Tier 1 capital less all intangible assets, well above the minimum levels. DIVIDENDS. The Federal Reserve has issued a policy statement concerning the payment of cash dividends by bank holding companies. The policy statement provides that a bank holding company experiencing earnings weaknesses should not pay cash dividends exceeding its net income or which could only be funded in ways that weakened the bank holding company's financial health, such as by borrowing. Also, the Federal Reserve possesses enforcement powers over bank holding companies and their non-bank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations. Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies. BANK REGULATIONS The Bank operates under a Kansas state bank charter and is subject to regulation by the Kansas Banking Department and the FDIC. The Kansas Banking Department and the FDIC 59 regulate or monitor all areas of the Bank's operations, including capital requirements, issuance of stock, declaration of dividends, interest rates, deposits, record keeping, establishment of branches, acquisitions, mergers, loans, investments, borrowing, security devices and procedures and employee responsibility and conduct. The Kansas Banking Department places limitations on activities of the Bank including the issuance of capital notes or debentures and the holding of real estate and personal property and requires the Bank to maintain a certain ratio of reserves against deposits. The Kansas Banking Department requires the Bank to file a report annually showing receipts and disbursements of the Bank, in addition to any periodic report requested. DEPOSIT INSURANCE. The FDIC, through its Bank Insurance Fund, insures the Bank's deposit accounts to a maximum of $100,000 for each insured depositor. The FDIC, through its Savings Association Insurance Fund, insures certain deposit accounts acquired by the Bank in 1994 from a branch of a failed savings institution. These deposit accounts are insured to a maximum of $100,000 for each insured depositor. The FDIC bases deposit insurance premiums on the perceived risk each bank presents to its deposit insurance fund and currently range from zero (for banks in the lowest risk-based premium category) to 27 cents for each $100 of insured deposits (for banks in the highest risk-based premium category). In addition, all Bank Insurance Fund-insured and Savings Association Insurance Fund-insured institutions currently pay an assessment of 2.08 cents for each $100 of insured deposits to service debt issued by the Financing Corporation, a federal agency established to finance the recapitalization of the former Federal Savings and Loan Insurance Corporation. The FDIC may terminate the deposit insurance of any insured depository institution if the FDIC determines, after a hearing, that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, order, or any condition imposed in writing by, or written agreement with, the FDIC. The FDIC may also suspend deposit insurance temporarily during the hearing process for a permanent termination of insurance if the institution has no tangible capital. Management is not aware of any activity or condition that could result in termination of the deposit insurance of the Bank. CAPITAL REQUIREMENTS. The FDIC has established the following minimum capital standards for state-chartered, insured non-member banks, such as the Bank: (1) a leverage requirement consisting of a minimum ratio of Tier 1 capital to total assets of 3%; and (2) a risk-based capital requirement consisting of a minimum ratio of total capital to total risk-weighted assets of 8%, at least one-half of which must be Tier 1 capital. These capital requirements are minimum requirements, and higher capital levels may be required if warranted by the particular circumstances or risk profiles of individual institutions. The federal banking regulators also have broad power to take "prompt corrective action" to resolve the problems of undercapitalized institutions. The extent of the regulators' powers depends upon whether the institution in question is "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" or "critically undercapitalized." Under the prompt corrective action rules, an institution is: o "Well-capitalized" if the institution has a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 6% or greater, and a leverage ratio of 5% or greater, and the institution is not subject to an order, written agreement, 60 capital directive, or prompt corrective action directive to meet and maintain a specific capital level for any capital measure; o "Adequately capitalized" if the institution has a total risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital ratio of 4% or greater, and a leverage ratio of 4% or greater; o "Undercapitalized" if the institution has a total risk-based capital ratio that is less than 8%, a Tier 1 risk-based capital ratio that is less than 4%, or a leverage ratio that is less than 4%; o "Significantly undercapitalized" if the institution has a total risk-based capital ratio that is less than 6%, a Tier 1 risk-based capital ratio that is less than 3%, or a leverage ratio that is less than 3%; and o "Critically undercapitalized" if the institution has a ratio of tangible equity to total assets that is equal to or less than 2%. The federal banking regulators must take prompt corrective action with respect to capital deficient institutions. Depending upon the capital category to which an institution is assigned, the regulators' corrective powers include: o Placing limits on asset growth and restrictions on activities, including the establishing of new branches; o Requiring the institution to issue additional capital stock (including additional voting stock) or to be acquired; o Restricting transactions with affiliates; o Restricting the interest rate the institution may pay on deposits; o Requiring that senior executive officers or directors be dismissed; o Requiring the institution to divest subsidiaries; o Prohibiting the payment of principal or interest on subordinated debt; and o Appointing a receiver for the institution. Companies controlling an undercapitalized institution are also required to guarantee the subsidiary institution's compliance with the capital restoration plan subject to an aggregate limitation of the lesser of 5% of the institution's assets at the time it received notice that it was undercapitalized or the amount of the capital deficiency when the institution first failed to meet the plan. The Federal Deposit Insurance Act generally requires the appointment of a conservator or receiver within 90 days after an institution becomes critically undercapitalized. 61 As of December 31, 1999, the Bank had capital in excess of the requirements for a "well-capitalized" institution. INSIDER TRANSACTIONS. The Bank is subject to restrictions on extensions of credit to executive officers, directors, principal stockholders or any related interest of these persons. Extensions of credit must be made on substantially the same terms, including interest rates and collateral as the terms available for third parties and must not involve more than the normal risk of repayment or present other unfavorable features. The Bank is also subject to lending limits and restrictions on overdrafts to these persons. COMMUNITY REINVESTMENT ACT REQUIREMENTS. The Community Reinvestment Act of 1977 requires that, in connection with examinations of financial institutions within their jurisdiction, the federal banking regulators must evaluate the record of the financial institutions in meeting the credit needs of their local communities, including low and moderate income neighborhoods, consistent with the safe and sound operation of those banks. These factors are also considered in evaluating mergers, acquisitions and applications to open a branch or facility. In its most recent examination, the Bank received a rating of "outstanding record of meeting community credit needs." This is the highest rating a bank may receive. STATE BANK ACTIVITIES. With limited exceptions, FDIC-insured state banks, like the Bank, may not make or retain equity investments of a rate or in an amount that are not permissible for national banks and also may not engage as a principal in any activity that is not permitted for a national bank or its subsidiary, respectively, unless the bank meets, and continues to meet, its minimum regulatory capital requirements and the FDIC determines that the activity would not pose a significant risk to the deposit insurance fund of which the bank is a member. REGULATIONS GOVERNING EXTENSIONS OF CREDIT. The Bank is subject to restrictions on extensions of credit to Blue Valley and on investments in Blue Valley's securities and using those securities as collateral for loans. These regulations and restrictions may limit Blue Valley's ability to obtain funds from the Bank for its cash needs, including funds for acquisitions and for payment of dividends, interest and operating expenses. Further, the Bank Holding Company Act and Federal Reserve regulations prohibit a bank holding company and its subsidiaries from engaging in various tie-in arrangements in connection with extensions of credit, leases or sales of property or furnishing of services. RESERVE REQUIREMENTS. The Federal Reserve requires all depository institutions to maintain reserves against their transaction accounts and non-personal time deposits. Reserves of 3% must be maintained against net transaction accounts of $44.3 million or less (subject to adjustment by the Federal Reserve) and an initial reserve of $1,329,000 plus 10% (subject to adjustment by the Federal Reserve to a level between 8% and 14%) must be maintained against that portion of net transaction accounts in excess of this amount. The balances maintained to meet the reserve requirements imposed by the Federal Reserve may be used to satisfy liquidity requirements. 62 OTHER REGULATIONS Interest and various other charges collected or contracted for by the Bank are subject to state usury laws and other federal laws concerning interest rates. The Bank's loan operations are also subject to federal laws applicable to credit transactions. The federal Truth in Lending Act governs disclosures of credit terms to consumer borrowers. The Home Mortgage Disclosure Act of 1975 requires financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves. The Equal Credit Opportunity Act prohibits discrimination on the basis of race, creed or other prohibited factors in extending credit. The Fair Credit Reporting Act of 1978 governs the use and provision of information to credit reporting agencies. The Fair Debt Collection Act governs the manner in which consumer debts may be collected by collection agencies. The various federal agencies charged with the responsibility of implementing these federal laws have adopted various rules and regulations. The deposit operations of the Bank are also subject to the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records, and the Electronic Funds Transfer Act, and Regulation E issued by the Federal Reserve to implement that Act, which govern automatic deposits to and withdrawals from the use of ATMs and other electronic banking services. MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The Blue Valley board of directors is divided into three classes as nearly equal in number as the total number of directors constituting the entire board of directors permits. In order to implement this staggered board, at the 2000 annual meeting, the directors of class 1 were elected to hold office for a term of one year, the directors of class 2 were elected to hold office for a term of two years, and the directors of class 3 were elected to hold office for a term of three years. Thereafter, at each succeeding annual meeting, the directors of each class that are elected will serve a three-year term, and will continue to hold office until their successors are elected and qualified. All of our directors are also directors of the Bank, except Messrs. Henry and McDonnell. Ms. Dotson and Messrs. Bodker and Stein are directors of the Bank, but not of Blue Valley. Each of our directors has been elected for a term to expire at the next annual meeting. None of our executive officers have employment contracts assuring continued employment. For each of our directors, the additional directors of the Bank and our executive officers, we have set forth below their ages as of March 1, 2000, and their principal positions with Blue Valley. 63 Name Age Positions - ---- --- --------- DIRECTORS Robert D. Regnier ................. 51 President, Chief Executive Officer and Chairman of the Board of Directors of Blue Valley; President, Chief Executive Officer and Director of the Bank Donald H. Alexander................ 61 Director of Blue Valley and the Bank Wayne A. Henry, Jr................. 47 Director of Blue Valley C. Ted McCarter.................... 63 Director of Blue Valley and Chairman of the Board of Directors of the Bank Thomas A. McDonnell................ 54 Director of Blue Valley ADDITIONAL DIRECTORS OF THE BANK Harvey S. Bodker................... 64 Director of the Bank Suzanne E. Dotson.................. 53 Director of the Bank Stewart M. Stein................... 49 Director of the Bank EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS John K. Doull...................... 38 Executive Vice President and Chief Lending Officer of the Bank Mark A. Fortino.................... 33 Senior Vice President and Chief Financial Officer of the Bank; Treasurer of Blue Valley Nancy A. Taylor.................... 56 Senior Vice President - Mortgage Banking of the Bank Penny T. Hershman.................. 56 Senior Vice President - Retail Banking and Director of Marketing of the Bank Bonnie M. McConnaughy.............. 40 Vice President and Cashier of the Bank Below we have provided information regarding the principal occupations and business experience of each director and executive officer of Blue Valley and the additional directors of the Bank named above. Unless otherwise indicated, each person has held the indicated positions 64 for at least the past five years. Except as otherwise indicated below, there are no reportable family relationships among our directors and executive officers. ROBERT D. REGNIER has been a director and the President and Chief Executive Officer of Blue Valley and the Bank since their formation in 1989. He has also been the sole director and President and Chief Executive Officer of Blue Valley Investment since its formation in 1995, and of Blue Valley Building since its formation in 1994. Prior to joining Blue Valley, Mr. Regnier held various managerial positions with Boatmen's Bank and Trust and Boatmen's First National Bank of Kansas City. Mr. Regnier has nearly 30 years of experience in a number of banking areas, including lending, investments, personnel, administration, trust, operations, new business development and mergers. DONALD H. ALEXANDER has been a director of Blue Valley and member of its Audit Committee since its formation in 1989. Mr. Alexander has also been a director of the Bank since its formation in 1989. Mr. Alexander is a private investor with a background in commercial banking. In addition to his positions with Blue Valley and the Bank, Mr. Alexander has also been Chairman of Ventaire Corporation in Tulsa, Oklahoma, a metal fabrication company, since 1989; Chairman of Tulsa Power, LLC in Tulsa, Oklahoma, a machinery fabrication company, since 1988; Chairman of Huebert Fiberboard Corp. in Boonville, Missouri, a manufacturing company, since 1996; a director of BHA Group, Inc. in Raytown, Missouri, an air pollution control equipment manufacturer, since 1986; and President and director of Alexander & Associates, Inc. in Kansas City, Missouri, a private investment company, since 1987. WAYNE A. HENRY, JR. has been a director of Blue Valley since 1994. Mr. Henry has also been the President and Treasurer and a director of Personal Financial Designs, Inc. in Holden Missouri, a registered investment advisory firm providing portfolio management and financial planning services, since 1986. Mr. Henry is a licensed financial planning practitioner and has served on the board of directors of the Kansas City Chapter of the International Association of Financial Planning and as President and Chairman of the Heart of America Society of the Institute of Certified Financial Planners. C. TED MCCARTER has been a director of Blue Valley since 1990. Mr. Carter is also the Chairman of the board of directors of the Bank and a member of the Loan Committee, Trust Committee and Audit Committee of the Bank. He has served as the Chairman of Agency Premium Resource in Lenexa, Kansas, an insurance premium finance company, since 1990; the Chairman and President of Valley Investment Co. in Mission Woods, Kansas, a consulting company, since 1990; a director and co-owner of Huebert Fiberboard Co. in Boonville, Missouri, a manufacturing company, since 1990; and a director and co-owner of Emco Specialty Products, Inc. in Kansas City, Kansas, a manufacturing company, since 1990. Mr. McCarter has a background in commercial banking having served as President, Chief Executive Officer, and director of Boatmen's Bank in Kansas City from 1974 to 1990. He has also served as a director of Century Acceptance Corporation of Kansas City and Boatmen's Bancshares of St. Louis. THOMAS A. MCDONNELL has been a director of Blue Valley since 1996. Mr. McDonnell has also served as Chief Executive Officer of DST Systems, Inc. in Kansas City, Missouri, a transfer agent for mutual funds, stocks and bonds, since 1984, and as a director of DST since 1971. From August 1983 to November 1995, Mr. McDonnell was Executive Vice President and 65 a director of Kansas City Southern Industries, Inc. in Kansas City, Missouri, a holding company and the former parent of DST. Mr. McDonnell has also been a director of Informix Corp. in Menlo Park, California, a developer, manufacturer and marketer of relational database management systems, connectivity interfaces and gateways, since 1988; a director of BHA Group, Inc. in Kansas City, Missouri, a manufacturer of pollution control devices, since 1993; a director of Computer Sciences Corporation in El Segundo, California, an information technology company, since 1997; a director of Euronet Services, Inc. in Budapest, Hungary, an operator of automatic teller machines, since 1997; a director of Janus Capital Corporation in Denver, Colorado, a registered investment advisor, since 1985. HARVEY S. BODKER has been a director of the Bank since its formation in 1989. Mr. Bodker has been the President of Bodker Realty, Inc. in Prairie Village, Kansas, a commercial real estate brokerage, management and development company, since 1971. He has also been the managing partner of Rosewood Development Co. in Prairie Village, Kansas, a developer of small office buildings since 1978. Mr. Bodker is very active in the community having served on several boards including the Heart of America Boy Scout Board for over 25 years, the Menorah Medical Center Board of Trustees, Cosmopolitan Club of Johnson County, and Chairman of the Overland Park Civil Service Commission. Mr. Bodker has also served on the Kansas Real Estate Commission under two governors, the Overland Park Planning Commission, the Leawood Board of Zoning Appeals, the Sunflower State Private Industry Council, and on the Overland Park Chamber of Commerce. SUZANNE E. DOTSON has been a director of the Bank since 1993. Ms. Dotson is a community volunteer with a background in community banking. She has also been a director of the Brain Injury Association of Kansas and Greater Kansas City in Kansas City, Missouri, a non-profit association dedicated to brain injury prevention, research, education and advocacy, since 1992; and a director of Wayside Waifs in Kansas City, Missouri, an animal shelter and humane society dedicated to humane education and providing temporary housing for lost, abandoned, abused and unwanted animals, since 1998. Prior to joining the Bank in 1993, Ms. Dotson served as senior vice president of commercial lending at Boatmen's First National Bank of Kansas City and executive vice president of lending at First Continental Bank and Trust in the Kansas City area. STEWART M. STEIN has been a director of the Bank since its formation in 1989. Mr. Stein is a real estate, commercial and collections attorney. He has been a partner with the law firm of Morrison & Hecker LLP in Overland Park, Kansas, since 1997. Mr. Stein was managing partner of the law firm of Buck, Bohm & Stein, P.C. in Overland Park, Kansas, from 1981 to 1997. JOHN K. DOULL is currently the Executive Vice President and Chief Lending Officer of the Bank, and a member of the Bank's Discount Committee, Trust Committee, Audit Committee, Risk Management Committee and Compliance Committee. As such, he is primarily responsible for overseeing the lending function of the Bank. He is also responsible for strategic planning, risk management, funds management and developing future plans for the Bank. Mr. Doull has over 15 years experience in banking. Prior to joining Blue Valley, he was a commercial loan officer at Boatmen's First National Bank of Kansas City. Mr. Doull is also currently the Board President and a member of the Administrative Team at Indian Creek Community Church in Olathe, Kansas. He is also the past treasurer of the Johnson County Housing Coalition. 66 MARK A. FORTINO has been Treasurer of Blue Valley, Blue Valley Investment and Blue Valley Building, and Senior Vice President and Chief Financial Officer of the Bank since May, 1998. As such, he is responsible for oversight of all financial reporting and analysis for Blue Valley, as well as oversight of human resources, technology and administrative functions. Mr. Fortino also serves on the Technology Committee and Communications/Moral Committee of the Bank. Mr. Fortino is a certified public accountant, and for ten years prior to joining Blue Valley, served in various positions, including Audit Manager, at Baird, Kurtz & Dobson, a public accounting firm in Kansas City, Missouri. His prior experience includes bank consulting and auditing, bank mergers and acquisitions, public securities offerings and periodic SEC reporting. Mr. Fortino is a member of the Missouri Society of CPAs and the American Institute of CPAs. Mr. Fortino is also a Board member and Chairman of the Finance Committee of the Girl Scouts of Midcontinent Council and a member of the Associate Advisory Committee to the University of Kansas Accounting and Information Systems Board. NANCY A. TAYLOR has been Senior Vice President - Mortgage Banking of the Bank since 1989. As such, Ms. Taylor is responsible for mortgage loan origination (both conforming and non-conforming), mortgage loan operations, the sale of mortgage loans in the secondary market and consumer construction loans for the Bank. Ms. Taylor has over 24 years of banking experience. PENNY T. HERSHMAN has been the Senior Vice President of Retail Banking and Director of Marketing of the Bank since 1997. As such, she directs the retail functions for the Bank, including branching and marketing. Ms. Hershman has over 30 years of banking experience. From 1995 to 1997, Ms. Hershman served as principal of at Tapco Consulting in Novato, California, a consulting firm, where she specialized in banking, management and marketing. From 1984 to 1995, Ms. Hershman served in various positions at Novato National Bank in Novato, California, including President and Chief Executive Officer. Ms. Hershman began her career at Metcalf Bank in Overland Park, Kansas, where she advanced from teller to director and Senior Vice President and Cashier. BONNIE M. MCCONNAUGHY has been Vice President, Cashier, Security Officer and Bank Security Act Officer of the Bank, and a member of the Bank's Compliance Committee, Technology Committee and Planning Committee, since 1990. As such, her primary responsibilities include deposit operations, teller functions, and developing and implementing new products for the Bank. Ms. McConnaughy has over 18 years of banking experience. COMMITTEES OF THE BOARD OF DIRECTORS The Blue Valley board of directors has a standing Audit Committee, which reports to the full board of directors in discharging its responsibilities relating to our accounting, reporting and financial control practices. The Audit Committee has general responsibility for oversight of financial controls, as well as our accounting, regulatory and audit activities, and annually reviews the qualifications of our independent auditors. The current members of the Audit Committee are Messrs. Regnier, Alexander and McCarter. The Blue Valley board of directors does not currently have a standing Nominating Committee or Compensation Committee. The full Blue Valley board of directors nominates 67 persons to serve as directors of Blue Valley. The compensation of the executive officers and employees of the Bank is determined jointly by the full boards of directors of Blue Valley and the Bank. COMPENSATION OF EXECUTIVE OFFICERS The Summary Compensation Table below provides summary information concerning compensation that we paid or accrued during 1999, 1998 and 1997 to or on behalf of our Chief Executive Officer and the three other highest paid executive officers whose salary and bonus for 1999 was in excess of $100,000:
ANNUAL COMPENSATION (1) ------------------------- LONG-TERM COMPENSATION AWARDS - --------------------------------------------------- ------ ----------- -------- ---------- ------------ ----------- OTHER SECURITIES ALL ANNUAL UNDERLYING OTHER NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS COMP.(2) OPTIONS COMP.(3) - --------------------------------------------------- ------ ----------- -------- ---------- ------------ ----------- Robert D. Regnier................................ 1999 $ 185,000 $85,000 $ 17,322 14,000 $ - President, Chief Executive Officer and 1998 170,000 80,000 16,285 15,160 7,519 Chairman of the Board of Directors of Blue 1997 150,000 80,000 18,129 16,000 - Valley; Chief Executive Officer and Director of the Bank John K. Doull.................................... 1999 $ 115,000 $80,000 $ 17,322 10,000 $ - Executive Vice President and Chief Lending 1998 105,000 55,000 16,285 11,156 - Officer of the Bank 1997 95,000 50,000 16,529 12,000 - Mark A. Fortino.................................. 1999 $ 82,500 $25,000 $ 7,172 4,000 $ - Treasurer of Blue Valley; Senior Vice 1998 50,000 12,000 - 6,800 - President and Chief Financial Officer of 1997 - - - - - the Bank Nancy A. Taylor.................................. 1999 $ 65,000 $40,000 $ 11,367 3,000 $ - Senior Vice President - Mortgage Banking 1998 60,000 35,000 9,948 2,800 2,077 of the Bank 1997 55,000 27,500 9,415 4,000 -
____________________ [FN] (1) Annual compensation does not include the cost to us of benefits executive officers receive in addition to salary and cash bonuses. The aggregate amounts of these personal benefits, however, did not exceed the lesser of either $50,000 or 10% of the total annual compensation of each named executive officer. (2) Includes the amount of our contributions to our Profit Sharing Plan allocated to the accounts of each of the named executive officers. (3) Includes amounts paid for unused vacation. GRANTS OF STOCK OPTIONS The following table sets forth information with respect to the executive officers identified in the prior table concerning the grants of options during 1999. 68
AGGREGATED OPTION GRANTS IN 1999 POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION INDIVIDUAL GRANTS FOR OPTION TERM - ---------------------------------------------------------------------------------------- ----------------------- (A) (B) (C) (D) (E) (F) (G) NUMBER OF % OF TOTAL EXERCISE SECURITIES OPTIONS --------- UNDERLYING GRANTED TO OR BASE OPTIONS EMPLOYEES IN PRICE EXPIRATION NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($) - --------------------------------- ---------- -------------- ---------- ----------- ----------- ---------- Robert D. Regnier............... 14,000 21.88% $14.375 12/16/2009 $126,560 $320,740 John K. Doull................... 10,000 15.63% $14.375 12/16/2009 $90,400 $229,100 Mark A. Fortino................. 4,000 6.25% $14.375 12/16/2009 $36,160 $91,640 Nancy A. Taylor................. 3,000 4.69% $14.375 12/16/2009 $27,120 $68,730
EXERCISES OF STOCK OPTIONS The following table sets forth information with respect to the executive officers identified in the prior table concerning the exercise of options during 1999, and unexercised options held as of December 31, 1999.
AGGREGATED OPTION EXERCISES IN 1999 AND 1999 YEAR-END OPTION VALUES VALUE OF UNEXERCISED NUMBER OF IN-THE-MONEY NUMBER OF UNEXERCISED OPTIONS OPTIONS SHARES AT YEAR-END: AT YEAR-END: ACQUIRED ON EXERCISABLE/ EXERCISABLE/ NAME EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE(1) - ----------------------------------- ------------- --------------- --------------------- -------------------- Robert D. Regnier.................. - - 29,160/ - $47,375/ $ - John K. Doull...................... - - - /21,156 $ - /$34,863 Mark A. Fortino.................... - - - /6,800 $ - /$ 8,750 Nancy A. Taylor.................... - - 4,000/5,800 $27,500/$ 8,750 _________________
[FN] (1) The estimated fair value of our common stock at December 31, 1999 was $14.375. 1998 EQUITY INCENTIVE PLAN In April, 1998, our board of directors and stockholders approved the Blue Valley Ban Corp 1998 Equity Incentive Plan (the "Plan"), which superceded our 1994 Stock Option Plan. The Plan is administered by our full board of directors. The Plan authorizes our board of directors to grant equity awards to substantially all of our employees and directors. The total number of shares of our common stock reserved for awards under the Plan is 215,284. Awards granted under the Plan may consist of any of the following: 69 o incentive stock options and nonqualified stock options, which entitle the holder to purchase a stated number of shares of our common stock; o restricted shares of our common stock, which are subject to forfeiture; and o deferred share units, which entitle the holder to receive a future cash payment equal to the increase in the value of shares of our common stock. The period of any award granted under the Plan may not exceed ten years, and awards vest based on the determination by our board of directors. The exercise price of any incentive stock option granted under the Plan may not be less than the fair market value of a share of our common stock on the date of grant. The exercise price of any nonqualified stock option may be less than, greater than or equal to the fair market value of a share of our common stock on the grant date. The consideration to be received by Blue Valley in exchange for any award of restricted shares may not be less than the minimum amount for which our shares of common stock can be issued under Kansas law. The initial value of a deferred share unit generally will equal the fair market value of a share of our common stock on the grant date. The Plan provides for increases in the number of shares and to the exercise price, if applicable, in the event of a declaration of a stock dividend or any recapitalization resulting in a stock split-up, combination or exchange of shares of our common stock. The Plan further provides that in most instances unvested restricted share or deferred share unit awards and any unexercised options are forfeited upon the termination of the recipient's employment with Blue Valley for cause. If employment is terminated due to an award recipient's death or disability, unvested awards generally vest, and in the case of options, may be exercised within 12 months thereafter. If employment is terminated for any other reason, unvested options, restricted shares and deferred share units are generally forfeited, and vested options may be exercised within three months after the termination of employment. DIRECTOR COMPENSATION We pay each of our nonemployee directors a fee of $1,500 for each meeting of our board of directors, and a fee of $350 for each committee meeting, that he attends in person. Directors are also eligible to receive stock options, restricted stock and deferred share unit grants under our 1998 Equity Incentive Plan. In 1999, each nonemployee director of Blue Valley received options to purchase 2,000 shares of our common stock. Mr. Regnier received options to purchase 14,000 shares of our common stock. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION All of our executive officers and employees are employed by the Bank and do not receive separate compensation for positions held with Blue Valley, Blue Valley Investment or Blue Valley Building. Executive compensation is determined jointly by the full boards of directors of Blue Valley and the Bank. During 1999, Robert D. Regnier, who is a director of Blue Valley and the Bank, and President and Chief Executive Officer of Blue Valley and the Bank, Mark A. Fortino, who is Senior Vice President and Chief Financial Officer of the Bank and Treasurer of Blue Valley, and John K. Doull who is Executive Vice President - - Lending of the Bank, 70 participated in the deliberations of the boards of directors of Blue Valley and the Bank concerning executive compensation. There are no other reportable compensation committee interlocks or insider participation matters. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Bank periodically makes loans to our executive officers and directors, the members of their immediate families and companies that they are affiliated with. As of December 31, 1999, the Bank had aggregate loans to such persons of approximately $1.4 million, which represented 7.41% of our stockholders' equity of $18.9 million on that date. These loans: o were made in the ordinary course of business; o were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons; and o did not involve more than the normal risk of collectibility or present other unfavorable features. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF SECURITIES The following table shows the common stock owned by directors and executive officers of Blue Valley and persons known by Blue Valley to beneficially own more than 5% of our outstanding common stock as of December 31, 1999. The address of each person listed below is 11935 Riley, Overland Park, Kansas 66225-6128. This information has been prepared based upon the SEC's "beneficial ownership" rules. Under these rules a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of a security, or investment power, which includes the power to dispose or to direct the disposition of a security. Unless otherwise indicated, each of the following persons has sole voting and investment power with respect to the shares beneficially owned. 71 Beneficial Owner Shares Percentage - ---------------------------------- ----------- --------- Robert D. Regnier.............. 487,644 (1) 21.90 % Donald H. Alexander............ 124,500 (1) 5.59 Wayne A. Henry, Jr............. 93,880 (1) 4.22 C. Ted McCarter................ 66,552 (1) 2.99 Thomas A. McDonnell............ 127,920 5.75 John K. Doull.................. 68,880 3.09 Mark A. Fortino................ 4,000 0.18 Nancy A. Taylor................ 32,820 (1) 1.47 All directors and executive officers, 10 in number, as a group.... 1,018,196 (1) 45.73 - ------------ [FN] (1) Includes options that are currently exercisable, or become exercisable within 60 days of December 31, 1999, to purchase from us the number of shares of common stock indicated for the following persons: Robert D. Regnier, 29,160; Donald H. Alexander, 4,000; Wayne A. Henry, Jr. 5,500; C. Ted McCarter, 4,000; Nancy A. Taylor, 4,000; Penny T. Hershman, 4,000; and Bonnie M. McConnaughy, 8,000. DESCRIPTION OF THE TRUST PREFERRED SECURITIES The trust preferred securities and the common securities will be issued under the terms of the trust agreement of BVBC Trust. The trust agreement will be qualified as an indenture under the Trust Indenture Act. Initially, Wilmington Trust Company will be the property trustee and will act as trustee for the purpose of complying with the Trust Indenture Act. The terms of the trust preferred securities will include those stated in the trust agreement of BVBC Trust and those made part of the trust agreement by the Trust Indenture Act. The following is a summary of the material terms and provisions of the trust preferred securities and the trust agreement. Prospective investors in the trust preferred securities are urged to read all the provisions of the trust agreement, including the definitions in the trust agreement, and the Trust Indenture Act. The form of the trust agreement has been filed as an exhibit to the registration statement of which this prospectus is a part. GENERAL OVERVIEW Under the terms of the trust agreement of BVBC Trust, the administrative trustees will issue the trust preferred securities and the common securities, collectively, the trust securities. The trust preferred securities will represent preferred undivided beneficial interests in the assets of BVBC Trust and the holders of the trust preferred securities will be entitled to a preference in most circumstances regarding distributions and amounts payable on redemption or liquidation over the common securities of BVBC Trust, as well as other benefits as described in the trust agreement. The trust preferred securities will rank equally, and payments will be made thereon pro rata, with the common securities of BVBC Trust except as described under "Subordination of Common Securities of BVBC Trust Held by Blue Valley" below. Legal title to the junior subordinated debentures will be held by the property trustee in trust for the benefit of the holders of the trust securities. The trust preferred securities guarantee executed by Blue Valley for the benefit of the holders of the trust preferred securities will be a guarantee on a subordinated basis and will not guarantee payment of distributions or amounts payable on redemption or liquidation of the trust preferred securities if BVBC Trust does not 72 have funds on hand available to make the payments. See "Description of Trust Preferred Securities Guarantee." If an event of default under the indenture has occurred and is continuing and the default is attributable to Blue Valley's failure to pay interest or principal on the junior subordinated debentures on the due date, a holder of trust preferred securities may institute a legal proceeding directly against Blue Valley for payment of principal and interest on the junior subordinated debentures having a principal amount equal to the aggregate liquidation amount of the trust preferred securities of the holder. This action is referred to in this discussion as a direct action. See "Description of the Junior Subordinated Debentures - Enforcement of Rights by Holders of Trust Preferred Securities" and "Relationship Among the Trust Preferred Securities, the Junior Subordinated Debentures and the Trust Preferred Securities Guarantee." QUARTERLY DISTRIBUTION PAYMENTS AND EXTENSIONS ON DISTRIBUTION PAYMENTS PAYMENT OF DISTRIBUTIONS. Distributions on the trust preferred securities will be payable at the annual rate of % of the stated liquidation amount of $8, payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, beginning June 30, 2000. The amount of each distribution due will include amounts accrued and unpaid through the date the distribution is due. Distributions on the trust preferred securities will be payable to the holders as they appear on the register of BVBC Trust on the relevant record date. Until the trust preferred securities do not remain in book-entry form, the relevant record date will be one business day prior to the relevant distribution date and, in the event the trust preferred securities are not in book-entry form, the relevant record date will be the 15th day of the month in which the relevant distribution date occurs. The right to receive distributions will be cumulative from the date of original issuance of the trust preferred securities. The amount of distributions payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. In the event that any payment date is not a business day, the distribution will be made on the next business day, and without any interest or other payment regarding any delay. If, however, the business day falls in the next calendar year, the distribution will be made on the immediately preceding business day. As used in this prospectus, a business day means any day other than a Saturday or a Sunday, or a day on which banking institutions in Delaware or Kansas are authorized or required by law or executive order to remain closed. The only funds of BVBC Trust available for distribution to its trust preferred securities holders will be payments by Blue Valley under the junior subordinated debentures. See "Description of Junior Subordinated Debentures." If Blue Valley does not make interest payments on the junior subordinated debentures, the property trustee will not have funds available to pay distributions on the trust preferred securities. The payment of distributions, if and to the extent BVBC Trust has legally available funds and cash sufficient to make payments, is guaranteed by Blue Valley. For further information, see "Description of the Trust Preferred Securities Guarantee." EXTENSION PERIOD. Unless a debenture event of default has occurred and is continuing, Blue Valley has the right under the indenture to defer interest payments on the junior subordinated debentures at any time for a period not exceeding 20 consecutive quarters regarding each extension period. However, no extension period may extend beyond the stated maturity of the junior subordinated debentures. As a consequence of any extension election by Blue Valley, 73 quarterly distributions on the trust preferred securities will be deferred by BVBC Trust during any extension period. Distributions to which holders of trust preferred securities are entitled will accumulate additional amounts at the rate per year of % thereof, compounded quarterly from the relevant distribution date. The term distributions as used in this prospectus includes any additional accumulated amounts. During any extension period, Blue Valley may not (1) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment regarding, any of its capital stock, which includes common and preferred stock, or (2) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of Blue Valley that rank equally with or junior in interest to the junior subordinated debentures or make any trust preferred securities guarantee payments regarding any trust preferred securities guarantee by Blue Valley of the debt securities of any subsidiary of Blue Valley if the trust preferred securities guarantee ranks equally with or junior in interest to the junior subordinated debentures. These restrictions do not apply to: o dividends or distributions in capital stock of Blue Valley; o any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any plan of this type in the future, or the redemption or repurchase of any rights pursuant to this type of plan; o payments under the trust preferred securities guarantee of Blue Valley; or o purchases of common stock for issuance under any contracts, benefit plans or similar arrangements with or for its directors, officers, employees or consultants. Prior to the termination of any extension period, Blue Valley may further extend the extension period, provided that the extension does not cause the extension period to exceed 20 consecutive quarters or extend beyond the stated maturity of the junior subordinated debentures. Upon the termination of any extension period and the payment of all amounts then due, and subject to the above limitations, Blue Valley may elect to begin a new extension period. There is no limitation on the number of times that Blue Valley may elect to begin an extension period. Blue Valley has no current intention of exercising its right to defer payments of interest by extending the interest payment period on the junior subordinated debentures. REDEMPTION - MANDATORY AND OPTIONAL RIGHTS OF BLUE VALLEY MANDATORY REDEMPTION OF TRUST PREFERRED SECURITIES. Upon the repayment or redemption at any time, in whole or in part, of any junior subordinated debentures, the proceeds from the repayment or redemption will be applied by the property trustee to redeem a like amount of the trust securities at the redemption price, as defined below. For more information, see "Description of the Junior Subordinated Debentures - Redemption." If less than all of the junior subordinated debentures are to be repaid or redeemed on a redemption date, then the 74 proceeds will be allocated to the redemption of the trust preferred securities and common securities pro rata. OPTIONAL REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES. Blue Valley will have the right to redeem the junior subordinated debentures (1) beginning on June 30, 2005, in whole at any time or in part from time to time or (2) at any time, in whole, but not in part, upon a tax event, an investment company event or a capital treatment event as defined in the following paragraphs. The redemption price will be equal to the accrued and unpaid interest on the redeemed junior subordinated debentures, plus 100% of the principal amount. These payments will be subject to receipt of prior approval by the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. See "Description of the Junior Subordinated Debentures - Redemption." TAX EVENT REDEMPTION, INVESTMENT COMPANY EVENT REDEMPTION, CAPITAL EVENT REDEMPTION OR DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES. If a tax event, an investment company event or a capital treatment event occurs after original issuance of the trust preferred securities and is continuing, Blue Valley has the right to redeem the junior subordinated debentures in whole, but not in part. If a redemption of the junior subordinated debentures occurs, Blue Valley would also cause a mandatory redemption of the trust preferred securities and common securities in whole at the redemption price, as defined below, within 90 days following the occurrence of any of these events. In each case the redemption would be subject to receipt of prior approval by the Federal Reserve if then required under its applicable capital guidelines or policies. If any of these events has occurred and is continuing, and Blue Valley does not elect to redeem the junior subordinated debentures and cause a mandatory redemption of the trust securities or to liquidate BVBC Trust and cause the junior subordinated debentures to be distributed to holders of the trust securities in liquidation of BVBC Trust, the trust securities will remain outstanding. Also, additional sums, as defined below, may be payable on the junior subordinated debentures. A tax event requires the receipt by Blue Valley and BVBC Trust of a legal opinion to the effect that, as a result of any amendment to, including any announced prospective change in, the laws or regulations of the United States or any political subdivision or taxing authority of the United States, or as a result of any official administrative pronouncement or judicial decision interpreting or applying the tax laws or regulations, there is more than an insubstantial risk that: o BVBC Trust is, or will be within 90 days of the date of the opinion, subject to United States federal income tax regarding income received or accrued on the junior subordinated debentures; o interest payable by Blue Valley on the junior subordinated debentures is not, or within 90 days of the opinion, will not be, deductible by Blue Valley, in whole or in part, for United States federal income tax purposes; or o BVBC Trust is, or will be within 90 days of the date of the opinion, subject to more than a de minimis amount of other taxes, duties, assessments or other governmental charges. 75 An investment company event requires the receipt by Blue Valley and BVBC Trust of a legal opinion to the effect that, as a result of any change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, BVBC Trust is or will be considered an investment company required to be registered under the Investment Company Act. A capital treatment event requires the receipt by Blue Valley and BVBC Trust of a legal opinion to the effect that, as a result of any amendment to, including any proposed change in, the laws or regulations of the United States or any of its political subdivisions, or as a result of any official action or judicial decision interpreting the laws or regulations, there is more than an insubstantial risk that Blue Valley's ability to treat the trust preferred securities as Tier 1 capital or its equivalent for purposes of the Federal Reserve capital adequacy guidelines is impaired. However, the inability of Blue Valley to treat all or any portion of the liquidation amount of the trust preferred securities as Tier 1 capital will not constitute the basis for a capital treatment event if this inability results from Blue Valley having cumulative preferred stock, minority interests in consolidated subsidiaries, or any other class of security or interest which the Federal Reserve now or in the future may accord Tier 1 capital treatment in excess of the amount which may qualify for treatment as Tier 1 capital under applicable capital adequacy guidelines of the Federal Reserve. In addition, the distribution of junior subordinated debentures in connection with the dissolution of BVBC Trust will not in and of itself constitute a capital treatment event. Additional sums means the additional amounts as may be necessary to be paid by Blue Valley on the junior subordinated debentures so that the amount of distributions payable by BVBC Trust on the outstanding trust securities will not be reduced as a result of any additional taxes, duties, assessments and other governmental charges to which BVBC Trust has become subject. Like amount means (1) regarding a redemption of trust securities, trust securities having a liquidation amount, as defined below, equal to that portion of the principal amount of junior subordinated debentures to be contemporaneously redeemed in accordance with the indenture, allocated to the common securities and to the trust preferred securities based upon the relative liquidation amounts of these classes and the proceeds of which will be used to pay the redemption price of the trust securities, and (2) regarding a distribution of junior subordinated debentures to holders of trust securities in connection with a dissolution or liquidation of BVBC Trust, junior subordinated debentures having a principal amount equal to the liquidation amount of the trust securities of the holder to whom the junior subordinated debentures are distributed. Liquidation amount means the stated amount of $8 per trust security. Redemption price means, regarding any trust security, the liquidation amount of the trust security, plus accumulated and unpaid distributions to the redemption date, allocated on a pro rata basis, based on liquidation amounts, among the trust securities to be redeemed. DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES Subject to Blue Valley's having received prior approval of the Federal Reserve, Blue Valley will have the right at any time to liquidate BVBC Trust and, after satisfaction of the liabilities of creditors of BVBC Trust as provided by applicable law, cause the junior subordinated debentures to be distributed to the holders of trust securities in liquidation of BVBC Trust. After the liquidation date fixed for any distribution of junior subordinated debentures for trust preferred securities: o the trust preferred securities will no longer be deemed to be outstanding; 76 o the depositary or its nominee, as the record holder of the trust preferred securities, will receive a registered global certificate or certificates representing the junior subordinated debentures to be delivered upon the distribution; and o any certificates representing trust preferred securities not held by the depositary or its nominee will be deemed to represent the junior subordinated debentures having a principal amount equal to the liquidation amount of the trust preferred securities, and bearing interest equal to the accrued and unpaid distributions on the trust preferred securities, until the certificates are presented to the administrative trustees or their agent for reissuance. There can be no assurance as to the market prices for the trust preferred securities or the junior subordinated debentures that may be distributed in exchange for the trust preferred securities if a dissolution and liquidation of BVBC Trust were to occur. Accordingly, the trust preferred securities that you may purchase, or the junior subordinated debentures that you may receive on dissolution and liquidation of BVBC Trust, may trade at a discount to the price that you paid to purchase the trust preferred securities. If the junior subordinated debentures are distributed, Blue Valley is required to use its best efforts to list them on a national securities exchange or quotation system, but this requirement will not prevent Blue Valley from partially redeeming the junior subordinated debentures. If Blue Valley exercises its right to partially redeem the junior subordinated debentures, they may not qualify for listing on a national securities exchange or quotation system. REDEMPTION PROCEDURES Trust preferred securities redeemed on each redemption date will be redeemed at the redemption price with the proceeds from the contemporaneous redemption of the junior subordinated debentures. Redemptions of the trust preferred securities will be made and the redemption price will be payable on each redemption date only to the extent that BVBC Trust has funds on hand available for the payment of the redemption price. See "- Subordination of Common Securities of BVBC Trust Held by Blue Valley" and "Description of the Trust Preferred Securities Guarantee." Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of trust securities at the holder's registered address. Unless BVBC Trust defaults in payment of the applicable redemption price, on and after the redemption date, distributions will cease to accrue on the trust preferred securities called for redemption. If BVBC Trust gives a notice of redemption regarding the trust preferred securities, then, by 10:00 a.m., Delaware time, on the redemption date, the property trustee will pay the redemption price to the depositary, as the record holder of the trust preferred securities. The depositary thereafter will credit the redemption price to the participants for whom it holds the trust preferred securities. If the trust preferred securities are no longer in book-entry form, the property trustee, to the extent funds are available, will deposit with the paying agent for the trust preferred securities funds sufficient to pay the aggregate redemption price. The property trustee will give the paying agent irrevocable instructions and authority to pay the redemption price 77 upon surrender of certificates evidencing the trust preferred securities. Notwithstanding the foregoing, distributions payable on or prior to the redemption date will be payable to the holders of the trust preferred securities on the relevant record dates for the related distribution dates. If notice of redemption has been given and funds deposited as required, then upon the date of the deposit, all rights of the holders of the trust preferred securities will cease, except the right of the holders of the trust preferred securities to receive the redemption price, but without interest on the redemption price, and the trust preferred securities will cease to be outstanding. If any date fixed for redemption of the trust preferred securities is not a business day, then payment of the redemption price payable on the date will be made on the next business day and without any interest or other payment for the delay. If, however, the business day falls in the next calendar year, the payment will be made on the immediately preceding business day. If payment of the redemption price in respect of trust preferred securities called for redemption is improperly withheld or refused and not paid either by BVBC Trust or by Blue Valley under the trust preferred securities guarantee, distributions on the trust preferred securities will continue to accrue at the then applicable rate, from the redemption date originally established by BVBC Trust for the trust preferred securities to the date the redemption price is actually paid. In this case the actual payment date will be the date fixed for redemption for purposes of calculating the redemption price. See "Description of the Trust Preferred Securities Guarantee." Subject to applicable law, including, without limitation, federal securities laws, Blue Valley may at any time and from time to time purchase outstanding trust preferred securities by tender, in the open market or by private agreement. Payment of the redemption price on the trust preferred securities and any distribution of junior subordinated debentures to holders of trust preferred securities will be made to the applicable record holders as they appear on the register of the trust preferred securities on the relevant record date, which date will be one business day prior to the relevant redemption date; provided, however, that if any trust preferred securities are not in book-entry form, the relevant record date for them will be a date at least 15 days prior to the redemption date. In the case of a liquidation, the record date will be established by the property trustee and be no more than 45 days before the liquidation date. If less than all of the trust securities are to be redeemed on a redemption date, then the aggregate redemption price for the trust securities to be redeemed will be allocated pro rata to the trust preferred securities and common securities based upon the relative liquidation amounts of these classes. The particular outstanding trust preferred securities to be redeemed will be selected by any method as the property trustee deems fair and appropriate. This method may provide for the selection for redemption of portions equal to $8 or an integral multiple of $8 of the liquidation amount of trust preferred securities. The property trustee will promptly notify the trust securities registrar in writing of the trust preferred securities selected for redemption and, in the case of any trust preferred securities selected for partial redemption, the liquidation amount thereof to be redeemed. For all purposes of the trust agreement, unless the context otherwise requires, all provisions relating to the redemption of trust preferred securities will relate to the portion of the aggregate liquidation amount of trust preferred securities which has been or is to be redeemed. 78 SUBORDINATION OF COMMON SECURITIES OF BVBC TRUST HELD BY BLUE VALLEY Payment of distributions on, and the redemption price of, the trust preferred securities and common securities will be made pro rata based on the liquidation amounts of these securities. However, if on any distribution date or redemption date a debenture event of default has occurred and is continuing, no distributions on or redemption of the common securities will be made. Further, no other payment on account of the redemption, liquidation or other acquisition of the common securities will be made unless payment in full in cash of all distributions payable on all of the outstanding trust preferred securities are made, or in the case of redemption the full redemption price on all of the outstanding trust preferred securities then called for redemption, has been made or provided for. All funds available to the property trustee will first be applied to the payment in full in cash of all distributions on, or redemption price of, the trust preferred securities then due and payable. In the case of any event of default under the trust agreement resulting from a debenture event of default, Blue Valley as holder of the common securities will be deemed to have waived any right to act regarding any event of default until the effects of all events of default have been cured, waived or otherwise eliminated. Until any events of default have been so cured, waived or otherwise eliminated, the property trustee will act solely on behalf of the holders of the trust preferred securities and not on behalf of Blue Valley as holder of the common securities, and only the holders of the trust preferred securities will have the right to direct the property trustee to act on their behalf. LIQUIDATION DISTRIBUTIONS UPON DISSOLUTION Blue Valley will have the right at any time to dissolve BVBC Trust and cause the junior subordinated debentures to be distributed to the holders of the trust preferred securities. This right is subject to Blue Valley having received prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. See "Distribution of the Junior Subordinated Debentures" above. In addition, under the trust agreement, BVBC Trust will automatically dissolve upon expiration of its term and will earlier dissolve on the first to occur of: (1) events of bankruptcy, dissolution or liquidation of Blue Valley; (2) delivery by Blue Valley of written direction to the property trustee to dissolve BVBC Trust, which direction is optional and wholly within the discretion of Blue Valley; (3) redemption of all of the trust preferred securities as described under "- Redemption - Mandatory and Optional Rights of Blue Valley"; and (4) the entry of an order for the dissolution of BVBC Trust by a court of competent jurisdiction (each, an "early termination"). If an early termination occurs as described in clause (1), (2) or (4) above or upon the expiration of the term of BVBC Trust, it will be liquidated by the trustees as expeditiously as the trustees determine to be possible. The liquidation will be made after satisfaction of liabilities to creditors of BVBC Trust as provided by Section 3808(e) of the Delaware Business Trust Act and any other applicable law. In the liquidation, holders of the trust securities will receive a like amount of the junior subordinated debentures, unless this distribution is determined by the property trustee not to be practical. If the property trustee determines that a distribution of the 79 junior subordinated debentures is not practical, then the holders of trust preferred securities will be entitled to receive an amount equal to the liquidation amount of $8 per trust security plus accrued and unpaid distributions thereon to the date of payment. This amount, payable out of the assets of BVBC Trust available for distribution, is referred to as the liquidation distribution. If the liquidation distribution can be paid only in part because BVBC Trust has insufficient assets available to pay the full aggregate liquidation distribution, then the amounts payable directly by BVBC Trust on the trust preferred securities will be paid on a pro rata basis. The holders of the common securities will be entitled to receive distributions upon a liquidation pro rata with the holders of the trust preferred securities, except that if a debenture event of default has occurred and is continuing, the trust preferred securities will have a priority over the common securities. Under current United States federal income tax law and interpretations and assuming, as expected, BVBC Trust is treated as a grantor trust, a distribution of the junior subordinated debentures should not be a taxable event to holders of the trust preferred securities. Should there be a change in law, a change in legal interpretation, a tax event or other circumstances, however, the distribution could be a taxable event to holders of the trust preferred securities. See "Material Federal Income Tax Consequences." If Blue Valley elects neither to redeem the junior subordinated debentures prior to maturity nor to liquidate BVBC Trust and distribute the junior subordinated debentures to holders of the trust preferred securities, the trust preferred securities will remain outstanding until the repayment of the junior subordinated debentures. If Blue Valley elects to dissolve BVBC Trust and cause the junior subordinated debentures to be distributed to holders of the trust preferred securities in liquidation of BVBC Trust, Blue Valley will continue to have the right to shorten the maturity of the junior subordinated debentures under most circumstances. See "Description of the Junior Subordinated Debentures - General Overview." EVENTS OF DEFAULT; NOTICE Any one of the following events that has occurred and is continuing constitutes an event of default under the trust agreement: o the occurrence of a debenture event of default under the indenture, see "Description of the Junior Subordinated Debentures - Indenture Events of Default"; or o default by BVBC Trust in the payment of any distribution when it becomes due and payable, and continuation of the default for a period of 30 days; or o default by BVBC Trust in the payment of any redemption price of any trust security when it becomes due and payable; or o default in the performance, or breach, in any material respect, of any covenant or warranty of the property trustee in the trust agreement, other than a default or breach in the performance of a covenant or warranty which is addressed in the previous two points above, and continuation of the default or breach, for a period of 60 days after there has been given, by registered or certified mail, to the 80 property trustee by the holders of at least 25% in aggregate liquidation amount of the outstanding trust preferred securities, a written notice specifying the default or breach and requiring it to be remedied and stating that the notice is a "Notice of Default" under the trust agreement; or o the occurrence of events of bankruptcy or insolvency regarding the property trustee and the failure by Blue Valley to appoint a successor property trustee within 60 days thereof. Within five business days after the occurrence of any event of default actually known to the property trustee, the property trustee is required to transmit notice of the event of default to the holders of the trust preferred securities, the administrative trustees and Blue Valley, unless the event of default has been cured or waived. Blue Valley and the administrative trustees are required to file annually with the property trustee a certificate as to whether they are in compliance with all the conditions and covenants applicable to them under the trust agreement. If a debenture event of default has occurred and is continuing, the trust preferred securities will have a preference over the common securities upon termination of BVBC Trust as described above. See "- Liquidation Distribution Upon Termination." Upon a debenture event of default, unless the principal of all the junior subordinated debentures has already become due and payable, either the property trustee or the holders of not less than 25% in aggregate principal amount of outstanding junior subordinated debentures may declare all of the junior subordinated debentures to be due and payable immediately. Written notice must be given to Blue Valley, and to the property trustee, if given by holders of the junior subordinated debentures. If the property trustee or the holders of the junior subordinated debentures fail to declare the principal of all of the junior subordinated debentures due and payable upon a debenture event of default, the holders of at least 25% in liquidation amount of the trust preferred securities then outstanding will have the right to declare the junior subordinated debentures immediately due and payable. In either event, payment of principal and interest on the junior subordinated debentures will remain subordinated to the extent provided in the indenture. In addition, holders of the trust preferred securities have the right to bring a direct action as discussed below. See "Description of the Junior Subordinated Debentures - Enforcement of Rights by Holders of Trust Preferred Securities." REMOVAL OF TRUSTEES Unless a debenture event of default has occurred and is continuing, any trustee may be removed at any time by the holder of the common securities of BVBC Trust. If a debenture event of default has occurred and is continuing, the property trustee, Delaware trustee or both may be removed by the holders of a majority in liquidation amount of the outstanding trust preferred securities. In no event will the holders of the trust preferred securities have the right to vote to appoint, remove or replace the administrative trustees, which voting rights are vested exclusively in Blue Valley as the holder of the common securities. No resignation or removal of a trustee and no appointment of a successor trustee will be effective until the acceptance of appointment by the successor trustee in accordance with the provisions of the trust agreement. 81 CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEES Unless an event of default has occurred and is continuing, at any time, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of trust property may at the time be located, the holders of the common securities and the administrative trustees have power to appoint one or more persons either to act as (1) a co-trustee, jointly with the property trustee, of all or any part of the trust property, or (2) to act as separate trustee of any such property. In either case these trustees will have the powers which may be provided in the instrument of appointment, and will have vested in them any property, title, right or power deemed necessary or desirable, subject to the provisions of the trust agreement. In case a debenture event of default has occurred and is continuing, the property trustee alone will have power to make the appointment. MERGER OR CONSOLIDATION OF TRUSTEES Generally, any person or successor to any of the trustees of BVBC Trust may be a successor trustee to any of the trustees, including a successor resulting from a merger or consolidation. However, any successor trustee must meet all of the qualifications and eligibility standards to act as a trustee to BVBC Trust. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF BVBC TRUST BVBC Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any trust or other person, except as described below. BVBC Trust may, at the request of Blue Valley, with the consent of the administrative trustees and without the consent of the holders of the trust preferred securities, the property trustee or the Delaware trustee, undertake the transactions described above; provided, that: o the successor entity either (1) expressly assumes all of the obligations of BVBC Trust regarding the trust preferred securities or (2) substitutes for the trust preferred securities other securities having substantially the same terms as the trust preferred securities, so long as the successor securities rank the same as the trust preferred securities rank in priority regarding distributions and payments upon liquidation, redemption and otherwise; o Blue Valley expressly appoints a trustee of the successor entity possessing substantially the same powers and duties as the property trustee as the holder of the junior subordinated debentures; o any transaction of this kind does not adversely affect the rights, preferences and privileges of the holders of the trust preferred securities, including any successor securities, in any material respect; o the successor entity has a purpose identical to that of BVBC Trust; 82 o the successor securities will be listed or traded on any national securities exchange or other organization on which the trust preferred securities may then be listed; o prior to the transaction, Blue Valley has received a legal opinion from independent counsel to BVBC Trust experienced in such matters to the effect that (1) the transaction does not adversely affect the rights, preferences and privileges of the holders of the trust preferred securities, including any successor securities, in any material respect, and (2) following any transaction of this kind, neither BVBC Trust nor the successor entity will be required to register as an investment company under the Investment Company Act; and o Blue Valley or any permitted successor or designee owns all of the common securities of the successor entity and guarantees the obligations of the successor entity under the successor securities at least to the extent provided by the trust preferred securities guarantee. Notwithstanding the foregoing, BVBC Trust will not, except with the consent of holders of 100% in liquidation amount of the trust preferred securities, enter into any transaction of this kind, or permit any other entity to consolidate, amalgamate, merge with or into, or replace it, if the transaction would cause BVBC Trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes. VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT Except in certain limited circumstances described below and under "Description of the Trust Preferred Securities Guarantee - Amendments and Assignment", in general, the holders of the trust preferred securities will have no voting rights. The trust agreement may be amended from time to time by Blue Valley and the trustees, without the consent of the holders of the trust securities: o to cure any ambiguity, correct or supplement any provisions in the trust agreement that may be inconsistent with any other provision, or to make any other provisions regarding matters or questions arising under the trust agreement, which are not inconsistent with the other provisions of the trust agreement; or o to modify, eliminate or add to any provisions of the trust agreement to the extent that is necessary to ensure that BVBC Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any trust securities are outstanding or to ensure that BVBC Trust will not be required to register as an investment company under the Investment Company Act. Provided, however, that in the case of the first point above, this action will not adversely affect in any material respect the interests of any holder of trust securities, and any amendments of the trust agreement will become effective when notice is given to the holders of the trust securities. 83 The trust agreement may be amended by the trustees and Blue Valley (1) with the consent of holders representing not less than a majority of the aggregate liquidation amount of the outstanding trust securities, and (2) upon receipt by the trustees of an opinion of counsel to the effect that the amendment or the exercise of any power granted to the trustees in accordance with the amendment will not affect BVBC Trust's status as a grantor trust for United States federal income tax purposes or BVBC Trust's exemption from status as an investment company under the Investment Company Act. However, without the consent of each holder of trust securities, the trust agreement may not be amended to (1) change the amount or timing of any distribution on the trust securities or otherwise adversely affect the amount of any distribution required to be made in respect of the trust securities as of a specified date or (2) restrict the right of a holder of trust securities to institute suit for the enforcement of any payment of distributions afterwards. For the time that any junior subordinated debentures are held by the property trustee, the trustees will not: o direct the time, method and place of conducting any proceeding for any remedy available to the indenture trustee, or executing any trust or power conferred on the indenture trustee regarding the junior subordinated debentures; o waive any past default that is waivable under the indenture; o exercise any right to rescind or annul a declaration that the principal of all the junior subordinated debentures will be due and payable; or o consent to any amendment, modification or termination of the indenture or the junior subordinated debentures, where this consent is required, without, in each case, obtaining the prior approval of the holders of a majority in aggregate liquidation amount of all outstanding trust preferred securities. However, where a consent under the indenture would require the consent of each affected holder of junior subordinated debentures, this consent may not be given by the property trustee without the prior consent of each holder of the trust preferred securities. The trustees will not revoke any action previously authorized or approved by a vote of the holders of the trust preferred securities except by subsequent vote of the holders of the trust preferred securities. The property trustee will notify each holder of the trust preferred securities of any notice of default regarding the junior subordinated debentures. In addition to obtaining these approvals of the holders of the trust preferred securities, prior to taking any of the above actions, the trustees will obtain an opinion of counsel stating that BVBC Trust will not, as a consequence of the proposed action by the property trustee, cease to be classified as a grantor trust and will not be classified as an association taxable as a corporation for United States federal income tax purposes on account of the action. Any required approval of holders of the trust preferred securities may be given at a meeting of holders of trust preferred securities convened for this purpose or under written consent. The property trustee will cause a notice of any meeting at which holders of the trust 84 preferred securities are entitled to vote, or of any matter upon which action by written consent of the holders is to be taken, to be given to each holder of record of the trust preferred securities in the manner set forth in the trust agreement. No vote or consent of the holders of the trust preferred securities will be required for BVBC Trust to redeem and cancel the trust preferred securities in accordance with the trust agreement. Any of the trust preferred securities that are owned by Blue Valley, the trustees or any affiliate of Blue Valley or any trustees, will, for purposes of the vote or consent, be treated as if they were not outstanding. GLOBAL TRUST PREFERRED SECURITIES The trust preferred securities will be represented by one or more global certificates registered in the name of the depositary or its nominee. Beneficial interests in the trust preferred securities will be shown on, and transfers will be effected only through, records maintained by participants in the depositary. Except as described below, trust preferred securities in certificated form will not be issued in exchange for the global certificates. A global security will be exchangeable for trust preferred securities registered in the names of persons other than the depositary or its nominee only if: o the depositary notifies Blue Valley that it is unwilling or unable to continue as a depositary for the global security and no successor depositary has been appointed, or if at any time the depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, at a time when the depositary is required to be so registered to act as a depositary; o Blue Valley in its sole discretion determines that the global security will be so exchangeable; or o there has occurred and is continuing an event of default under the indenture. Any global security that is exchangeable under the preceding sentence will be exchangeable for definitive certificates registered in the names which the depositary directs. It is expected that the instructions will be based upon directions received by the depositary regarding ownership of beneficial interests in the global security. In the event that trust preferred securities are issued in certificated form, they will be in denominations of $8 or integral multiples of $8 and may be transferred or exchanged at the offices described below. Unless and until it is exchanged in whole or in part for the individual trust preferred securities, the global trust preferred security may not be transferred except (1) as a whole by the depositary to a nominee of the depositary or by a nominee of the depositary to the depositary, (2) to another nominee of the depositary or (3) by the depositary or any nominee to a successor depositary or any nominee of the successor. 85 Payments on trust preferred securities represented by a global security will be made to the depositary, as the depositary for the trust preferred securities. In the event the trust preferred securities are issued in certificated form, distributions will be payable, the transfer of the trust preferred securities will be registrable, and trust preferred securities will be exchangeable for trust preferred securities of other denominations of a like aggregate liquidation amount, at the corporate office of the property trustee, or at the offices of any paying agent or transfer agent appointed by the administrative trustees. However, payment of any distribution may be made at the option of the administrative trustees by check mailed to the address of the persons entitled to payments or by wire transfer. In addition, if the trust preferred securities are issued in definitive form, the record dates for payment of distributions will be the 15th day of the month in which the relevant distribution date occurs. Upon the issuance of a global trust preferred security, and the deposit of the global trust preferred security with or on behalf of the depositary, the depositary will credit, on its book-entry registration and transfer system, the respective aggregate liquidation amounts of the individual trust preferred securities represented by the global trust preferred security to persons that have accounts with the depositary. The accounts will be designated by the dealers, underwriters or agents regarding the trust preferred securities. Ownership of beneficial interests in a global trust preferred security will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in the global trust preferred security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the depositary or its nominee and the records of participants regarding interests of persons who hold through participants. The laws of some states require that some purchasers of securities in those states take physical delivery of the securities in certificated form. The limits, under these laws, may impair the ability to transfer beneficial interests in a global trust preferred security. For the time that the depositary for a global trust preferred security, or its nominee, is the registered owner of the global trust preferred security, this registered owner will be considered the sole owner or holder of the trust preferred securities represented by the global trust preferred security for all purposes under the trust agreement of BVBC Trust. Except as provided below, owners of beneficial interests in a global trust preferred security will not be entitled to have any of the individual trust preferred securities represented by the global trust preferred security registered in their names, will not receive or be entitled to receive physical delivery of any the trust preferred securities in certificated form and will not be considered the owners or holders thereof. None of Blue Valley, the property trustee, any paying agent, or the securities registrar for the trust preferred securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of the global trust preferred security or for maintaining, supervising or reviewing any records relating to the beneficial ownership interests. Blue Valley expects that the depositary, upon receipt of any payment of the liquidation amount or distributions in respect of a permanent global trust preferred security, immediately will credit participants' accounts with payments in amounts proportionate to their respective beneficial interest in the aggregate liquidation amount of the global trust preferred security as shown on the records of the depositary or its nominee. Blue Valley also expects that payments by 86 participants to owners of beneficial interests in the global trust preferred security held through the participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in street name. The payments will be the responsibility of the participants. If the depositary for the trust preferred securities is at any time unwilling, unable or ineligible to continue as depositary and a successor depositary is not appointed by Blue Valley within 90 days, BVBC Trust will issue individual trust preferred securities in exchange for the global trust preferred security. In addition, BVBC Trust may at any time in its sole discretion, subject to any limitations described in this prospectus relating to the trust preferred securities, determine not to have any trust preferred securities represented by one or more global trust preferred securities. In this event, Blue Valley will issue individual trust preferred securities in exchange for the global trust preferred security or securities representing the trust preferred securities. Further, if BVBC Trust specifies, an owner of a beneficial interest in a global trust preferred security representing trust preferred securities may receive individual trust preferred securities in exchange for the beneficial interests, subject to any limitations described in this prospectus. In any such instance, a beneficial interest owner in a global trust preferred security will be entitled to physical delivery of individual trust preferred securities represented by the global trust preferred security equal in liquidation amount to the beneficial interest, and to have the trust preferred securities registered in its name. Individual trust preferred securities issued will be issued in denominations, unless otherwise specified by BVBC Trust, of $8 and integral multiples of $8. PAYMENT AND PAYING AGENCY Payments in respect of the trust preferred securities will be made to the depositary, which will credit the relevant accounts at the depositary on the applicable distribution dates. However, if any of the trust preferred securities are not held by the depositary, the payments will be made by check mailed to the address of the holder as the address appears on the register. The paying agent will initially be the property trustee and any co-paying agent chosen by the property trustee and acceptable to the administrative trustees and Blue Valley. The paying agent will be permitted to resign as paying agent upon 30 days' written notice to the administrative trustees, the property trustee and Blue Valley. In the event that the property trustee is no longer the paying agent, the administrative trustees will appoint a successor paying agent, which will be a bank or trust company acceptable to the property trustee and Blue Valley. REGISTRAR AND TRANSFER AGENT The property trustee will act as registrar and transfer agent for the trust preferred securities. Registration of transfers of the trust preferred securities will be effected without charge by or on behalf of BVBC Trust, but the registrar may require payment to cover any tax or other governmental charges that may be imposed in connection with any transfer or exchange. BVBC Trust will not be required to register or cause to be registered the transfer of the trust preferred securities after the trust preferred securities have been called for redemption. 87 INFORMATION CONCERNING THE PROPERTY TRUSTEE The property trustee, other than upon the occurrence and during the continuance of an event of default, undertakes to perform only the duties which are specifically set forth in the trust agreement. After an event of default, the property trustee must exercise the same degree of care and skill as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the property trustee is under no obligation to exercise any of the powers vested in it by the trust agreement at the request of any holder of trust preferred securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred. If no event of default has occurred and is continuing and the property trustee is required to decide between alternative causes of action, construe ambiguous provisions in the trust agreement or is unsure of the application of any provision of the trust agreement, and the matter is not one on which holders of the trust preferred securities are entitled under the trust agreement to vote, then the property trustee will take action as directed by Blue Valley. If the property trustee is not so directed, it will take action as it deems advisable and in the best interests of the holders of the trust securities and will have no liability under the trust agreement except for its own bad faith, negligence or willful misconduct. MISCELLANEOUS The administrative trustees are authorized and directed to conduct the affairs of and to operate BVBC Trust in such a way that BVBC Trust will not be deemed to be an "investment company" required to be registered under the Investment Company Act or classified as an association taxable as a corporation for United States federal income tax purposes and so that the junior subordinated debentures will be treated as indebtedness of Blue Valley for United States federal income tax purposes. In this regard, Blue Valley and the administrative trustees are authorized to take any lawful action not inconsistent with the certificate of trust of BVBC Trust or the trust agreement, that they determine in their discretion to be necessary or desirable for these purposes, as long as the action does not materially adversely affect the interests of the holders of the related trust preferred securities. Holders of the trust preferred securities have no preemptive or similar rights. For so long as the trust securities are outstanding, Blue Valley is required to fulfill all reporting and filing obligations under the Securities Exchange Act, as applicable to a company having a class of securities registered under that Act. The administrative trustees are required to use their best efforts to maintain the listing of the trust preferred securities on The American Stock Exchange or another national securities exchange or quotation system, but this requirement does not prevent BVBC Trust from redeeming all or a portion of the trust securities in accordance with the trust agreement. BVBC Trust may not borrow money or issue debt or mortgage or pledge any of its assets. 88 DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES The junior subordinated debentures will be issued under a subordinated indenture to be entered into between Blue Valley and Wilmington Trust Company, as the indenture trustee. The following is a summary of the material terms and provisions of the junior subordinated debentures and the indenture. Prospective investors are urged to read the indenture, which has been filed as an exhibit to the registration statement of which this prospectus forms a part. Wherever particular defined terms of the indenture are referred to but not defined herein, such defined terms have the same meaning as that in the indenture. The indenture is qualified under the Trust Indenture Act. Concurrently with the issuance of the trust preferred securities, BVBC Trust will invest the proceeds from the sale of the trust preferred securities, together with the consideration paid by Blue Valley for the common securities, in junior subordinated debentures issued by Blue Valley. The junior subordinated debentures will be issued as unsecured debt under the indenture. GENERAL OVERVIEW The junior subordinated debentures will bear interest at the rate of % per year of their principal amount, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning June 30, 2000, to the person in whose name each junior subordinated debenture is registered, subject to minor exceptions, at the close of business on the business day next preceding the interest payment date. Notwithstanding the above, in the event that either (1) the junior subordinated debentures are held by the property trustee and the trust preferred securities are no longer in book-entry only form or (2) the junior subordinated debentures are not represented by a global subordinated debenture, the record date for the interest payment will be the 15th day of the month in which the payment is made. The amount of each interest payment due regarding the junior subordinated debentures will include amounts accrued and unpaid through the date the interest payment is due. It is anticipated that, until the liquidation, if any, of BVBC Trust, each junior subordinated debenture will be held in the name of the property trustee in trust for the benefit of the holders of the trust preferred securities. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on the junior subordinated debentures is not a business day, then payment of the interest payable on that date will be made on the next business day. If, however, the business day falls in the next calendar year, the payment will be made on the immediately preceding business day. Accrued interest that is not paid on the applicable interest payment date will bear additional interest at the rate per year of % compounded quarterly. The term interest as used in this prospectus includes quarterly interest payments, interest on quarterly interest payments not paid on the applicable interest payment date and additional sums, as defined below, as applicable. The junior subordinated debentures will mature on June 30, 2030. This date, as it may be shortened as described below, is the stated maturity. This date may be shortened once at any time by Blue Valley before the day which is 90 days before the scheduled maturity date to any date not earlier than June 30, 2005, subject to Blue Valley having received prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve. In the event that Blue Valley elects to shorten the stated maturity of the junior 89 subordinated debentures, it will give at least 90 days prior notice to the registered holders of the junior subordinated debentures, the property trustee and the indenture trustee. The property trustee must give notice to the holders of the trust securities of the shortening of the stated maturity. The junior subordinated debentures will be unsecured and will rank junior and be subordinate in right of payment to all senior and subordinated debt, as defined in the indenture, of Blue Valley. As of February 29, 2000, Blue Valley had $9.1 million of indebtedness that ranked senior in right of payment to the junior subordinated debentures. After giving effect to the use of the proceeds of this offering as described under "Use of Proceeds," as of that date Blue Valley would have had $1.9 million of indebtedness that ranked senior in right of payment to the junior subordinated debentures. Because Blue Valley is a holding company, the right of Blue Valley to participate in any distribution of assets of the Bank or any other subsidiary, or upon the Bank's or any other subsidiary's liquidation or reorganization or otherwise, and thus the ability of holders of the junior subordinated debentures to benefit indirectly from the distribution, is subject to the prior claims of creditors of that subsidiary, except to the extent that Blue Valley may itself be recognized as a creditor of that subsidiary. Accordingly, the junior subordinated debentures will be effectively subordinated to all existing and future liabilities of Blue Valley's subsidiaries, and holders of junior subordinated debentures should look only to the assets of Blue Valley for payments on the junior subordinated debentures. The indenture does not limit the incurrence or issuance of other secured or unsecured debt of Blue Valley, including senior and subordinated debt, whether under the indenture or any existing or other indenture that Blue Valley may enter into in the future or otherwise. See "Subordination" below. OPTION TO EXTEND INTEREST PAYMENT PERIOD If no debenture event of default has occurred and is continuing, Blue Valley has the right under the indenture at any time during the term of the junior subordinated debentures to defer interest payments at any time for a period not exceeding 20 consecutive quarters. However, no extension period may extend beyond the stated maturity of the junior subordinated debentures. At the end of an extension period, Blue Valley must pay all interest then accrued and unpaid, together with interest at the rate of % per year, compounded quarterly. During an extension period, interest will continue to accrue and holders of junior subordinated debentures will be required to accrue interest income for United States federal income tax purposes. See "Material Federal Income Tax Consequences - Interest Income and Original Issue Discount." During any extension period, Blue Valley may not (1) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment regarding, any of Blue Valley's capital stock or (2) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of Blue Valley, including other junior subordinated debentures, that rank equally with or junior in interest to the junior subordinated debentures or make any trust preferred securities guarantee payments regarding any trust preferred securities guarantee by Blue Valley of the debt securities of any subsidiary of Blue Valley if the trust preferred securities guarantee ranks equally with or junior in interest to the junior subordinated debentures. These restrictions do not apply to: 90 o dividends or distributions in capital stock of Blue Valley; o any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any plan in the future, or the redemption or repurchase of any rights pursuant to this type of plan; o payments under the trust preferred securities guarantee; or o purchases of common stock for issuance under any contracts, benefit plans or similar arrangements with or for its directors, officers, employees or consultants. Prior to the termination of any extension period, Blue Valley may further extend the extension period, provided that the extension does not cause the extension period to exceed 20 consecutive quarters or extend beyond the stated maturity of the junior subordinated debentures. Upon the termination of any extension period and the payment of all amounts then due on any interest payment date, Blue Valley may elect to begin a new extension period subject to the above requirements. No interest will be due and payable during an extension period, except at the end of the extension period. If the property trustee is the only registered holder of the junior subordinated debentures, Blue Valley must give the property trustee, the administrative trustees and the indenture trustee notice of its election of any extension period at least five business days prior to the earlier of (1) the date the distributions on the trust preferred securities would have been payable except for the election to begin or extend the extension period or (2) the date the administrative trustees are required to give notice to the holders of the trust preferred securities of the record date or the date the distributions are payable, but in any event not less than five business days prior to the record date. The indenture trustee will give notice of Blue Valley's election to begin or extend a new extension period to the administrative trustees who, in turn, will give notice to the holders of the trust preferred securities. There is no limitation on the number of times that Blue Valley may elect to begin an extension period. ADDITIONAL SUMS TO BE PAID AS A RESULT OF ADDITIONAL TAXES If BVBC Trust or the property trustee is required to pay any additional taxes, duties, assessments or other governmental charges as a result of a tax event, Blue Valley will pay as additional amounts on the junior subordinated debentures any amounts which will be required so that the distributions payable by BVBC Trust will not be reduced as a result of any additional taxes, duties or other governmental charges. See "Description of the Trust Preferred Securities - Redemption - Mandatory and Optional Rights of Blue Valley" for a definition of tax event. REDEMPTION Subject to Blue Valley's having received prior approval of the Federal Reserve, if then required under applicable capital guidelines or policies of the Federal Reserve, the junior subordinated debentures are redeemable prior to maturity at the option of Blue Valley (1) beginning June 30, 2005, in whole at any time or in part from time to time, or (2) at any time in whole, but not in part, upon the occurrence and during the continuance of a tax event, an investment 91 company event or a capital treatment event, in each case at a redemption price equal to the accrued and unpaid interest on the junior subordinated debentures redeemed to the date fixed for redemption, plus 100% of the principal amount of the junior subordinated debentures. See "Description of the Trust Preferred Securities - Redemption - Mandatory and Optional Rights of Blue Valley" for definitions of tax event, investment company event and capital treatment event. Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of junior subordinated debentures to be redeemed at the holder's registered address. Unless Blue Valley defaults in payment of the redemption price, on and after the redemption date interest will cease to accrue on the junior subordinated debentures or portions of the junior subordinated debentures called for redemption. The junior subordinated debentures will not be subject to any sinking fund. DISTRIBUTION UPON LIQUIDATION As described under "Description of the Trust Preferred Securities - Liquidation Distribution upon Termination," under circumstances involving the dissolution of BVBC Trust, the junior subordinated debentures may be distributed to the holders of the trust preferred securities and common securities in liquidation of BVBC Trust after satisfaction of liabilities to creditors of BVBC Trust. If distributed to holders of the trust preferred securities in liquidation, the junior subordinated debentures will initially be issued in the form of one or more global securities and the depositary, or any successor depositary for the trust preferred securities, will act as depositary for the junior subordinated debentures. It is anticipated that the depositary arrangements for the junior subordinated debentures would be substantially identical to those in effect for the trust preferred securities. If the junior subordinated debentures are distributed to the holders of trust preferred securities upon the dissolution of BVBC Trust, there can be no assurance as to the market price of any junior subordinated debentures that may be distributed to the holders of trust preferred securities. If the junior subordinated debentures are distributed, Blue Valley is required to use its best efforts to list them on a national securities exchange or quotation system, but this requirement will not prevent Blue Valley from redeeming any or all of the junior subordinated debentures. RESTRICTIONS ON PAYMENTS Blue Valley has restrictions on paying dividends or making payments regarding debt that is equal to or junior in rank if: o there has occurred any event of which Blue Valley has actual knowledge that (a) with the giving of notice or the lapse of time, or both, would constitute a debenture event of default and (b) in respect of which Blue Valley shall not have taken reasonable steps to cure; or o Blue Valley has given notice of its election of an extension period as provided in the indenture regarding the junior subordinated debentures and has not rescinded the notice, or the extension period, or any extension thereof, is continuing; or 92 o while the junior subordinated debentures are held by BVBC Trust, Blue Valley is in default regarding its payment of any obligation under the trust preferred securities guarantee. If any of the events above have occurred, Blue Valley will not: o declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment regarding, any of Blue Valley's capital stock; or o make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of Blue Valley, including other junior subordinated debt, that rank equally with or junior in interest to the junior subordinated debentures or make any trust preferred securities guarantee payments regarding any trust preferred securities guarantee by Blue Valley of the debt securities of any subsidiary of Blue Valley if the trust preferred securities guarantee ranks equally or junior in interest to the junior subordinated debentures. Provided, however, Blue Valley may (1) declare and pay dividends or distributions in common stock, (2) make any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under this type of plan in the future or the redemption or repurchase of any rights under such plan, (3) make payments under the trust preferred securities guarantee and (4) make purchases of common stock related to the issuance of common stock or rights under any of Blue Valley's benefit plans for its directors, officers or employees. SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES TO SENIOR AND SUBORDINATED DEBT OF BLUE VALLEY In the indenture, Blue Valley has agreed that any junior subordinated debentures will be subordinate and junior in right of payment to all senior and subordinated debt to the extent provided in the indenture. Upon any payment or distribution of assets to creditors upon any liquidation, dissolution, winding up, reorganization or any bankruptcy, or similar proceedings in connection with any insolvency or bankruptcy proceeding of Blue Valley, the holders of senior and subordinated debt will first be entitled to receive payment in full of principal, interest and premium, if any, on the senior and subordinated debt before the holders of junior subordinated debentures will be entitled to receive principal or interest payments on the junior subordinated debentures. In the event of the acceleration of the maturity of any junior subordinated debentures, the holders of all senior and subordinated debt outstanding upon acceleration will first be entitled to receive payment in full of all amounts due to them, including any amounts due upon acceleration, before the holders of junior subordinated debentures will be entitled to receive any principal or interest payments on the junior subordinated debentures. However, holders of subordinated debt will not be entitled to receive payment of any of these amounts to the extent that the subordinated debt is by its terms subordinated to trade creditors. 93 No principal or interest payments on the junior subordinated debentures may be made if there has occurred and is continuing a default in any payment regarding senior and subordinated debt or an event of default regarding any senior and subordinated debt resulting in the acceleration of the maturity of senior and subordinated debt, or if any judicial proceeding is pending regarding any of this type of default. Debt as used in this discussion means regarding any person, whether recourse is to all or a portion of the assets of the person and whether or not contingent: o every obligation of the person for money borrowed; o every obligation of the person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; o every reimbursement obligation of the person regarding letters of credit, bankers' acceptances or similar facilities issued for the account of the person; o every obligation of the person issued or assumed as the deferred purchase price of property or services, but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business; o every capital lease obligation of the person; and o every obligation of the type referred to in all of the points immediately above of another person and all dividends of another person the payment of which, in either case, the person has guaranteed or is responsible or liable, directly or indirectly, as obligor or otherwise. Senior and subordinated debt means the principal of and premium, if any, and interest, if any, on debt of Blue Valley, including interest accruing at the time of the filing of any petition in bankruptcy or for reorganization relating to Blue Valley, whether incurred on or prior to the date of the indenture or thereafter incurred, unless, in the instrument creating or evidencing the debt or under which the debt is outstanding, it is provided that the obligations are not superior in right of payment to the junior subordinated debentures or to other debt which is equal with, or subordinated to, the junior subordinated debentures. However, senior and subordinated debt will not be deemed to include: o any debt of Blue Valley which when incurred and without respect to any election under section 1111(b) of the United States Bankruptcy Code was without recourse to Blue Valley; o any debt to any employee of Blue Valley; o any debt which by its terms is subordinated to trade accounts payable or accrued liabilities arising in the ordinary course of business to the extent that payments 94 made to the holders of the debt by the holders of the junior subordinated debentures as a result of the subordination provisions of the indenture would be greater than they otherwise would have been as a result of any obligation of the holders to pay amounts over to the obligees on the trade accounts payable or accrued liabilities arising in the ordinary course of business as a result of subordination provisions to which the debt is subject; o the trust preferred securities guarantee; and o any other debt securities issued under the indenture. The indenture places no limitation on the amount of additional senior and subordinated debt that may be incurred by Blue Valley. Blue Valley expects from time to time to incur additional indebtedness constituting senior and subordinated debt. DENOMINATIONS, REGISTRATION AND TRANSFER It is anticipated that, until the liquidation, if any, of BVBC Trust, each junior subordinated debenture will be held in the name of the property trustee in trust for the benefit of the holders of the trust preferred securities. However, in the event of either a tax event, investment company event or capital treatment event, the junior subordinated debentures in certificated form may be exchanged and represented by global certificates registered in the name of the depositary or its nominee. In the event of such an exchange, beneficial interests in the junior subordinated debentures will be shown on, and transfers thereof will be effected only through, records maintained by the depositary. Except as described below, junior subordinated debentures in certificated form will not be issued in exchange for the global certificates. Unless and until a global subordinated debenture is exchanged in whole or in part for the individual junior subordinated debentures, it may not be transferred except (1) as a whole by the depositary for the global subordinated debenture to a nominee of the depositary, (2) by the depositary to a successor depositary selected or approved by Blue Valley or (3) to any nominee of the successor. A global security will be exchangeable for junior subordinated debentures registered in the names of persons other than the depositary or its nominee only if (1) the depositary notifies Blue Valley that it is unwilling or unable to continue as a depositary for the global security and no successor depositary has been appointed, or if at any time the depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934 at a time when the depositary is required to be so registered to act as a depositary or (2) Blue Valley in its sole discretion determines that the global security will be so exchangeable. Any global security that is exchangeable under the preceding sentence will be exchangeable for definitive certificates registered in the names which the depositary directs. It is expected that the instructions will be based upon directions received by the depositary from its participants regarding ownership of beneficial interests in the global security. In the event that junior subordinated debentures are issued in definitive form, the junior subordinated debentures will be in denominations of $8 and integral multiples of $8 and may be transferred or exchanged at the offices described below. 95 Payments on junior subordinated debentures represented by a global security will be made to the depositary for the junior subordinated debentures. In the event junior subordinated debentures are issued in definitive form, principal and interest will be payable, the transfer of the junior subordinated debentures will be registrable, and junior subordinated debentures will be exchangeable for junior subordinated debentures of other denominations of a like aggregate principal amount, at the corporate office of the indenture trustee, or at the offices of any paying agent or transfer agent appointed by Blue Valley. However, interest payments may be made at the option of Blue Valley by check mailed to the address of the persons entitled to payments or by wire transfer. In addition, if the junior subordinated debentures are issued in certificated form, the record dates for interest payments will be the 15th day of the month in which the payment is to be made. Blue Valley will appoint the indenture trustee as securities registrar under the indenture. Junior subordinated debentures may be presented for exchange as provided above, and may be presented for registration of transfer with the form of transfer endorsed, or a satisfactory written instrument of transfer, duly executed, at the office of the securities registrar. Blue Valley may at any time rescind the designation of any registrar or approve a change in the location through which any registrar acts, provided that Blue Valley maintains a registrar in the place of payment. Blue Valley may at any time designate additional registrars regarding the junior subordinated debentures. In the event of any redemption of less than all of the junior subordinated debentures, neither Blue Valley nor the indenture trustee will be required to issue, exchange or register the transfer of less than all of the junior subordinated debentures during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption selecting for redemption less than all of the junior subordinated debentures and ending at the close of business on the day of mailing of the relevant notice of redemption. PAYMENT AND PAYING AGENTS Payment of principal of and any interest on the junior subordinated debentures will be made at the office of the indenture trustee, except that at the option of Blue Valley payment of any interest may be made, except in the case of a global subordinated debenture, by check mailed to the address of the person entitled to payment as the person's address appears in the securities register. Payment of any interest on junior subordinated debentures will be made to the person in whose name the junior subordinated debenture is registered at the close of business on the regular record date for the interest payment. Blue Valley may at any time designate additional paying agents or rescind the designation of any paying agent; however, Blue Valley will at all times be required to maintain a paying agent in each place of payment for the junior subordinated debentures. Any moneys deposited with the indenture trustee or any paying agent, or then held by Blue Valley in trust, for the payment of the principal of or interest on the junior subordinated debentures that are not applied and remain unclaimed for two years after the principal or interest has become due and payable will, at the request of Blue Valley, be repaid to Blue Valley. Thereafter, the holder of the junior subordinated debenture will look, as a general unsecured creditor, only to Blue Valley for payment. 96 MODIFICATION OF INDENTURE From time to time Blue Valley and the indenture trustee may, without the consent of the holders of the junior subordinated debentures, amend, waive or supplement the indenture for specified purposes. These purposes may include, among other things, curing ambiguities, defects or inconsistencies, provided that this action does not materially adversely affect the interests of the holders of the junior subordinated debentures or the trust preferred securities while they remain outstanding, and qualifying, or maintaining the qualification of, the indenture under the Trust Indenture Act. The indenture contains provisions permitting Blue Valley and the indenture trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the outstanding junior subordinated debentures, to modify the indenture in a manner affecting the rights of the holders of the junior subordinated debentures; provided, that, the modification may not, without the consent of the holder of each outstanding junior subordinated debenture: o change the stated maturity of the junior subordinated debentures or extend the time of payment of interest on them, except as described under "Description of the Junior Subordinated Debentures - General Overview" and "- Option to Extend Interest Payment Period," or reduce the principal amount thereof or the rate of interest thereon; or o reduce the percentage of principal amount of junior subordinated debentures, the holders of which are required to consent to any such modification of the indenture. However, while any of the trust preferred securities remain outstanding, (1) no modification may be made that adversely affects the holders of the trust preferred securities in any material respect, (2) no termination of the indenture may occur, and (3) no waiver of any debenture event of default or compliance with any covenant under the indenture may be effective, without the prior consent of the holders of at least a majority of the aggregate liquidation amount of the trust preferred securities, until the principal and interest of the junior subordinated debentures have been paid in full and other conditions are satisfied. CO-TRUSTEES AND SEPARATE TRUSTEES Unless an event of default under the indenture has occurred and is continuing, at any time, for the purpose of meeting the legal requirements of any applicable jurisdiction, Blue Valley and the indenture trustee have the power to appoint one or more persons either to act as (1) a co-trustee, jointly with the indenture trustee, or (2) a separate trustee under the indenture. In either case, these trustees will have the powers which may be provided in the instrument of appointment, and will have vested in them any property, title, right or power deemed necessary or desirable, subject to the provisions of the indenture. In case an event of default under the indenture has occurred and is continuing, the indenture trustee alone will have the power to make the appointment. INDENTURE EVENTS OF DEFAULT The indenture provides that any one or more of the following described events regarding the junior subordinated debentures that has occurred and is continuing constitutes a debenture event of default: o failure for 30 days to pay any interest on the junior subordinated debentures, when due, subject to the deferral of any due date in the case of an extension period; o failure to pay any principal on the junior subordinated debentures when due whether at maturity, upon redemption, by declaration or otherwise, provided however that a valid extension of any interest payment period by Blue Valley according to the terms of the indenture will not constitute a debenture event of default; 97 o failure by Blue Valley to observe or perform in any material respect any of its other covenants or agreements contained in the indenture for 90 days after written notice to Blue Valley from the indenture trustee or to Blue Valley and the indenture trustee by the holders of at least 25% in aggregate outstanding principal amount of the junior subordinated debentures; or o events in bankruptcy, insolvency or reorganization of Blue Valley, including the voluntary commencement of bankruptcy proceedings, entry of an order for relief against Blue Valley in a bankruptcy proceeding, appointment of a custodian over substantially all of Blue Valley's property, a general assignment for the benefit of creditors, or a court order for liquidation of Blue Valley. The holders of a majority in aggregate outstanding principal amount of the junior subordinated debentures have the right to direct the time, method and place of conducting any proceeding for any remedy available to the indenture trustee. The indenture trustee or the holders of not less than 25% in aggregate outstanding principal amount of the junior subordinated debentures may declare the principal due and payable immediately upon a debenture event of default. The holders of a majority in aggregate outstanding principal amount of the junior subordinated debentures may rescind and annul the declaration and waive the default if the default, other than the non-payment of the principal of the junior subordinated debentures which has become due solely by the acceleration, has been cured and a sum sufficient to pay all matured installments of interest and principal due otherwise than by acceleration has been deposited with the indenture trustee. Should the holders of the junior subordinated debentures fail to annul the declaration and waive the default, the holders of a majority in aggregate liquidation amount of the trust preferred securities will have the right to do so. In case a debenture event of default occurs and is continuing, the property trustee will have the right to declare the principal of and the interest on the junior subordinated debentures, and any other amounts payable under the indenture, to be due and payable and to enforce its other rights as a creditor. Blue Valley is required to file annually with the indenture trustee a certificate as to whether Blue Valley is in compliance with all the conditions and covenants applicable to it under the indenture. ENFORCEMENT OF RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES If an event of default under the indenture has occurred and is continuing and the default is attributable to Blue Valley's failure to pay interest or principal on the junior subordinated debentures on the due date, a holder of trust preferred securities may institute a legal proceeding directly against Blue Valley for payment of principal and interest on the junior subordinated debentures having a principal amount equal to the aggregate liquidation amount of the trust preferred securities of the holder. This action is referred to in this discussion as a direct action. If the right to bring a direct action is removed, BVBC Trust may become subject to the reporting obligations under the Securities Exchange Act of 1934. Blue Valley will have the right under the indenture to set-off any payment made to the holder of trust preferred securities by Blue Valley in connection with a direct action. 98 The holders of the trust preferred securities will not be able to exercise directly any remedies other than those set forth in the preceding paragraph available to the holders of the junior subordinated debentures unless there has been an event of default under the trust agreement. See "Description of the Trust Preferred Securities - Events of Default; Notice." CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS The indenture provides that Blue Valley will not consolidate with or merge into any other person or convey, transfer or lease its properties and assets substantially as an entirety to any person, and no person will consolidate with or merge into Blue Valley or convey, transfer or lease its properties and assets substantially as an entirety to Blue Valley, unless: o in case Blue Valley consolidates with or merges into another person or conveys or transfers its properties and assets substantially as an entirety to any person, the successor person is organized under the laws of the United States or any state or the District of Columbia, and the successor person expressly assumes Blue Valley's obligations on the junior subordinated debentures issued under the indenture; o immediately after giving effect to this type of transaction, no debenture event of default, and no event which, after notice or lapse of time or both, would become a debenture event of default, has occurred and is continuing; and o other conditions as prescribed in the indenture are met. The provisions of the indenture do not afford holders of the junior subordinated debentures protection in the event of a highly leveraged or other transaction involving Blue Valley that may adversely affect holders of the junior subordinated debentures. SATISFACTION AND DISCHARGE Under the indenture, Blue Valley will have satisfied and discharged the indenture when all junior subordinated debentures not previously delivered to the indenture trustee for cancellation (1) have become due and payable or (2) will become due and payable at their stated maturity within one year, and Blue Valley deposits in trust with the indenture trustee sufficient funds to pay and discharge the entire indebtedness on the junior subordinated debentures to the deposit date or to the stated maturity, as the case may be. This satisfaction and discharge will not apply to Blue Valley's obligations to pay all other sums due under the indenture and to provide the officers' certificates and opinions of counsel described in the indenture. GOVERNING LAW The indenture and the junior subordinated debentures will be governed by and construed in accordance with the laws of the State of Kansas. 99 INFORMATION CONCERNING THE INDENTURE TRUSTEE The indenture trustee will have and be subject to all the duties and responsibilities specified for an indenture trustee under the Trust Indenture Act. Subject to these provisions, the indenture trustee is under no obligation to exercise any of the powers vested in it by the indenture at the request of any holder of junior subordinated debentures, unless offered reasonable indemnity by the holder against the costs, expenses and liabilities which might be incurred. The indenture trustee is not required to expend or risk its own funds or otherwise incur personal financial liability in the performance of its duties if the indenture trustee reasonably believes that repayment or adequate indemnity is not reasonably assured to it. COVENANTS OF BLUE VALLEY Blue Valley will covenant in the indenture, as to the junior subordinated debentures, that during the time that (1) BVBC Trust is the holder of all junior subordinated debentures, (2) a tax event in respect of BVBC Trust has occurred and is continuing and (3) Blue Valley has elected, and has not revoked the election, to pay additional sums, as defined under "Description of the Trust Preferred Securities - Redemption - Mandatory and Optional Rights of Blue Valley," in respect of the trust preferred securities, Blue Valley will pay to BVBC Trust these additional sums. Blue Valley will also covenant, as to the junior subordinated debentures: o to maintain directly or indirectly 100% ownership of the common securities of BVBC Trust to which junior subordinated debentures have been issued, provided that successors which are permitted under the indenture may succeed to Blue Valley's ownership of the common securities; o to not voluntarily dissolve BVBC Trust, except upon approval of the Federal Reserve if then so required, and to use its reasonable efforts to cause BVBC Trust to remain a business trust, except (a) in connection with a distribution of junior subordinated debentures to the holders of the trust preferred securities in liquidation of BVBC Trust, (b) the redemption of all of the trust securities or (c) in connection with mergers, consolidations, or amalgamations permitted by the trust agreement; o to use its reasonable efforts to cause each holder of trust securities to be treated as owning an individual beneficial interest in the junior subordinated debentures; and o to fulfill all filing and reporting obligations under the Securities Exchange Act, as applicable to a company having a class of securities registered under that Act, for so long as the junior subordinated debentures are outstanding. DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEE The trust preferred securities guarantee agreement will be executed and delivered by Blue Valley and Wilmington Trust Company concurrently with the issuance of the trust preferred securities. The trust preferred securities guarantee will be for the benefit of the holders of the trust preferred securities. Wilmington Trust Company will act as trustee under the trust preferred securities guarantee for the purposes of compliance with the Trust Indenture Act, and the trust preferred 100 securities guarantee will be qualified under the Trust Indenture Act. The following is a summary of the material provisions of the trust preferred securities guarantee. Prospective investors are urged to read the form of the trust preferred securities guarantee which has been filed as an exhibit to the registration statement of which this prospectus forms a part. The guarantee trustee will hold the trust preferred securities guarantee for the benefit of the holders of the trust preferred securities. GENERAL OVERVIEW The trust preferred securities guarantee is an irrevocable guarantee on a subordinated basis of all of BVBC Trust's obligations to make payments under the trust preferred securities, but will apply only to the extent that BVBC Trust has funds sufficient to make the payments, and is not a guarantee of collection. Blue Valley will irrevocably and unconditionally agree to pay in full on a subordinated basis, to the extent set forth in this prospectus, the trust preferred securities guarantee payments, as defined below, to the holders of the trust preferred securities, as and when due, regardless of any defense, right of set-off or counterclaim that BVBC Trust may have or assert other than the defense of payment. The following payments regarding the trust preferred securities, to the extent not paid by or on behalf of BVBC Trust, will be subject to the trust preferred securities guarantee of Blue Valley: o any accrued and unpaid distributions required to be paid on the trust preferred securities, to the extent that BVBC Trust has available funds on hand at the time; o the redemption price regarding any trust preferred securities called for redemption to the extent that BVBC Trust has available funds on hand at the time; and o upon a voluntary or involuntary dissolution of BVBC Trust, unless the junior subordinated debentures are distributed to holders of the trust preferred securities. The amount of the trust preferred securities guarantee will be the lesser of (a) the liquidation distribution and (b) the amount of assets of BVBC Trust remaining available for distribution to holders of trust preferred securities. Blue Valley's obligation to make a trust preferred securities guarantee payment may be satisfied by direct payment of the required amounts by Blue Valley to the holders of the trust preferred securities or by causing BVBC Trust to pay these amounts to the holders. If Blue Valley does not make interest payments on the junior subordinated debentures held by BVBC Trust, BVBC Trust will not be able to pay distributions on the trust preferred securities and will not have funds legally available to pay distributions. The trust preferred securities guarantee will rank subordinate and junior in right of payment to all senior and subordinated debt of Blue Valley. See " -- Status of the Trust Preferred Securities Guarantee" below. Because Blue Valley is a holding company, the right of Blue Valley to participate in any distribution of assets of any subsidiary upon the subsidiary's liquidation or reorganization or otherwise, is subject to the prior claims of creditors of that subsidiary, except to the extent Blue 101 Valley may itself be recognized as a creditor of that subsidiary. Accordingly, Blue Valley's obligations under the trust preferred securities guarantee will be effectively subordinated to all existing and future liabilities of Blue Valley's subsidiaries, and claimants should look only to the assets of Blue Valley for payments under the trust preferred securities guarantee. Except as otherwise described in this prospectus, the trust preferred securities guarantee does not limit the incurrence or issuance of other secured or unsecured debt of Blue Valley, including senior and subordinated debt whether under the indenture, any other indenture that Blue Valley may enter into in the future, or otherwise. Blue Valley has, through the trust preferred securities guarantee, the trust agreement, the junior subordinated debentures, the indenture and the expense agreement relating to BVBC Trust, taken together, fully, irrevocably and unconditionally guaranteed on a subordinated basis all of BVBC Trust's obligations under the trust preferred securities. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes this trust preferred securities guarantee. It is only the combined operation of these documents that has the effect of providing a full, irrevocable and unconditional guarantee on a subordinated basis of all of BVBC Trust's obligations under the trust preferred securities. See "Relationship Among the Trust Preferred Securities, the Junior Subordinated Debentures and the Trust Preferred Securities Guarantee." STATUS OF THE TRUST PREFERRED SECURITIES GUARANTEE The trust preferred securities guarantee will constitute an unsecured obligation of Blue Valley and will rank subordinate and junior in right of payment to all senior and subordinated debt in the same manner as the junior subordinated debentures. As of February 29, 2000, Blue Valley had $9.1 million of indebtedness that ranked senior in right of payment to its obligations under the trust preferred securities guarantee. After giving effect to the use of the proceeds of this offering as described under "Use of Proceeds," as of that date Blue Valley would have had $1.9 million of indebtedness that ranked senior in right of payment to its obligations under the trust preferred securities guarantee. The trust preferred securities guarantee will constitute a guarantee of payment and not of collection. The guaranteed party may institute a legal proceeding directly against Blue Valley to enforce its rights under the trust preferred securities guarantee without first instituting a legal proceeding against any other person or entity. The trust preferred securities guarantee will be held for the benefit of the holders of the trust preferred securities. The trust preferred securities guarantee does not place a limitation on the amount of additional senior and subordinated debt that may be incurred by Blue Valley. Blue Valley expects from time to time to incur additional indebtedness constituting senior and subordinated debt. AMENDMENTS AND ASSIGNMENT Except regarding any changes which do not adversely affect the rights of holders of the trust preferred securities in a material manner, in which case no consent will be required, the trust preferred securities guarantee may not be amended without the prior approval of the holders of not less than a majority of the aggregate liquidation amount of the outstanding trust preferred securities. No amendment that affects the rights, powers, duties, obligations or immunities of the 102 guarantee trustee will be effective unless approved by the guarantee trustee. See "Description of the Trust Preferred Securities - Voting Rights; Amendment of the Trust Agreement." All guarantees and agreements contained in the trust preferred securities guarantee will bind the successors, assigns, receivers, trustees and representatives of Blue Valley and will inure to the benefit of the holders of the trust preferred securities then outstanding. EVENTS OF DEFAULT An event of default under the trust preferred securities guarantee will occur upon the failure of Blue Valley to perform any of its payment or other obligations under the trust preferred securities guarantee. The holders of not less than a majority in aggregate liquidation amount of the trust preferred securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the guarantee trustee regarding the trust preferred securities guarantee or to direct the exercise of any trust or power conferred upon the guarantee trustee under the trust preferred securities guarantee. Any holder of trust preferred securities may institute a legal proceeding directly against Blue Valley to enforce the holder's rights under the trust preferred securities guarantee without first instituting a legal proceeding against BVBC Trust, the guarantee trustee or any other person or entity. Blue Valley, as guarantor, is required to file annually with the guarantee trustee a certificate as to whether Blue Valley is in compliance with all the conditions and covenants applicable to it under the trust preferred securities guarantee. INFORMATION CONCERNING THE GUARANTEE TRUSTEE The guarantee trustee, other than during the occurrence and continuance of a default by Blue Valley in performance of the trust preferred securities guarantee, undertakes to perform only the duties which are specifically set forth in the trust preferred securities guarantee. After default regarding the trust preferred securities guarantee, the guarantee trustee must exercise the same degree of care and skill as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the guarantee trustee is under no obligation to exercise any of the rights or powers vested in it by the trust preferred securities guarantee at the request or direction of any holder of the trust preferred securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred. TERMINATION OF THE TRUST PREFERRED SECURITIES GUARANTEE The trust preferred securities guarantee will terminate and be of no further force and effect upon full payment of the redemption price of the trust preferred securities, upon full payment of the amounts payable upon liquidation of BVBC Trust or upon distribution of junior subordinated debentures to the holders of the trust preferred securities. The trust preferred securities guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of the trust preferred securities must restore payment of any sums paid under the trust preferred securities or the trust preferred securities guarantee. 103 GOVERNING LAW The trust preferred securities guarantee will be governed by and construed in accordance with the laws of the State of Kansas. DESCRIPTION OF THE EXPENSE AGREEMENT Under the agreement as to expenses and liabilities to be entered into by Blue Valley under the trust agreement, Blue Valley will irrevocably and unconditionally guarantee to each person or entity to whom BVBC Trust becomes indebted or liable, the full payment of any costs, expenses or liabilities of BVBC Trust, other than obligations of BVBC Trust to pay to the holders of the trust preferred securities or other similar interests in BVBC Trust of the amounts due the holders under the terms of the trust preferred securities or the other similar interests, as the case may be. RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE JUNIOR SUBORDINATED DEBENTURES AND THE TRUST PREFERRED SECURITIES GUARANTEE FULL AND UNCONDITIONAL TRUST PREFERRED SECURITIES GUARANTEE ON A SUBORDINATED BASIS Payments of distributions and other amounts due on the trust preferred securities, to the extent BVBC Trust has funds available for the payment of the distributions, are irrevocably guaranteed by Blue Valley as and to the extent set forth under "Description of the Trust Preferred Securities Guarantee." Taken together, Blue Valley's obligations under the junior subordinated debentures, the indenture, the trust agreement, the expense agreement and the trust preferred securities guarantee provide, in the aggregate, a full, irrevocable and unconditional guarantee on a subordinated basis of payments of distributions and other amounts due on the trust preferred securities. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes the trust preferred securities guarantee. It is only the combined operation of those documents that has the effect of providing a full, irrevocable and unconditional guarantee on a subordinated basis of BVBC Trust's obligations under the trust preferred securities. If and to the extent that Blue Valley does not make payments on the junior subordinated debentures, BVBC Trust will not pay distributions or other amounts due on the trust preferred securities. The trust preferred securities guarantee does not cover payment of distributions when BVBC Trust does not have sufficient funds to pay the distributions. In this event, the remedy of a holder of the trust preferred securities is to institute a legal proceeding directly against Blue Valley for enforcement of payment of the distributions to the holder. The obligations of Blue Valley under the trust preferred securities guarantee are subordinate and junior in right of payment to all senior and subordinated debt. SUFFICIENCY OF PAYMENTS As long as payments of interest and other payments are made when due on the junior subordinated debentures, the payments will be sufficient to cover distributions and other payments due on the trust preferred securities, primarily because: 104 o the aggregate principal amount of the junior subordinated debentures will be equal to the sum of the aggregate liquidation amount of the trust preferred securities and common securities; o the interest rate and interest and other payment dates on the junior subordinated debentures will match the distribution rate and distribution and other payment dates for the trust preferred securities; o Blue Valley will pay for any and all costs, expenses and liabilities of BVBC Trust except BVBC Trust's obligations to holders of trust preferred securities; and o the trust agreement further provides that BVBC Trust will not engage in any activity that is not consistent with the limited purposes of BVBC Trust. Notwithstanding anything to the contrary in the indenture, Blue Valley may satisfy any payment it is otherwise required to make to the trust under the indenture, by and to the extent that it has made, or is concurrently on the date of the payment required by the indenture making, a payment under the trust preferred securities guarantee. ENFORCEMENT RIGHTS OF HOLDERS OF THE TRUST PREFERRED SECURITIES UNDER THE TRUST PREFERRED SECURITIES GUARANTEE A holder of any of the trust preferred securities may institute a legal proceeding directly against Blue Valley to enforce its rights under the trust preferred securities guarantee without first instituting a legal proceeding against the guarantee trustee, BVBC Trust or any other person or entity. A default or event of default under any senior and subordinated debt would not constitute an event of default. However, in the event of payment defaults under, or acceleration of, senior and subordinated debt, the subordination provisions of the indenture provide that no payments may be made in respect of the junior subordinated debentures until the senior and subordinated debt has been paid in full or any payment default thereunder has been cured or waived. Failure to make required payments on junior subordinated debentures would constitute an event of default. LIMITED PURPOSE OF BVBC TRUST The trust preferred securities evidence a beneficial interest in BVBC Trust, and BVBC Trust exists for the sole purpose of issuing the trust securities and investing the proceeds from the sale of the trust securities in the junior subordinated debentures. A principal difference between the rights of a holder of the trust preferred securities and a holder of a junior subordinated debenture is that a holder of a junior subordinated debenture is entitled to receive from Blue Valley the principal amount of and interest accrued on junior subordinated debentures held, while a holder of the trust preferred securities is entitled to receive distributions from BVBC Trust, or from Blue Valley under the trust preferred securities guarantee, if and to the extent BVBC Trust has funds available for the payment of the distributions. 105 RIGHTS UPON DISSOLUTION Upon any voluntary or involuntary dissolution of BVBC Trust involving the liquidation of the junior subordinated debentures, the holders of trust preferred securities will be entitled to receive, out of assets held by BVBC Trust and available for distribution, the liquidation distribution in cash. See "Description of the Trust Preferred Securities - Liquidation Distribution Upon Termination." Upon any voluntary or involuntary liquidation or bankruptcy of Blue Valley, the property trustee, as holder of the junior subordinated debentures, would be a subordinated creditor of Blue Valley, subordinated in right of payment to all senior and subordinated debt as set forth in the indenture, but entitled to receive payment in full of principal and interest, before any shareholders of Blue Valley receive payments or distributions. Since Blue Valley is the guarantor under the trust preferred securities guarantee and has agreed to pay for all costs, expenses and liabilities of BVBC Trust, other than BVBC Trust's obligations to the holders of its trust preferred securities, the positions of a holder of the trust preferred securities and a holder of junior subordinated debentures relative to other creditors and to shareholders of Blue Valley in the event of liquidation or bankruptcy of Blue Valley are expected to be substantially the same. MATERIAL FEDERAL INCOME TAX CONSEQUENCES GENERAL Blackwell Sanders Peper Martin LLP, Kansas City, Missouri, as Blue Valley's special tax counsel ("Tax Counsel"), has given their written legal opinion that the following discussion correctly describes the material United States federal income tax consequences of the purchase, ownership and disposition of trust preferred securities. The following discussion is general and may not apply to your particular circumstances for any of the following, or other, reasons: o This discussion is based on United States federal income tax laws, including the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations promulgated thereunder and administrative and judicial interpretations of these authorities, in effect as of the date of this prospectus. Changes to any of these laws, possibly on a retroactive basis, after this date may affect the tax consequences described below. o This discussion addresses only trust preferred securities acquired at original issuance at the original offering price and held as capital assets, within the meaning of United States federal income tax law. It does not discuss all of the tax consequences that may be relevant to "Holders," as defined below, of trust preferred securities who are subject to special rules, such as banks, thrift institutions and certain other financial institutions, real estate investment trusts, regulated investment companies, insurance companies, brokers and dealers in securities or currencies, certain securities traders, tax-exempt investors, individual retirement accounts and certain tax-deferred accounts, and foreign investors. This discussion also does not address tax consequences that may be relevant to a 106 Holder in light of the Holder's particular circumstances, such as a Holder holding a trust preferred security as a position in a straddle, hedge, conversion or other integrated investment. o This discussion does not address: (a) The income tax consequences to stockholders in, or partners or beneficiaries of, a Holder of trust preferred securities; (b) the United States alternative minimum tax consequences or other collateral tax consequences of purchasing, owning and disposing of trust preferred securities; or (c) any state, local or foreign tax consequences of purchasing, owning and disposing of trust preferred securities. The authorities on which this discussion is based are subject to various interpretations, and the opinions of Tax Counsel are not binding on the IRS or the courts, either of which could take a contrary position. Moreover, no rulings have been or will be sought from the IRS with respect to the transactions described herein. Accordingly, no assurance can be given to prospective investors that the IRS will not challenge the opinions expressed herein or that a court would not sustain such a challenge. WE ADVISE YOU TO CONSULT YOUR OWN TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF THE TRUST PREFERRED SECURITIES BASED ON YOUR PARTICULAR CIRCUMSTANCES AND THE RELEVANT TAXING JURISDICTION. UNITED STATES HOLDERS IN GENERAL. For purposes of the following discussion, a United States Holder (a "Holder") means. o a citizen or individual resident of the United States; o a corporation or partnership created or organized in or under the laws of the United States or any political subdivision; o an estate the income of which is includible in its gross income for United States federal income tax purposes without regard to its source; or o a trust if a court within the United States is able to exercise primary supervision over its administration and at least one United States person has the authority to control all substantial decisions of the trust. CHARACTERIZATION OF BVBC TRUST. Tax Counsel has delivered its opinion that (1) under then current law and based on the representations, facts and assumptions set forth in this prospectus, (2) assuming full compliance with the terms of the trust agreement, and other 107 relevant documents, and (3) based on assumptions and qualifications contained in the opinion, BVBC Trust will be characterized for United States federal income tax purposes as a grantor trust and not as an association taxable as a corporation. Accordingly, for United States federal income tax purposes, a Holder of a trust preferred security will be considered the beneficial owner of an undivided interest in the junior subordinated debentures owned by BVBC Trust, and will be required to include on its United States federal income tax return all income or gain recognized for United States federal income tax purposes with respect to its share of the junior subordinated debentures. CHARACTERIZATION OF THE JUNIOR SUBORDINATED DEBENTURES. Tax Counsel has delivered its opinion that, under current law, the junior subordinated debentures are debt of Blue Valley for United States federal income tax purposes. By acceptance of a beneficial interest in a trust preferred security, a Holder agrees to treat the junior subordinated debentures as Blue Valley's debt and the trust preferred securities as evidence of a beneficial ownership interest in the junior subordinated debentures. This position may be challenged by the IRS and Tax Counsel cannot give any assurance that a challenge will be unsuccessful. The remainder of this discussion assumes that the junior subordinated debentures will be classified as debt for United States federal income tax purposes. INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT. Under the terms of the junior subordinated debentures, Blue Valley has the ability to defer payments of interest from time to time by extending the interest payment period for a period not exceeding 20 consecutive quarterly periods, but not beyond the stated maturity of the junior subordinated debentures. Treasury regulations provide that debt instruments like the junior subordinated debentures, assuming they will be issued at face value, will not be considered issued with original issue discount ("OID"), even if their issuer can defer payments of interest, if the likelihood of any deferral is "remote." Blue Valley concluded, and this discussion assumes, that, as of the date of this prospectus, the likelihood of Blue Valley deferring payments of interest is "remote" within the meaning of the applicable Treasury regulations. This conclusion is based in part on the fact that exercising that option would prevent Blue Valley from declaring dividends on its common stock and would prevent it from making any payments with respect to debt securities that rank equally with or junior to the junior subordinated debentures. Therefore, Blue Valley believes and will take the position that the junior subordinated debentures will not be treated as issued with OID by reason of the deferral option alone. Rather, Holders will be taxed on stated interest on the junior subordinated debentures when it is paid or accrued in accordance with each Holder's method of accounting for United States federal income tax purposes. Because this issue has not been addressed in any published rulings or interpretations issued by the IRS, it is possible that the IRS could take a position contrary to the position taken by Blue Valley. If Blue Valley exercises its option to defer payments of interest, the junior subordinated debentures would be treated as redeemed and reissued for OID purposes. The sum of the remaining interest payments, and any de minimis OID, on the junior subordinated debentures will thereafter be treated as OID. The OID would accrue, and be includible in a Holder's taxable income, on a daily economic accrual basis, regardless of a Holder's method of accounting for income tax purposes, over the remaining term of the junior subordinated debentures, including 108 any period of interest deferral, without regard to the timing of payments under the junior subordinated debentures. Subsequent distributions of interest on the junior subordinated debentures generally would not be taxable. The amount of OID that would accrue in any period would approximately equal the amount of interest that accrued on the junior subordinated debentures in that period at the stated interest rate. Consequently, during any period of interest deferral, a Holder will include OID in gross income in advance of the receipt of cash, and if a Holder disposes of a trust preferred security prior to the record date for payment of distributions on the junior subordinated debentures following that deferral period, a Holder will be subject to income tax on OID accrued through the date of disposition, and not previously included in income, but will not receive cash from BVBC Trust with respect to the OID. If the possibility of Blue Valley's exercise of its option to defer payments of interest is not remote, the junior subordinated debentures would be treated as initially issued with OID in an amount equal to the aggregate stated interest, plus any de minimis OID, over the term of the junior subordinated debentures. A Holder would include that OID in its taxable income, over the term of the junior subordinated debentures, on a daily economic accrual basis. CHARACTERIZATION OF INCOME. Because the income underlying the trust preferred securities will be characterized as interest, not as dividends, for United States federal income tax purposes, if a Holder is a corporate holder of the trust preferred securities, it will not be entitled to a dividends-received deduction for any income it recognizes with respect to the trust preferred securities. MARKET DISCOUNT AND BOND PREMIUM. Under some circumstances, a Holder may be considered to have acquired its undivided interest in the junior subordinated debentures with market discount or acquisition premium, as each phrase is defined for United States federal income tax purposes. In this situation, such Holder needs to contact its own tax advisor to determine its particular tax consequences. RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF BVBC TRUST. Under the circumstances described above, BVBC Trust may distribute a pro-rata share of the junior subordinated debentures to Holders in exchange for their trust preferred securities and in liquidation of BVBC Trust. See "Description of the Trust Preferred Securities - Distribution of Junior Subordinated Debentures." Except as discussed below, that type of a distribution would not be a taxable event for United States federal income tax purposes, and consequently a Holder (1) would have an aggregate adjusted basis in the junior subordinated debentures received for United States federal income tax purposes equal to the Holder's aggregate adjusted basis in the Holder's trust preferred securities, and (2) would have a holding period in the junior subordinated debentures received in such a liquidation of BVBC Trust which includes the period during which the Holder held the trust preferred securities. If, however, the event causing the liquidation of the BVBC Trust is a tax event, which results in BVBC Trust being treated as an association taxable as a corporation, the distribution would constitute a taxable event to a Holder for United States federal income tax purposes. The Holder would recognize gain or loss as if the Holder had sold or exchanged its trust preferred securities for the junior subordinated debentures and received them upon liquidation. See "Sales of Trust Preferred Securities" below. The Holder would recognize interest income in respect of the junior subordinated debentures received 109 from BVBC Trust in the manner described above under "Interest Income and Original Issue Discount." Under circumstances described above, Blue Valley may redeem junior subordinated debentures for cash and distribute the proceeds of the redemption to Holders in redemption of their trust preferred securities. See "Description of the Trust Preferred Securities - Redemption - Mandatory and Optional Rights of Blue Valley." The redemption would be taxable for United States federal income tax purposes, and a Holder would recognize gain or loss as if it had sold the trust preferred securities for cash. See "Sales of Trust Preferred Securities" below. SALES OF TRUST PREFERRED SECURITIES. Upon the sale or other taxable disposition, including a redemption for cash, of the trust preferred securities, a Holder will recognize gain or loss in an amount equal to the difference between its adjusted tax basis in the trust preferred securities and the amount realized in the sale, except to the extent of any amount received in respect to accrued but unpaid interest or OID not previously included in income. A Holder's adjusted tax basis in the trust preferred securities generally will be its initial purchase price, increased by OID, if any, previously includible in a Holder's gross income to the date of disposition and decreased by payments, if any, received on the trust preferred securities in respect of OID to the date of disposition. The gain or loss generally will be a capital gain or loss, and will be a long-term capital gain or loss if the Holder has held the trust preferred securities for more than one year prior to the date of disposition. The trust preferred securities may trade at a price that does not accurately reflect the value of accrued but unpaid interest, or OID, with respect to the underlying junior subordinated debentures. A Holder who disposes of its trust preferred securities between record dates for payments of distributions thereon will be required to include in its taxable income for United States federal income tax purposes (1) any portion of the amount realized that is attributable to the accrued but unpaid interest to the extent not previously included in income or (2) any amount of OID, in either case, that has accrued on its pro rata share of the underlying junior subordinated debentures during the taxable year of sale through the date of disposition. Any income inclusion will increase a Holder's adjusted tax basis in the trust preferred securities of which it disposes. To the extent that the amount realized in the sale is less than a Holder's adjusted tax basis, a Holder will recognize a capital loss. Subject to certain limited exceptions applicable to non-corporate taxpayers, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. EFFECT OF CHANGES IN TAX LAWS In recent years there have been several legislative proposals which, if enacted, could have adversely affected the ability of Blue Valley to deduct interest paid on the junior subordinated debentures. These proposals, however, were not enacted. Nevertheless, there can be no assurance that other legislation enacted in the future after the date hereof will not otherwise adversely affect the ability of Blue Valley to deduct the interest payable on the junior subordinated debentures. Legislation affecting the deductibility of such interest may cause a tax event. Such a tax event would give us the right to redeem the junior subordinated debentures. See "Description of Junior Subordinated Debentures - Redemption" and "Description of Trust Preferred Securities - Redemption - Mandatory and Optional Rights of Blue Valley - Tax Event 110 Redemption, Investment Company Event Redemption, Capital Event Redemption or Distribution of Junior Subordinated Debentures." A petition was filed during 1998 in the United States Tax Court as a result of a challenge by the IRS of a taxpayer's treatment as indebtedness of a security issued with characteristics similar to the junior subordinated debentures. The IRS ultimately agreed to dismiss the related adjustments. Nevertheless, the IRS could assert similar adjustments against other taxpayers. If adjustments were proposed and the issue litigated resulting in the IRS's position being sustained, a determination would constitute a tax event resulting in early redemption of the trust preferred securities. See "Sales of Trust Preferred Securities" above for the United States federal income tax consequences of a redemption to a Holder. NON-UNITED STATES HOLDERS The following discussion applies to you if you are not a "Holder" as described above. Payments of interest, including OID, to a non-United States Holder on a trust preferred security will generally not be subject to withholding of income tax, provided that: o the non-United States Holder did not, directly or indirectly, actually or constructively, own 10% or more of the total combined voting power of all classes of Blue Valley stock entitled to vote; o the non-United States Holder is not a controlled foreign corporation that is related to Blue Valley through stock ownership; o the interest does not constitute contingent interest as described in Section 871(h)(4) of the Code; o the non-United States Holder is not a bank receiving interest described in Section 881(c)(3)(A) of the Code; and o either (1) the non-United States Holder certifies to BVBC Trust or its agent under penalties of perjury, that the non-United States Holder is not a United States Holder and provides its name and address, or (2) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "Financial Institution"), and holds the trust preferred security in that capacity, certifies to BVBC Trust or its agent, under penalties of perjury and in accordance with applicable Treasury regulations, that it requires and has received the required statement from the non-United States Holder or another Financial Institution between it and the holder in the chain of ownership, and furnishes BVBC Trust or its agent with a copy. Recently finalized Treasury regulations, that are generally effective with respect to payments made after December 31, 2000, would provide alternative methods for satisfying the certification requirements described above. 111 As discussed above, it is possible that changes in the law affecting the income tax consequences of the junior subordinated debentures could adversely affect Blue Valley's ability to deduct interest payable on the junior subordinated debentures. These changes could also cause the junior subordinated debentures to be classified as Blue Valley's equity, rather than our debt, for United States federal income tax purposes. This might cause the income derived from the junior subordinated debentures to be characterized as dividends, generally subject to a 30%, or lower rate under an applicable income tax treaty, income tax, on a withholding basis, when paid to you if you are not a United States Holder, rather than as portfolio interest which, as discussed above, generally is exempt from income tax in the hands of a foreign corporation or nonresident alien who is not a United States Holder. If a non-United States Holder holds the trust preferred securities in connection with the active conduct of a United States trade or business, the non-United States Holder will be subject to income tax on all income and gains recognized with respect to its proportionate share of the junior subordinated debentures. INFORMATION REPORTING AND BACKUP WITHHOLDING In general, information reporting requirements will apply to payments made on, and proceeds from the sale of, the trust preferred securities held by a noncorporate Holder within the United States. In addition, payments made on, and payments of the proceeds from the sale of, the trust preferred securities to or through the United States office of a broker are subject to information reporting unless the Holder certifies as to its non-United States Holder status or otherwise establish as an exemption from information reporting and backup withholding. Taxable income on the trust preferred securities for a calendar year should be reported to United States Holders on the appropriate forms by the following January 31st. Payments made on, and proceeds from the sale of, the trust preferred securities may be subject to a "backup" withholding tax of 31% unless a Holder complies with various identification or exemption requirements. Any amounts so withheld will be allowed as a credit against a Holder's income tax liability, or refunded, provided the required information is provided to the IRS. In addition, a non-United States Holder will generally not be subject to withholding of income tax on any gain realized upon the sale or other disposition of a trust preferred security. THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE CONSEQUENCES TO PARTICULAR PERSONS OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TRUST PREFERRED SECURITIES. POTENTIAL PURCHASERS OF THE TRUST PREFERRED SECURITIES ARE URGED TO CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR PARTICULAR TAX CONSEQUENCES. ERISA CONSIDERATIONS We and certain of our affiliates may each be considered to be a "party in interest" within the meaning of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or a "disqualified person" within the meaning of Section 4975 of the Code with respect to many 112 employee benefit plans that are subject to ERISA. The purchase of the trust preferred securities by an employee benefit plan that is subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of Section 4975(e)(1) of the Code and with respect to which we, or any affiliate of ours, is a service provider, or otherwise a party in interest or a disqualified person, may constitute or result in a prohibited transaction under ERISA or Section 4975 of the Code, unless the trust preferred securities are acquired pursuant to and in accordance with an applicable exemption. Any pension or other employee benefit plan proposing to acquire any trust preferred securities should consult with its counsel. UNDERWRITING Subject to the terms and conditions of the underwriting agreement between us, BVBC Trust, and the underwriter, the underwriter has agreed to purchase from BVBC Trust, and BVBC Trust has agreed to sell to the underwriter, 1,250,000 trust preferred securities. The obligations of the underwriter to purchase the trust preferred securities are subject to approval of certain legal matters by its counsel and to various other conditions. Under the terms and conditions of the underwriting agreement, the underwriter is committed to accept and pay for all of the trust preferred securities, other than trust preferred securities covered by the over-allotment option described below, if any are taken. The underwriter proposes to offer the trust preferred securities directly to the public at the public offering price set forth on the cover page of this prospectus, and to certain securities dealers at this price, less a concession not in excess of $ per preferred security. The underwriter may allow, and the selected dealers may reallow, a discount not in excess of $ per preferred security to certain brokers and dealers. After the trust preferred securities are released for sale to the public, the offering price and other selling terms may from time to time be changed by the underwriter. BVBC Trust has granted to the underwriter an option, exercisable within 30 days after the date of this prospectus, to purchase up to 187,500 additional trust preferred securities at the same price per trust preferred security to be paid by the underwriter for the other trust preferred securities being offered hereby. The underwriter may exercise the option only for the purpose of covering over-allotments, if any, made in connection with the distribution of the trust preferred securities being offered hereby. If the underwriter exercises its option to purchase additional trust preferred securities, BVBC Trust will issue and sell to us additional common securities and we will issue and sell to BVBC Trust junior subordinated debentures in an aggregate principal amount equal to the total aggregate liquidation amount of the additional trust preferred securities being purchased under the option and the additional common securities sold to us. The following table summarizes the price and proceeds on a per security and aggregate basis. The proceeds to be received by BVBC Trust as shown in the below do not reflect estimated expenses in connection with this offering of the trust preferred securities of $800,000 payable by us. 113 PER TRUST PREFERRED SECURITY TOTAL ------------------ ----- Public Offering Price................. $8.00 $10,000,000 Proceeds to BVBC Trust................ $8.00 $10,000,000 In view of that fact that the proceeds of the sale of the trust preferred securities will be used by BVBC Trust to purchase the junior subordinated debentures from us, we have agreed to pay the underwriter $ per preferred security, or a total of $ , as compensation for arranging the investment in the junior subordinated debentures. Should the underwriter exercise the over-allotment option, an aggregate of $ will be paid to the underwriter for arranging the investment in the junior subordinated debentures. During a period of 30 days from the date of this prospectus, neither BVBC Trust nor we will, subject to certain exceptions, without the prior written consent of the underwriter, directly or indirectly, sell, offer to sell, grant any option for sale of, or otherwise dispose of, any trust preferred securities, any security convertible into or exchangeable for trust preferred securities or junior subordinated debentures or any debt securities substantially similar to the junior subordinated debentures or equity securities substantially similar to the trust preferred securities, except for junior subordinated debentures and the trust preferred securities being offered hereby. Because the National Association of Securities Dealers may view the trust preferred securities as interests in a direct participation program, the offer and sale of the trust preferred securities is being made in compliance with the provisions of Rule 2810 under the NASD Conduct Rules. Although we have applied to have the trust preferred securities listed on the American Stock Exchange under the trading symbol " ", we cannot make any assurances as to the liquidity of the trust preferred securities or that an active and liquid market will develop or, if developed, that the market will continue. The offering price and distribution rate for the trust preferred securities have been determined by negotiations among our representatives and the underwriter, and the offering price of the trust preferred securities may not be indicative of their market price following this offering. Blue Valley and the underwriter have agreed to indemnify, or to contribute to payments made by, each other against certain civil liabilities, including certain civil liabilities arising under the Securities Act. This offering of the trust preferred securities is made for delivery when, as and if accepted by the underwriter and subject to prior sale and to withdrawal, cancellation or modification of this offering without notice. The underwriter reserves the right to reject any order for the purchase of the trust preferred securities. The underwriter has advised us that it does not intend to confirm any sales to any accounts over which it exercises discretionary authority. In connection with this offering, the underwriter may engage in transactions that are intended to stabilize, maintain or otherwise affect the price of the trust preferred securities during and after the offering, such as the following: 114 o the underwriter may over-allot or otherwise create a short position in the trust preferred securities for their own account by selling more trust preferred securities than have been sold to them; o the underwriter may elect to cover any short position by purchasing trust preferred securities in the open market or by exercising the over-allotment option; o the underwriter may stabilize or maintain the price of the trust preferred securities by bidding; and o the underwriter may impose penalty bids, under which selling concessions allowed to syndicate members or broker-dealers participating in this offering are reclaimed if trust preferred securities previously distributed in this offering are repurchased in connection with stabilization transactions or otherwise. The effect of these transactions may be to stabilize or maintain the market price at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price of the trust preferred securities to the extent that it discourages resales. No representation is made as to the magnitude or effect of any of these stabilization or other transactions. These transactions may be effected on the American Stock Exchange or otherwise and, if commenced, may be discontinued at any time. The underwriter has advised us that it does not intend to confirm any sales to any accounts over which it exercises discretionary authority. AVAILABLE INFORMATION We have filed a registration statement on Form S-1 under the Securities Act with the SEC in connection with the offering described in this prospectus. This prospectus omits certain information, exhibits and undertakings contained in the registration statement we filed with the SEC. You may read and copy, upon payment of a fee set by the SEC, any document that we file with the SEC at its public reference rooms in Washington, D.C., 450 Fifth Street, N.W., 20549, New York, New York, Seven World Trade Center, 13th Floor, Suite 1300, 10048, and Chicago, Illinois, Citicorp Center, 500 West Madison Street, 14th Floor, Suite 1400, 60661. You may also call the SEC at 1-800-432-0330 for more information on the public reference rooms. Our filings are also available to the public on the Internet, through the SEC's EDGAR database. You may access the EDGAR database at the SEC's web site at http://www.sec.gov. Separate financial statements of BVBC Trust are not included in this prospectus. We do not believe separate financial statements would be helpful because: o BVBC Trust is a subsidiary of Blue Valley, which will file consolidated financial information under the Exchange Act. o BVBC Trust does not have any independent operations other than issuing the preferred and common securities and purchasing the junior subordinated debentures of Blue Valley. 115 o BVBC Trust's only material assets will be the junior subordinated debentures of Blue Valley when issued. o The combined obligations of Blue Valley under the junior subordinated debentures, the guarantee, the trust agreement and the indenture have the effect of providing a full and unconditional guarantee of BVBC Trust's obligations under its trust preferred securities. See "Description of Junior Subordinated Securities," "Description of the Trust Preferred Securities," "Description of Trust Preferred Securities Guarantee" and "Relationship Among the Trust Preferred Securities, the Junior Subordinated Debentures and the Trust Preferred Securities Guarantee." LEGAL MATTERS The validity of the trust preferred securities and matters relating to United States federal income tax consequences of this offering, will be passed upon for us and for BVBC Trust by Blackwell Sanders Peper Martin LLP, Kansas City, Missouri. Morris, Nichols, Arsht & Tunnell, Delaware, will pass upon certain matters relating to Delaware law for BVBC Trust. Certain legal matters will be passed upon for the underwriter by Lewis, Rice & Fingersh, L.C., St. Louis, Missouri. EXPERTS The consolidated financial statements of Blue Valley for each of the years in the three-year period ended December 31, 1999, included in this prospectus, have been audited by Baird, Kurtz & Dobson, independent accountants, as stated in their report appearing herein, and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 116 INDEX TO FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS OF BLUE VALLEY BAN CORP Independent Accountants' Report.............................................F-2 Consolidated Balance Sheets - December 31, 1999 and 1998....................F-3 Consolidated Statements of Income - years ended December 31, 1999, 1998 and 1997......................................................F-5 Consolidated Statements of Changes in Stockholders' Equity - years ended December 31, 1999, 1998 and 1997...................................F-6 Consolidated Statements of Cash Flows - years ended December 31, 1999, 1998 and 1997......................................................F-7 Notes to Consolidated Financial Statements - December 31, 1999, 1998 and 1997...........................................................F-8 F-1 INDEPENDENT ACCOUNTANTS' REPORT Board of Directors Blue Valley Ban Corp Overland Park, Kansas We have audited the accompanying consolidated balance sheets of BLUE VALLEY BAN CORP as of December 31, 1999 and 1998, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of BLUE VALLEY BAN CORP as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles. /s/ Baird, Kurtz & Dobson March 1, 2000 Kansas City, Missouri F-2 BLUE VALLEY BAN CORP CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1999 AND 1998 (dollars in thousands, except share data) ASSETS 1999 1998 --------- ---------- Cash and due from banks $ 15,460 $ 8,299 Federal funds sold 8,000 20,700 --------- --------- Cash and cash equivalents 23,460 28,999 Available-for-sale securities 48,646 53,427 Mortgage loans held for sale 952 1,954 Loans 250,410 161,444 Less allowance for loan losses 3,817 2,341 --------- --------- Net loans 246,593 159,103 Premises and equipment 5,574 5,422 Foreclosed assets held for sale, net 186 46 Interest receivable 2,039 1,501 Deferred income taxes 1,841 471 Prepaid expenses and other assets 840 584 Federal Home Loan Bank stock 1,034 617 Excess of cost over fair value of net assets acquired, at amortized cost 1,448 1,600 --------- --------- Total Assets $ 332,613 $ 253,724 ========= ========= [FN] See Notes to Consolidated Financial Statements F-3
BLUE VALLEY BAN CORP CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1999 AND 1998 (dollars in thousands, except share data) LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998 --------- --------- LIABILITIES Demand deposits $ 36,950 $ 33,752 Savings, NOW and money market deposits 126,398 63,215 Time deposits 104,797 112,857 --------- --------- Total Deposits 268,145 209,824 Securities sold under agreements to repurchase 11,260 8,817 Short-term debt 17,450 3,575 Long-term debt 11,908 12,038 Advances from borrowers for taxes and insurance 2,559 712 Accrued interest and other liabilities 2,422 1,742 --------- --------- Total Liabilities 313,744 236,708 --------- --------- STOCKHOLDERS' EQUITY Capital stock Common Stock, par value $1 per share; Authorized 15,000,000 shares; issued and outstanding 1999 - 2,137,720 shares; 1998 - 2,130,396 shares 2,138 2,130 Additional paid-in capital 5,230 5,159 Retained earnings 12,458 9,375 Accumulated other comprehensive income Unrealized appreciation (depreciation) on available-for-sale securities, net of income taxes of $(638) in 1999 and $235 in 1998 (957) 352 ---------- --------- Total Stockholders' Equity 18,869 17,016 --------- --------- Total Liabilities and Stockholders' Equity $ 332,613 $ 253,724 ========= =========
[FN] See Notes to Consolidated Financial Statements F-4
BLUE VALLEY BAN CORP CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (dollars in thousands, except per share data) 1999 1998 1997 ----------- ----------- ---------- INTEREST INCOME Interest and fees on loans $ 20,422 $ 14,608 $ 12,000 Federal funds sold 431 396 276 Available-for-sale securities 2,755 2,814 2,275 ----------- ----------- ----------- Total Interest Income 23,608 17,818 14,551 ----------- ----------- ----------- INTEREST EXPENSE Deposits 9,832 8,232 6,634 Securities sold under repurchase agreements 287 438 167 Long-term debt and advances 1,085 535 457 ----------- ----------- ----------- Total Interest Expense 11,204 9,205 7,258 ----------- ----------- ----------- NET INTEREST INCOME 12,404 8,613 7,293 PROVISION FOR LOAN LOSSES 2,144 1,061 660 ----------- ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 10,260 7,552 6,633 ----------- ----------- ----------- NONINTEREST INCOME Service fees 2,835 2,084 1,045 Other income 189 562 409 ----------- ----------- ----------- Total Noninterest Income 3,024 2,646 1,454 ----------- ----------- ----------- NONINTEREST EXPENSE Salaries and employee benefits 4,578 3,312 2,304 Net occupancy expense 894 748 663 Other operating expense 3,208 1,936 1,689 ----------- ----------- ----------- Total Noninterest Expense 8,680 5,996 4,656 ----------- ----------- ----------- INCOME BEFORE INCOME TAXES 4,604 4,202 3,431 PROVISION FOR INCOME TAXES 1,521 1,386 1,145 ----------- ----------- ----------- NET INCOME $ 3,083 $ 2,816 $ 2,286 =========== =========== =========== BASIC EARNINGS PER SHARE $ 1.45 $ 1.36 $ 1.24 =========== =========== =========== DILUTED EARNINGS PER SHARE $ 1.42 $ 1.35 $ 1.22 =========== =========== ===========
[FN] See Notes to Consolidated Financial Statements F-5
BLUE VALLEY BAN CORP CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (dollars in thousands, except share data) Accumulated Other Comprehensive Income ------------- Unrealized Appreciation Additional (Depreciation) on Comprehensive Common Paid-In Retained Available-for-Sale Income Stock Capital Earnings Securities, Net Total ------------- ------ ------------- --------- --------------------- -------- BALANCE, DECEMBER 31, 1996 $ 1,841 $ 4,026 $ 4,273 $ (40) $10,100 Issuance of 186,600 shares of common stock 187 591 778 Net income $ 2,286 2,286 2,286 Change in unrealized appreciation (depreciation) on available-for-sale securities, net of income taxes of $200 300 300 300 ------- -------- ------------ ------- ------- ------- $ 2,586 ======= BALANCE, DECEMBER 31, 1997 2,028 4,617 6,559 260 13,464 Issuance of 102,336 shares of common stock 102 542 644 Net income $ 2,816 2,816 2,816 Change in unrealized appreciation (depreciation) on available-for-sale securities, net of income taxes of $61 92 92 92 ------- -------- -------- ------- ------- ------- $ 2,908 ======= BALANCE, DECEMBER 31, 1998 2,130 5,159 9,375 352 17,016 Issuance of 7,324 shares of common stock 8 71 79 Net income $ 3,083 3,083 3,083 Change in unrealized appreciation (depreciation) on available-for-sale securities, net of income taxes of $(872) (1,309) (1,309) (1,309) -------- -------- ------- ------- ------- -------- $ 1,774 ======== BALANCE, DECEMBER 31, 1999 $ 2,138 $5,230 $ 12,458 $ (957) $18,869 ======== ====== ======== ======== ======= 1999 1998 1997 ------ ------ ------ RECLASSIFICATION DISCLOSURE: Unrealized appreciation (depreciation) on available-for-sale securities, net of income taxes of $(871), $106 and $203 for 1999, 1998 and 1997, respectively $ (1,307) $ 159 $ 305 Less: reclassification adjustments for appreciation (depreciation) included in net income, net of income taxes of $1, $45 and $3, for 1999, 1998 and 1997, respectively (2) (67) (5) --------- --------- --------- Change in unrealized appreciation (depreciation) on available-for-sale securities, net of income taxes of $(872), $61 and $200 for 1999, 1998 and 1997, respectively $ (1,309) $ 92 $ 300 ========= ======== =========
[FN] See Notes to Consolidated Financial Statements F-6
BLUE VALLEY BAN CORP CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (dollars in thousands) 1999 1998 1997 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 3,083 $ 2,816 $ 2,286 Items not requiring (providing) cash: Depreciation and amortization 533 445 388 Amortization (accretion) of premiums and discounts on securities 50 27 Provision for loan losses 2,144 1,061 660 Deferred income taxes (497) (298) (103) Provision for losses on foreclosed assets 116 Gain on sales of available-for-sale securities (3) (112) (8) (Gain) loss on sale of foreclosed assets (78) 45 Changes in: Accrued interest receivable (538) (141) (204) Mortgage loans held for sale 1,002 (1,063) 610 Prepaid expenses and other assets (259) 38 212 Accrued interest payable and other liabilities 680 730 283 -------- -------- -------- Net cash provided by operating activities 6,195 3,398 4,312 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Net originations of loans (92,460) (38,869) (27,802) Proceeds from sales of loan participations 2,231 4,394 254 Purchase of premises and equipment (530) (1,203) (286) Proceeds from the sale of foreclosed assets 455 827 329 Proceeds from sales of available-for-sale securities 2,003 11,115 3,865 Proceeds from maturities of available-for-sale securities 10,105 7,270 4,422 Purchases of available-for-sale securities (9,973) (31,433) (11,947) --------- --------- --------- Net cash used in investing activities (88,169) (47,899) (31,165) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase in demand deposits, money market, NOW and savings accounts 66,381 18,861 9,665 Net increase (decrease) in certificates of deposit (8,060) 20,171 21,199 Repayments of long-term debt (130) (120) (112) Proceeds from long-term debt 10,000 Net proceeds (payments) on short-term debt 13,875 (463) 1,150 Proceeds from sale of common stock 79 644 778 Net increase in other borrowings 2,443 704 2,382 Net increase (decrease) in advances from borrowers for taxes and insurance 1,847 (1,277) 973 -------- --------- -------- Net cash provided by financing activities 76,435 48,520 36,035 -------- -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,539) 4,019 9,182 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 28,999 24,980 15,798 -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 23,460 $ 28,999 $ 24,980 ======== ======== ========
[FN] See Notes to Consolidated Financial Statements F-7 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS The Company is a holding company for Bank of Blue Valley (the Bank) and Blue Valley Building Corporation through 100% ownership of each. The Bank is primarily engaged in providing a full range of banking and mortgage services to individual and corporate customers in southern Johnson County. The Bank is subject to competition from other financial institutions. The Bank also is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities. The Blue Valley Building Corporation is primarily engaged in leasing real property at its only facility in Overland Park, Kansas. OPERATING SEGMENT The Company provides community banking services through its subsidiary bank, including such products and services as loans; time deposits, checking and savings accounts; trust services; and investment services. These activities are reported as one operating segment. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowance for loan losses and the valuation of foreclosed assets held for sale, management obtains independent appraisals for significant properties. Management believes that the allowances for losses on loans and the valuation of foreclosed assets held for sale are adequate. While management uses available information to recognize losses on loans and foreclosed assets held for sale, changes in economic conditions may necessitate revision of these estimates in future years. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowances for losses on loans and valuation of foreclosed assets held for sale. Such agencies may require the Company to recognize additional losses based on their judgements of information available to them at the time of their examination. F-8 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Blue Valley Ban Corp and its 100% owned subsidiaries, Bank of Blue Valley and Blue Valley Building Corporation. Significant intercompany accounts and transactions have been eliminated in consolidation. CASH EQUIVALENTS The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 1999 and 1998, cash equivalents consisted of federal funds sold. INVESTMENT IN DEBT SECURITIES Available-for-sale securities, which include any security for which the Company has no immediate plan to sell, but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically identified amortized cost of the specific security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in stockholders' equity. Premiums and discounts are amortized and accreted, respectively, to interest income using a method which approximates the level-yield method over the period to maturity. Interest on investments in debt securities is included in income when earned. OTHER INVESTMENTS The Company, as a member of the Federal Home Loan Bank (FHLB) system, is required to maintain an investment in capital stock of the FHLB. No ready market exists for the FHLB stock, and it has no quoted market value. Such stock is recorded at cost and reported as other investments in the accompanying consolidated balance sheets. MORTGAGE LOANS HELD FOR SALE Mortgage loans held for sale are carried at the lower of cost or fair value, determined using an aggregate basis. Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs. Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale. Amounts paid to investors to obtain forward commitments are deferred until such time as the related loans are sold. The fair values of the forward commitments are not recognized in the financial statements. Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors. Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold, net of discounts collected or paid, commitment fees paid and considering a normal servicing rate. Fees received from borrowers to guarantee the funding of mortgage loans held for sale are recognized as income or expense when the loans are sold or when it becomes evident that the commitment will not be used. F-9 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) LOANS Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-offs, are reported at their outstanding principal adjusted for any charge-offs, the allowance for loan losses and any deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is increased by provisions charged to expense and reduced by loans charged off, net of recoveries. The allowance is maintained at a level considered adequate to provide for potential loan losses, based on management's evaluation of the loan portfolio, as well as on prevailing and anticipated economic conditions and historical losses by loan category. General allowances have been established, based upon the aforementioned factors, and allocated to the individual loan categories. Allowances are accrued on specific loans evaluated for impairment for which the basis of each loan, including accrued interest, exceeds the discounted amount of expected future collections of interest and principal or, alternatively, the fair value of loan collateral. A loan is considered impaired when it is probable that the Company will not receive all amounts due according to the contractual terms of the loan. This includes loans that are delinquent 90 days or more (nonaccrual loans) and certain other loans identified by management. Accrual of interest is discontinued, and interest accrued and unpaid is removed, at the time such amounts are delinquent 90 days. Interest is recognized for nonaccrual loans only upon receipt, and only after all principal amounts are current according to the terms of the contract. PREMISES AND EQUIPMENT Depreciable assets are stated at cost less accumulated depreciation. Depreciation is charged to expense using the straight-line method over the estimated useful lives of the assets. FORECLOSED ASSETS HELD FOR SALE Assets acquired by foreclosure or in settlement of debt and held for sale are valued at estimated fair value as of the date of foreclosure, and a related valuation allowance is provided for estimated costs to sell the assets. Management evaluates the value of foreclosed assets held for sale periodically and increases the valuation allowance for any subsequent declines in fair value. Increases in the valuation allowance and gains/losses on sales of foreclosed assets are included in non-interest expenses, net. F-10 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED Unamortized costs in excess of the fair value of underlying net tangible assets acquired aggregated $1,448,000 and $1,600,000 (originally $2,286,000) at December 31, 1999 and 1998, respectively, and are being amortized over a 15-year period using the straight-line method. Amortization expense related to purchased subsidiaries and acquired deposits was $152,000 for each of the years 1999, 1998 and 1997. FEE INCOME Loan origination fees, net of direct origination costs, are recognized as income using the level-yield method over the term of the loans. RECLASSIFICATION Certain reclassifications have been made to the 1998 financial statements to conform to the 1999 financial statement presentation. These reclassifications had no effect on net income. INCOME TAXES Deferred tax liabilities and assets are recognized for the tax effect of differences between the financial statement and tax bases of assets and liabilities. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that a deferred tax asset will not be realized. EARNINGS PER SHARE Basic earnings per share is computed based on the weighted average number of shares outstanding during each year. Diluted earnings per share is computed using the weighted average common shares and all potential dilutive common shares outstanding during the period. The computation of per share earnings is as follows:
1999 1998 1997 ---- ---- ---- (in thousands, except share and per share data) Net income $ 3,083 $ 2,816 $ 2,286 --------- --------- --------- Average common shares outstanding 2,131,372 2,065,400 1,843,228 Average common share stock options outstanding 34,636 18,688 24,616 --------- --------- --------- Average diluted common shares 2,166,008 2,084,088 1,867,844 --------- --------- --------- Basic earnings per share $ 1.45 $ 1.36 $ 1.24 ========= ======= ======== Diluted earnings per share $ 1.42 $ 1.35 $ 1.22 ======== ====== =======
F-11 NOTE 2: INVESTMENT IN DEBT SECURITIES The amortized cost and approximate fair value of available-for-sale securities at December 31, 1999 are as follows:
Gross Gross Amortized Unrealized Unrealized Approximate Cost Gains Losses Fair Value -------------- ------------ -------------- ------------ (dollars in thousands) U.S. Treasury $10,012 $20 $ (83) $ 9,949 U.S. Government agencies 25,591 (1,365) 24,226 State and political subdivisions 14,638 33 (200) 14,471 ------- --- -------- ------- $50,241 $ 53 $(1,648) $48,646 ======= ===== ======== ======= Maturities of available-for-sale debt instruments at December 31, 1999 are as follows: Amortized Approximate Cost Fair Value ---- ---------- (dollars in thousands) In one year or less $ 3,262 $ 3,255 After one through five years 15,239 15,025 After five through ten years 31,740 30,366 After ten years -------- -------- $ 50,241 $ 48,646 ======== ======== The amortized cost and approximate fair value of available-for-sale securities at December 31, 1998 are as follows: Gross Gross Amortized Unrealized Unrealized Approximate Cost Gains Losses Fair Value ------------ ----------- ------------ ------------ (dollars in thousands) U.S. Treasury $12,024 $ 198 $ (10) $12,212 U.S. Government agencies 26,660 142 (155) 26,647 State and political subdivisions 14,156 416 (4) 14,568 ------- ----- ------- ------- $52,840 $ 756 $ (169) $53,427 ======= ===== ======= =======
F-12 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 2: INVESTMENT IN DEBT SECURITIES (CONTINUED) The book value of securities pledged as collateral to secure public deposits amounted to $22,177,000 at December 31, 1999 and $28,231,000 at December 31, 1998. The approximate fair value of pledged securities amounted to $21,597,000 at December 31, 1999 and $28,568,000 at December 31, 1998. The Company entered into sales of securities under agreements to repurchase. The amounts deposited under these agreements represent short-term borrowings and are reflected as a liability in the consolidated balance sheets. The securities underlying the agreements are book-entry securities. During the period, securities held in safekeeping were pledged to the depositors under a written custodial agreement that explicitly recognizes the depositors' interest in the securities. At December 31, 1999, or at any month end during the period, no material amount of agreements to repurchase securities sold was outstanding with any individual dealer. Securities sold under agreements to repurchase averaged $9,500,000 and $7,042,000 during 1999 and 1998, and the maximum amounts outstanding at any month-end were $13,056,000 and $8,886,000, respectively. The book value of securities pledged to secure agreements to repurchase amounted to $15,110,000, and $10,092,000 at December 31, 1999 and 1998, respectively. The approximate fair value of these securities was $14,235,000 at December 31, 1999 and $10,012,000 at December 31, 1998. Gross gains of $3,000, $112,000 and $8,000 were realized at December 31, 1999, 1998 and 1997, respectively, resulting from sales of available-for-sale securities. NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES Categories of loans at December 31, 1999 and 1998 include the following: 1999 1998 ---- ---- (dollars in thousands) Commercial $ 64,552 $ 52,310 Commercial real estate 26,617 15,457 Construction 41,336 25,834 Residential real estate 33,251 28,367 Leases 30,174 13,765 Personal 44,747 19,751 Home equity 9,820 6,170 --------- --------- Total loans 250,497 161,654 Less: Unearned discount and fees 87 210 Allowance for loan losses 3,817 2,341 --------- --------- Net loans $ 246,593 $ 159,103 ========= ========= F-13 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) Activity in the allowance for loan losses was as follows:
1999 1998 1997 ---- ---- ---- (dollars in thousands) Balance, beginning of year $ 2,341 $ 1,618 $ 1,275 Provision charged to expense 2,144 1,061 660 Losses charged off, net of recoveries of $104,000, $48,000 and $142,000 for 1999, 1998 and 1997, respectively (668) (338) (317) -------- -------- -------- Balance, end of year $ 3,817 $ 2,341 $ 1,618 ======= ======= =======
Impaired loans totaled $5,153,000 and $5,237,000 at December 31, 1999 and 1998, respectively, with related allowances for loan losses of $825,000 and $747,000, respectively. Interest of $713,000 and $600,000 was recognized on average impaired loans of $4,092,000 and $3,496,000 for 1999 and 1998, respectively. Interest of $140,000 and $85,000 was recognized on impaired loans on a cash basis during 1999 and 1998, respectively. NOTE 4: PREMISES AND EQUIPMENT Major classifications of these assets are as follows: 1999 1998 ---- ---- (dollars in thousands) Land $ 1,477 $ 1,477 Building and improvements 3,567 3,405 Furniture and equipment 1,651 1,282 Land improvements, net 230 230 ------- ------- 6,925 6,394 Less accumulated depreciation 1,351 972 ------- ------- Total premises and equipment $ 5,574 $ 5,422 ======= ======= F-14 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 5: INTEREST-BEARING DEPOSITS Interest-bearing deposits in denominations of $100,000 or more were $34,957,000 on December 31, 1999 and $35,846,000 on December 31, 1998. At December 31, 1999, the scheduled maturities of certificates of deposit are as follows: (dollars in thousands) 2000 $ 66,492 2001 16,192 2002 10,851 2003 7,024 2004 and thereafter 4,238 --------- $ 104,797 ========= NOTE 6: OPERATING LEASES Blue Valley Building Corp. leases office space to others under noncancellable operating leases expiring in various years through 2004. Minimum future rentals receivable under noncancellable operating leases at December 31, 1999 are as follows: (dollars in thousands) 2000 $ 160 2001 132 2002 133 2003 138 2004 143 ------- Future minimum lease receivable $ 706 ======= NOTE 7: INCOME TAXES The provision for income taxes consists of the following:
1999 1998 1997 ---- ---- ---- (dollars in thousands) Taxes currently payable $ 2,018 $ 1,684 $ 1,248 Deferred income taxes (497) (298) (103) ----------- ----------- ----------- $ 1,521 $ 1,386 $ 1,145 ========== ========== ==========
F-15 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 7: INCOME TAXES (CONTINUED) A reconciliation of income tax expense at the statutory rate to the Company's actual income tax expense is shown below:
1999 1998 1997 ---- ---- ---- (dollars in thousands) Computed at the statutory rate (34%) $1,565 $1,428 $1,167 Increase (decrease) resulting from: Tax-exempt interest (190) (213) (140) Stock options (22) (6) (60) State income taxes 138 139 130 Other 30 38 48 ------ ------ ------ Actual tax provision $1,521 $1,386 $1,145 ====== ====== ======
The tax effects of temporary differences related to deferred taxes shown on the December 31, 1999 and 1998 consolidated balance sheets are as follows: 1999 1998 ---- ---- Deferred tax assets: (dollars in thousands) Allowance for loan losses $ 1,239 $ 739 Accrued compensated absences 50 37 Accumulated depreciation on available-for- sale securities 638 --------- ------ 1,927 776 --------- ------ Deferred tax liabilities: Accumulated depreciation (41) (49) Accumulated appreciation on available-for- sale securities (235) Other (45) (21) --------- ------- (86) (305) --------- ------- Net deferred tax asset $ 1,841 $ 471 ========= ====== F-16 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 8: SHORT-TERM DEBT Short-term debt at December 31, 1999 and 1998 consisted of the following components: 1999 1998 ---- ---- (dollars in thousands) Note payable to bank (A) $ 7,450 $ 3,575 Line of credit (B) 10,000 ----------- ----------- Total short-term debt $ 17,450 $ 3,575 =========== =========== (A) Due on demand, but no later than July 2000; payable in quarterly installments of $187,500 plus interest at prime less 1.0%; collateralized by 258,000 shares of the Bank's capital stock. (B) Line of credit with the Federal Home Loan Bank. Amount outstanding is a two-week advance with principal and interest payable at maturity. The line is collateralized by various assets including mortgage-backed loans and securities, and U.S. Treasury and Agency securities. The interest rate is adjusted daily and is tied to the Federal Funds rate. Availability is determined quarterly; at December 31, 1999 an additional $396,000 was available. NOTE 9: LONG-TERM DEBT Long-term debt at December 31, 1999 and 1998 consisted of the following components: 1999 1998 ---- ---- (dollars in thousands) Note payable - other (A) $ 1,908 $ 2,038 Federal Home Loan Bank advances (B) 10,000 10,000 ----------- ----------- Total long-term debt $ 11,908 $ 12,038 =========== =========== (A) Due in August 2009; payable in monthly installments of $23,175 including interest at 7.5%; collateralized by land, building and assignment of future rents. (B) Due in 2008; collateralized by various assets including mortgage-backed loans and securities, and U.S. Treasury and Agency securities. The interest rates on the advances range from 4.63% to 5.682%. F-17 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 9: LONG-TERM DEBT (CONTINUED) Aggregate annual maturities of long-term debt at December 31, 1999 are as follows: (dollars in thousands) 2000 $ 140 2001 151 2002 162 2003 175 2004 188 Thereafter 11,092 ---------- $ 11,908 ========== NOTE 10: REGULATORY MATTERS The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgements by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 1999, that the Company and the Bank meet all capital adequacy requirements to which they are subject. F-18 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 10: REGULATORY MATTERS (CONTINUED) As of December 31, 1999, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank's category. The Company and the Bank's actual capital amounts and ratios are also presented in the table.
To Be Well Capitalized For Capital Under Prompt Corrective Adequacy Purposes Action Provisions ------------------------ ---------------- AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO ------------ ------- ----------- ------ -------- ----- AS OF DECEMBER 31, 1999: (dollars in thousands) Total Capital (to Risk Weighted Assets) Consolidated $21,749 8.07% $21,573 8.00% N/A ======= ===== ======= ===== Bank Only $27,396 10.31% $21,256 8.00% $26,570 10.00% ======= ====== ======= ===== ======= ====== Tier 1 Capital (to Risk Weighted Assets) Consolidated $18,378 6.82% $10,786 4.00% N/A ======= ===== ======= ===== Bank Only $24,074 9.06% $10,628 4.00% $15,942 6.00% ======= ====== ======= ===== ======= ====== Tier 1 Capital (to Average Assets) Consolidated $18,378 5.80% $12,678 4.00% N/A ======= ===== ======= ===== Bank Only $24,074 7.69% $12,525 4.00% $15,656 5.00% ======= ====== ======= ===== ======= ====== AS OF DECEMBER 31, 1998: Total Capital (to Risk Weighted Assets) Consolidated $17,319 9.62% $14,406 8.00% N/A ======= ===== ======= ===== Bank Only $19,012 10.79% $14,100 8.00% $17,625 10.00% ======= ====== ======= ===== ======= ====== Tier 1 Capital (to Risk Weighted Assets) Consolidated $15,064 8.37% $ 7,203 4.00% N/A ======= ===== ======= ===== Bank Only $16,809 9.54% $ 7,050 4.00% $10,575 6.00% ======= ====== ======= ===== ======= ====== Tier 1 Capital (to Average Assets) Consolidated $15,064 6.13% $ 9,837 4.00% N/A ======= ===== ======= ===== Bank Only $16,809 6.94% $ 9,684 4.00% $12,104 5.00% ======= ====== ======= ===== ======= ======
The Bank is subject to certain restrictions on the amounts of dividends that it may declare without prior regulatory approval. At December 31, 1999, approximately $6,140,000 of retained earnings were available for dividend declaration without prior regulatory approval. F-19 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 11: TRANSACTIONS WITH RELATED PARTIES At December 31, 1999 and 1998, the Company had loans outstanding to executive officers, directors and to companies in which the Banks' executive officers or directors were principal owners, in the amounts of $1,384,000 and $1,713,000, respectively. Related party transactions for 1999 were as follows: (dollars in thousands) Balance, beginning of year $ 1,713 New loans 202 Repayments (531) -------- Balance, end of year $ 1,384 ======== In management's opinion, such loans and other extensions of credit and deposits were made in the ordinary course of business and were made on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons. Further, in management's opinion, these loans did not involve more than the normal risk of collectibility or present other unfavorable features. NOTE 12: PROFIT SHARING PLAN The Company's profit sharing plan covers substantially all employees. Contributions to the plan are determined annually by the Board of Directors, and participant interests are vested over a period from two to six years of service. Employer contributions charged to expense for 1999, 1998 and 1997 were $216,000, $152,000 and $132,000, respectively. NOTE 13: STOCK OPTIONS The Company has a fixed option plan under which the Company may grant options which vest two years from the date of grant to its employees for shares of common stock. At December 31, 1999, the Company had 215,284 options available to be granted (options granted prior to 1998 were subject to an earlier plan with similar terms). The exercise price of each option is intended to equal the fair value of the Company's stock on the date of grant, and maximum terms are 10 years. F-20 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 13: STOCK OPTIONS (CONTINUED) A summary of the status of the plan at December 31, 1999, 1998 and 1997, and changes during the years then ended, is presented below:
1999 1998 1997 ---------------------- ---------------------- ---------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price --------- --------- ---------- --------- ---------- --------- Outstanding, beginning of year 101,340 $ 9.18 138,160 $ 6.17 264,260 $ 4.45 Granted 64,000 14.38 65,516 11.02 60,500 7.50 Exercised (7,324) 10.75 (102,336) 6.30 (186,600) 4.17 Forfeited (800) --------- --------- --------- ------- --------- ------- Outstanding, end of year 157,216 $ 11.21 101,340 $ 9.18 138,160 $ 6.17 ========= ======= ========== ======= ========== ======= Options exercisable, end of year 88,860 $ 11.19 68,984 $ 7.34 138,160 $ 6.17 ========= ======= ========== ======= ========== =======
The weighted-average remaining contractual life at December 31, 1999 was 8.86 years. Exercise prices ranged from $3.75 to $14.38. The Company applies APB Opinion 25 and related Interpretations in accounting for the plan and no compensation cost has been recognized. No fair value disclosures with respect to stock options are presented because, in the opinion of management, such values do not have a material effect. NOTE 14: ADDITIONAL CASH FLOWS INFORMATION
NONCASH INVESTING AND FINANCING ACTIVITIES 1999 1998 1997 - ------------------------------------------ ---------- ---------- -------- (dollars in thousands) Loans transferred to foreclosed assets held for sale $ 595 $ 82 $ 647 ADDITIONAL CASH PAYMENT INFORMATION - ----------------------------------- Interest paid 11,411 8,995 7,061 Income taxes paid 1,655 1,551 1,165
F-21 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 15: OTHER INCOME/EXPENSE OTHER INCOME/EXPENSE Other operating expenses consist of the following: 1999 1998 1997 ---- ---- ---- (dollars in thousands) Advertising $ 475 $ 269 $ 119 Data processing 352 266 206 Professional fees 259 154 203 Other expense 2,122 1,247 1,161 -------- -------- -------- Total $ 3,208 $ 1,936 $ 1,689 ======== ======== ======== Other income consists of the following: 1999 1998 1997 ---- ---- ---- (dollars in thousands) Rental income $ 143 $ 273 $ 352 Other income 46 289 57 -------- -------- -------- Total $ 189 $ 562 $ 409 ======== ======== ======== NOTE 16: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of each class of financial instruments: CASH AND CASH EQUIVALENTS For these short-term instruments, the carrying amount approximates fair value. AVAILABLE-FOR-SALE SECURITIES Fair values for available-for-sale securities, which also are the amounts recognized in the consolidated balance sheets, equal quoted market prices, if available. If quoted market prices are not available, fair values are estimated based on quoted market prices of similar securities. MORTGAGE LOANS HELD FOR SALE For homogeneous categories of loans, such as mortgage loans held for sale, fair value is estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. F-22 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 16: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED) LOANS The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations. The carrying amount of accrued interest approximates its fair value. DEPOSITS The fair value of demand deposits, savings accounts, NOW accounts and certain money market deposits is the amount payable on demand at the reporting date (i.e., their carrying amount). The fair value of fixed maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities. The carrying amount of accrued interest payable approximates its fair value. ADVANCES FROM BORROWERS FOR TAXES AND INSURANCE The fair value of advances from borrowers for taxes and insurance is the amount payable at the reporting date (i.e., their carrying amount). SECURITIES SOLD UNDER AGREEMENT TO REPURCHASE AND OTHER LIABILITIES For these short-term instruments, the carrying amount is a reasonable estimate of fair value. NOTES PAYABLE AND LONG-TERM DEBT Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate fair value of existing debt. COMMITMENTS TO EXTEND CREDIT, LETTERS OF CREDIT AND LINES OF CREDIT The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit and lines of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. F-23 NOTE 16: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED) COMMITMENTS TO EXTEND CREDIT, LETTERS OF CREDIT AND LINES OF CREDIT (CONTINUED) The following table presents estimated fair values of the Company's financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which method involves significant judgements by management and uncertainties. Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Because no market exists for certain of these financial instruments, and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instrument could be sold individually or in the aggregate.
1999 1998 ------------------------------ ---------------------------- Carrying Fair Carrying Fair Amount Value Amount Value --------------- ------------- -------------- ----------- Financial assets: (dollars in thousands) Cash and cash equivalents $ 23,460 $ 23,460 $ 28,999 $ 28,999 Available-for-sale securities 48,646 48,646 53,427 53,427 Mortgage loans held for sale 952 952 1,954 1,954 Interest receivable 2,039 2,039 1,501 1,501 Loans, net of allowance for loan losses 246,593 246,090 159,103 159,160 Financial liabilities: Deposits 268,145 262,913 209,824 211,219 Advances from borrowers for taxes and insurance 2,559 2,559 712 712 Securities sold under agreements to repurchase 11,260 11,260 8,817 8,817 Short-term debt 17,450 17,450 3,575 3,575 Long-term debt 11,908 11,348 12,038 12,002 Interest payable 870 870 976 976 Unrecognized financial instruments (net of amortization): Commitments to extend credit 0 0 0 0 Letters of credit 0 0 0 0 Lines of credit 0 0 0 0 Forward commitments 0 0 0 0
F-24 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 17: COMMITMENTS AND CREDIT RISKS The Company extends credit for commercial real estate mortgages, residential mortgages, working capital financing and consumer loans to businesses and residents principally in southern Johnson County. The Bank also purchases indirect leases from various leasing companies throughout Kansas and Missouri. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require a payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate. At December 31, 1999 and 1998, the Company had outstanding commitments to originate loans aggregating approximately $36,826,000 and $14,518,000, respectively. The commitments extended over varying periods of time with the majority being disbursed within a one-year period. Loan commitments at fixed rates of interest amounted to $2,116,000 and $3,333,000 at December 31, 1999 and 1998, respectively, with the remainder at floating market rates. Mortgage loans in the process of origination represent amounts which the Company plans to fund within a normal period of 60 to 90 days and which are intended for sale to investors in the secondary market. Forward commitments to sell mortgage loans are obligations to deliver loans at a specified price on or before a specified future date. The Bank acquires such commitments to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale. Total mortgage loans in the process of origination amounted to $9,204,000 and $8,858,000 and mortgage loans held for sale amounted to $952,000 and $1,954,000 at December 31, 1999 and 1998, respectively. Related forward commitments to sell mortgage loans amounted to approximately $10,156,000 and $10,812,000 at December 31, 1999 and 1998, respectively. Mortgage loans in the process of origination represent commitments to originate loans at fixed rates. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company had total outstanding letters of credit amounting to $4,267,000 and $2,318,000 at December 31, 1999 and 1998, respectively. F-25 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTE 17: COMMITMENTS AND CREDIT RISKS (CONTINUED) Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on-balance sheet instruments. At December 31, 1999 and 1998, unused lines of credit borrowings aggregated approximately $75,112,000 and $58,786,000, respectively. Additionally, the Company periodically has excess funds which are loaned to other banks as federal funds sold. At December 31, 1999 and 1998, federal funds sold totaling $8,000,000 and $20,700,000, respectively, were loaned to various banks, as approved by the Board of Directors, with the largest balance at any one bank being $5,000,000 and $17,700,000 (Federal Home Loan Bank) at December 31, 1999 and 1998. NOTE 18: SIGNIFICANT ESTIMATES AND CONCENTRATIONS Generally accepted accounting principles require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Estimates related to the allowance for loan losses are reflected in the footnote regarding loans. Current vulnerabilities due to certain concentrations of credit risk are discussed in the footnote on commitments and credit risk. NOTE 19: FUTURE CHANGES IN ACCOUNTING PRINCIPLE The Financial Accounting Standards Board ("FASB") has issued Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS 133"). This statement, as amended by SFAS No. 137, requires all derivatives to be recorded on the balance sheet at fair value and establishes standard accounting methodologies for hedging activities. The standard will result in the recognition of offsetting changes in value or cash flows of both the hedge and the hedged item in earnings or comprehensive income in the same period. The statement is effective for Blue Valley's fiscal year ending December 31, 2001. Because Blue Valley generally does not hold derivative instruments, the adoption of this statement is not expected to have a material impact on the financial statements. F-26 NOTE 20: SUBSEQUENT EVENT Subsequent to year end, the stockholders authorized: o An increase in the number of authorized shares of the Company's common stock from 1,000,000 to 15,000,000. o A reduction in the par value of the Company's common stock from $10.00 to $1.00 per share. o The issuance of up to 15,000,000 shares of preferred stock in one or more series with such limitations and restrictions as may be determined by the Board's sole discretion. In addition, the Board of Directors authorized a 4-for-1 stock split. All shares and per share amounts presented in these financial statements have been restated to give effect to the stock split, retroactively. NOTE 21: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) CONDENSED BALANCE SHEETS DECEMBER 31, 1999 AND 1998 1999 1998 ---- ---- (In thousands) ASSETS Cash and cash equivalents $ 136 $ 318 Investments in subsidiaries: Bank of Blue Valley 24,565 18,762 Blue Valley Building Corp. 1,425 1,404 Loans 300 200 Other assets 334 202 -------- -------- Total Assets $ 26,760 $ 20,886 ======== ======== LIABILITIES Long-term debt $ 7,450 $ 3,575 Other liabilities 441 295 -------- -------- Total Liabilities 7,891 3,870 -------- -------- STOCKHOLDERS' EQUITY Common stock 2,138 2,130 Additional paid in capital 5,230 5,159 Undivided profits 12,458 9,375 Unrealized appreciation (depreciation) on available-for-sale securities, net of income taxes of $(638) and $235 at 1999 and 1998, respectively (957) 352 ----- ------- Total stockholders' equity 18,869 17,016 ------ ------- Total Liabilities and Stockholders' Equity $ 26,760 $ 20,886 ======== ======== F-27 NOTE 21: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) (CONTINUED)
CONDENSED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 1999 1998 1997 ---- ---- ---- (In thousands) Income Dividends from subsidiaries $ 695 $ 100 $ 445 Other income 5 7 3 -------- -------- -------- 700 107 448 Expenses 379 350 250 -------- -------- -------- Income before income taxes and equity in undistributed net income of subsidiaries 321 (243) 198 Credit for income taxes (128) (118) (84) --------- -------- -------- Income before equity in undistributed net income of subsidiaries 449 (125) 282 Equity in undistributed net income of subsidiaries 2,634 2,941 2,004 -------- -------- -------- Net income $ 3,083 $ 2,816 $ 2,286 ======== ======== ========
F-28 NOTE 21: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) (CONTINUED)
CONDENSED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 1999 1998 1997 ---- ---- ---- (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 3,083 $ 2,816 $ 2,286 Items not requiring (providing) cash: Deferred income taxes (128) (198) (4) Equity in undistributed income of subsidiaries (2,634) (2,941) (2,004) Changes in: Other assets (3) Other liabilities 146 257 (14) -------- -------- --------- Net cash provided by (used in) operating activities 464 (66) 264 -------- --------- -------- CASH FLOW FROM INVESTING ACTIVITIES Capital contributed to subsidiary (4,500) (615) Net originations of loans (100) -------- --------- Net cash used in investing activities (4,600) (615) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Repayments of long-term debt (625) (463) (300) Proceeds from long-term debt 4,500 1,500 Proceeds from sale of common stock 79 644 778 -------- -------- -------- Net cash provided by financing activities 3,954 181 1,978 -------- -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (182) 115 1,627 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 318 203 76 -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 136 $ 318 $ 1,703 ======== ======== ========
F-29
========================================= ======================================== TABLE OF CONTENTS Page ---- Cautionary Note on Forward-Looking Statements.........................1 Prospectus Summary....................1 Risk Factors.........................10 Use of Proceeds......................20 Market for the Trust Preferred Securities........................20 Accounting Treatment.................20 Capitalization.......................22 1,250,000 TRUST PREFERRED SECURITIES Selected Consolidated Financial Data.23 BVBC CAPITAL TRUST I Management's Discussion and Analysis of Financial Condition and Results of Operations.....................25 Business.............................44 Regulation and Supervision...........55 % CUMULATIVE TRUST PREFERRED Management...........................63 SECURITIES Security Ownership of Management and Certain Beneficial Owners.........71 Description of the Trust Preferred Securities........................72 Description of Junior Subordinated FULLY, IRREVOCABLY AND Debentures........................89 UNCONDITIONALLY GUARANTEED ON A Description of the Trust Preferred SUBORDINATED BASIS BY Securities Guarantee.............101 Description of the Expense Agreement........................104 Relationship Among the Trust Preferred Securities, the Junior Subordinated Debentures and the Trust Preferred BLUE VALLEY BAN CORP Securities Guarantee.............104 Material Federal Income Tax Consequences.....................106 ___________ Erisa Considerations................113 Underwriting........................113 Available Information...............115 Legal Matters.......................116 ___________ Experts.............................116 PROSPECTUS Index To Financial Statements.......F-1 , 2000 ___________ o We have not authorized anyone to give you any information that differs from the information in this prospectus. If you receive any different information, you should not rely on it. STIFEL, NICOLAUS & COMPANY o The delivery of this prospectus shall INCORPORATED not, under any circumstances, create an implication that Blue Valley Ban Corp is operating under the same conditions that it was operating under when this prospectus was written. Do not assume that the information contained in this prospectus is correct at any time past the date indicated. o This prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, any securities other than the securities to which it relates. o This prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the securities to which it relates in any circumstances in which such offer or solicitation is unlawful. o Until , 2000 (25 days after the date of this prospectus), all dealers that effect transactions in the trust preferred securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. ========================================= =======================================
PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. (1) Nature of Expense Amount (3) - ----------------- ------------- SEC filing fee (2)...................................... $ 3,036 American Stock Exchange listing fee..................... NASD filing fee......................................... 1,650 Printing, postage and mailing........................... Legal fees and expenses................................. Accounting fees and expenses............................ Trustees' fees and expenses............................. Transfer agent and Registrar fees....................... Blue Sky fees and expenses.............................. Miscellaneous........................................... ------------- Total............................................. $ ============= - ----------- (1) The amounts set forth above, except for the SEC filing fee, the American Stock Exchange listing fee and the NASD filing fee are in each case estimated. (2) Based upon the sale of 1,437,500 trust preferred securities at $8.00 per trust preferred security. (3) To be filed by amendment. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Amended and Restated Articles of Incorporation of the registrant, together with its Bylaws, provide that the registrant shall indemnify each person who is or was an officer or director of the registrant, or who is or was serving at the request of the registrant as a director, officer, employee, partner, trustee or agent of the registrant to the fullest extent permitted by applicable law. The laws of the State of Kansas permit, and in some cases require, corporations to indemnify officers, directors, employees and agents who are or who have been a party to or are threatened to be made a party to litigation against judgments, fines, settlements and reasonable expenses under certain circumstances. The registrant has also adopted provisions in its Amended and Restated Articles of Incorporation that limit the liability of its directors to the fullest extent permitted by the laws of the State of Kansas. Under the registrant's Amended and Restated Articles of Incorporation, as permitted by the laws of the State of Kansas, a director is not liable to the registrant or its stockholders for monetary damages for a breach of fiduciary duty as a director, except to the extent such exemption from liability, or limitation thereof, is not permitted under the Kansas General Corporation Code (the "KGCC") as presently in effect or as the same may hereafter be amended. As of the filing date of this registration statement, KGCC ss. 17-6002 provides, in II-1 pertinent part, that corporations "shall not eliminate or limit the liability of a director (a) for any breach of the director's duty of loyalty to the corporation or its stockholders, policyholders or members, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under the provisions of K.S. 17-6424, and amendments thereto, or (d) for any transaction from which the director derived an improper personal benefit." The registrant has agreed to indemnify the underwriter and the underwriter has agreed to indemnify the registrant against certain civil liabilities, including liabilities under the Securities Act of 1933, as amended. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. On January 31, 2000, the registrant effected a 4-for-1 stock split of its common stock. In connection with such stock split, the registrant issued to its stockholders of record an aggregate of 1,603,290 shares of common stock. All common share and per share amounts herein have been retroactively adjusted to reflect the stock split. Since December 31, 1996, the registrant has granted options to purchase an aggregate of 190,016 shares of common stock (after giving effect to the stock split) under its 1998 Equity Incentive Plan and its 1994 Stock Option Plan (together, the "Plans"), exercisable at a weighted average price of $11.03 per share (after giving effect to the stock split). During this same period, options granted under the Plans to purchase 296,260 shares of the registrant's common stock were exercised at a weighted average price of $5.07 per share. No underwriters were involved in the foregoing transactions. The January 31, 2000 stock split was effected in reliance upon the definition of "sale" set forth in Section 2(a)(3) of the Securities Act. Each of the options granted under the Plans and the exercises thereof were effected in reliance on Rule 701 under the Securities Act, and are deemed restricted securities for the purposes of the Securities Act. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits The following is a complete list of exhibits filed as a part of this registration statement. 1.1* Draft form of Underwriting Agreement between Blue Valley Ban Corp, BVBC Capital Trust I and Stifel, Nicolaus & Company, Incorporated 3.1 Amended and Restated Articles of Incorporation of Blue Valley Ban Corp 3.2 Bylaws, as amended, of Blue Valley Ban Corp 4.1 1998 Equity Incentive Plan 4.2 1994 Stock Option Plan II-2 4.3 Draft form of Indenture of Blue Valley Ban Corp 4.4 Draft form of __% Junior Subordinated Debentures, due June 30, 2030 4.5 Certificate of Trust of BVBC Capital Trust I 4.6 Draft form of Amended and Restated Trust Agreement of BVBC Capital Trust I 4.7 Draft form of ___% Cumulative Preferred Security Certificate for BVBC Capital Trust I 4.8 Draft form of Trust preferred securities Guarantee Agreement of Blue Valley Ban Corp relating to the ___% Cumulative Trust preferred securities 4.9 Draft form of Agreement as to Expenses and Liabilities 5.1* Opinion of Blackwell Sanders Peper Martin LLP as to the legality of the ___% junior subordinated debentures, due June 30, 2030 and the Trust Preferred Securities Guarantee Agreement relating to the ___% Cumulative Trust preferred securities 5.2 Opinion of Morris, Nichols, Arsht & Tunnell (special Delaware counsel) as to the legality of the ___% cumulative trust preferred securities to be issued by BVBC Capital Trust I 8.1 Opinion of Blackwell Sanders Peper Martin LLP as to certain federal income tax matters. 10.1 Security Agreement of Blue Valley Ban Corp in favor of Boatmen's First National Bank of Kansas City, dated as of June 7, 1994 10.2 Agreement between Blue Valley Ban Corp, Bank of Blue Valley and Boatmen's First National Bank of Kansas City, dated as of January 2, 1997 10.3 Amendment of Loan Documents between Blue Valley Ban Corp, Bank of Blue Valley and NationsBank, N.A. (successor to Boatmen's First National Bank of Kansas City), dated as of December 26, 1997 10.4 Second Amendment of Loan Documents between Blue Valley Ban Corp, Bank of Blue Valley and NationsBank, N.A., dated as of January 31, 1999 10.5 Third Amendment of Loan Documents between Blue Valley Ban Corp, Bank of Blue Valley and NationsBank, N.A., dated as of June 21, 1999 10.6 Fourth Amendment of Loan Documents between Blue Valley Ban Corp, Bank of Blue Valley and NationsBank, N.A., dated as of December 30, 1999 II-3 10.7 Amended and Restated Promissory Note of Blue Valley Ban Corp, dated December 30, 1999 10.8 Promissory Note of Blue Valley Building, dated July 15, 1994 10.9 Mortgage, Assignment of Leases and Rents and Security Agreement between Blue Valley Building and Businessmen's Assurance Company of America, dated July 15, 1994 10.10 Assignment of Leases and Rents between Blue Valley Building and Businessmen's Assurance Company of America, dated July 15, 1994 10.11 Lease Agreement between Bank of Blue Valley and CMI, Inc., dated January 18, 1999 12.1 Statements re: computations of ratios 21.1 Subsidiaries of Blue Valley Ban Corp 23.1 Consent of Blackwell Sanders Peper Martin LLP (see exhibits 5.1 and 8.1) 23.2 Consent of Morris, Nichols, Arsht & Tunnell (special Delaware counsel) (see exhibit 5.2) 23.3 Consent of Baird, Kurtz & Dobson 24.1 Power of attorney 25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the Indenture 25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the Amended and Restated Trust Agreement 25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the Trust Preferred Securities Guaranty Agreement 27 Financial Data Schedule * To be filed by amendment (b) Financial Statement Schedules No financial statement schedules are applicable. II-4 ITEM 17. UNDERTAKINGS (a) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. (b) Insofar as indemnification for liabilities under the Securities Act of 1933 may be permitted to officers, directors and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (d) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Overland Park, State of Kansas, on April 10, 2000. BLUE VALLEY BAN CORP By: /s/ Robert D. Regnier Robert D. Regnier, President and Chief Executive Officer II-6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Overland Park, State of Kansas, on April 10, 2000. BVBC CAPITAL TRUST I By: /s/ Robert D. Regnier Robert D. Regnier, Administrative Trustee II-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date * - --------------------- President, Chief Executive April 10, 2000 Robert D. Regnier Officer & Director * - --------------------- Director April 10, 2000 Donald H. Alexander * - --------------------- Director April 10, 2000 Wayne A. Henry, Jr. * - --------------------- Director April 10, 2000 C. Ted McCarter * - --------------------- Director April 10, 2000 Thomas A. McDonnell * - --------------------- Treasurer and Principal April 10, 2000 Mark A. Fortino Finance and Accounting Officer *By /s/ Mark A. Fortino ------------------------------ Mark A. Fortino, Attorney-in-Fact II-8 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date * - --------------------- Administrative Trustee April 10, 2000 Robert D. Regnier * - --------------------- Administrative Trustee April 10, 2000 Mark A. Fortino *By /s/ Mark A. Fortino ------------------------------ Mark A. Fortino, Attorney-in-Fact II-9 EX-3.1 2 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF BLUE VALLEY BAN CORP. A CORPORATION ORIGINALLY INCORPORATED IN THE STATE OF KANSAS ON JUNE 21, 1989 ARTICLE ONE NAME OF CORPORATION The name of the corporation is Blue Valley Ban Corp. (the "Corporation"). ARTICLE TWO REGISTERED OFFICE AND AGENT The address of the Corporation's registered office in the State of Kansas is 11935 Riley, Overland Park, Johnson County, Kansas 66213. The name of its registered agent at such address is Robert D. Regnier. ARTICLE THREE GENERAL NATURE OF BUSINESS The purpose of the Corporation is to engage in any lawful conduct or activity for which corporations may be organized under the Kansas General Corporation Code. ARTICLE FOUR DURATION The duration of the Corporation shall be perpetual. ARTICLE FIVE CAPITAL STOCK AUTHORIZED SHARES 1. The total number of shares of stock the Corporation has authority to issue shall be 30,000,000 shares, of which 15,000,000 shares shall be designated Preferred Stock (the "Preferred Stock") and 15,000,000 shares shall be designated Common Stock, par value $1.00 per share (the "Common Stock"). 2. The relative rights, voting power, preferences and restrictions of the shares of each class of stock that are fixed by the Articles of Incorporation, and the express grant of authority to the Board of Directors of the Corporation to fix by resolution or resolutions certain rights, voting power, preferences and restrictions, are as follows: PREFERRED STOCK 3. Shares of Preferred Stock may be issued in one or more series at such time or times and for such consideration as the Board of Directors may determine. Each such series shall be given a distinguishing designation. All shares of any one series shall have preferences, limitations and relative rights identical with those of other shares of the same series and, except to the extent otherwise provided in the description of such series, with those of other shares of Preferred Stock. 4. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following: (a) The distinguishing designation and number of shares constituting that series, which number may (except where otherwise provided by the Board of Directors in creating such series) be increased or decreased from time to time by action of the Board of Directors; (b) The dividend rate, if any, on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series over shares of any other series or over the Common Stock; (c) The voting rights, if any, that shares of that series shall have, and the terms of such voting rights; (d) Whether the shares of that series shall be convertible into or exchangeable for cash, shares of stock of any other class or any other series, indebtedness or other property or rights, including securities of another corporation, and, if so, the terms and conditions of such exchange or conversion, including the rate or rates of conversion, and whether such rate shall be a designated amount or an amount determined in accordance with a designated formula or by reference to extrinsic data or events, the date or dates upon or after which they shall be convertible or exchangeable, the duration for which they shall be convertible or exchangeable, the event or events upon or after which they shall be convertible or exchangeable, and whether they shall be convertible or exchangeable at the option of the Corporation, the shareholder or another person, and the method (if any) of adjusting the rate of conversion or exchange in the event of a stock split, stock dividend, combination of shares or similar event; (e) Whether or not the shares of that series shall be redeemable and, if so, the terms and conditions of such redemption, including the date or dates upon or after which 2 the shares of that series shall be redeemable, whether they shall be redeemable at the option of the Corporation, the shareholder or another person, the amount per share payable in the event of redemption (which amount may vary under different conditions and at different redemption dates), whether such amount shall be a designated amount or an amount determined in accordance with a designated formula or by reference to extrinsic data or events, and whether such amount shall be paid in cash, indebtedness, securities or other property or rights, including securities of any other corporation; (f) Whether that series shall have a retirement or sinking fund for the purchase or redemption of shares of that series, and, if so, the terms and amount payable into such fund; (g) The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that series over shares of any other series or over the Common Stock; (h) Whether the issuance of any additional shares of such series, or of any shares of any other series, shall be subject to restrictions as to issuance, or as to the powers, preferences or rights of any such other series; and (i) Any other preferences, powers, privileges, and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the shares of that series, as the Board of Directors may deem advisable and as shall not be inconsistent with these Articles of Incorporation or the Kansas General Corporation Code. COMMON STOCK 5. The holders of Common Stock shall be entitled to one vote per share on all matters to be voted on by the stockholders of the Corporation. 6. To the extent permitted under the Kansas General Corporation Code and subject to the provisions of the Preferred Stock, the holders of Common Stock shall be entitled to participate ratably on a per share basis in the payment of dividends, whether in cash, property or securities of the Corporation, when and as declared thereon by the Board of Directors. 7. Subject to the provisions of the Preferred Stock, the holders of Common Stock shall be entitled to participate ratably on a per share basis in all distributions to the holders of Common Stock in any liquidation, dissolution or winding up of the Corporation. ARTICLE SIX ACTION BY STOCKHOLDERS 1. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the 3 Corporation and may not be effected by any consent in writing by such stockholders. Meetings of stockholders may be held within or without the State of Kansas, as the bylaws of the Corporation may provide. Election of Directors need not be by written ballot. 2. The books of the Corporation may be kept outside the State of Kansas at such place or places as may be designated from time to time by the Board of Directors or in the bylaws of the Corporation. Stockholders shall have the right to inspect the books and records of the Corporation to the extent and in the manner provided by Kansas law, subject to reasonable restrictions as may be determined by the Board of Directors or the officers of the Corporation, from time to time with respect to any request for such inspection. 3. Except as otherwise required by law and subject to the right of holders of Preferred Stock then outstanding, special meetings of stockholders may be called by the President of the Corporation or by or at the direction of a majority of the Board of Directors, and shall be called by the Chairman of the Board, the President or the Secretary upon the written request of the holders of not less than twenty percent (20 %) of all of the outstanding shares of the Corporation entitled to vote at the meeting. The business transacted at a special meeting of stockholders shall be limited to that stated in the notice of such meeting or in a duly executed waiver thereof. 4. Except as otherwise provided by these Articles of Incorporation or as otherwise required by any applicable law, and subject to the rights of the holders of any Preferred Stock then outstanding, all of the shares of the capital stock of the Corporation entitled to vote on a matter shall vote on such matter together as a single class. 5. The holders of capital stock of the Corporation shall not be entitled to use cumulative voting on any matter. 6. Except as may otherwise be required by applicable law or regulation or be expressly authorized by the entire Board of Directors, a stockholder may make a nomination or nominations for Director of the Corporation at an annual meeting of stockholders or may bring up any other matter for consideration and action by the stockholders at an annual meeting of stockholders, only if the provisions of subsections A, B, C and D hereto shall have been satisfied. If such provisions shall not have been satisfied, any nomination sought to be made or other business sought to be presented by a stockholder for consideration and action by the stockholders at such a meeting shall be deemed not properly brought before the meeting, shall be ruled by the Chairman of the meeting to be out of order, and shall not be presented or acted upon at the meeting. A. The stockholder must be a stockholder of record on the record date for such annual meeting, must continue to be a stockholder of record at the time of such meeting, and must be entitled to vote thereat. B. The stockholder must deliver or cause to be delivered a written notice to the secretary of the Corporation. Such notice must be received by the secretary no less than one hundred twenty (120) days prior to the day corresponding to the date on which the Corporation released its proxy statement in connection with the 4 previous year's annual meeting; provided, however, that if the date of the annual meeting has been changed by more than thirty (30) days from the date of the previous year's annual meeting, such notice must be received by the secretary a reasonable time prior to the time at which notice of such meeting is delivered to the stockholders. The notice shall specify (a) the name and address of the stockholder as they appear on the books of the Corporation, (b) the class and number of shares of the Corporation which are beneficially owned by the stockholder; (c) any material interest of the stockholder in the proposed business described in the notice; (d) if such business is a nomination for director, each nomination sought to be made, together with the reasons for each nomination, a description of the qualifications and business or professional experience of each proposed nominee and a statement signed by each nominee indicating his or her willingness to serve if elected, and disclosing the information about him or her that is required by the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations promulgated thereunder to be disclosed in the proxy materials for the meeting involved if he or she were a nominee of the Corporation for election as one of its directors; (e) if such business is other than a nomination for director, the nature of the business, the reasons why it is sought to be raised and submitted for a vote of the stockholders and if and why it is deemed by the stockholder to be beneficial to the Corporation, and (f) if so requested by the Corporation, all other information that would be required to be filed with the Securities and Exchange Commission if, with respect to the business proposed to be brought before the meeting, the person proposing such business was a participant in a solicitation subject to Section 14 of the 1934 Act. C. Notwithstanding satisfaction of the provisions of subsection A and subsection B, the proposed business described in the notice may be deemed not to be properly brought before the meeting if, pursuant to state law or to any rule or regulation of the Securities and Exchange Commission, it was offered as a stockholder proposal and was omitted, or had it been so offered, it could have been omitted, from the notice of, and proxy material for, the meeting (or any supplement thereto) authorized by the Board of Directors. D. In the event such notice is timely given pursuant to subsection B and the business described therein is not disqualified pursuant to subsection C, such business may be presented by, and only by, the stockholder who shall have given the notice required by subsection A or a representative of such stockholder who is qualified under the law of the State of Kansas to present the proposal on the stockholder's behalf at the meeting. ARTICLE SEVEN NUMBER, CLASSIFICATION AND ELECTION OF DIRECTORS; VACANCIES 1. The number of Directors constituting the entire Board of Directors shall be neither less than three (3) nor more than twelve (12). Subject to the rights of the holders of any Preferred Stock then outstanding, the specific number of Directors within such minimum and 5 maximum shall be authorized from time to time by, and only by, resolution duly adopted by a majority of the total number of Directors then constituting the entire Board of Directors. 2. At the first annual meeting of stockholders following the filing of these Amended and Restated Articles of Incorporation with the Secretary of State of the State of Kansas after being adopted by the stockholders of the Corporation, the Board of Directors shall be divided into three (3) classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as possible, of one-third of the total number of Directors then constituting the entire Board of Directors. At such first annual meeting, Directors will be elected to serve staggered terms of either one, two or three years. The length of each Director's term shall depend upon the initial classification of the Director. Directors elected to Class I shall serve a one year term. Directors elected to Class II shall serve a two year term. Directors elected to Class III shall serve a three year term. At each annual stockholders' meeting thereafter, Directors elected to succeed the Directors whose terms expire at such meeting shall be elected for a full three year term. Initially, the number of Directors shall be five. If the number of Directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain or attain, to the extent possible, the equality of the number of Directors in each class. In no case shall a decrease in the number of Directors shorten the term of any incumbent Director. A Director shall hold office until the annual meeting for the year in which such Director's term expires and until a successor shall be duly elected and qualified, or until such Director's earlier death, resignation or removal. 3. Subject to the rights of the holders of any Preferred Stock then outstanding, any vacancies existing on the Board of Directors for any reason, including by reason of any increase in the number of Directors, shall be filled only by the Board of Directors, acting by the affirmative vote of a majority of the Directors then in office. The term of a Director elected to fill a vacancy shall expire upon the expiration of the term of office of the class in which such vacancy occurred. 4. The Board of Directors may authorize the appointment of a Chairman of the Board of Directors, who may, but need not be, the President of the Corporation. ARTICLE EIGHT REMOVAL OF DIRECTORS Subject to the rights of the holders of any Preferred Stock then outstanding, (i) any Director, or the entire Board of Directors, may be removed from office at any time by the affirmative vote of the holders of record of outstanding shares representing at least sixty-six and two-thirds percent (66 2/3 %) of the voting power of all the shares of capital stock of the Corporation then entitled to vote generally in the election of Directors, voting together as a single class, and (ii) to the extent permitted by law, any Director may be removed from office at any time, but only for Cause, by the affirmative vote of a majority of the entire Board of Directors. As used in these Articles of Incorporation, the term "Cause" means (i) conviction of the Director of a felony; (ii) declaration by order of a court that the Director is of unsound mind; or (iii) gross 6 abuse of trust that is proven by clear and convincing evidence to have been committed in bad faith. ARTICLE NINE INDEMNIFICATION OF OFFICERS, DIRECTORS AND ADVISORY DIRECTORS The Corporation shall indemnify each officer, Director and advisory Director of the Corporation to the fullest extent permitted by applicable law. The modification or repeal of this ARTICLE NINE shall not adversely affect the right to indemnification of an officer, Director or advisory Director hereunder with respect to any act or omission occurring prior to such modification or repeal. ARTICLE TEN LIMITATION ON PERSONAL LIABILITY OF DIRECTORS AND ADVISORY DIRECTORS No Director or advisory Director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a Director, except to the extent such exemption from liability or limitation thereof is not permitted under the Kansas General Corporation Code as presently in effect or as the same may hereafter be amended. Any repeal or modification of this ARTICLE TEN shall not adversely affect any right or protection of a Director or advisory Director of the Corporation existing at the time of such repeal modification. ARTICLE ELEVEN CONTROL SHARE ACQUISITIONS The Corporation expressly elects to be governed by ss.ss. 17-1286 et seq. of the Kansas General Corporation Code to the same extent as if such provisions, as amended from time to time, were restated in their entirety herein. ARTICLE TWELVE BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS The Corporation expressly elects to be governed by ss.ss. 17-12, 100 et seq. of the Kansas General Corporation Code to the same extent as if such provisions, as amended from time to time, were restated in their entirety herein. 7 ARTICLE THIRTEEN AMENDMENT OF BYLAWS The Board of Directors is hereby authorized to make, amend, alter or repeal the bylaws of the Corporation, subject to the power of the stockholders as described below to make, amend, alter or repeal the bylaws of the Corporation. Notwithstanding the foregoing or any other provisions of these Amended and Restated Articles of Incorporation or of the bylaws of the Corporation, the affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the then outstanding capital stock of the Corporation, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with, ARTICLE TWO, ARTICLE THREE and ARTICLE EIGHT of the bylaws of the Corporation. ARTICLE FOURTEEN AMENDMENT OF ARTICLES The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation in the manner now or hereafter prescribed herein and by the laws of the State of Kansas, and all rights conferred upon stockholders herein are granted subject to this reservation. Notwithstanding the above provision or any other provisions of the Articles of Incorporation or the bylaws of the Corporation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3 %) of the voting power of the shares of the then outstanding voting stock of the Corporation, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with, ARTICLES SIX, SEVEN, EIGHT, NINE, TEN, ELEVEN, TWELVE, THIRTEEN or this ARTICLE FOURTEEN of these Articles of Incorporation. These Amended and Restated Articles of Incorporation were proposed by the Board of Directors of the Corporation and adopted by the Corporation's stockholders in accordance with the provisions of K.S.A. 17-6605 and K.S.A. 17-6602. Dated January 12,2000. BLUE VALLEY BAN CORP. By: /s/ Robert D. Regnier Robert D. Regnier President ATTEST: /s/ Patricia L. Day Patricia L. Day, Secretary EX-3.2 3 BYLAWS OF BLUE VALLEY BAN CORP. Article I OFFICES Section 1. Principal Office. The principal office shall be located at corporation's principal place of business at 11935 Riley in the City of Overland Park, County of Johnson, State of Kansas. Section 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Kansas as the Board of Directors may from time to time determine or the business of the Corporation may require. Article II MEETINGS OF STOCKHOLDERS Section 1. Place of Meeting. All meetings of the Stockholders shall be held at such place either within or without the State of Kansas as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. In the event that the Board of Directors shall fail to fix the place for a meeting of Stockholders, such meeting shall be held at the Corporation's principal office. Section 2. Annual Meeting. Annual meetings of Stockholders shall be held at 10:00 a.m. on the fifteenth day in January of each fiscal year (unless otherwise designated by the Board of Directors), or if that day be a legal holiday, on the next succeeding day not a legal holiday. At such annual meeting the Stockholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. Section 3. Special Meetings. Special meetings of the Stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Incorporation, may be called by the President of the Corporation, a majority of the Board of Directors, or upon the written request of Stockholders owning not less than twenty percent (20%) of the outstanding stock entitled to vote. Such request shall state the purpose or purposes of the proposed meeting, as described in Section 4 of this Article II. Business transacted at any special meeting of Stockholders shall be limited to the purposes stated in the notice. Section 4. Notice. Written notice of each meeting of Stockholders stating the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered or given to each Stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. If mailed, notice shall be deemed to have been given when deposited in the United States mail, postage prepaid, directed to the Stockholder at his address as it appears on the records of the Corporation. Attendance of a Stockholder at a meeting shall constitute a waiver of notice of such meeting, except when the Stockholder attends a meeting for the express and exclusive purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting was not lawfully called or convened. An affidavit of the Secretary or Assistant Secretary or of the transfer agent of the Corporation that notice has been given shall be prima facie evidence of the facts stated therein in the absence of fraud. Section 5. Stockholders' List. The officer, or any person designated by the Corporation, who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of Stockholders, a complete list of the Stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the addresses of each Stockholder and the number of shares registered in the name of each Stockholder. Such list shall be open to the examination of any Stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any Stockholder who is present. Section 6. Quorum. The holders of one-half (1/2) of the stock issued and outstanding and entitled to vote at any meeting, represented in person or by proxy, shall constitute a quorum at all meetings of the Stockholders for the transaction of business except as otherwise provided by statute or by the Articles of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the Stockholders, the Stockholders entitled to vote at any meeting, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented; provided, however, if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Stockholder of record entitled to vote at the meeting. At such adjourned meeting any business may be transacted that might have been transacted at the meeting as originally notified, so long as a quorum shall be present or represented. Section 7. Action by Stockholders. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one requiring a different vote by express provision of the statutes or of the Articles of Incorporation, in which case, such express provision shall govern and control the decision on such question. Section 8. Voting of Shares. Each holder of common stock of the Corporation shall at every meeting of the Stockholders be entitled to vote in person or by proxy for each share of the capital stock having voting power held by such Stockholder, but no proxy shall be voted on after three (3) years from its date, unless the proxy provides for a longer period. 2 Section 9. Informal Action by Stockholders. Any action required to be taken at any annual or special meeting of Stockholders of the Corporation, or any action that may be taken at any annual or special meeting of such Stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by all the Stockholders entitled to vote with respect to the subject matter thereof. Such agreement or consent shall be filed by the Secretary in the Minute Book of the Corporation. Article III DIRECTORS Section 1. Management of Corporation. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors. The Board may exercise all such powers of the Corporation and do all such lawful acts and things that are not otherwise required by statute, by the Articles of Incorporation, or by these Bylaws to be done by the Stockholders. Section 2. Number. The number of Directors constituting the entire Board of Directors shall be neither less than three (3) nor more than twelve (12). Subject to the rights of any holders of Preferred Stock then outstanding, the specific number of Directors within such minimum and maximum shall be authorized from time to time by, and only by, resolutions duly adopted by a majority of the total number of Directors then constituting the entire Board of Directors. The Directors shall be elected at the annual meeting of the Stockholders, except as provided in Section 13 of this Article, and each Director elected shall hold office until his resignation, his removal, or his successor is elected and qualified, whichever shall occur first. Directors need not be Stockholders. Section 3. Meetings of the Newly Elected Board; Notice. The first annual meeting of the members of each newly elected Board of Directors shall be held (i) at such time and place either within or without the State of Kansas immediately after the meeting of Stockholders at which such newly elected Board was elected, and no notice of such meeting shall be necessary to the newly elected Directors in order to legally hold such meeting, provided a quorum shall be present, or (ii) if a quorum shall not be present, at such time and place as shall be consented to in writing by a majority of the newly elected Directors, provided that written notice of such meeting shall be given to each of the other Directors in the same manner as provided in Section 6 of this Article III with respect to the giving of notice for special meetings of the Board except that it shall not be necessary to state the purpose of the meeting in such notice, or (iii) at such time and place as shall be consented to in writing by all of the newly elected Directors. Every Director of the Corporation, upon his election, shall qualify by accepting the office of Director, and his attendance at, or his written approval of the minutes of, any meeting of the Board subsequent to his election shall constitute his acceptance of such office; or he may execute such acceptance by a separate writing. Such writing shall be placed in the Minute Book of the Corporation. Section 4. Regular Meetings. Regular meetings of the Board of Directors shall be held without notice at the principal office of the Corporation on the fifteenth of every January, April, July, and October at 10:00 a.m. or, with notice, at such time and at such place, either 3 within or without the State of Kansas, as shall from time to time be determined by the Board and in any manner, including by means of telephone conference or similar communications as provided in Section 7 of Article III of these Bylaws, permitted under the Kansas General Corporation Code of 1972, as amended. Section 5. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board, the President, any Vice President, the Secretary, or by any one (1) or more of the Directors. The place may be within or without the State of Kansas as designated in the notice, as described in Section 6 of this Article III. Section 6. Notice of Special Meetings. Written notice of each special meeting of the Board, stating the place, day and hour of the meeting and the purpose or purposes thereof, shall be mailed to each Director addressed to him at his residence or usual place of business at least three (3) days before the day on which the meeting is to be held, or shall be sent to him by telegram, or delivered to him personally, at least two (2) days before the day on which the meeting is to be held. If mailed, such notice shall be deemed to be delivered when it is deposited in the United States mail with postage thereon addressed to the Director at his residence or usual place of business. If given by telegraph, such notice shall be deemed to be delivered when it is delivered to the telegraph company. The notice may be given by any officer having authority to call the meeting. Any meeting of the Board of Directors shall be a legal meeting without any notice thereof having been given if all Directors shall be present or if all those not present shall waive notice of the meeting. Section 7. Meetings by Telephone Conference or Similar Communications Equipment. Unless otherwise restricted by the Articles of Incorporation, members of the Board of Directors, or any committee designated by the Board, may participate in a meeting of the Board or committee by means of telephone conference or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant hereto shall constitute presence in person at such meeting. All actions agreed upon by the Board using telephone or similar communications equipment shall be valid corporate actions provided a quorum of Directors participate in such telephone or similar conference. Section 8. Quorum. At all meetings of the Board a majority of the Directors shall constitute a quorum, except that when a Board of one Director is authorized under the provisions of Kansas General Corporation Code Section 17-6301, then one Director shall constitute a quorum, except as may be otherwise specifically provided by statute or by the Articles of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Informal Action by Directors. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. 4 Section 10. Designation of Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the Directors. The Board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent expressly provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require such seal; but no such committee shall have the power or authority in reference to amending the Articles of Incorporation, except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Kansas General Corporation Code Section 17-6401, and amendments thereto, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolutions, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series, adopting an agreement of merger or consolidation, recommending to the Stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the Stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the Bylaws of the Corporation; and, unless the resolution so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Kansas General Corporation Code Section 17-6703 and amendment thereto. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Section 11. Minutes of Committee Meetings. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. Section 12. Compensation of Directors. The Board of Directors shall have the authority to fix the compensation of Directors. The Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as Director. No such payments shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. Section 13. Vacancies. Any vacancies, however created, and newly created directorships resulting from any increase in the authorized number of Directors may be filled by a majority of the Directors then in office, even if less than a quorum, or by a sole remaining Director. The Directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, unless sooner displaced. If there are no Directors in office, then an election of Directors may be held in the manner provided by statute. If, at the 5 time of filling any vacancy or any newly created directorship, the Directors then in office shall constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the District Court of the State of Kansas, upon application of one or more Stockholders holding at least ten percent (10%) of the total number of the outstanding shares at the time, having the right to vote for such Directors, may summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the Directors chosen by the Directors then in office. Section 14. Removal of Director. One or more Directors, whether elected by the Stockholders or appointed by the Directors, may be removed from office, with or without cause, at any time by the holders of a majority of the shares of stock then entitled to vote at an election of Directors, except as may be otherwise specifically provided by statute or by the Articles of Incorporation, in which case, such express provision shall govern and control the removal of Directors. Section 15. Resignations. Any Director may resign at any time upon written notice to the Corporation. Such resignation shall take effect at the time specified therein or, if no time is specified therein, shall take effect upon receipt thereof by the Corporation, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Article IV OFFICERS Section 1. Manner of Selection; Authorized Officers. The Board of Directors shall elect such officers and give such officers any titles designated by the Board. Each office shall have the duties prescribed in Section 6 of this Article. Section 2. Time for Selection of Officers. Officers of the Corporation shall be elected by the Board of Directors at each of its annual meetings, immediately following the annual meeting of Stockholders, or at such other time as the Board deems necessary or appropriate to fill vacancies as provided by Article IV, Section 5. Section 3. Appointment of Agents. The Board of Directors may appoint such other agents as it shall deem necessary or advisable to exercise such powers and perform such duties as shall be determined from time to time by the Directors. Section 4. Compensation. The compensation of all officers and agents of the Corporation shall be fixed by the Board of Directors. Section 5. Term. Each officer of the Corporation shall hold office until his resignation, his removal, or his successor is duly elected and qualified, whichever first occurs. Any officer elected or appointed by the Board of Directors may be removed at any time, with or without cause, by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. 6 Section 6. Duties. The officers of the Corporation shall have the following duties: The Chairman of the Board of Directors The Board of Directors may authorize the appointment of a Chairman of the Board of Directors. The Chairman may, but need not be, the President of the Corporation. In the event the Board elects to authorize the appointment of a Chairman, such Chairman shall possess general executive powers and duties of supervision and management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. The Chairman of the Board of Directors shall also preside at all meetings of the Stockholders and Directors at which he may be present and shall have such other duties, powers and authority as may be prescribed elsewhere in these Bylaws. The President The President shall be the chief operating officer of the Corporation and shall perform such duties and have such powers as the Board of Directors may from time to time prescribe or which the Chairman of the Board may from time to time delegate. In the absence of the Chairman of the Board of Directors, or in the event of his inability or refusal to act, the President shall preside at all meetings of the Stockholders and Directors, except that if the President is not available to preside at a meeting of the Board of Directors, the President shall designate a member of the Board to so preside. The Vice-President The Vice-President or Vice-Presidents shall perform such duties and have such powers as the Board of Directors may from time to time prescribe or which the Chairman of the Board of Directors or which the President may from time to time delegate. In the absence of the President or in the event of his inability or refusal to act, the Vice-President (or in the event there be more than one Vice-President, the Vice-Presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the President in his capacity as an officer (and not as a Director) of the Corporation, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Secretary and Assistant Secretary The Secretary or Assistant Secretary shall record all proceedings of the meetings of the Board of Directors and all meetings of the Stockholders in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary may also give, or cause to be given, notice of all meetings of the Stockholders and special meetings of the Board of Directors, and shall keep, or cause to be kept, an account of the stock registered and transferred, and shall perform such other duties as may be prescribed by the Board of Directors or which the Chairman of the Board of Directors or which the President may from time to time delegate. The Secretary, or such person as the Corporation designates, shall have custody of the 7 corporate seal of the Corporation and he, or such designated person, shall have authority to affix the corporate seal to any instrument requiring it. When so affixed, such instrument may be attested by the signature of the Secretary or the signature of an Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe, or which the Chairman of the Board of Directors or which the President may from time to time delegate. The Treasurer and Assistant Treasurer The Treasurer shall have the custody of the Corporation's funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. Subject to the provisions of Article VI, Section 3, the Treasurer shall disburse the funds of the Corporation, keeping appropriate record of such disbursements, and shall render to the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer, or any Assistant Treasurer, shall give the Corporation a bond (which shall be renewed at least every six (6) years, unless sooner required by the Board of Directors) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe, or which the Chairman of the Board of Directors or the President may from time to time delegate. Article V CERTIFICATES OF STOCK Section 1. Certificate for Shares. Every holder of stock in the Corporation shall be entitled to have a certificate, signed by the Chairman of the Board of Directors or the President or a Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. If the Corporation shall be authorized to issue more than one class of stock or more 8 than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof, and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided that, except as otherwise provided in Section 17-6426 of the Kansas General Corporation Code of 1972, as amended, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each Stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Legends. All certificates or instruments evidencing securities of any kind or nature issued by the Corporation shall bear the following legend unless the offer and sale thereof by the Corporation has been registered under the Securities Act of 1933 and all applicable state and other securities laws: THE OFFER AND SALE OF THE SECURITIES EVIDENCED BY THIS INSTRUMENT ("SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR UNDER ANY APPLICABLE STATE OR OTHER SECURITIES LAWS, IN RELIANCE UPON EXEMPTIONS THEREFROM. NEITHER THE SECURITIES NOR ANY INTEREST IN THE SECURITIES MAY BE ASSIGNED, SOLD OR OTHERWISE TRANSFERRED EXCEPT EITHER (A) UPON COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE ACT AND ALL APPLICABLE STATE OR OTHER SECURITIES LAWS, OR (B) UPON FURNISHING AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND CONTENT SATISFACTORY TO THE CORPORATION THAT ANY SUCH ASSIGNMENT, SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT AND ALL APPLICABLE STATE OR OTHER SECURITIES LAWS. Section 3. Facsimile Signatures. Where a certificate is countersigned by a transfer agent or registrar who is not an officer or employee of the Corporation, any other signature on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 4. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and to give the Corporation an indemnification or a bond in such 9 sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. Section 5. Transfer of Stock. Upon surrender to the Corporation or the transfer agent of the Corporation or to any person designated by the Corporation, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, together with evidence in form, substance and content satisfactory to counsel for the Corporation establishing compliance with all applicable state and federal securities laws or other laws or agreements restricting the transfer of such shares, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 6. Fixing Record Date. In order that the Corporation may determine the Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, that shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of Stockholders of record entitled to notice of or to vote at a meeting of Stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 7. Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, to vote as such owner, and to exercise such other rights as are conferred upon the Corporation's Stockholders by statute, the Corporation's Articles of Incorporation or the Bylaws. The Corporation shall not be bound to recognize any equitable or other claim to or interest in any such share or shares on the part of any other person who is not registered as the owner thereof on the Corporation's books, whether or not the Corporation shall have express or other notice thereof, except as otherwise provided by the laws of Kansas. Article VI GENERAL PROVISIONS Section 1. Payment of Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Articles of Incorporation, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Articles of Incorporation. Section 2. Special Purpose Reserves. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Directors shall think conducive to the interest of 10 the Corporation, and the Directors may modify or abolish any such reserve in the manner in which it was created. Section 3. Checks. All checks or demands for money and notes of the Corporation shall be signed by the Treasurer or such officer or officers or such other person or persons as the Board of Directors may from time to time authorize. Article VII SEAL The corporate seal, if any, shall have inscribed thereon the name of the Corporation and the words "KANSAS" and "CORPORATE SEAL". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Article VIII INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES & AGENTS Section 1. General. In addition to and without limiting the rights to indemnification and advancement of expenses specifically provided for in the other sections of this Article, the Corporation shall indemnify and advance expenses to each person who is or was an officer or Director of the Corporation, or who is or was serving at the request of the Corporation as a Director, officer, employee, partner, trustee or agent of any Other Enterprise (as hereinafter defined), to the full extent permitted by the laws of the State of Kansas as in effect on the date of the adoption of this Article and as may hereafter be amended. Section 2. Indemnification Generally. The Corporation shall indemnify each person who has been or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that such person is or was an officer or Director of the Corporation or is or was serving at the request of the Corporation as a Director, officer, employee, partner, trustee or agent of any Other Enterprise, against all liabilities and expenses, including, without limitation, judgments, amounts paid in settlement, attorneys' fees, ERISA excise taxes or penalties, fines and other expenses actually and reasonably incurred by such person in connection with such action, suit or proceeding, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; provided, however, that the Corporation shall not be required to indemnify or advance expenses to any person in connection with an action, suit or proceeding initiated by such person (other than an action, suit or proceeding initiated by such person to enforce his right to indemnification and advancement of expenses pursuant to Section 7 hereof) unless the initiation of such action, suit or proceeding was authorized in advance by the Board of Directors of the Corporation. 11 Section 3. Indemnification in Derivative Actions. The Corporation shall indemnify each person who has been or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that the person is or was a Director or officer of the Corporation or is or was serving at the request of the Corporation as a Director, officer, employee, partner, trustee or agent of any Other Enterprise, against all liabilities and expenses, including, without limitation, amounts paid in settlement, attorneys' fees and other expenses actually and reasonably incurred by such person in connection with such action or suit, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that the court shall deem proper. Section 4. Mandatory Indemnification. To the extent that a person referred to in Sections 1, 2 or 3 of this Article has been successful in the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1, 2 or 3 of this Article, or in defense of any claim, issue or matter therein, such person shall be indemnified against all expenses actually and reasonably incurred in connection therewith, including attorneys' fees. Section 5. Standards for Discretionary Indemnification. Except as otherwise provided in Section 4 of this Article, or unless the indemnification is ordered by a court, any indemnification of a person by the Corporation pursuant to Sections 1, 2 and 3 of this Article shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the person is proper in the circumstances because the person has met the applicable standard of conduct set forth in Sections 1, 2 or 3 of this Article. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action or proceeding, or (ii) if such a quorum is not attainable, or even if attainable, should a quorum of disinterested Directors so direct, by independent legal counsel in a written opinion or (iii) by the Stockholders. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or under a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that such person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe his conduct was unlawful. Section 6. Advancement of Expenses. Expenses (including attorneys' fees) actually and reasonably incurred by a person who may be entitled to indemnification hereunder in connection with the defense of a civil or criminal action, suit or proceeding or in connection with the initiation of an action, suit or proceeding by such person to enforce his right to indemnification and advancement of expenses pursuant to this Section shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation. The Board of Directors 12 may, in each individual case, impose any additional terms and conditions as they shall deem appropriate. Section 7. Enforcement of Indemnification and Advancement of Expenses. Notwithstanding any other provision of this Article, including without limitation Sections 2 and 3 hereof, in the event the Corporation refuses to indemnify or advance expenses to any person or persons who may be entitled to be indemnified or to have expenses advanced hereunder, then, to the extent permitted by law, such person or persons shall have the right to maintain an action in any court of competent jurisdiction against the Corporation to determine whether or not such person has met the requisite standard of conduct and is entitled to such indemnification or advancement of expenses hereunder. If such court action is successful and the person or persons is determined to be entitled to such indemnification, such person or persons shall be reimbursed by the Corporation for all fees and expenses reasonably and actually incurred in connection therewith (including, without limitation, the fees and expenses reasonably and actually incurred in connection with the investigation, defense, settlement or appeal of such action). Section 8. Non-Exclusivity. The indemnification and the advancement of expenses provided by this Article shall not be exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any statute, the Articles of Incorporation, Bylaws or any agreement, vote of Stockholders or disinterested Directors, policy of insurance or otherwise, both as to action in their official capacity and as to action in another capacity while holding their respective offices, and shall not limit in any way any right which the Corporation may have to make additional indemnifications with respect to the same or different persons or classes of persons. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article shall continue as to any person who has ceased to hold any position with the Corporation or any Other Enterprise, and shall inure to the benefit of the heirs, executors, administrators and estate of such person. Section 9. Insurance. Upon resolution passed by the Board of Directors, the Corporation may purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a Director, officer, employee, partner, trustee or agent of any Other Enterprise, against any liability asserted against him and incurred by him in such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. Section 10. Vesting of Rights. The rights granted by this Article shall be vested in each person entitled to indemnification hereunder as a bargained-for, contractual condition of such person's acceptance of his position as a Director or officer of the Corporation, and while this Article may be amended or repealed, no such amendment or repeal shall release, terminate or adversely affect the rights of such person under this Article with respect to any act taken or the failure to take any act by such person prior to such amendment or repeal or with respect to any action, suit or proceeding with respect to such act or failure to act filed after such amendment or repeal. 13 Section 11. Definitions. For the purpose of this Article, references to: (1) "Other Enterprises" or "Other Enterprise" shall include without limitation any bank, corporation, partnership, joint venture, trust, employee benefit plan or other venture; (2) "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; (3) "defense" shall include investigations of any threatened, pending or completed action, suit or proceeding as well as appeals thereof and shall also include any defensive assertion of a cross-claim or a counterclaim; (4) "serving at the request of the Corporation" shall include any service as a Director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such Director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; (5) "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its Directors, officers and employees or agents, so that any person who is or was a Director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a Director, officer, employee, partner, trustee or agent of any Other Enterprise, shall stand in the same position under this Article with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. As referred to in this Article, a person acting in good faith and in a manner he reasonably believed to be in the interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation." For the purpose of this Article, unless the Board of Directors of the Corporation shall determine otherwise, any Director or officer of the Corporation who shall serve as an officer, Director, employee, partner, trustee or agent of any Other Enterprise of which the Corporation, directly or indirectly, is a Stockholder or creditor, or in which the Corporation is in any way interested, shall be presumed to be serving in such a capacity at the request of the Corporation. In all other instances where any person shall serve as a Director, officer, employee, partner, trustee or agent of any Other Enterprise, if it is not otherwise established that such person is or was serving in such a capacity at the request of the Corporation, the Board of Directors of the Corporation shall determine whether such person is or was serving at the request of the Corporation, and it shall not be necessary to show any actual or prior request for such service, which determination shall be final and binding on the Corporation and the person seeking indemnification. Section 12. Severability. If any provision of this Article or the application of any such provision to any person or circumstance is held invalid, illegal or unenforceable for any reason whatsoever, the remaining provisions of this Article and the application of such provision to 14 other persons or circumstances shall not be affected thereby and to the fullest extent possible the court finding such provision invalid, illegal or unenforceable shall modify and construe the provision so as to render it valid and enforceable as against all persons or entities and to give the maximum possible protection to persons subject to indemnification hereby within the bounds of validity, legality and enforceability. Without limiting the generality of the foregoing, if an officer or Director of the Corporation or any person who is or was serving at the Corporation's request as a Director, officer, employee, partner, trustee or agent of any Other Enterprise, is entitled under any provision of this Article to indemnification by the Corporation for some or a portion of the judgments, amounts paid in settlement, attorneys' fees, ERISA excise taxes or penalties, fines or other expenses actually and reasonably incurred by any such person in connection with any threatened, pending or completed action, suit or proceeding (including without limitation the investigation, defense, settlement or appeal of such action, suit or proceeding), but not, however, for all of the total amount thereof, the Corporation shall nevertheless indemnify such person for the portion thereof to which such person is entitled. Section 13. Personal Right. The right of any person to indemnification from the Corporation under the provisions of this Article shall be a personal right, and the Corporation shall have no liability hereunder to any insurer, Other Enterprise or other person (other than the heirs, executors, administrators, or estate of a person entitled thereto pursuant to Section 8 hereof) by reason of subrogation, assignment or succession by any other means to the claim of any person to indemnification from the Corporation hereunder. Section 14. Regulatory Actions. Notwithstanding any other provision of this Article, in no event shall the Corporation indemnify any person against liabilities, penalties, or expenses incurred in connection with an administrative proceeding or action instituted by a bank regulatory agency, which proceeding or action results in a final order assessing civil money penalties or requiring affirmative action by such person or persons in the form of payments to the Corporation or any Other Enterprise. Article IX AMENDMENTS These Bylaws may be altered, amended or repealed or new Bylaws may be adopted as provided in the Articles of Incorporation. Article X MISCELLANEOUS Section 1. Construction. The titles of the paragraphs and subparagraphs have been inserted as a matter of convenience and reference only, and shall not control or affect the meaning or construction of these Bylaws. Use of the masculine gender shall also be deemed to refer to the feminine gender and neuter gender and the singular to the plural unless the context clearly requires otherwise. 15 EX-4.1 4 1998 EQUITY INCENTIVE PLAN BLUE VALLEY BAN CORP. 1998 EQUITY INCENTIVE PLAN Table of Contents Article 1. Establishment, Effective Date, Objectives and Duration............1 1.1 ESTABLISHMENT OF THE PLAN.............................................1 1.2 OBJECTIVES OF THE PLAN................................................1 1.3 DURATION OF THE PLAN..................................................1 Article 2. Definitions.......................................................1 2.1 ARTICLE...............................................................1 2.2 AWARD.................................................................1 2.3 AWARD AGREEMENT.......................................................1 2.4 BOARD.................................................................1 2.5 CAUSE.................................................................1 2.6 CODE..................................................................2 2.7 COMMITTEE.............................................................2 2.8 COMMON STOCK..........................................................2 2.9 COMPANY...............................................................2 2.10 COVERED EMPLOY.......................................................2 2.11 DEFERRED SHARE UNITS.................................................2 2.12 DISABILITY...........................................................2 2.13 DISQUALIFYING DISPOSITION............................................2 2.14 ELIGIBLE PERSON......................................................2 2.15 EXCHANGE ACT.........................................................3 2.16 FAIR MARKET VALUE....................................................3 2.17 GRANT DATE...........................................................3 2.18 GRANTEE..............................................................3 2.19 INCENTIVE STOCK OPTION...............................................3 2.20 INCLUDING............................................................3 2.21 MATURE SHARES........................................................3 2.22 MINIMUM CONSIDERATION................................................3 2.23 OPTION...............................................................3 2.24 OPTION PRICE.........................................................3 2.25 OPTION TERM..........................................................3 2.26 PERFORMANCE-BASED EXCEPTION..........................................4 2.27 PERIOD OF RESTRICTION................................................4 2.28 PERSON...............................................................4 2.29 PLAN.................................................................4 2.30 RELOAD OPTION........................................................4 2.31 REQUIRED WITHHOLDING.................................................4 2.32 RESTRICTED SHARES....................................................4 2.33 RULE 16B-3...........................................................4 2.34 SEC..................................................................4 2.35 SECTION..............................................................4 2.36 SHARE................................................................4 2.37 SUBSIDIARY...........................................................4 2.38 TERMINATION OF AFFILIATION...........................................4 2.39 10% OWNER............................................................5 Article 3. Administration....................................................5 3.1 COMMITTEE.............................................................5 3.2 POWERS OF COMMITTEE...................................................5 Article 4. Shares Subject to the Plan and Maximum Awards.....................6 4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS.................................6 4.2 ADJUSTMENTS IN AUTHORIZED SHARES......................................7 Article 5. Eligibility and General Conditions of Awards......................7 5.1 ELIGIBILITY...........................................................7 5.2 GRANT DATE............................................................7 5.3 MAXIMUM TERM..........................................................7 5.4 AWARD AGREEMENT.......................................................7 5.5 RESTRICTIONS ON SHARE TRANSFERABILITY.................................7 5.6 TERMINATION OF AFFILIATION............................................8 5.7 NONTRANSFERABILITY OF AWARDS..........................................9 5.8 CANCELLATION AND RESCISSION OF AWARDS.................................9 5.9 LOANS AND GUARANTEES..................................................9 Article 6. Stock Options....................................................10 6.1 GRANT OF OPTIONS.....................................................10 6.2 AWARD AGREEMENT......................................................10 6.3 OPTION PRICE.........................................................10 6.4 GRANT OF INCENTIVE STOCK OPTIONS.....................................10 6.5 GRANT OF RELOAD OPTIONS..............................................11 6.6 CONDITIONS ON RELOAD OPTIONS.........................................12 6.7 PAYMENT..............................................................12 Article 7. Restricted Shares................................................13 7.1 GRANT OF RESTRICTED SHARES...........................................13 7.2 AWARD AGREEMENT......................................................13 7.3 CONSIDERATION........................................................13 7.4 EFFECT OF FORFEITURE.................................................13 7.5 ESCROW; LEGENDS......................................................13 Article 8. Beneficiary Designation..........................................13 Article 9. Deferred Share Units/Deferrals...................................14 9.1 DEFERRED SHARE UNITS.................................................14 9.2 DEFERRALS............................................................14 Article 10. Rights of Employees/Directors...................................14 10.1 EMPLOYMENT..........................................................14 10.2 PARTICIPATION.......................................................14 Article 11. Amendment, Modification, and Termination........................14 11.1 AMENDMENT, MODIFICATION, AND TERMINATION............................14 11.2 ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR ....... NONRECURRING EVENTS...................................................14 11.3 AWARDS PREVIOUSLY GRANTED...........................................15 Article 12. Withholding.....................................................15 12.1 WITHHOLDING.........................................................15 12.2 NOTIFICATION UNDER CODE SECTION 83(B)...............................16 Article 13. Successors......................................................16 Article 14. Additional Provisions...........................................16 14.1 GENDER AND NUMBER...................................................16 14.2 SEVERABILITY........................................................16 14.3 REQUIREMENTS OF LAW.................................................16 14.4 SECURITIES LAW COMPLIANCE...........................................17 14.5 NO RIGHTS AS A STOCKHOLDER..........................................17 14.6 NATURE OF PAYMENT...................................................17 14.7 GOVERNING LAW.......................................................18 EXHIBIT A..................................................................19 Sample STOCK OPTION AGREEMENT..............................................21 Blue Valley Ban Corp. 1998 Equity Incentive Plan Article 1. Establishment, Effective Date, Objectives and Duration 1.1 Establishment of the Plan. Blue Valley Ban Corp., a Kansas corporation (the "Company"), hereby establishes an incentive compensation plan to be known as the "Blue Valley Ban Corp. 1998 Equity Incentive Plan" (the "Plan"). The Plan has been adopted by the Board of Directors of the Company (the "Board") and approved by the shareholders of the Company. The Plan shall be effective as of April 9 , 1998 (the "Effective Date"). 1.2 Objectives of the Plan. The Plan is intended to allow selected employees and directors of the Company and its Subsidiaries to acquire or increase equity ownership in the Company, thereby strengthening their commitment to the success of the Company and stimulating their efforts on behalf of the Company, and to assist the Company and its Subsidiaries in attracting new employees and directors and retaining existing employees and directors. The Plan is also intended to optimize the profitability and growth of the Company through incentives which are consistent with the Company's goals; to provide employees and directors with an incentive for excellence in individual performance; and to promote teamwork among employees and directors. 1.3 Duration of the Plan. The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to Article 11 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan's provisions. However, in no event may an Incentive Stock Option be granted under the Plan on or after the date 10 years following the earlier of (i) the date the Plan was adopted and (ii) the date the Plan was approved by the shareholders of the Company. Article 2. Definitions Whenever used in the Plan, the following terms shall have the meanings set forth below: 2.1 "Article" means an Article of the Plan. 2.2 "Award" means Options (including Incentive Stock Options), Restricted Shares or Deferred Share Units granted under the Plan. 2.3 "Award Agreement" means the written agreement by which an Award shall be evidenced. 2.4 "Board" has the meaning set forth in Section 1.1. 2.5 "Cause" means, unless otherwise defined in an Award Agreement, any one or more of the following, as determined by the Committee: (i) a Grantee's commission of a crime which, in the judgment of the Committee, is likely to result in injury to the Company or a Subsidiary; (ii) the material violation by the Grantee of written policies of the Company or a Subsidiary; (iii) the habitual neglect by the Grantee in the performance of his or her duties to the Company or a Subsidiary; or (iv) action or inaction by the Grantee in connection with his or her duties to the Company or a Subsidiary resulting, in the judgment of the Committee, in a material injury to the Company or a Subsidiary. 2.6 "Code" means the Internal Revenue Code of 1986, as amended from time to time, and regulations and rulings thereunder. References to a particular section of the Code include references to successor provisions. 2.7 "Committee" has the meaning set forth in Article 3. 2.8 "Common Stock" means the common stock, $10.00 par Value, of the Company. 2.9 "Company" has the meaning set forth in Section 1.1. 2.10 "Covered Employ" means a Grantee who, as of the date that the value of an Award is recognizable as income, is one of the group of "covered employees," within the meaning of Code Section 162(m). 2.11 "Deferred Share Units" means units granted under Section 9.1 of the Plan. 2.12 "Disability" means, unless otherwise defined in an Award Agreement, for purposes of the exercise of an Incentive Stock Option after Termination of Affiliation, a disability within the meaning of Section 22(e)(3) of the Code, and for all other purposes, a mental or physical condition which, in the judgment of the Committee, renders a Grantee unable to perform any of the principal job responsibilities which such Grantee held or the tasks to which such Grantee was assigned at the time the disability was incurred, and which condition is expected to be permanent or for an indefinite duration exceeding two years. 2.13 "Disqualifying Disposition" has the meaning set forth in Section 6.4. 2.14 "Eligible Person" means (i) any employee (including any officer) of the Company or any Subsidiary, including any such employee who is on an approved leave of absence, layoff, or has been subject to a disability which does not qualify as a Disability and (ii) any director of the Company or any Subsidiary. 2 2.15 "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. References to a particular section of the Exchange Act include references to successor provisions. 2.16 "Fair Market Value" means (A) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee, and (B) with respect to Shares, unless otherwise determined in the good faith discretion of the Committee, as of any date, (i) the closing price on the date of determination on the New York Stock Exchange (or, if no sale of Shares was reported for such date, on the next preceding date on which a sale of Shares was reported), (ii) if the Shares are not listed on the New York Stock Exchange, the closing price of the Shares on such other national exchange on which the Shares are principally traded or as reported by the National Market System, or similar organization, or if no such quotations are available, the average of the high bid and low asked quotations in the over-the-counter market as reported by the National Quotation Bureau Incorporated or similar organizations; or (iii) in the event that there shall be no public market for the Shares, the fair market value of the Shares as determined (which determination shall be conclusive) in good faith by the Committee. 2.17 "Grant Date" has the meaning set forth in Section 5.2. 2.18 "Grantee" means an individual who has been granted an Award. 2.19 "Incentive Stock Option" means an option granted under Article 6 of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provisions thereto. 2.20 "including" or "includes" means "including, without limitation," or "includes, without limitation", respectively. 2.21 "Mature Shares" means Shares for which the holder thereof has good title, free and clear of all liens and encumbrances, and which such holder either (i) has held for at least six months or (ii) has purchased on the open market. 2.22 "Minimum Consideration" means $.01 per Share or such other amount that is from time to time considered to be capital under applicable law. 2.23 "Option" means an option granted under Article 6 of the Plan. 2.24 "Option Price" means the price at which a Share may be purchased by a Grantee pursuant to an Option. 2.25 "Option Term" means the period beginning on the Grant Date of an Option and ending on the expiration date of such Option, as specified in the Award Agreement for such Option and as may, in the discretion of the Committee and consistent with the provisions of the Plan, be extended from time to time prior to the expiration date of such Option then in effect. 3 2.26 "Performance-Based Exception" means the performance-based exception from the tax deductibility limitations of Code Section 162(m). 2.27 "Period of Restriction" means the period during which the transfer of Restricted Shares is limited in some way (the length of the period being based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 7. 2.28 "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) thereof. 2.29 "Plan" has the meaning set forth in Section 1.1. 2.30 "Reload Option" has the meaning set forth in Section 6.5. 2.31 "Required Withholding" has the meaning set forth in Article 12. 2.32 "Restricted Shares" means Shares that are subject to forfeiture if the Grantee does not satisfy the conditions, if any, specified in the Award Agreement applicable to such Shares. 2.33 "Rule 16b-3 " means Rule 16b-3 promulgated by the SEC under the Exchange Act, as amended from time to time, together with any successor rule, as in effect from time to time. 2.34 "SEC" means the United States Securities and Exchange Commission, or any successor thereto. 2.35 "Section" means, unless the context otherwise requires, a Section of the Plan. 2.36 "Share" means a share of Common Stock. 2.37 "Subsidiary" means, for purposes of grants of Incentive Stock Options, a corporation as defined in Section 424(f) of the Code (with the Company being treated as the employer corporation for purposes of this definition) and, for all other purposes, a United States or foreign corporation with respect to which the Company owns, directly or indirectly, 50% or more of the thenoutstanding common stock. 2.38 "Termination of Affiliation" occurs on the first day on which an individual is for any reason no longer providing services to the Company or any Subsidiary in the capacity of an employee or director, or with respect to an individual who is an employee or director of a Subsidiary, the first day on which the Company no longer owns, directly or indirectly, voting securities possessing at least 50% of the combined voting power of the thenoutstanding securities entitled to vote generally in the election of directors of such Subsidiary. 4 2.39 "10% Owner" means a person who owns capital stock (including stock treated as owned under Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of capital stock of the Company or any Subsidiary. Article 3. Administration 3.1 Committee. Subject to Article 11, and to Section 3.2, the Plan shall be administered by the Board, or a committee appointed by the Board to administer the Plan. Any references herein to "Committee" are references to the Board, or a committee established by the Board, as applicable. To the extent the Board considers it desirable to comply with or qualify under Rule 16b-3 or meet the Performance-Based Exception, the Committee shall consist of two or more directors of the Company, all of whom qualify as "outside directors" as defined for purposes of the regulations under Code Section 162(m) and "non-employee directors" within the meaning of Rule 16b-3. The number of members of the Committee shall from time to time be increased or decreased, and shall be subject to such conditions, in each case as the Board deems appropriate to permit transactions in Shares pursuant to the Plan to satisfy such conditions of Rule 16b-3 and the Performance-Based Exception as then in effect. 3.2 Powers of Committee. Subject to the express provisions of the Plan, the Committee has full and final authority and sole discretion as follows: (i) to determine when, to whom and in what types and amounts Awards should be granted and the terms and conditions applicable to each Award, and whether or not specific Awards shall be granted in connection with other specific Awards, and if so whether they shall be exercisable cumulatively with., or alternatively to, such other specific Awards; (ii) to determine the amount, if any, that a Grantee shall pay for Restricted Shares, whether to permit or require the payment of cash dividends thereon to be deferred and the terms related thereto, when Restricted Shares (including Restricted Shares acquired upon the exercise of an Option) shall be forfeited and whether such shares shall be held in escrow; (iii) to construe and interpret the Plan and to make all determinations necessary or advisable for the administration of the Plan; (iv) to make, amend, and rescind rules relating to the Plan, including rules with respect to the exercisability and non forfeitability of Awards upon the Termination of Affiliation of a Grantee; (v) to determine the terms and conditions of all Award Agreements (which need not be identical) and, with the consent of the Grantee, to amend any such Award Agreement at any time, among other things, to permit transfers of such Awards to the extent permitted by the Plan; provided that the consent of the Grantee shall not be required for any amendment which (A) does not adversely affect the rights of the Grantee, or (B) is necessary or 5 advisable (as determined by the Committee) to carry out the purpose of the Award as a result of any new or change in existing applicable law; (vi) to cancel, with the consent of the Grantee, outstanding Awards and to grant new Awards in substitution therefor; (vii) to accelerate the exercisability (including exercisability within a period of less than six months after the Grant Date) of, and to accelerate or waive any or all of the terms and conditions applicable to, any Award or any group of Awards for any reason and at any time, including in connection with a Termination of Affiliation; (viii) subject to Sections 1.3 and 5.3, to extend the time during which any Award or group of Awards may be exercised; (ix) to make such adjustments or modifications to Awards to Grantees working outside the United States as are advisable to fulfill the purposes of the Plan; (x) to impose such additional terms and conditions upon the grant, exercise or retention of Awards as the Committee may, before or concurrently with the grant thereof, deem appropriate, including limiting the percentage of Awards which may from time to time be exercised by a Grantee; and (xi) to take any other action with respect to any matters relating to the Plan for which it is responsible. The determination of the Committee on all matters relating to the Plan or any Award Agreement shall be final, conclusive and binding on all Persons. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award. Article 4. Shares Subject to the Plan and Maximum Awards 4.1 Number of Shares Available for Grants. Subject to adjustment as provided in Section 4.2, the number of Shares hereby reserved for issuance under the Plan shall be 50,000, and the number of Shares for which Awards may be granted to any Grantee in any calendar year shall not exceed 15,000. If anyShares subject to an Award granted hereunder are forfeited or such Award otherwise terminates without the issuance of such Shares or of other consideration in lieu of such Shares, the Shares subject to such Award, to the extent of any such forfeiture or termination shall again be available for grant under the Plan. If any Shares subject to an Award granted hereunder are withheld, applied as payment, or sold and the proceeds thereof applied as payment in connection with the exercise of an Award or the withholding or payment of taxes related thereto, such Shares, to the extent of any such withholding or payment, shall again be available for grant under the Plan. The Committee shall from time to time determine the appropriate methodology for calculating the number of Shares issued pursuant to the Plan. Shares issued pursuant to the Plan may be treasury Shares or newly issued Shares. 6 4.2 Adjustments in Authorized Shares. In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, subdivision, consolidation or reduction of capital, reorganization, merger, scheme of arrangement, split-up, spin-off or combination involving the Company or repurchase or exchange of Shares or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that any adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or property) with respect to which Awards may be granted, (ii) the number and type of Shares (or other securities or property) subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; provided, in each case that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b)(1) of the Code or any successor provision thereto; and provided further, that the number of Shares subject to any Award denominated in Shares shall always be a whole number. Article 5. Eligibility and General Conditions of Awards 5.1 Eligibility. The Committee may in its discretion grant Awards to any Eligible Person, whether or not he or she has previously received an Award. 5.2 Grant Date. The Grant Date of an Award shall be the date on which the Committee grants the Award or such later date as specified in advance by the Committee. 5.3 Maximum Term. Any provision of the Plan to the contrary notwithstanding, the Option Term or other period during which an Award may be outstanding shall under no circumstances extend more than 10 years after the Grant Date, and shall be subject to earlier termination as herein provided. 5.4 Award Agreement. To the extent not set forth in the Plan, the terms and conditions of each Award (which need not be the same for each grant or for each Grantee) shall be set forth in an Award Agreement. 5.5 Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise or vesting of an Award as it may deem advisable, including restrictions under applicable federal securities laws. Except as otherwise provided by the Committee in an Award Agreement, all Shares acquired pursuant to the exercise or vesting of an Award shall be subject to (i) the option right by the Company to purchase such Shares set forth in Article V of the Company's Articles of Incorporation (as the same may be amended from time to time), (ii) the right of the Company to purchase, and to require a Grantee to sell. to the Company, such Shares at any time within sixty (60) days following such Grantee's Termination of Affiliation (or, if later, following the Grantee's acquisition of such Shares pursuant to exercise or vesting of an Award) at a purchase price 7 payable in cash equal to the Fair Market Value of the shares on the date of purchase, and (iii) in the event of a transaction pursuant to which the holders of more than 50% of the then-outstanding Shares agree to sell their Shares to any Person, the right of the Company to require the Grantee to sell to such Person, on the same terms and conditions applicable to the sale by such other shareholders, any or, all Shares acquired pursuant to the exercise or vesting of an Award. 5.6 Termination of Affiliation. Except as otherwise provided by the Committee in an Award Agreement, the extent to which the Grantee shall have the right to exercise, vest in, or receive payment in respect of an Award following Termination of Affiliation shall be determined in accordance with the following provisions of this Section 5.6. (a) For Cause. Except as otherwise provided by the Committee in an Award Agreement, if a Grantee has a Termination of Affiliation for Cause, (i) the Grantee's Restricted Shares and Deferred Share Units that are forfeitable shall thereupon be forfeited, subject to the provisions of Section 7.4 regarding repayment of certain amounts to the Grantee; and (ii) any unexercised Option shall terminate effective immediately upon such Termination of Affiliation. (b) On Account of Death. Except as otherwise provided by the Committee in an Award Agreement, if a Grantee has a Termination of Affiliation on account of death, then: (i) the Grantee's Restricted Shares and Deferred Share Units that were forfeitable shall thereupon become nonforfeitable; and . (ii) any unexercised Option, whether or not exercisable on the date of such Termination of Affiliation, may be exercised, in whole or in part, within the first 12 months after such Termination of Affiliation (but only during the Option Term) by (A) the Grantee's personal representative or the person to whom the Option is transferred by will or the applicable laws of descent and distribution, or (B) the Grantee's beneficiary designated in accordance with Article 8. (c) On Account of Disability. Except as otherwise provided by the Committee in an Award Agreement, if a Grantee has a Termination of Affiliation on account of Disability, then: (i) the Grantee's Restricted Shares and Deferred Share Units that were forfeitable shall thereupon become nonforfeitable; and (ii) any unexercised Option, whether or not exercisable on the date of such Termination of Affiliation, may be exercised, in whole or in part, within the first 12 months after such Termination of Affiliation (but only during the Option Term) by the Grantee or, after his or her death, by (A) his or her personal representative or the person to whom the Option is transferred by will or the applicable laws of descent and distribution, or (B) the Grantee's beneficiary designated in accordance with Article 8. 8 (d) Any Other Reason. Except as otherwise provided by the Committee in an Award Agreement, if a Grantee has a Termination of Affiliation for any reason other than for Cause, Death, or Disability, then: (i) the Grantee's Restricted Shares and Deferred Share Units, to the extent forfeitable on the date of the Grantee's Termination of Affiliation, shall be forfeited on such date; and (ii) any unexercised Option, to the extent exercisable immediately before the Grantee's Termination of Affiliation, may be exercised in whole or in part, not later than three months after such Termination of Affiliation (but only during the Option Term) by the Grantee, or, after his or her death, by (A) his or her personal representative or the person to whom the Option is transferred by will or the applicable laws of descent and distribution, or (B) the Grantee's beneficiary designated in accordance with Article 8. 5.7 Nontransferability of Awards. (a) Each Award, and each right under any Award, shall be exercisable only by the Grantee during the Grantee's lifetime, or, if permissible under applicable law, by the Grantee's guardian or legal representative or by a transferee receiving such Award pursuant to a qualified domestic relations order (a "QDRO") as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974 as amended ("ERISA"), or the rules thereunder. (b) No Award (prior to the time, if applicable, Shares are issued in respect of such Award), and no right under any Award, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Grantee otherwise than by will or by the laws of descent and distribution (or in the case of Restricted Shares, to the Company) or pursuant to a QDRO, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Subsidiary; provided, that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. 5.8 Cancellation and Rescission of Awards. Unless the Award Agreement specifies otherwise, the Committee may cancel, rescind, suspend, withhold, or otherwise limit or restrict any unexercised Award at any Lime if the Grantee is not in compliance with all applicable provisions of the Award Agreement and the Plan or if the Grantee has a Termination of Affiliation for Cause. 5.9 Loans and Guarantees. The Committee may in its discretion, and subject to applicable law, (i) allow a Grantee to defer payment to the Company of all or any portion of the Option Price of an Option, (ii) allow a Grantee to defer payment to the Company of all or any portion of the purchase price of Restricted Shares, or (iii) cause the Company to loan to the Grantee all or any portion of any taxes associated with the exercise, nonforfeitability of, or payment of benefits in connection with, an Award, or cause the Company to guarantee a loan from a third party to the Grantee, in an amount equal to all or any portion of such Option Price, purchase price of Restricted Shares or any related taxes. Any such payment deferral, loan 9 or guarantee by the Company shall be on such terms and conditions as the Committee may determine. Article 6. Stock Options 6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to any Eligible Person in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee. 6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the Option Term, the number of shares to which the Option pertains, the time or times at which such Option shall be exercisable and such other provisions as the Committee shall determine. 6.3 Option Price. The Option Price of an Option under this Plan shall be determined in the sole discretion of the Committee, and may be less than, equal to, or more than 100% of the Fair Market Value of a Share on the Grant Date; provided, however, that the Option Price of an Incentive Stock Option shall be at least equal to 100% of the Fair Market Value of a Share on the Grant Date. 6.4 Grant of Incentive Stock Options. At the time of the grant of any Option, the Committee may in its discretion designate that such Option shall be made subject to additional restrictions to permit it to qualify as an "incentive stock option" under the requirements of Section 422 of the Code. Any Option designated as an Incentive Stock Option: (i) shall, if granted to a 10% Owner, have an Option Price not less than 110% of the Fair Market Value of a Share on its Grant Date; (ii) shall be for a period of not more than 10 years (five years in the case of an Incentive Stock Option granted to a 10% Owner) from its Grant Date, and shall be subject to earlier termination as provided herein or in the applicable Award Agreement; (iii) shall not have an aggregate Fair Market Value (as of the Grant Date of each Incentive Stock Option) of the Shares with respect to which Incentive Stock Options (whether granted under the Plan or any other stock option plan of the Grantee's employer or any parent or Subsidiary thereof ("Other Plans")) are exercisable for the first time by such Grantee during any calendar year, determined in accordance with the provisions of Section 422 of the Code, which exceeds $100,000 (the 1100,000 Limit"); (iv) shall, if the aggregate Fair Market Value of the Shares (determined on the Grant Date) with respect to the portion of such grant which is exercisable for the first time during any calendar year ("Current Grant") and all Incentive Stock Options previously granted under the Plan and any Other Plans which are exercisable for the first time during a calendar year ("Prior Grants") would exceed the $100,000 Limit, be exercisable as follows: 10 (A) the portion of the Current Grant which would, when added to any Prior Grants, be exercisable with respect to Shares which would have an aggregate Fair Market Value (determined as of the respective Grant Date for such options) in excess of tile $100,000 Limit shall, notwithstanding the terms of the Current Grant, be exercisable for the first time by the Grantee in the first subsequent calendar year or years in which it could be exercisable for the first time by the Grantee when added to all Prior Grants without exceeding the $100,000 Limit; and (B) if, viewed as of the date of the Current Grant, any portion of a Current Grant could not be exercised under the preceding provisions of this Section during any calendar year commencing with the calendar yew in which it is first exercisable through and including the last calendar you in which it may by its terms be exercised, such portion of the Current Grant shall not be an Incentive Stock Option, but shall be exercisable as a separate option at such date or dates as are provided in the Current Grant; (v) shall be granted within 10 years from the earlier of the date the Plan is adopted or the date the Plan is approved by the stockholders of the Company; (vi) shall require the Grantee to notify the Committee of any disposition of any Shares issued pursuant to the exercise of the Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions) (any such circumstance, a "Disqualifying Disposition"), within 10 days of such Disqualifying Disposition; and (vii) shall by its terms not be assignable or transferable other than by will or the laws of descent and distribution and may be exercised, during the Grantee's lifetime, only by the Grantee; PROVIDED, HOWEVER, that the Grantee may, to the extent provided in the Plan in any manner specified by the Committee, designate in writing a beneficiary to exercise his or her Incentive Stock, Option after the Grantee's death. Notwithstanding the foregoing and Section 3.2(v), the Committee may, without the consent of the Grantee, at any time before the exercise of an Option (whether or not an Incentive Stock Option), take any action necessary to prevent such Option from being treated as an Incentive Stock Option. 6.5 Grant of Reload Options. The Committee may in connection with the grant of an Option or thereafter provide that a Grantee who (i) is an Eligible Person when he or she exercises an Option, (ii) exercises such Option for Shares which have a Fair Market Value equal to not less than 120% of the Option Price for such Option ("Exercised Option") and (iii) satisfies the Option Price or Required Withholding applicable thereto with Shares shall automatically be granted, subject to Article 4, an additional option ("Reload Option") in an amount equal to the sum ("Reload Number") of the number of Shares tendered to exercise the Exercised Option plus, if so provided by the Committee, the number of Shares, if any, retained by the Company in connection with the exercise of the Exercised Option to satisfy any federal, state or local tax withholding requirements; provided that no Reload Option shall be granted in connection with the exercise of an Option that has been transferred by the initial Grantee thereof. 11 6.6 Conditions on Reload Options. Reload Options shall be subject to the following terms and conditions: (a) the Grant Date for each Reload Option shall be the date of exercise of the Exercised Option to which it relates; (b) subject to Section 6.6(c), the Reload Option may be exercised at any time during the Option Term of the Exercised Option (subject to earlier termination thereof as provided in the Plan or in the applicable Award Agreement); and (c) the terms of the Reload Option shall be the same as the terms of the Exercised Option to which it relates, except that, unless otherwise provided in the Award Agreement, the Option Price for the Reload Option shall be 100% of the Fair Market Value of a Share on the Grant Date of the Reload Option. 6.7 Payment. Options granted under this Article 6 shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares made by any one or more of the following means subject to the approval of the Committee: (A) cash, personal check or wire transfer; (B) Mature Shares, valued at their Fair Market Value on the date of exercise; (C) with the approval of the Committee, Restricted Shares held by the Grantee, for at least six months prior to the exercise of the Option, each such share valued at the Fair Market Value of a Share on the date of exercise; (D) subject to applicable law, pursuant to procedures previously approved by the Company, through the sale of the Shares acquired on exercise of the Option through a broker-dealer to whom the Grantee has submitted an irrevocable notice of exercise and irrevocable instructions to deliver promptly to the Company the amount of sale or loan proceeds sufficient to pay for such Shares, together with, if requested by the Company, the amount of federal, state, local or foreign withholding taxes payable by Grantee by reason of such exercise; or (E) in the discretion of the Committee, payment may also be made in accordance with Section 5.9. The Committee may in its discretion specify that, if any Restricted Shares ("Tendered Restricted Shares") are used to pay the Option Price, (x) all the Shares acquired on exercise of the Option shall be subject to the same restrictions as the Tendered Restricted Shares, determined as of the date of exercise of the Option, or (y) a number of Shares acquired on exercise of the Option 12 equal to the number of Tendered Restricted Shares shall be subject to the same restrictions as the Tendered Restricted Shares, determined as of the date of exercise of the Option. Article 7. Restricted Shares 7.1 Grant of Restricted Shares. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Restricted Shares to any Eligible Person in such amounts as the Committee shall determine. 7.2 Award Agreement. Each grant of Restricted Shares shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Restricted Shares granted, and such other provisions as the Committee shall determine. The Committee may impose such conditions and/or restrictions on any Restricted Shares granted pursuant to the Plan as it may deem advisable, including restrictions based upon the achievement of specific performance goals (Company-wide, divisional, and/or individual), time-based restrictions on vesting following the attainment of the performance goals, and/or restrictions under applicable securities laws. The Committee may also grant Restricted Shares without any performance, time-based or other restrictions which shall be nonforfeitable upon grant. 7.3 Consideration. The Committee shall determine the amount, if any, that a Grantee shall pay for Restricted Shares, subject to the following sentence. Except with respect to Restricted Shares that are treasury shares, for which no payment need be required, the Committee shall require the Grantee to pay at least the Minimum Consideration for each Restricted Share. Such payment shall be made in full by the Grantee before the delivery of the shares and in any event no later than 10 business days after the Grant Date for such shares. 7.4 Effect of Forfeiture. If Restricted Shares are forfeited, and if the Grantee was required to pay for such shares or acquired such Restricted Shares upon the exercise of an Option, the Grantee shall be deemed to have resold such Restricted Shares to the Company at a price equal to the lesser of (x) the amount paid by the Grantee for such Restricted Shares, or (Y) the Fair Market Value of such Restricted Shares on the date of such forfeiture. The Company shall pay to the Grantee the required amount as soon as is administratively practical. Such Restricted Shares shall cease to be outstanding, and shall no longer confer on the Grantee thereof any rights as a stockholder of the Company, from and after the date of the event causing the forfeiture, whether or not the Grantee accepts the Company's tender of payment for such Restricted Shares. 7.5 Escrow; Legends. The Committee may provide that the certificates for any Restricted Shares (x) shall be held (together with a stock power executed in blank by the Grantee) in escrow by the Secretary of the Company until such Restricted Shares become nonforfeitable or are forfeited or (y) shall bear an appropriate legend restricting the transfer of such Restricted Shares. Article 8. Beneficiary Designation Each Grantee under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the 13 Plan is to be paid in case of his or her death before he or she receives any or ail of such benefit. Each such designation shall revoke all prior designations by the same Grantee, shall be in a form prescribed by the Company, and will be effective only when filed by the Grantee in writing with the Company during the Grantee's lifetime. In the absence of any such designation, benefits remaining unpaid at the Grantee's death shall be paid to the Grantee's estate. Article 9. Deferred Share Units/Deferrals 9.1 Deferred Share Units. Subject to the terms and provisions of the Plan, Deferred Share Units may be granted to any Eligible Person in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee. Except as otherwise provided in an Award Agreement, each Deferred Share Unit shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Committee may impose such conditions and/or restrictions on any Deferred Share Units granted pursuant to the Plan as it may deem advisable, including time-vesting restrictions and deferred payment features. Except as otherwise provided in an Award Agreement, payment to the Grantee of the value or increase in value, as applicable, of Deferred Share Units shall be made upon the Grantee's Termination of Affiliation. 9.2 Deferrals. The Committee may permit or require a Grantee to defer receipt of the delivery of Shares that would otherwise be due by virtue of the exercise of an Option or the lapse or waiver of restrictions with respect to Restricted Shares. If any such deferral is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such deferrals. Except as otherwise provided in an Award Agreement, any Shares that are subject to such deferral shall be delivered to the Grantee upon the earlier of (i) the first day on which Shares are traded in a public market or (ii) the Grantee's Termination of Affiliation. Article 10. Rights of Employees/Directors 10.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Grantee's employment or directorship at any time, nor confer upon any Grantee the right to continue in the employ or as a director of the Company. 10.2 Participation. No employee or director shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award. Article 11. Amendment, Modification, and Termination 11.1 Amendment, Modification, and Termination. Subject to the terms of the Plan, the Board may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part without the approval of the Company's stockholders. 11.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including the events described in Section 4.2) affecting the Company or the financial statements of the Company or of 14 changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan; provided that no such adjustment shall be authorized to the extent that such authority would be inconsistent with the Plan's meeting the requirements of the Performance-Based Exception. 11.3 Awards Previously Granted. Notwithstanding any other provision of the Plan to the contrary, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Grantee of such Award. Article 12. Withholding 12.1 Withholding (a) Mandatory Tax Withholding. (1) Whenever under the Plan, Shares are to be delivered upon exercise or payment of an Award or upon Restricted Shares becoming nonforfeitable, or any other event with respect to rights and benefits hereunder, the Company shall be entitled to require (i) that the Grantee remit an amount in cash, or in the Committee's discretion, Mature Shares, sufficient to satisfy all federal, state, and local tax withholding requirements related thereto ("Required Withholding"), (ii) the withholding of such Required Withholding from compensation otherwise due to the Grantee or from any Shares due to the Grantee under the Plan or (iii) any combination of the foregoing. (2) Any Grantee who makes a Disqualifying Disposition or an election under Section 83(b) of the Code shall remit to the Company an amount sufficient to satisfy all resulting Required Withholding; provided that, in lieu of or in addition to the foregoing, the Company shall have the right to withhold such Required Withholding from compensation otherwise due to the Grantee or from any Shares or other payment due to the Grantee under the Plan. (b) Elective Share Withholding. (1) Subject to the following subsection, a Grantee may elect the withholding ("Share Withholding") by the Company of a portion of the Shares otherwise deliverable to such Grantee upon the exercise of an Award or upon Restricted Shares becoming non-forfeitable (each, a "Taxable Event") having a Fair Market Value equal to (i) the minimum amount necessary to satisfy Required Withholding liability attributable to the Taxable Event; or (ii) with the Committee's prior approval, a greater amount, not to exceed the estimated total amount of such Grantee's tax liability with respect to the Taxable Event. 15 (2) Each Share Withholding election shall be subject to the following conditions: (i) any Grantee's election shall be subject to the Committee's discretion to revoke the Grantee's right to elect Share Withholding at any time before the Grantee's election if the Committee has reserved the right to do so in the Award Agreement; (ii) the Grantee's election must be made before the date (the "Tax Date") on which the amount of tax to be withheld is determined; and (iii) the Grantee's election shall be irrevocable. 12.2 Notification under Code Section 83(b). If the Grantee, in connection with the exercise of any Option, or the grant of Restricted Shares, makes the election permitted under Section 83(b) of the Code to include in such Grantee's gross income in the year of transfer the amounts specified in Section 83(b) of the Code, then such Grantee shall notify the Company of such election within 10 days of filing the notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code. The Committee may, in connection with the grant of an Award or at any time thereafter, prohibit a Grantee from making the election described above. Article 13. Successors All obligations of the Company under the Plan with respect to Awards granted hereunder .shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise of all or substantially all of the business and/or assets of the Company. Article 14. Additional Provisions 14.1 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural. 14.2 Severability. If any part of the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other part of the Plan. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid. 14.3 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. Notwithstanding any provision of the Plan or any Award, Grantees shall not be entitled to exercise, or receive benefits under, any Award, and the Company shall not be obligated to deliver any Shares or deliver benefits to a Grantee, if such exercise or delivery would constitute a violation by the Grantee or the Company of any applicable law or regulation. 16 14.4 Securities Law Compliance. (a) If the Committee deems it necessary to comply with any applicable securities law, or the requirements of any stock exchange upon which Shares may be listed, the Committee may impose any restriction on Shares acquired pursuant to Awards under the Plan as it may deem advisable. All certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the SEC, any stock exchange upon which Shares are then listed, any applicable securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. If so requested by the Company, the Grantee shall make a written representation to the Company that he or she will not sell or offer to sell any Shares unless a registration statement shall be in effect with respect to such Shares under the Securities Act of 1993, as amended, and any applicable state securities law or unless he or she shall have furnished to the Company, in form and substance satisfactory to the Company, that such registration is not required. (b) If the Committee determines that the exercise or non forfeitability of, or delivery of benefits pursuant to, any Award would violate any applicable provision of securities laws or the listing requirements of any national securities exchange or national market system .on which are listed any of the Company's equity securities, then the Committee may postpone any such exercise, nonforfeitability or delivery, as applicable, but the Company shall use all reasonable efforts to cause such exercise, nonforfeitability or delivery to comply with all such provisions at the earliest practicable date. 14.5 No Rights as a Stockholder. A Grantee shall not have any rights as a stockholder of the Company with respect to the Shares (other than Restricted Shares) which may be deliverable upon exercise or payment of such Award until such shares have been delivered to him or her. Restricted Shares, whether held by a Grantee or in escrow by the Secretary of the Company, shall confer on the Grantee all rights of a stockholder of the Company, except as otherwise provided in the Plan or Award Agreement. At the time of a grant of Restricted Shares, the Committee may require the payment of cash dividends thereon to be deferred and, if the Committee so determines, reinvested in additional Restricted Shares. Stock dividends and deferred cash dividends issued with respect to Restricted Shares shall be subject to the same restrictions and other terms as apply to the Restricted Shares with respect to which such dividends are issued. The Committee may in its discretion provide for payment of interest on deferred cash dividends. 14.6 Nature of Payment. Awards shall be special incentive payments to the Grantee and shall not be taken into account in computing the amount of salary or compensation of the Grantee for purposes of determining any pension, retirement, death or other benefit under (a) any pension, retirement, profit-sharing, bonus, insurance or other employee benefit plan of the Company or any Subsidiary or (b) any agreement between (i) the Company or any Subsidiary and (ii) the Grantee, except as such plan or agreement shall otherwise expressly provide. 17 14.7 Governing Law. The Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Kansas, other than its laws respecting choice of law. 18 EX-4.2 5 STOCK OPTION PLAN STOCK OPTION PLAN OF BLUE VALLEY BAN CORP. This Stock Option Plan, is adopted this 14th day of December, 1994, by BLUE VALLEY BAN CORP., a Kansas corporation (the "Company") for the benefit of the optionees (herein referred to as the "Optionee" or "Optionees" as the context requires). Any person who from time-to-time becomes an Optionee shall be added to the list of Optionees on Exhibit A hereto. Exhibit A shall at all times be incorporated herein by this reference. An Optionee shall be a director and/or employee of the Company or Bank of Blue Valley, a Kansas corporation (the "Bank"). The Stock Option Plan is as follows: 1. Grant and Designation of Option. Pursuant to this Stock Option Plan (the "Plan"), the Company's Board of, Directors may from time-to-time grant to an Optionee, a nonqualified stock option (the "Option") to purchase shares of the Company's common stock (the "Optioned shares"). The date the Board of Directors approves an Option shall be known herein as the "Grant Date". The number of Optioned Shares and Grant Date approved by the Board of Directors shall be added to the listing of Optionees on Exhibit A hereto. 2. Option Price. The price per share of the Optioned Shares (the "Option Price") shall be determined as of the Grant Date by the Board of Directors and shall be specified on Exhibit A hereto. 3. Term of Option. Any Option granted as of the date of this Plan or later shall expire at the end of ten (10) years from the Grant Date, subject to earlier termination as provided hereinafter. Any Option granted prior to the date of this Plan shall have the term specified for such Option in Exhibit A hereto. 4. Exercising Options. a. Notice of Exercise. The option shall be exercised by delivering notice to the Company which: (i) states the Optionee's election to exercise the Option; (ii) states the total number of shares that are being exercised; and (iii) is accompanied by the full Option Price of the shares. For purposes of this Paragraph 4, the date the Company receives such notice and purchase price shall be the "Exercise Date". To the extent the Optionee has been granted more than one Option under this Plan, the first-in-first-out rule will apply in determining which option has been exercised. If the Option is exercised as permitted herein by any person or persons other than the Optionee, such notice shall be accompanied by such documentation as the Company may reasonably require, including without limitation, evidence of the authority of such person or persons to exercise the Option and evidence satisfactory to the Company that any death taxes payable with respect to such shares have been paid or adequately reserved, b. Payment of Purchase Price. The purchase price shall be paid with: (i) cash or a check payable to the Company, and/or (ii) a properly endorsed certificate(s) with signatures guaranteed (unless such signature guarantee is waived by an officer of the Company), representing shares of the Company's common stock which are fully paid and free and clear from all liens and encumbrances. If, at the Exercise Date, the shares surrendered by the Optionee are restricted under any federal or state securities laws, then an equivalent number of newly issued shares equal to the restricted shares surrendered shall continue to be so restricted. See Paragraph 5 below for purposes of determining the fair market value of the Company's common stock exchanged by an Optionee as all or part of the purchase price of an option on any Exercise Date. c. Delivery of Certificates. The Company shall deliver a certificate or certificates representing the shares as to which the Option has been exercised as soon as practicable after receipt of the notice, payment of the full purchase price, satisfaction of any withholding requirements set forth in Paragraph 9 of this Plan, and receipt of any other documentation that the Company may reasonably request. 5. Fair Market Value Determination. As of any Exercise Date, the fair market value per share of the Company's common stock shall be equal to eighty percent (80%) of the net book value of the Company's stock based on the consolidated financial statements of the Company as of the June 30 or December 31 ending on or preceding the Exercise Date (i.e., if June 29 is the Exercise Date, then the previous December 31 financial statements will be used, if June 30 is the Exercise Date, then that June 30 financial statements will be used). The Company's determination of fair market value shall be binding on all Optionees and option holders. 6. Limited Transferability. This option shall be transferable only as follows: (i) by option holder's will; (ii) by the laws of descent and distribution governing the option holder's estate; (iii) at anytime to option holder's spouse, lineal ascendants (including brothers and sisters), and lineal descendants; or (iv) to a trust or court-appointed fiduciary for the benefit of the option holder or any of the family members specified previously in (iii) of this sentence. Any options granted hereunder which are transferred because of the death of the option holder shall lapse if not exercised by the successor option holder within one (1 ) year after the date of the option holder's death. During the lifetime of the option holder, the Option may be exercised only by the following: the option holder; the option holder's legal guardian or representative; or under a Power of Attorney from the option holder to some other person or entity. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions hereof and the levy of any execution, attachment or similar process upon the Option shall be null and void and without effect. The terms and provisions of this Plan are intended to apply not only to the original Optionee, but to any subsequent option holder. Use of the term Optionee in this Plan shall also be deemed to include any option holder as the context requires. The Optionee acknowledges that the stock is subject to certain rights of first refusal on any subsequent sale of the stock to outside parties. 7. Stock Adjustments. If the Company determines that any stock dividend, stock split, reverse stock split, merger, reorganization, consolidation, recapitalization, split-up, spin-off, repurchase, exchange of shares, issuance of warrants or any other rights to purchase the Company's securities, or other event affects the Company's common stock, adjustments shall be made in the maximum number and/or class of shares and/or Option Price as the Company determines to be appropriate in order to prevent the dilution or enlargement of benefits or potential benefits under this Plan. 8. Compliance With certain Laws and Regulations. If the Company determines that the consent or approval of any governmental regulatory body, or that the listing, registration or qualification of the shares subject to any Option upon any securities exchange or under any law or regulation, is necessary or desirable in connection with the granting or exercising of an option or the acquisition of shares thereunder, the option holder shall supply the Company with such certificates, representations and information as the Company may request and shall otherwise cooperate with the Company in obtaining any such listing, registration, qualification, consent or approval. The Optionee acknowledges that the Company makes no representation that any of the foregoing conditions exist, and undertakes no obligation to assure that any such conditions exist at the time of exercise. 9. Tax Withholding. a. Whenever the Company issues common stock under this Plan, the Company shall have the right to require the option holder to remit to the Company amounts sufficient to satisfy all applicable federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such shares. If such certificate or certificates have been delivered prior to the time a withholding obligation arises, the company shall have the right to require the Optionee (or his guardian, legal representative , power of attorney, or successor) to remit to the Company amounts sufficient to satisfy all federal, state and local withholding tax requirements at the time such obligation arises and to withhold, as necessary, from any of the option holder's accounts at the Bank or from any other amounts (including payroll) payable to the optionee or option holder by the Company or the Bank. Whenever the Company makes cash payments under this Plan, the Company shall have the right to make such payments net of an amount sufficient to satisfy all federal, state and local withholding tax requirements. b. When permitted by the Company, the option holder may irrevocably elect in writing, as to each option and on or prior to the date as of which income is realized by the Optionee, in connection with such Option, to satisfy the withholding obligation, in whole or in part, by complying with one of the following alternatives at the Exercise Date: (i) request the Company to withhold shares of common stock of the Company which would otherwise be issuable upon such exercise; or (ii) deliver to the Company shares of common stock of the Company owned by Optionee, having an aggregate fair market value, together with cash for any fractional amount, equal to the amount required to be withheld for such taxes. Any certificates delivered to the Company shall be properly endorsed with signatures guaranteed (unless such signature guarantee is waived by an officer of the Company), representing shares of the Company's common stock which are fully paid and free and clear from all liens and encumbrances. 10. General. a. Transfer Taxes. The Company shall pay all original issue and transfer taxes and all other fees and expenses necessarily incurred by the Company in connection with the issue and transfer of shares by the Company to the option holder pursuant to this Plan. b. Privilege of Stock Ownership. The option holder shall no have any rights of a stockholder with respect to the Optioned Shares until the Option has been duly exercised and the shares have been transferred to the option holder on the books and records of Company. c. Construction and No Waiver. Notwithstanding any provision of this Plan, every option granted and exercised pursuant to this Plan are subject to the provisions of this Plan. The failure of the Company in any instance to exercise any of its rights granted under this Plan shall not constitute a waiver of any subsequent identical rights or any other rights that may arise under this Plan. d. Notices. Any notice required to be given or delivered to the Company or the Optionee under the terms of this Plan shall be in writing and addressed to the Company at the Bank's main corporate offices and to the optionee at the address indicated on Exhibit A. Either party may designate another address by sending a written notice to the other party. All notices shall be sent by U.S. certified mail, with return receipt requested, or by actual delivery, if a signed receipt is obtained. e. Sole and Absolute Discretion. The Company shall have sole and absolute discretion as to any action or determination of the Company pursuant to this Plan. f . Governing Law. This Plan shall be governed by and construed in accordance with the laws of Kansas without reference to its principles of conflicts of law. Venue for any litigation shall be in Johnson County, Kansas. This Stock Option Plan has been duly executed, as of the day and year first above written. BLUE VALLEY BAN CORP. [SEAL] By: /s/ Robert D. Regnier Robert D. Regnier, President EX-4.3 6 SUBORDINATED INDENTURE ------------------------------------------------------ SUBORDINATED INDENTURE BLUE VALLEY BAN CORP., as Issuer to WILMINGTON TRUST COMPANY, as Trustee _____% Junior Subordinated Debentures Dated as of ________________, 2000 ------------------------------------------------------ TABLE OF CONTENTS Page ARTICLE I.....................................................................1 1.01 DEFINITIONS...........................................................1 ARTICLE II....................................................................8 2.01 DESIGNATION AND PRINCIPAL AMOUNT......................................8 2.02 MATURITY..............................................................9 2.03 FORM AND PAYMENT......................................................9 2.04 GLOBAL SUBORDINATED DEBENTURE.........................................9 2.05 INTEREST.............................................................11 2.06 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.......................12 2.07 REGISTRATION AND TRANSFER............................................12 2.08 MUTILATED, DESTROYED, LOST AND STOLEN JUNIOR SUBORDINATED DEBENTURES.........................................13 ARTICLE III..................................................................14 3.01 REDEMPTION...........................................................14 3.02 SPECIAL EVENT REDEMPTION.............................................14 3.03 OPTIONAL REDEMPTION BY COMPANY.......................................14 3.04 NOTICE OF REDEMPTION.................................................15 3.05 PAYMENT UPON REDEMPTION..............................................16 3.06 NO SINKING FUND......................................................17 ARTICLE IV...................................................................17 4.01 EXTENSION OF INTEREST PAYMENT PERIOD.................................17 4.02 NOTICE OF EXTENSION..................................................17 4.03 LIMITATION OF TRANSACTIONS DURING EXTENSION..........................18 ARTICLE V....................................................................18 5.01 PAYMENT OF PRINCIPAL AND INTEREST....................................18 5.02 MAINTENANCE OF AGENCY................................................18 5.03 PAYING AGENTS........................................................19 5.04 APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE.....................20 i 5.05 COMPLIANCE WITH CONSOLIDATION PROVISIONS.............................20 5.06 RESTRICTIONS ON CERTAIN PAYMENTS.....................................20 5.07 COVENANTS AS TO THE TRUST............................................20 ARTICLE VI...................................................................21 6.01 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF SECURITYHOLDERS.................................................21 6.02 PRESERVATION OF INFORMATION; COMMUNICATIONS WITH SECURITYHOLDERS.................................................21 6.03 REPORTS BY THE COMPANY...............................................21 6.04 REPORTS BY THE TRUSTEE...............................................22 ARTICLE VII..................................................................22 7.01 EVENTS OF DEFAULT....................................................22 7.02 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE......................................................24 7.03 APPLICATION OF MONEYS COLLECTED......................................26 7.04 LIMITATION ON SUITS..................................................26 7.05 RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER...........................................................27 7.06 CONTROL BY SECURITYHOLDERS...........................................27 7.07 UNDERTAKING TO PAY COSTS.............................................28 ARTICLE VIII.................................................................28 8.01 FORM OF JUNIOR SUBORDINATED DEBENTURE................................28 8.02 ORIGINAL ISSUE OF JUNIOR SUBORDINATED DEBENTURES.....................28 ARTICLE IX...................................................................29 9.01 CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE...................29 9.02 CERTAIN RIGHTS OF TRUSTEE............................................30 9.03 TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF THE JUNIOR SUBORDINATED DEBENTURES..............................31 9.04 MAY HOLD JUNIOR SUBORDINATED DEBENTURES..............................32 9.05 MONEYS HELD IN TRUST.................................................32 9.06 COMPENSATION AND REIMBURSEMENT.......................................32 9.07 RELIANCE ON OFFICERS' CERTIFICATE....................................33 9.08 DISQUALIFICATION; CONFLICTING INTERESTS..............................33 ii 9.09 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY..............................33 9.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR....................33 9.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR...............................34 9.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS........................................................35 9.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.........................................................35 9.14 APPOINTMENT OF AUTHENTICATING AGENT..................................35 9.15 CO-TRUSTEES AND SEPARATE TRUSTEES....................................37 ARTICLE X....................................................................38 10.01 EVIDENCE OF ACTION BY SECURITYHOLDERS...............................38 10.02 PROOF OF EXECUTION BY SECURITYHOLDERS...............................39 10.03 WHO MAY BE DEEMED OWNERS............................................39 10.04 CERTAIN JUNIOR SUBORDINATED DEBENTURES OWNED BY COMPANY DISREGARDED..........................................39 10.05 ACTIONS BINDING ON FUTURE SECURITYHOLDERS...........................40 ARTICLE XI...................................................................40 11.01 SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF SECURITYHOLDERS..............................................40 11.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS..............................................41 11.03 EFFECT OF SUPPLEMENTAL INDENTURES...................................41 11.04 JUNIOR SUBORDINATED DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES......................................41 11.05 EXECUTION OF SUPPLEMENTAL INDENTURES................................42 ARTICLE XII..................................................................42 12.01 COMPANY MAY CONSOLIDATE, ETC........................................42 12.02 SUCCESSOR SUBSTITUTED...............................................43 12.03 EVIDENCE OF CONSOLIDATTION, ETC., TO TRUSTEE........................43 ARTICLE XIII.................................................................43 13.01 SATISFACTION AND DISCHARGE OF INDENTURE.............................43 13.02 DISCHARGE OF OBLIGATIONS............................................44 13.03 DEPOSITED MONEYS TO BE HELD IN TRUST................................44 iii 13.04 PAYMENT OF MONEYS HELD BY PAYING AGENTS.............................44 13.05 REPAYMENT TO COMPANY................................................44 ARTICLE XIV..................................................................45 14.01 NO RECOURSE.........................................................45 ARTICLE XV...................................................................45 15.01 EFFECT ON SUCCESSORS AND ASSIGNS....................................45 15.02 ACTIONS BY SUCCESSOR................................................45 15.03 SURRENDER OF COMPANY POWERS.........................................45 15.04 NOTICES.............................................................45 15.05 GOVERNING LAW.......................................................46 15.06 TREATMENT OF JUNIOR SUBORDINATED DEBENTURES AS DEBT.................46 15.07 COMPLIANCE CERTIFICATES AND OPINIONS................................46 15.08 PAYMENTS ON BUSINESS DAYS...........................................46 15.09 CONFLICT WITH TRUST INDENTURE ACT...................................47 15.10 COUNTERPARTS........................................................47 15.11 SEPARABILITY........................................................47 15.12 ASSIGNMENT..........................................................47 15.13 ACKNOWLEDGMENT OF RIGHTS............................................47 ARTICLE XVI..................................................................47 16.01 AGREEMENT TO SUBORDINATE............................................47 16.02 DEFAULT ON SENIOR AND SUBORDINATED DEBT.............................48 16.03 LIQUIDATION; DISSOLUTION; BANKRUPTCY................................48 16.04 SUBROGATION.........................................................49 16.05 TRUSTEE TO EFFECTUATE SUBORDINATION.................................50 16.06 NOTICE BY THE COMPANY...............................................50 16.07 RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR AND SUBORDINATED DEBT............................................51 16.08 SUBORDINATION MAY NOT BE IMPAIRED...................................51 EXHIBIT A....................................................................54 iv BLUE VALLEY BAN CORP. RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939, AS AMENDED, AND SUBORDINATED INDENTURE, DATED AS OF _______________, 2000 TRUST INDENTURE ACT SECTION SUBORDINATED INDENTURE SECTION Section 310 .......................................................... 15.09 Section 310(b) ............................................................9.08 Section 311 ...........................................................15.09 Section 311(a) ............................................................9.13 (b) ............................................................9.13 Section 312 ...........................................................15.09 Section 312(b) ............................................................6.02 Section 313 ...........................................................15.09 Section 313(a) ............................................................6.04 (b) ............................................................6.04 (c) ............................................................6.04 Section 314 ...........................................................15.09 Section 315 ...........................................................15.09 Section 316 ...........................................................15.09 Section 317 ...........................................................15.09 NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Subordinated Indenture. v SUBORDINATED INDENTURE SUBORDINATED INDENTURE (the "Indenture"), dated as of ________________, 2000, between BLUE VALLEY BAN CORP., a Kansas corporation (the "Company") and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee (the "Trustee"); WHEREAS, for its lawful corporate purposes, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its securities to be known as its _____% Junior Subordinated Debentures due June 30, 2030 (hereinafter referred to as the "Junior Subordinated Debentures"), the form and substance of such Junior Subordinated Debentures and the terms, provisions and conditions thereof to be set forth as provided in this Indenture; and WHEREAS, BVBC Capital Trust I, a Delaware statutory business trust (the "Trust"), has offered to the public up to $11,500,000 aggregate liquidation amount of its _____% Cumulative Trust Preferred Securities (the "Preferred Securities"), representing undivided beneficial interests in the assets of the Trust and proposes to invest the proceeds from such offering, together with the proceeds of the issuance and sale by the Trust to the Company of up to $355,672 aggregate liquidation amount of its _____% Common Securities, in $11,855,672 aggregate principal amount of the Junior Subordinated Debentures; and WHEREAS, the Company has requested that the Trustee execute and deliver this Indenture and all requirements necessary to make this Indenture a valid instrument in accordance with its terms, and to make the Junior Subordinated Debentures, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company; and WHEREAS, to provide the terms and conditions upon which the Junior Subordinated Debentures are to be authenticated, issued and delivered, the Company has duly authorized the execution and delivery of this Indenture; and WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. NOW, THEREFORE, in consideration of the premises and the purchase of the Junior Subordinated Debentures by the holders thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit of the holders of Junior Subordinated Debentures: ARTICLE I DEFINITIONS 1.01 DEFINITIONS. The terms defined in this Section (except as in this Indenture otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section and shall include the plural as well as the singular. All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939, as amended, or that are by reference in said Trust Indenture Act defined in the Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of the execution of this Indenture. "Accelerated Maturity Date" means, if the Company elects to accelerate the Maturity Date in accordance with Section 2.02, the date selected by the Company which is prior to the Scheduled Maturity Date, but is after June 30, 2005. "Additional Sums" shall have the meaning set forth in Section 2.05(c). "Administrative Trustees" has the meaning set forth in the Trust Agreement. "Affiliate" means, with respect to a specified Person, (a) any Person directly or indirectly owning, controlling or holding with power to vote 10% or more of the outstanding voting securities or other ownership interests of the specified Person, (b) any Person 10% or more of whose outstanding voting securities or other ownership interests are directly or indirectly owned, controlled or held with power to vote by the specified Person, (c) any Person directly or indirectly controlling, controlled by, or under common control with the specified Person, (d) a partnership in which the specified Person is a general partner, (e) any officer or director of the specified Person, and (f) if the specified Person is an individual, any entity of which the specified Person is an officer, director or general partner. "Authenticating Agent" means an authenticating agent with respect to the Junior Subordinated Debentures appointed by the Trustee pursuant to Section 9.14. "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company or any duly authorized committee of such Board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification. "Business Day" means any day other than a day on which federal or state banking institutions in the State of Kansas or Delaware are authorized or obligated by law, executive order or regulation to close or a day on which the Trustee is closed. "Capital Treatment Event" means the receipt by the Company and the Trust of an Opinion of Counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision thereof or therein, or as a result of any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such proposed change, pronouncement or decision is announced on or after the date of issuance of the Preferred Securities under the Trust Agreement, there is more than an insubstantial risk of impairment of the Company's ability to treat the Preferred Securities (or any substantial portion thereof) as Tier 1 Capital for purposes of any then applicable capital adequacy guidelines of the Federal Reserve, as then in effect and 2 applicable to the Company; provided, however, that the inability of the Company to treat all or any portion of the Liquidation Amount of the Preferred Securities as Tier 1 Capital shall not constitute the basis for a Capital Treatment Event if such inability results from the Company having cumulative preferred stock, minority interests in consolidated subsidiaries, or any other class of security or interest which the Federal Reserve now or may hereafter accord Tier 1 Capital treatment in excess of the amount which may qualify for treatment as Tier 1 Capital under applicable capital adequacy guidelines of the Federal Reserve; provided, further, however, that the distribution of Junior Subordinated Debentures in connection with the dissolution of the Trust shall not in and of itself constitute a Capital Treatment Event. "Certificate" means a certificate signed by the principal executive officer, the principal financial officer or the principal accounting officer of the Company. The Certificate need not comply with the provisions of Section 15.07. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Securities" means undivided beneficial interests in the assets of the Trust which rank pari passu with Preferred Securities issued by the Trust; provided, however, that upon the occurrence of an Event of Default, the rights of holders of Common Securities to payment in respect of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of Preferred Securities. "Company" means Blue Valley Ban Corp., a corporation duly organized and existing under the laws of the State of Kansas, and, subject to the provisions of Article XII, shall also include its successors and assigns. "Compounded Interest" shall have the meaning set forth in Section 4.01. "Corporate Trust Office" means the office of the Trustee at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof is located at 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration. "Coupon Rate" shall have the meaning set forth in Section 2.05(a). "Custodian" means any receiver, trustee, assignee, liquidator, or similar official under any Bankruptcy Law. "Debt" means with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (a) every obligation of such Person for money borrowed; (b) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (c) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (d) every obligation of such Person issued or assumed as the deferred purchase price of property 3 or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (e) every capital lease obligation of such Person; and (f) every obligation of the type referred to in clauses (a) through (e) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or for which such Person is responsible or liable, directly or indirectly, as obligor or otherwise. "Default" means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default. "Deferred Interest" shall have the meaning set forth in Section 4.01. "Depositary" means, with respect to Junior Subordinated Debentures issued as a Global Subordinated Debenture, The Depository Trust Company, New York, New York, another clearing agency, or any successor registered as a clearing agency under the Exchange Act, or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to either Section 2.01 or 2.04. "Dissolution Event" means that as a result of the occurrence and continuation of a Special Event, the Trust is to be dissolved in accordance with the Trust Agreement and the Junior Subordinated Debentures held by the Property Trustee are to be distributed to the holders of the Trust Securities issued by the Trust pro rata in accordance with the Trust Agreement. "Distributions" shall have the meaning set forth in the Trust Agreement. "Event of Default" means any event specified in Section 7.01, continued for the period of time, if any, therein designated. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Extended Interest Payment Period" shall have the meaning set forth in Section 4.01. "Federal Reserve" means the Board of Governors of the Federal Reserve System. "Global Subordinated Debenture" means a Junior Subordinated Debenture executed by the Company and delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction, all in accordance with this Indenture, which shall be registered in the name of the Depositary or its nominee. "Governmental Obligations" means securities that are (a) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America that, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any such Governmental Obligation or a specific payment of principal of or interest on any such Governmental Obligation held by such custodian for the account of the holder of such depositary receipt; provided, however, that (except as required by law) such custodian is not authorized to 4 make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Governmental Obligation or the specific payment of principal of or interest on the Governmental Obligation evidenced by such depositary receipt. "Herein," "hereof" and "hereunder," and other words of similar import, refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into in accordance with the terms hereof. "Interest Payment Date," when used with respect to any installment of interest on the Junior Subordinated Debentures, means the date specified in the Junior Subordinated Debenture as the fixed date on which an installment of interest with respect to the Junior Subordinated Debentures is due and payable. "Investment Company Act" means the Investment Company Act of 1940, as amended. "Investment Company Event" means the receipt by the Company and the Trust of an Opinion of Counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in Investment Company Act Law"), the Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act, which Change in Investment Company Act Law becomes effective on or after the date of original issuance of the Preferred Securities under the Trust Agreement. "Junior Subordinated Debentures" means the _____% Junior Subordinated Debentures due 2030 authenticated and delivered under this Indenture. "Liquidation Amount" means the stated amount of $8.00 per Trust Security. "Maturity Date" shall have the meaning set forth in Section 2.02. "Non Book-Entry Preferred Securities" shall have the meaning set forth in Section 2.04(a). "Officers' Certificate" means a certificate signed by the Chief Executive Officer, the President or a Vice President and by the Chief Accounting Officer or the Controller or an Assistant Controller or the Secretary or an Assistant Secretary of the Company that is delivered to the Trustee in accordance with the terms hereof. Each such certificate shall include the statements provided for in Section 15.07, if and to the extent required by the provisions thereof. "Opinion of Counsel" means an opinion in writing of legal counsel, who may be an employee of or counsel for the Company, that is delivered to the Trustee in accordance with the terms hereof. Each such opinion shall include the statements provided for in Section 15.07, if and to the extent required by the provisions thereof. 5 "Outstanding," when used with reference to Junior Subordinated Debentures means, subject to the provisions of Section 10.04, as of any particular time, all Junior Subordinated Debentures theretofore authenticated and delivered by the Trustee under this Indenture, except (a) Junior Subordinated Debentures theretofore canceled by the Trustee or any paying agent, or delivered to the Trustee or any paying agent for cancellation or that have previously been canceled; (b) Junior Subordinated Debentures or portions thereof for the payment or redemption of which moneys or Governmental Obligations in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own paying agent); provided, however, that if such Junior Subordinated Debentures or portions of such Junior Subordinated Debentures are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in Article III, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Junior Subordinated Debentures in lieu of or in substitution for which other Junior Subordinated Debentures shall have been authenticated and delivered pursuant to the terms of Section 2.08. "Person" means any individual, corporation, partnership, joint venture, joint-stock company, unincorporated organization or government or any agency or political subdivision thereof. "Predecessor Junior Subordinated Debenture" means every previous Junior Subordinated Debenture evidencing all or a portion of the same debt as that evidenced by such particular Junior Subordinated Debenture; and, for the purposes of this definition, any Junior Subordinated Debenture authenticated and delivered under Section 2.08 in lieu of a lost, destroyed or stolen Junior Subordinated Debenture shall be deemed to evidence the same debt as the lost, destroyed or stolen Junior Subordinated Debenture. "Preferred Securities" means undivided beneficial interests in the assets of the Trust which rank pari passu with Common Securities issued by the Trust; provided, however, that upon the occurrence of an Event of Default, the rights of holders of Common Securities to payment in respect of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of Preferred Securities. "Preferred Securities Certificate" has the meaning set forth in the Trust Agreement. "Preferred Securities Guarantee" means any guarantee that the Company may enter into with the Property Trustee or other Persons that operates directly or indirectly for the benefit of holders of Preferred Securities of the Trust. "Property Trustee" has the meaning set forth in the Trust Agreement. "Redemption Price" means the amount equal to 100% of the principal amount of Junior Subordinated Debentures to be redeemed plus any accrued and unpaid interest thereon to the date of the redemption of such Junior Subordinated Debentures. "Responsible Officer" when used with respect to the Trustee means any Vice President or any corporate trust officer with direct responsibility for the administration of this Indenture or any other officer or assistant officer of the Trustee customarily performing functions similar to 6 those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with the particular subject. "Scheduled Maturity Date" means June 30, 2030. "Securities Register" and "Securities Registrar" have the respective meanings specified in Section 2.07. "Securityholder," "Holder," "Registered Holder," or other similar term, means the Person or Persons in whose name or names particular Junior Subordinated Debentures shall be registered in the Securities Register. "Senior and Subordinated Debt" means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not such claim for post-petition interest is allowed in such proceeding), on Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of payment to the Junior Subordinated Debentures or to other Debt which is pari passu with, or subordinated to, the Junior Subordinated Debentures; provided, however, that Senior and Subordinated Debt shall not be deemed to include (a) any Debt of the Company which when incurred and without respect to any election under section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was without recourse to the Company, (b) any Debt to any employee of the Company, (c) any Debt which by its terms is subordinated to any trade accounts payable or accrued liabilities arising in the ordinary course of business but only to the extent that payments made to the holders of such Debt by the Holders of the Junior Subordinated Debentures as a result of the subordination provisions of this Indenture would be greater than they otherwise would have been as a result of any obligation of such Holders to pay amounts over to the obligees on such trade accounts payable or accrued liabilities arising in the ordinary course of business as a result of subordination provisions to which such Debt is subject, (d) the Preferred Securities Guarantee, and (e) any other debt securities issued pursuant to this Indenture. "Special Event" means a Tax Event, an Investment Company Event or a Capital Treatment Event. "Subsidiary" means, with respect to any Person, (a) any corporation at least a majority of whose outstanding Voting Stock shall at the time be owned, directly or indirectly, by such Person, or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries, (b) any general partnership, joint venture or similar entity, at least a majority of whose outstanding partnership or similar interests shall at the time be owned by such Person, or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries, and (c) any limited partnership of which such Person or any of its Subsidiaries is a general partner. "Tax Event" means the receipt by the Company and the Trust of an Opinion of Counsel experienced in such matters to the effect that, as a result of any amendment to, or change 7 (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of issuance of the Junior Subordinated Debentures there is more than an insubstantial risk that (a) interest payable by the Company on the Junior Subordinated Debentures is not, or within 90 days after the date of such Opinion of Counsel will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, (b) the Trust is, or will be within 90 days after the date of such Opinion of Counsel, subject to United States federal income tax with respect to income received or accrued on the Junior Subordinated Debentures, or (c) the Trust is, or will be within 90 days after the date of such Opinion of Counsel, subject to more than a de minimis amount of other taxes, duties, assessments or other governmental charges. "Trust" means BVBC Capital Trust I, a Delaware statutory business trust created for the purpose of issuing Trust Securities in connection with the issuance of Junior Subordinated Debentures under this Indenture. "Trust Agreement" means the Amended and Restated Trust Agreement, dated as of _______________, 2000, of the Trust. "Trustee" means Wilmington Trust Company and, subject to the provisions of Article IX, shall also include its successors and assigns, and, if at any time there is more than one Person acting in such capacity hereunder, "Trustee" shall mean each such Person. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date of execution of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trust Securities" means Common Securities and Preferred Securities of the Trust. "Voting Stock" as applied to stock of any Person, means shares, interests, participations or other equivalents in the equity interest (however designated) in such Person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such Person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency. ARTICLE II DESCRIPTION, TERMS, CONDITIONS, REGISTRATION AND EXCHANGE OF THE JUNIOR SUBORDINATED DEBENTURES 2.01 DESIGNATION AND PRINCIPAL AMOUNT. There is hereby authorized a series of Securities designated the "_____% Junior Subordinated Debentures due 2030," limited in aggregate principal amount to $11,855,672, which amount shall be as set forth in any written order of the Company for the authentication and delivery of Junior Subordinated Debentures pursuant to Section 8.02 of this Indenture. 8 2.02 MATURITY. (a) The Maturity Date will be either: (i) the Scheduled Maturity Date; or (ii) if the Company elects to accelerate the Maturity Date to be a date prior to the Scheduled Maturity Date in accordance with Section 2.02(b), the Accelerated Maturity Date. (b) The Company may, at any time before the day which is 90 days before the Scheduled Maturity Date, elect to shorten the Maturity Date only once to the Accelerated Maturity Date, provided that the Company has received the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve, but in no case shall such Accelerated Maturity Date be a date before June 30, 2005. (c) If the Company elects to accelerate the Maturity Date in accordance with Section 2.02(b), the Company shall give notice to the Registered Holders of the Junior Subordinated Debentures, the Property Trustee and the Trustee of the acceleration of the Maturity Date and the Accelerated Maturity Date at least 90 days before the Accelerated Maturity Date. 2.03 FORM AND PAYMENT. Except as provided in Section 2.04, the Junior Subordinated Debentures shall be issued in fully registered certificated form without interest coupons. Principal and interest on the Junior Subordinated Debentures issued in certificated form will be payable, the transfer of such Junior Subordinated Debentures will be registrable and such Junior Subordinated Debentures will be exchangeable for Junior Subordinated Debentures bearing identical terms and provisions at the office or agency of the Trustee; provided, however, that payment of interest may be made at the option of the Company by check mailed to the Holder at such address as shall appear in the Securities Register. Notwithstanding the foregoing, so long as the Holder of any Junior Subordinated Debentures is the Property Trustee, the payment of the principal of and interest (including Compounded Interest and Additional Sums, if any) on such Junior Subordinated Debentures held by the Property Trustee will be made at such place and to such account as may be designated by the Property Trustee. 2.04 GLOBAL SUBORDINATED DEBENTURE. (a) In connection with a Dissolution Event: (i) the Junior Subordinated Debentures in certificated form may be presented to the Trustee by the Property Trustee in exchange for a Global Subordinated Debenture in an aggregate principal amount equal to the aggregate principal amount of all outstanding Junior Subordinated Debentures (a "Global Subordinated Debenture"), to be registered in the name of the Depositary, or its nominee, and delivered by the Trustee to the Depositary for crediting to the accounts of its participants pursuant to the instructions of the Administrative Trustees. The Company upon any such presentation shall execute a Global 9 Subordinated Debenture in such aggregate principal amount and deliver the same to the Trustee for authentication and delivery in accordance with this Indenture. Payments on the Junior Subordinated Debentures issued as a Global Subordinated Debenture will be made to the Depositary; and (ii) if any Preferred Securities are held in non book-entry certificated form, the Junior Subordinated Debentures in certificated form may be presented to the Trustee by the Property Trustee and any Preferred Securities Certificate which represents Preferred Securities other than Preferred Securities held by the Depositary or its nominee ("Non Book-Entry Preferred Securities") will be deemed to represent beneficial interests in Junior Subordinated Debentures presented to the Trustee by the Property Trustee having an aggregate principal amount equal to the aggregate Liquidation Amount of the Non Book-Entry Preferred Securities until such Preferred Securities Certificates are presented to the Securities Registrar for transfer or reissuance at which time such Preferred Securities Certificates will be canceled and a Junior Subordinated Debenture, registered in the name of the holder of the Preferred Securities Certificate or the transferee of the holder of such Preferred Securities Certificate, as the case may be, with an aggregate principal amount equal to the aggregate Liquidation Amount of the Preferred Securities Certificate canceled, will be executed by the Company and delivered to the Trustee for authentication and delivery in accordance with this Indenture. On issue of such Junior Subordinated Debentures, Junior Subordinated Debentures with an equivalent aggregate principal amount that were presented by the Property Trustee to the Trustee will be deemed to have been canceled. (b) A Global Subordinated Debenture may be transferred, in whole but not in part, only to another nominee of the Depositary, or to a successor Depositary selected or approved by the Company or to a nominee of such successor Depositary. (c) If at any time the Depositary notifies the Company that it is unwilling or unable to continue as Depositary or if at any time the Depositary for such series shall no longer be registered or in good standing under the Exchange Act or other applicable statute or regulation, and a successor Depositary for such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, as the case may be, the Company will execute, and the Trustee, upon written notice from the Company, will authenticate and deliver the Junior Subordinated Debentures in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Subordinated Debenture in exchange for such Global Subordinated Debenture. In addition, the Company may at any time determine that the Junior Subordinated Debentures shall no longer be represented by a Global Subordinated Debenture. In such event the Company will execute, and the Trustee, upon receipt of an Officers' Certificate evidencing such determination by the Company, will authenticate and deliver the Junior Subordinated Debentures in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Subordinated Debenture in exchange for such Global Subordinated Debenture. 10 Upon the exchange of the Global Subordinated Debenture for such Junior Subordinated Debentures in definitive registered form without coupons, in authorized denominations, the Global Subordinated Debenture shall be canceled by the Trustee. Such Junior Subordinated Debentures in definitive registered form issued in exchange for the Global Subordinated Debenture shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Junior Subordinated Debentures to the Depositary for delivery to the Persons in whose names such Junior Subordinated Debentures are so registered. 2.05 INTEREST. (a) Each Junior Subordinated Debenture will bear interest at the rate of _____% per annum (the "Coupon Rate") from the original date of issuance until the principal thereof becomes due and payable, and on any overdue principal and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the Coupon Rate, compounded quarterly, payable (subject to the provisions of Article IV) quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (each, an "Interest Payment Date"), commencing on June 30, 2000, to the Person in whose name such Junior Subordinated Debenture or any Predecessor Junior Subordinated Debenture is registered at the close of business on the regular record date for such interest installment, which, in respect of (i) Junior Subordinated Debentures of which the Property Trustee is the Holder and the Preferred Securities are in book-entry-only form or (ii) a Global Subordinated Debenture, shall be the close of business on the Business Day next preceding that Interest Payment Date. Notwithstanding the foregoing sentence, if (A) the Junior Subordinated Debentures are held by the Property Trustee and the Preferred Securities are no longer in book-entry only form or (B) the Junior Subordinated Debentures are not represented by a Global Subordinated Debenture, the record date for such interest installment shall be the 15th day of the month in which such payment is to be made. The amount of each interest payment due with respect to the Junior Subordinated Debentures will include amounts accrued through the date the interest payment is payable. (b) The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the following sentence, the amount of interest payable for any period shorter than a full quarterly period for which interest is computed will be computed on the basis of the actual number of days elapsed in such a quarterly period. In the event that any date on which interest is payable on the Junior Subordinated Debentures is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. (c) If, at any time while the Property Trustee is the Holder of any Junior Subordinated Debentures, the Trust or the Property Trustee is required to pay any taxes, 11 duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any case, the Company will pay as additional interest ("Additional Sums") on the Junior Subordinated Debentures held by the Property Trustee such additional amounts as shall be required so that the net amounts received and retained by the Trust and the Property Trustee after paying such taxes, duties, assessments or other governmental charges will be equal to the amounts the Trust and the Property Trustee would have received had no such taxes, duties, assessments or other government charges been imposed. 2.06 EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Junior Subordinated Debentures shall be executed on behalf of the Company by its Chief Executive Officer, its President or any Vice President and attested by its Secretary or Assistant Secretary. The signature of any of these officers on the Junior Subordinated Debentures may be manual or facsimile. Junior Subordinated Debentures bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Junior Subordinated Debentures or did not hold such offices at the date of such Junior Subordinated Debentures. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Junior Subordinated Debentures executed by the Company to the Trustee for authentication, together with a Company order for the authentication and delivery of such Junior Subordinated Debentures. The Trustee in accordance with such Company order shall authenticate and deliver such Junior Subordinated Debentures as provided in this Indenture and not otherwise. Upon the initial issuance, each Junior Subordinated Debenture shall be dated ________________, 2000, and thereafter Junior Subordinated Debentures issued hereunder shall be dated the date of their authentication. No Junior Subordinated Debenture shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Junior Subordinated Debenture a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Junior Subordinated Debenture shall be conclusive evidence, and the only evidence, that such Junior Subordinated Debenture has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. 2.07 REGISTRATION AND TRANSFER. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office or any other office or agency pursuant to Section 5.02 being herein sometimes referred to as the "Securities Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of the Junior Subordinated Debentures and transfers of the Junior Subordinated Debentures. The Trustee is hereby appointed "Securities Registrar" 12 for the purpose of registering the Junior Subordinated Debentures and transfers of the Junior Subordinated Debentures as herein provided. Upon surrender for registration of transfer of any Junior Subordinated Debenture at an office or agency of the Company designated pursuant to Section 5.02 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, a new Junior Subordinated Debenture of the authorized denomination. All Junior Subordinated Debentures issued upon any registration of transfer of Junior Subordinated Debentures shall be valid obligations of the Company, evidencing the same debt and entitled to the same benefits under this Indenture as the Junior Subordinated Debentures surrendered upon such registration of transfer. Every Junior Subordinated Debenture presented or surrendered for registration of transfer shall be duly endorsed for transfer (if so required by the Company or the Trustee), or shall be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by the Holder thereof or such Holder's attorney duly authorized in writing. No service charge shall be made for any registration of transfer of Junior Subordinated Debentures, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer of Junior Subordinated Debentures. The Company shall not be required to issue or register the transfer of any Junior Subordinated Debenture during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Junior Subordinated Debentures selected for redemption pursuant to Article III and ending at the close of business on the day of such mailing. 2.08 MUTILATED, DESTROYED, LOST AND STOLEN JUNIOR SUBORDINATED DEBENTURES. If any mutilated Junior Subordinated Debenture is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Junior Subordinated Debenture of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (a) evidence to their satisfaction of the destruction, loss or theft of any Junior Subordinated Debenture and (b) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Junior Subordinated Debenture has been acquired by a protected purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Junior Subordinated Debenture, a new Junior Subordinated Debenture of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Junior Subordinated Debenture has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Junior Subordinated Debenture, pay such Junior Subordinated Debenture. 13 Upon the issuance of any new Junior Subordinated Debenture under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Junior Subordinated Debenture issued pursuant to this Section in lieu of any destroyed, lost or stolen Junior Subordinated Debenture shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Junior Subordinated Debenture shall be at any time enforceable by anyone, and shall be entitled to all of the benefits of this Indenture. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Junior Subordinated Debentures. ARTICLE III REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES 3.01 REDEMPTION. Subject to the Company having received prior approval of the Federal Reserve, if then required under the applicable capital guidelines or policies of the Federal Reserve, the Company may redeem the Junior Subordinated Debentures in accordance with this Article III. 3.02 SPECIAL EVENT REDEMPTION. Subject to the Company having received the prior approval of the Federal Reserve, if then required under the applicable capital guidelines or policies of the Federal Reserve, if a Special Event has occurred and is continuing, then, notwithstanding Section 3.03, the Company shall have the right upon not less than 30 days' nor more than 60 days' notice to the Holders of the Junior Subordinated Debentures to redeem the Junior Subordinated Debentures, in whole but not in part, for cash within 90 days following the occurrence of such Special Event (the "90-Day Period") at the Redemption Price, provided that if at the time there is available to the Company the opportunity to eliminate, within the 90-Day Period, the Tax Event by taking some ministerial action ("Ministerial Action"), such as filing a form or making an election, or pursuing some other similar reasonable measure which has no adverse effect on the Company, the Trust or the Holders of the Trust Securities issued by the Trust, the Company shall pursue such Ministerial Action in lieu of redemption, and, provided, further, that the Company shall have no right to redeem the Junior Subordinated Debentures while the Trust is pursuing any Ministerial Action to eliminate the Tax Event. The Redemption Price shall be paid prior to 2:00 p.m., Overland Park, Kansas time, on the date of such redemption or such earlier time as the Company determines, provided that the Company shall deposit with the Trustee an amount sufficient to pay the Redemption Price by 12:00 noon, Overland Park, Kansas time, on the date such Redemption Price is to be paid. 3.03 OPTIONAL REDEMPTION BY COMPANY. (a) Except as otherwise may be specified in this Indenture, the Company shall have the right to redeem the Junior Subordinated Debentures, in whole or in part, from time to time, on or after June 30, 2005, at the Redemption Price. Any redemption 14 pursuant to this Section 3.03 will be made upon not less than 30 days' nor more than 60 days' notice to the Holders of the Junior Subordinated Debentures, at the Redemption Price. If the Junior Subordinated Debentures are only partially redeemed pursuant to this Section 3.03, the Junior Subordinated Debentures will be redeemed pro rata or by lot or by any other method utilized by the Trustee; provided, that if at the time of redemption the Junior Subordinated Debentures are registered as a Global Subordinated Debenture, the Depositary shall determine, in accordance with its procedures, the principal amount of such Junior Subordinated Debentures held by each Holder of Junior Subordinated Debentures to be redeemed. The Redemption Price shall be paid prior to 2:00 p.m., Overland Park, Kansas time, on the date of such redemption or at such earlier time as the Company determines provided that the Company shall deposit with the Trustee an amount sufficient to pay the Redemption Price by 12:00 noon, Overland Park, Kansas time, on the date such Redemption Price is to be paid. (b) If a partial redemption of the Junior Subordinated Debentures would result in the delisting of the Preferred Securities issued by the Trust from the American Stock Exchange or any national securities exchange or other organization on which the Preferred Securities may then be listed, if any, the Company shall not be permitted to effect such partial redemption and may only redeem the Junior Subordinated Debentures in whole or in part to such extent as would not cause such delisting. 3.04 NOTICE OF REDEMPTION. (a) In case the Company shall desire to exercise such right to redeem all or, as the case may be, a portion of the Junior Subordinated Debentures in accordance with the right reserved so to do, the Company shall, or shall cause the Trustee to, give notice of such redemption to Holders of the Junior Subordinated Debentures to be redeemed by mailing, first class postage prepaid, a notice of such redemption not less than 30 days and not more than 60 days before the date fixed for redemption to such Holders at their last addresses as they shall appear upon the Securities Register. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Registered Holder receives the notice. In any case, failure duly to give such notice to the Holder of any Junior Subordinated Debenture designated for redemption in whole or in part, or any defect in the notice, shall not affect the validity of the proceedings for the redemption of any other Junior Subordinated Debentures. In the case of any redemption of Junior Subordinated Debentures prior to the expiration of any restriction on such redemption provided elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with any such restriction. Each such notice of redemption shall specify the date fixed for redemption and the Redemption Price, and shall state that payment of the Redemption Price of such Junior Subordinated Debentures to be redeemed will be made at the office or agency of the Property Trustee in Wilmington, Delaware upon presentation and surrender of such Junior Subordinated Debentures, that interest accrued to the date fixed for redemption will be paid as specified in said notice, that from and after said date interest will cease to accrue. If less than all the Junior Subordinated Debentures are to be redeemed, the notice 15 to the Holders of Junior Subordinated Debentures to be redeemed in whole or in part shall specify the particular Junior Subordinated Debentures to be so redeemed. In case any Junior Subordinated Debenture is to be redeemed in part only, the notice that relates to such Junior Subordinated Debenture shall state the portion of the principal amount thereof to be redeemed, and shall state that on and after the redemption date, upon surrender of such Junior Subordinated Debenture, a new Junior Subordinated Debenture or Junior Subordinated Debentures in principal amount equal to the unredeemed portion thereof shall be issued to the Holder. (b) If less than all the Junior Subordinated Debentures are to be redeemed, the Company shall give the Trustee at least 45 days' notice in advance of the date fixed for redemption as to the aggregate principal amount of Junior Subordinated Debentures to be redeemed, and thereupon the Trustee shall select, by lot or in such other manner as it shall deem appropriate and fair in its discretion and that may provide for the selection of a portion or portions (equal to eight dollars U.S. ($8) or any integral multiple thereof), the Junior Subordinated Debentures to be redeemed and shall thereafter promptly notify the Company in writing of the numbers of the Junior Subordinated Debentures to be redeemed, in whole or in part. The Company may, if and whenever it shall so elect, by delivery of instructions signed on its behalf by its Chief Executive Officer, its President or any Vice President, instruct the Trustee or any paying agent to call all or any part of the Junior Subordinated Debentures for redemption and to give notice of redemption in the manner set forth in this Section, such notice to be in the name of the Company or in the name of the Trustee or the paying agent, as the Trustee or such paying agent may deem advisable. In any case in which notice of redemption is to be given by the Trustee or any such paying agent, the Company shall deliver or cause to be delivered to, or permit to remain with, the Trustee or such paying agent, as the case may be, such Securities Register, transfer books or other records, or suitable copies or extracts therefrom, sufficient to enable the Trustee or such paying agent to give any notice by mail that may be required under the provisions of this Section. 3.05 PAYMENT UPON REDEMPTION. (a) If the giving of notice of redemption shall have been completed as above provided, the Junior Subordinated Debentures or portions of Junior Subordinated Debentures to be redeemed specified in such notice shall become due and payable on the date and at the place stated in such notice at the Redemption Price (which includes interest accrued to the date fixed for redemption) and interest on such Junior Subordinated Debentures or portions of Junior Subordinated Debentures shall cease to accrue on and after the date fixed for redemption, unless the Company shall default in the payment of such Redemption Price with respect to any such Junior Subordinated Debentures or portions thereof. On presentation and surrender of such Junior Subordinated Debentures on or after the date fixed for redemption at the place of payment specified in the notice, such Junior Subordinated Debentures shall be paid and redeemed at the Redemption Price (which includes the interest accrued thereon to the date fixed for redemption) (but if the date fixed for redemption is an Interest Payment 16 Date, the interest installment payable on such date shall be payable to the Registered Holder at the close of business on the applicable record date pursuant to Section 2.05(a)). (b) Upon presentation of any Junior Subordinated Debenture that is to be redeemed in part only, the Company shall execute and the Trustee shall authenticate and the office or agency where the Junior Subordinated Debenture is presented shall deliver to the Holder thereof, at the expense of the Company, a new Junior Subordinated Debenture or Junior Subordinated Debentures of authorized denominations in principal amount equal to the unredeemed portion of the Junior Subordinated Debenture so presented. 3.06 NO SINKING FUND. The Junior Subordinated Debentures are not entitled to the benefit of any sinking fund. ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD 4.01 EXTENSION OF INTEREST PAYMENT PERIOD. So long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time and from time to time during the term of the Junior Subordinated Debentures, to defer payments of interest by extending the interest payment period of such Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters (the "Extended Interest Payment Period"), during which Extended Interest Payment Period no interest shall be due and payable; provided that no Extended Interest Payment Period may extend beyond the Maturity Date. To the extent permitted by applicable law, interest, the payment of which has been deferred because of the extension of the interest payment period pursuant to this Section 4.01, will bear interest thereon at the Coupon Rate compounded quarterly for each quarter of the Extended Interest Payment Period ("Compounded Interest"). At the end of the Extended Interest Payment Period, the Company shall pay all interest accrued and unpaid on the Junior Subordinated Debentures, including any Additional Sums and Compounded Interest (together, "Deferred Interest") that shall be payable to the Holders of the Junior Subordinated Debentures in whose names the Junior Subordinated Debentures are registered in the Securities Register on the record date for the Interest Payment Date coinciding with the end of the Extended Interest Payment Period. Before the termination of any Extended Interest Payment Period, the Company may further extend such period, provided that such period together with all such further extensions thereof shall not exceed 20 consecutive quarters, or extend beyond the Maturity Date. Upon the termination of any Extended Interest Payment Period and upon the payment of all Deferred Interest then due, the Company may commence a new Extended Interest Payment Period, subject to the foregoing requirements. No interest shall be due and payable during an Extended Interest Payment Period, except at the end thereof, but the Company may prepay at any time all or any portion of the interest accrued during an Extended Interest Payment Period. 4.02 NOTICE OF EXTENSION. (a) If the Property Trustee is the only Registered Holder of the Junior Subordinated Debentures at the time the Company selects an Extended Interest Payment Period, the Company shall give written notice to the Administrative Trustees, the 17 Property Trustee and the Trustee of its selection of such Extended Interest Payment Period five Business Days before the earlier of (i) the next succeeding date on which Distributions are payable, or (ii) the date the Trust is required to give notice of the record date, or the date such Distributions are payable, to the Preferred Securities holders or to the American Stock Exchange or other applicable self-regulatory organization, if any, but in any event at least five Business Days before such record date. (b) If the Property Trustee is not the only Holder of the Junior Subordinated Debentures at the time the Company selects an Extended Interest Payment Period, the Company shall give the Holders of the Junior Subordinated Debentures and the Trustee written notice of its selection of such Extended Interest Payment Period at least five Business Days before the earlier of (i) the next succeeding Interest Payment Date, or (ii) the date the Company is required to give notice of the record or payment date of such interest payment to the Holders of the Junior Subordinated Debentures or to the American Stock Exchange or other applicable self-regulatory organization, if any. (c) The quarter in which any notice is given pursuant to paragraph (a) or paragraph (b) of this Section 4.02 shall be counted as one of the 20 quarters permitted in the maximum Extended Interest Payment Period permitted under Section 4.01. 4.03 LIMITATION OF TRANSACTIONS DURING EXTENSION. If (a) the Company shall exercise its right to defer payment of interest as provided in Section 4.01; or (b) there shall have occurred any Event of Default, then the Company shall be subject to the restrictions on payments set forth under Section 5.06. ARTICLE V PARTICULAR COVENANTS OF THE COMPANY 5.01 PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay or cause to be paid the principal of and interest on the Junior Subordinated Debentures at the time and place and in the manner provided herein and established with respect to such Junior Subordinated Debentures. 5.02 MAINTENANCE OF AGENCY. So long as any Junior Subordinated Debentures remain Outstanding, the Company agrees to maintain an office or agency in Wilmington, Delaware, or at such other location or locations as may be designated as provided in this Section 5.02, where (a) Junior Subordinated Debentures may be presented for payment, (b) Junior Subordinated Debentures may be presented as hereinabove authorized for registration of transfer and exchange, and (c) notices and demands to or upon the Company in respect of the Junior Subordinated Debentures and this Indenture may be given or served, such designation to continue with respect to such office or agency until the Company shall, by written notice signed by its Chief Executive Officer, its President or a Vice President and delivered to the Trustee, designate some other office or agency for such purposes or any of them. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, notices and demands. 18 5.03 PAYING AGENTS. (a) If the Company shall appoint one or more paying agents for the Junior Subordinated Debentures, other than the Trustee, the Company will cause each such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section: (i) that it will hold all sums held by it as such agent for the payment of the principal of or interest on the Junior Subordinated Debentures (whether such sums have been paid to it by the Company or by any other obligor) in trust for the benefit of the Persons entitled thereto; (ii) that it will give the Trustee notice of any failure by the Company (or by any other obligor) to make any payment of the principal of or interest on the Junior Subordinated Debentures when the same shall be due and payable; (iii) that it will, at any time during the continuance of any failure referred to in the preceding paragraph (a)(ii) above, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent; and (iv) that it will perform all other duties of paying agent as set forth in this Indenture. (b) If the Company shall act as its own paying agent with respect to the Junior Subordinated Debentures, it will on or before each due date of the principal of or interest on Junior Subordinated Debentures, set aside, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay such principal or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of such action, or any failure (by it or any other obligor) to take such action. Whenever the Company shall have one or more paying agents for the Junior Subordinated Debentures, it will, prior to each due date of the principal of or interest on the Junior Subordinated Debentures, deposit with the paying agent a sum sufficient to pay the principal or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal or interest, and (unless such paying agent is the Trustee) the Company will promptly notify the Trustee of this action or failure so to act. (c) Notwithstanding anything in this Section to the contrary, (i) the agreement to hold sums in trust as provided in this Section is subject to the provisions of Section 13.05, and (ii) the Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or direct any paying agent to pay, to the Trustee all sums held in trust by the Company or such paying agent, such sums to be held by the Trustee upon the same terms and conditions as those upon which such sums were held by the Company or such paying agent; and, upon such payment by any paying agent to the Trustee, such paying agent shall be released from all further liability with respect to such money. 19 5.04 APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 9.10, a Trustee, so that there shall at all times be a Trustee hereunder. 5.05 COMPLIANCE WITH CONSOLIDATION PROVISIONS. The Company will not, while any of the Junior Subordinated Debentures remain Outstanding, consolidate with, or merge into, or merge into itself, or sell or convey all or substantially all of its property to any other company unless the provisions of Article XII hereof are complied with. 5.06 RESTRICTIONS ON CERTAIN PAYMENTS. If at any time (a) there shall have occurred any event of which the Company has actual knowledge that (i) with the giving of notice or the lapse of time, or both, would constitute an Event of Default and (ii) in respect to which the Company shall not have taken reasonable steps to cure, or (b) the Company shall have given notice of its election of an Extended Interest Payment Period as provided herein with respect to the Junior Subordinated Debentures and shall not have rescinded such notice, or such Extended Interest Payment Period, or any extension thereof, shall be continuing; or (c) while the Junior Subordinated Debentures are held by the Trust, the Company shall be in default with respect to its payment of any obligation under the Preferred Securities Guarantee, then the Company will not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company (including the Junior Subordinated Debentures) that rank pari passu with or junior in interest to the Junior Subordinated Debentures or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company if such guarantee ranks pari passu or junior in interest to the Junior Subordinated Debentures (other than (A) dividends or distributions in common stock, (B) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future or the redemption or repurchase of any such rights pursuant thereto, (C) payments under the Preferred Securities Guarantee and (D) purchases of common stock related to the issuance of common stock or rights under any of the Company's benefit plans for its directors, officers or employees). 5.07 COVENANTS AS TO THE TRUST. For so long as the Trust Securities of the Trust remain outstanding, the Company will (a) maintain 100% direct or indirect ownership of the Common Securities of the Trust; provided, however, that any permitted successor of the Company under this Indenture may succeed to the Company's ownership of the Common Securities, (b) use its reasonable efforts to cause the Trust (i) to remain a business trust, except in connection with a distribution of Junior Subordinated Debentures, the redemption of all of the Trust Securities of the Trust or certain mergers, consolidations or amalgamations, each as permitted by the Trust Agreement, and (ii) to otherwise continue not to be treated as an association taxable as a corporation or partnership for United States federal income tax purposes and (c) to use its reasonable efforts to cause each Holder of Trust Securities to be treated as owning an individual undivided beneficial interest in the Junior Subordinated Debentures. If the Junior Subordinated Debentures are issued in connection with the distribution of the Junior Subordinated Debentures to the holders of the Preferred Securities issued by the Trust 20 upon a Dissolution Event, the Company will use its best efforts to list such Junior Subordinated Debentures on The American Stock Exchange LLC or on such other exchange as the Preferred Securities may then be listed; provided, however, that any redemption of the junior subordinated debentures, in whole or in part, effected in accordance with this Indenture shall not cause or result in a violation of this Section 5.07. For so long as the Junior Subordinated Debentures shall remain Outstanding, the Company shall fulfill all reporting and filing obligations under the Securities Exchange Act of 1934, as amended, as applicable to companies having a class of securities registered under Section 12(b) or 12(g) thereunder. ARTICLE VI SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE 6.01 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF SECURITYHOLDERS. The Company will furnish or cause to be furnished to the Trustee (a) on each regular record date (as defined in Section 2.05(a)) a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such regular record date, provided that the Company shall not be obligated to furnish or cause to furnish such list at any time that the list shall not differ in any respect from the most recent list furnished to the Trustee by the Company and (b) at such other times as the Trustee may request in writing within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that, in either case, no such list need be furnished if the Trustee shall be the Securities Registrar. 6.02 PRESERVATION OF INFORMATION; COMMUNICATIONS WITH SECURITYHOLDERS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders contained in the most recent list furnished to it as provided in Section 6.01 and as to the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar (if acting in such capacity). (b) The Trustee may destroy any list furnished to it as provided in Section 6.01 upon receipt of a new list so furnished. (c) Securityholders may communicate as provided in Section 312(b) of the Trust Indenture Act with other Securityholders with respect to their rights under this Indenture or under the Junior Subordinated Debentures. 6.03 REPORTS BY THE COMPANY. (a) The Company covenants and agrees to file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and 21 regulations prescribe) that the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports that may be required pursuant to any applicable rules and regulations of the Commission. (b) The Company covenants and agrees to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations. (c) The Company covenants and agrees to transmit by mail, first class postage prepaid, or reputable overnight delivery service that provides for evidence of receipt, to the Securityholders, as their names and addresses appear upon the Securities Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to subsections (a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. 6.04 REPORTS BY THE TRUSTEE. (a) Beginning July 31, 2001, on or before July 31 in each year in which any of the Junior Subordinated Debentures are Outstanding, the Trustee shall transmit by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Securities Register, a brief report dated as of the preceding December 31, if and to the extent required under Section 313(a) of the Trust Indenture Act. (b) The Trustee shall comply with Section 313(b) and 313(c) of the Trust Indenture Act. (c) A copy of each such report shall, at the time of such transmission to Securityholders, be filed by the Trustee with the Company, and also with the Commission. ARTICLE VII REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT 7.01 EVENTS OF DEFAULT. (a) Whenever used herein, "Event of Default" means any one or more of the following events that has occurred and is continuing: (i) the Company defaults in the payment of any installment of interest upon any of the Junior Subordinated Debentures, as and when the same shall 22 become due and payable, and continuance of such default for a period of 30 days; provided, however, that a valid extension of an interest payment period by the Company in accordance with the terms of this Indenture shall not constitute a default in the payment of interest for this purpose; (ii) the Company defaults in the payment of the principal of any of the Junior Subordinated Debentures as and when the same shall become due and payable whether at maturity, upon redemption, by declaration or otherwise; (iii) the Company fails to observe or perform any other of its covenants or agreements hereunder with respect to the Junior Subordinated Debentures for a period of 90 days after the date on which written notice of such failure, requiring the same to be remedied and stating that such notice is a "Notice of Default" hereunder, shall have been given to the Company by the Trustee, by registered or certified mail, or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Junior Subordinated Debentures at the time Outstanding; (iv) the Company pursuant to or within the meaning of any Bankruptcy Law (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a custodian of it or for all or substantially all of its property or (D) makes a general assignment for the benefit of its creditors; (v) a court of competent jurisdiction enters an order under any Bankruptcy Law that (A) is for relief against the Company in an involuntary case, (B) appoints a custodian of the Company for all or substantially all of its property, or (C) orders the liquidation of the Company, and the order or decree remains unstayed and in effect for 90 days; or (vi) in the event Junior Subordinated Debentures are issued to the Trust or a trustee of the Trust in connection with the issuance of Trust Securities by the Trust, the Trust shall have voluntarily or involuntarily dissolved, wound up its business or otherwise terminated its existence, except in connection with (A) the distribution of Junior Subordinated Debentures to holders of Trust Securities in liquidation of their interests in the Trust, (B) the redemption of all of the outstanding Trust Securities of the Trust or (C) certain mergers, consolidations or amalgamations, each as permitted by the Trust Agreement. (b) In each and every such case, unless the principal of all the Junior Subordinated Debentures shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Junior Subordinated Debentures then Outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by such Securityholders) may declare the principal of all the Junior Subordinated Debentures to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, 23 notwithstanding anything contained in this Indenture or in the Junior Subordinated Debentures to the contrary. (c) At any time after the principal of the Junior Subordinated Debentures shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Holders of a majority in aggregate principal amount of the Junior Subordinated Debentures then Outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (i) the Company has paid or deposited with the Trustee a sum sufficient to pay all matured installments of interest upon all the Junior Subordinated Debentures and the principal of any and all Junior Subordinated Debentures that shall have become due otherwise than by acceleration (with interest upon such principal and, to the extent that such payment is enforceable under applicable law, upon overdue installments of interest, at the rate per annum expressed in the Junior Subordinated Debentures to the date of such payment or deposit) and the amount payable to the Trustee under Section 9.06, and (ii) any and all Events of Default under this Indenture, other than the nonpayment of principal on Junior Subordinated Debentures that shall not have become due by their terms, shall have been remedied or waived as provided in Section 7.06. Should the Holders fail to annul such declaration and waive such default, then the holders of a majority in aggregate Liquidation Amount of the Preferred Securities shall have such right. No such rescission and annulment shall extend to or shall affect any subsequent default or impair any right consequent thereon. (d) In case the Trustee shall have proceeded to enforce any right with respect to Junior Subordinated Debentures under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall continue as though no such proceedings had been taken. 7.02 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE. (a) The Company covenants that (i) in case it shall default in the payment of any installment of interest on any of the Junior Subordinated Debentures as and when the same shall have become due and payable, and such default shall have continued for a period of 90 Business Days, or (ii) in case it shall default in the payment of the principal of any of the Junior Subordinated Debentures when the same shall have become due and payable, whether upon maturity of the Junior Subordinated Debentures or upon redemption or upon declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the Holders of the Junior Subordinated Debentures, the whole amount that then shall have become due and payable on all such Junior Subordinated Debentures for principal or interest, or both, as the case may be, with interest upon the overdue principal and (to the extent that payment of such 24 interest is enforceable under applicable law and, if the Junior Subordinated Debentures are held by the Trust or a trustee of the Trust, without duplication of any other amounts paid by the Trust or trustee in respect thereof) upon overdue installments of interest at the rate per annum expressed in the Junior Subordinated Debentures; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, and the amount payable to the Trustee under Section 9.06. (b) If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor upon the Junior Subordinated Debentures and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or other obligor upon the Junior Subordinated Debentures, wherever situated. (c) In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, readjustment, arrangement, composition or judicial proceedings affecting the Company or the creditors or property of either, the Trustee shall have power to intervene in such proceedings and take any action therein that may be permitted by the court and shall (except as may be otherwise provided by law) be entitled to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Trustee and of the Holders of Junior Subordinated Debentures allowed for the entire amount due and payable by the Company under this Indenture at the date of institution of such proceedings and for any additional amount that may become due and payable by the Company after such date, and to collect and receive any moneys or other property payable or deliverable on any such claim, and to distribute the same after the deduction of the amount payable to the Trustee under Section 9.06; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the Holders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to such Securityholders, to pay to the Trustee any amount due it under Section 9.06. (d) All rights of action and of asserting claims under this Indenture may be enforced by the Trustee without the possession of any of the Junior Subordinated Debentures, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for payment to the Trustee of any amounts due under Section 9.06, be for the ratable benefit of the Holders of the Junior Subordinated Debentures. In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid 25 of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Junior Subordinated Debentures or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding. 7.03 APPLICATION OF MONEYS COLLECTED. Any moneys collected by the Trustee pursuant to this Article with respect to the Junior Subordinated Debentures shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the Junior Subordinated Debentures, and notation thereon the payment, if only partially paid, and upon surrender thereof if fully paid: FIRST, to the payment of costs and expenses of collection and of all amounts payable to the Trustee under Section 9.06; SECOND, to the payment of all Senior and Subordinated Debt of the Company if and to the extent required by Article XVI; and THIRD, to the payment of the amounts then due and unpaid upon Junior Subordinated Debentures for principal and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Junior Subordinated Debentures for principal and interest, respectively. 7.04 LIMITATION ON SUITS. No Holder shall have any right by virtue of or by availing any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (a) such Holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof; (b) the Holders of not less than 25% in aggregate principal amount of the Junior Subordinated Debentures then Outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as trustee hereunder; (c) such Holder or Holders shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby; and (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action, suit or proceeding; and (e) during such 60-day period, the Holders of a majority in principal amount of the Junior Subordinated Debentures do not give the Trustee a direction inconsistent with the request. Notwithstanding any other provisions of this Indenture to the contrary, the right of any Holder to receive payment of the principal of and interest on the Junior Subordinated Debentures on or after the respective due dates (or in the case of redemption, on the redemption date), or to institute suit for the enforcement of any such payment on or after such respective dates or redemption date, shall not be impaired or affected without the consent of such Holder; and by 26 accepting a Junior Subordinated Debenture hereunder it is expressly understood, intended and covenanted by the Holder thereof with every other such Holder and the Trustee, that no one or more Holders shall have any right in any manner whatsoever by virtue of or by availing any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or seek to obtain priority over or preference to any such other Holders, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Junior Subordinated Debentures. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. 7.05 RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER. (a) Except as otherwise provided in Section 7.02, all powers and remedies given by this Article to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any other powers and remedies available to the Trustee or the Holders of the Junior Subordinated Debentures, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to such Junior Subordinated Debentures. (b) No delay or omission of the Trustee or of any Holder of any of the Junior Subordinated Debentures to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or on acquiescence therein; and, subject to the provisions of Section 7.04, every power and remedy given by this Article or by law to the Trustee or the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders. 7.06 CONTROL BY SECURITYHOLDERS. The Holders of a majority in aggregate principal amount of the Junior Subordinated Debentures at the time Outstanding, determined in accordance with Section 10.04, shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee; provided, however, that such direction shall not be in conflict with any rule of law or with this Indenture. Subject to the provisions of Section 9.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability. The Holders of a majority in aggregate principal amount of the Junior Subordinated Debentures at the time Outstanding affected thereby, determined in accordance with Section 10.04, may on behalf of the Holders of all of the Junior Subordinated Debentures waive any past default in the performance of any of the covenants contained herein and its consequences, except (a) a default in the payment of the principal of or interest on any of the Junior Subordinated Debentures as and when the same shall become due by its terms otherwise than by acceleration (unless such default has been cured and a sum sufficient to pay all matured installments of interest and principal has been deposited with the Trustee in accordance with Section 7.01(c)), (b) a default in the covenants contained in Section 5.06 or (c) in respect of a covenant or provision hereof which under Article XI cannot be 27 modified or amended without the consent of the Holder of each Outstanding Junior Subordinated Debenture affected; provided, however, that if the Junior Subordinated Debentures are held by the Trust or a Trustee of the Trust, such waiver or modification to such waiver shall not be effective until the Holders of a majority in Liquidation Amount of Trust Securities of the Trust shall have consented to such waiver or modification to such waiver; provided further, that if the consent of the Holder of each Outstanding Junior Subordinated Debenture is required, such waiver shall not be effective until each Holder of the Trust Securities of the Trust shall have consented to such waiver. Upon any such waiver, the default covered thereby shall be deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the Holders of the Junior Subordinated Debentures shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. 7.07 UNDERTAKING TO PAY COSTS. All parties to this Indenture agree, and each Holder of any Junior Subordinated Debentures by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding more than 10% in aggregate principal amount of the Outstanding Junior Subordinated Debentures, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on the Junior Subordinated Debentures on or after the due dates thereof. ARTICLE VIII FORM OF JUNIOR SUBORDINATED DEBENTURE AND ORIGINAL ISSUE 8.01 FORM OF JUNIOR SUBORDINATED DEBENTURE. The Junior Subordinated Debenture and the Trustee's Certificate of Authentication to be endorsed thereon are to be substantially in the forms contained as Exhibit A to this Indenture, attached hereto and incorporated herein by reference. 8.02 ORIGINAL ISSUE OF JUNIOR SUBORDINATED DEBENTURES. Junior Subordinated Debentures in the aggregate principal amount of $10,309,280 may, upon execution of this Indenture, be executed by the Company and delivered to the Trustee for authentication. If the Underwriter exercises its Option and there is an Option Closing Date (as such terms are defined in the Trust Agreement), then, on such Option Closing Date, Junior Subordinated Debentures in the aggregate principal amount of up to $1,546,392 may be executed by the Company and delivered to the Trustee for authentication. In either such event, the Trustee shall thereupon authenticate and deliver the Junior Subordinated Debentures to or upon the written order of the Company, signed by its Chairman, its Vice Chairman, its Chief Executive Officer, its President or any Vice President, without any further action by the Company. 28 ARTICLE IX CONCERNING THE TRUSTEE 9.01 CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE. (a) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform with respect to the Junior Subordinated Debentures such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants shall be read into this Indenture against the Trustee. In case an Event of Default has occurred (that has not been cured or waived) and is known to the Trustee, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (b) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (B) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirement of this Indenture; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in principal amount of the Junior Subordinated Debentures at the time Outstanding relating to the time, method and place of 29 conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture; and (iv) none of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there is reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Indenture or adequate indemnity against such risk is not reasonably assured to it. (c) Within 90 days after actual knowledge by a Responsible Officer of the Trustee of the occurrence of any default hereunder with respect to the Securities, the Trustee shall transmit by mail to all Holders of Securities, as their names and addresses appear in the Securities Register, notice of such default, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of Securities. For the purpose of this Section 9.01, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default with respect to the Securities. 9.02 CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in Section 9.01: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Board Resolution or an instrument signed in the name of the Company by the Chief Executive Officer, the President or any Vice President and by the Secretary or an Assistant Secretary or the Chief Accounting Officer thereof (unless other evidence in respect thereof is specifically prescribed herein); (c) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted hereunder in good faith and in reliance thereon; (d) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; nothing contained herein 30 shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default (that has not been cured or waived) known to the Trustee, to exercise such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his own affairs; (e) the Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security or other papers or documents, unless requested in writing so to do by the Holders of not less than a majority in principal amount of the Outstanding Junior Subordinated Debentures (determined as provided in Section 10.04); provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition to so proceeding. The reasonable expense of every such examination shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (h) the Trustee shall not be charged with knowledge of any default or Event of Default hereunder unless a Responsible Officer of the Trustee shall have knowledge of the default or Event of Default. 9.03 TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF THE JUNIOR SUBORDINATED DEBENTURES. (a) The recitals contained herein and in the Junior Subordinated Debentures shall be taken as the statements of the Company and the Trustee assumes no responsibility for the correctness of the same. (b) The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Junior Subordinated Debentures. (c) The Trustee shall not be accountable for the use or application by the Company of any of the Junior Subordinated Debentures or of the proceeds of such Junior Subordinated Debentures, or for the use or application of any moneys paid over by the Trustee in accordance with any provision of this Indenture, or for the use or application of any moneys received by any paying agent other than the Trustee. 31 9.04 MAY HOLD JUNIOR SUBORDINATED DEBENTURES. The Trustee or any paying agent or Securities Registrar, in its individual or any other capacity, may become the owner or pledgee of Junior Subordinated Debentures with the same rights it would have if it were not Trustee, paying agent or Securities Registrar. 9.05 MONEYS HELD IN TRUST. Subject to the provisions of Section 13.05, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any moneys received by it hereunder except such as it may agree with the Company to pay thereon. 9.06 COMPENSATION AND REIMBURSEMENT. (a) The Company covenants and agrees to pay to the Trustee, and the Trustee shall be entitled to, such reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), as the Company and the Trustee may from time to time agree in writing, for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee, and, except as otherwise expressly provided herein, the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Company also covenants to indemnify the Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Trustee and arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim of liability in the premises. (b) The obligations of the Company under this Section to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder. (c) The additional indebtedness described in Section 9.06(b) shall be secured by a lien prior to that of the Junior Subordinated Debentures upon all property and funds held or collected by the Trustee. (d) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 7.01(iv), (v) or (vi) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under the Bankruptcy Reform Act of 1978 or any successor statute. (e) The provisions of Section 9.06(a), (b) and (d) shall survive the termination of this Indenture. 32 9.07 RELIANCE ON OFFICERS' CERTIFICATE. Except as otherwise provided in Section 9.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting to take any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture upon the faith thereof. 9.08 DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the Company shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. 9.09 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee with respect to the Junior Subordinated Debentures issued hereunder which shall at all times be a corporation organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia, or a corporation or other Person permitted to act as trustee by the Commission, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal, state, territorial, or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. No Affiliate of the Company may serve as Trustee. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 9.10. 9.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) The Trustee, or any successor hereafter appointed, may at any time resign by giving written notice thereof to the Company and by transmitting notice of resignation by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Securities Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide Holder of Junior Subordinated Debentures for at least six months may, subject to the provisions of Section 7.07, on behalf of such Securityholder and all other Holders, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. 33 (b) In case at any time any one of the following shall occur: (i) the Trustee shall fail to comply with the provisions of Section 9.08 after written request therefor by the Company or by any Securityholder who has been a bona fide Holder of Junior Subordinated Debentures for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 9.09 and shall fail to resign after written request therefor by the Company or by any such Securityholder; or (iii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy proceeding, or a receiver of the Trustee or of its property shall be appointed or consented to, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Company may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 7.07, unless the Trustee's duty to resign is stayed as provided herein, any Securityholder who has been a bona fide Holder of Junior Subordinated Debentures for at least six months may, on behalf of that Holder and all other Holders, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The Holders of a majority in aggregate principal amount of the Junior Subordinated Debentures at the time Outstanding may at any time remove the Trustee by so notifying the Trustee and the Company and may appoint a successor Trustee with the consent of the Company. (d) Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section shall become effective upon acceptance of appointment by the successor trustee as provided in Section 9.11. 9.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (a) In case of the appointment hereunder of a successor trustee, every such successor trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor trustee all 34 the rights, powers, and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor trustee all property and money held by such retiring Trustee hereunder. (b) Upon request of any such successor trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor trustee all such rights, powers and trusts referred to in paragraph (a) of this Section. (c) No successor trustee shall accept its appointment unless at the time of such acceptance such successor trustee shall be qualified and eligible under this Article. (d) Upon acceptance of appointment by a successor trustee as provided in this Section, the Company shall transmit notice of the succession of such trustee hereunder by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Securities Register. If the Company fails to transmit such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be transmitted at the expense of the Company. 9.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be qualified and eligible under the provisions of this Article IX, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case any Junior Subordinated Debentures shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Junior Subordinated Debentures so authenticated with the same effect as if such successor Trustee had itself authenticated such Junior Subordinated Debentures. 9.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship described in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent included therein. 9.14 APPOINTMENT OF AUTHENTICATING AGENT. At any time when any of the Junior Subordinated Debentures remain Outstanding, the Trustee may appoint an Authenticating Agent or Agents which shall be authorized to act on behalf of the Trustee to authenticate Junior Subordinated Debentures issued upon original issuance, exchange, registration of transfer or partial redemption thereof or pursuant to Section 2.08, and Junior Subordinated Debentures so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Junior Subordinated Debentures by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an 35 Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any state thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of such supervision or examining authority, for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such notice of resignation or upon such termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first class mail, postage prepaid, to all Securityholders as their names and addresses appear in the Securities Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with the like effect as if originally named as an Authenticating Agent herein. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 9.06. If an appointment is made pursuant to this Section, the Junior Subordinated Debentures may have endorsed thereon, in lieu of the form of certificate of authentication set forth in Section 8.01, a certificate of authentication in the following form: "This is one of the Junior Subordinated Debentures described in the within mentioned Indenture." 36 _______________________________, as Trustee _______________________________ By_____________________________ as Authenticating Agent _______________________________ By_____________________________ Authorized Signature 9.15 CO-TRUSTEES AND SEPARATE TRUSTEES. At any time or times, for the purpose of meeting the legal requirements of any applicable jurisdiction, the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least 25% in aggregate principal amount of the Junior Subordinated Debentures then outstanding, the Company shall for such purpose join with the Trustee in the execution and delivery of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, or to act as separate trustee, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons, in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section 9.15. If the Company does not join in such appointment within 15 days after the receipt by it of a request so to do, or if an Event of Default shall have occurred and be continuing, the Trustee alone shall have power to make such appointment. Should any written instrument or instruments from the Company be required by any co-trustee or separate trustee so appointed to more fully confirm to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following conditions: (a) the Junior Subordinated Debentures shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee; (b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed either by the Trustee or by the Trustee and such co-trustee or separate trustee jointly, as shall be provided in the 37 instrument appointing such co-trustee, or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee; (c) the Trustee at any time, by an instrument in writing executed by it, with the concurrence of the Company, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 9.15, and, if an Event of Default shall have occurred and be continuing, the Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Company. Upon the written request of the Trustee, the Company shall join with the Trustee in the execution and delivery of all instruments and agreements, necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section; (d) no co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such trustee hereunder; and (e) any notice from the Holders of Junior Subordinated Debentures delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee. ARTICLE X CONCERNING THE SECURITYHOLDERS 10.01 EVIDENCE OF ACTION BY SECURITYHOLDERS. Whenever in this Indenture it is provided that the Holders of a majority or specified percentage in aggregate principal amount of the Junior Subordinated Debentures may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the Holders of such majority or specified percentage have joined therein may be evidenced by any instrument or any number of instruments of similar tenor executed by such Holders in Person or by agent or proxy appointed in writing. If the Company shall solicit from the Securityholders any request, demand, authorization, direction, notice, consent, waiver or other action, the Company may, at its option, as evidenced by an Officers' Certificate, fix in advance a record date for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action may be given before or after the record date, but only the Securityholders of record at the close of business on the record date shall be deemed to be Securityholders for the purposes of determining whether Securityholders of the requisite proportion of Outstanding Junior Subordinated Debentures have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the Outstanding Junior Subordinated 38 Debentures shall be computed as of the record date; provided, however, that no such authorization, agreement or consent by such Securityholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. 10.02 PROOF OF EXECUTION BY SECURITYHOLDERS. Subject to the provisions of Section 6.01, proof of the execution of any instrument by a Securityholder (such proof will not require notarization) or his agent or proxy and proof of the holding by any Person of any of the Junior Subordinated Debentures shall be sufficient if made in the following manner: (a) The fact and date of the execution by any such Person of any instrument may be proved in any reasonable manner acceptable to the Trustee. (b) The ownership of Junior Subordinated Debentures shall be proved by the Securities Register or by a certificate of the Securities Registrar thereof. (c) The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary. 10.03 WHO MAY BE DEEMED OWNERS. Prior to the due presentment for registration of transfer of any Junior Subordinated Debenture, the Company, the Trustee, any paying agent and any Securities Registrar may deem and treat the Person in whose name such Junior Subordinated Debenture shall be registered upon the books of the Company as the absolute owner of such Junior Subordinated Debenture (whether or not such Junior Subordinated Debenture shall be overdue and notwithstanding any notice of ownership or writing thereon made by anyone other than the Securities Registrar) for the purpose of receiving payment of or on account of the principal of and (subject to Section 2.03) interest on such Junior Subordinated Debenture and for all other purposes; and neither the Company nor the Trustee nor any paying agent nor any Securities Registrar shall be affected by any notice to the contrary. 10.04 CERTAIN JUNIOR SUBORDINATED DEBENTURES OWNED BY COMPANY DISREGARDED. In determining whether the Holders of the requisite aggregate principal amount of Junior Subordinated Debentures have concurred in any direction, consent or waiver under this Indenture, the Junior Subordinated Debentures that are owned by the Company or any other obligor on the Junior Subordinated Debentures or by any Person directly or indirectly controlling or controlled by or under common control with the Company or any other obligor on the Junior Subordinated Debentures shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Junior Subordinated Debentures that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. The Junior Subordinated Debentures so owned that have been pledged in good faith may be regarded as Outstanding for the purposes of this Section, if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right with respect to such Junior Subordinated Debentures and that the pledgee is not a Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any 39 such other obligor. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. 10.05 ACTIONS BINDING ON FUTURE SECURITYHOLDERS. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 10.01, of the taking of any action by the Holders of the majority or percentage in aggregate principal amount of the Junior Subordinated Debentures specified in this Indenture in connection with such action, any Holder who is shown by the evidence to have consented to such action may, by filing written notice with the Trustee, and upon proof of holding as provided in Section 10.02, revoke such action so far as concerns such Holder's Junior Subordinated Debentures. Except as aforesaid any such action taken by the Holder shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Holder's Junior Subordinated Debentures, and of any Junior Subordinated Debentures issued in exchange therefor, on registration of transfer thereof or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Junior Subordinated Debentures. Any action taken by the Holders of the majority or percentage in aggregate principal amount of the Junior Subordinated Debentures specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the Holders of all the Junior Subordinated Debentures. ARTICLE XI SUPPLEMENTAL INDENTURES 11.01 SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF SECURITYHOLDERS. In addition to any supplemental indenture otherwise authorized by this Indenture, the Company and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect), without the consent of the Securityholders, for one or more of the following purposes: (a) to cure any ambiguity, defect, or inconsistency herein, or in the Junior Subordinated Debentures, provided that any such action does not materially adversely affect the interests of the Holders or the holders of the Preferred Securities so long as they remain outstanding; (b) to comply with Article XII; (c) to provide for uncertificated Junior Subordinated Debentures in addition to or in place of certificated Junior Subordinated Debentures; (d) to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; (e) to add to, delete from, or revise the conditions, limitations, and restrictions on the authorized amount, terms, or purposes of issue, authentication, and delivery of Junior Subordinated Debentures, as herein set forth; (f) to make any change that does not adversely affect the rights of any Securityholder in any material respect; or 40 (g) to establish the form of any certifications required to be furnished pursuant to the terms of this Indenture or to add to the rights of the Holders. The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section may be executed by the Company and the Trustee without the consent of the Holders of any of the Junior Subordinated Debentures at the time Outstanding, notwithstanding any of the provisions of Section 11.02. 11.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS. With the consent (evidenced as provided in Section 10.01) of the Holders of not less than a majority in aggregate principal amount of the Junior Subordinated Debentures at the time Outstanding, the Company, when authorized by Board Resolutions, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner not covered by Section 11.01 the rights of the Holders of the Junior Subordinated Debentures under this Indenture; provided, however, that no such supplemental indenture shall without the consent of the Holders of each Junior Subordinated Debenture then Outstanding, (a) change (except as expressly provided herein pursuant to Section 2.02) the stated maturity of the Junior Subordinated Debentures or reduce the principal amount thereof; or reduce the rate or extend (except as expressly provided herein pursuant to Section 4.01) the time of payment of interest thereon; or (b) reduce the percentage of principal amount of Junior Subordinated Debentures, the Holders of which are required to consent to any such supplemental indenture; provided, further, that if the Junior Subordinated Debentures are held by the Trust or a trustee of the Trust, such supplemental indenture shall not be effective until the holders of a majority in aggregate Liquidation Amount of Preferred Securities shall have consented to such supplemental indenture; provided further, that if the consent of the Holder of each Outstanding Junior Subordinated Debenture is required, such supplemental indenture shall not be effective until each Holder of the Trust Securities shall have consented to such supplemental indenture. It shall not be necessary for the consent of the Securityholders to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. 11.03 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture pursuant to the provisions of this Article or of Section 12.01, this Indenture shall be and be deemed to be modified and amended in accordance therewith. 11.04 JUNIOR SUBORDINATED DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES. Junior Subordinated Debentures, affected by a 41 supplemental indenture, authenticated and delivered after the execution of such supplemental indenture pursuant to the provisions of this Article or of Section 12.01, may bear a notation in form approved by the Company, as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Junior Subordinated Debentures so modified as to conform, in the opinion of the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Junior Subordinated Debentures then Outstanding. 11.05 EXECUTION OF SUPPLEMENTAL INDENTURES. Upon the request of the Company, accompanied by Board Resolutions authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders required to consent thereto as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into such supplemental indenture. The Trustee, subject to the provisions of Section 9.01, may receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article is authorized or permitted by, and conforms to, the terms of this Article and that it is proper for the Trustee under the provisions of this Article to join in the execution thereof. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Company shall transmit by mail, first class postage prepaid, a notice, setting forth in general terms the substance of such supplemental indenture, to the Securityholders as their names and addresses appear upon the Securities Register. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. ARTICLE XII SUCCESSOR CORPORATION 12.01 COMPANY MAY CONSOLIDATE, ETC. The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless (a) in case the Company consolidates with or merges into another Person or conveys or transfers its properties and assets substantially as an entirety to any Person, the successor Person is organized under the laws of the United States or any state or the District of Columbia, and such successor Person expressly assumes the Company's obligations on the Junior Subordinated Debentures issued under this Indenture; (b) immediately after giving effect thereto, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and (c) such successor Person expressly assumes the due and punctual performance and observance of all the covenants and conditions of this Indenture to be kept and performed by the Company by executing and delivering a supplemental indenture in form and substance satisfactory to the Trustee. 42 12.02 SUCCESSOR SUBSTITUTED. (a) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition and upon the assumption by the successor Person by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and interest on all of the Junior Subordinated Debentures Outstanding and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company, such successor Person shall succeed to and be substituted for the Company, with the same effect as if it had been named as the Company herein, and thereupon the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Junior Subordinated Debentures. (b) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition such changes in phraseology and form (but not in substance) may be made in the Junior Subordinated Debentures thereafter to be issued as may be appropriate. 12.03 EVIDENCE OF CONSOLIDATION, ETC., TO TRUSTEE. The Trustee, subject to the provisions of Section 9.01, may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or other disposition, and any such assumption, comply with the provisions of this Article. ARTICLE XIII SATISFACTION AND DISCHARGE 13.01 SATISFACTION AND DISCHARGE OF INDENTURE. If at any time: (a) the Company shall have delivered to the Trustee for cancellation all Junior Subordinated Debentures theretofore authenticated (other than any Junior Subordinated Debentures that shall have been destroyed, lost or stolen and that shall have been replaced or paid as provided in Section 2.08) and Junior Subordinated Debentures for whose payment money or Governmental Obligations have theretofore been deposited in trust or segregated and held in trust by the Company (and thereupon repaid to the Company or discharged from such trust, as provided in Section 13.05); or (b) all such Junior Subordinated Debentures not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit or cause to be deposited with the Trustee as trust funds the entire amount in moneys or Governmental Obligations sufficient or a combination thereof sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay at maturity or upon redemption all Junior Subordinated Debentures not theretofore delivered to the Trustee for cancellation, including principal and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or cause to be paid all other sums payable hereunder by the Company; then this Indenture shall thereupon cease to be of further effect except for the provisions of Sections 2.02, 2.03, 2.04, 2.05, 4.01, 4.02, 4.03 and 9.10, that shall survive until the date of maturity or redemption date, as the case may be, and Sections 9.06 and 13.05, that shall 43 survive to such date and thereafter, and the Trustee, on demand of the Company and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. 13.02 DISCHARGE OF OBLIGATIONS. If at any time all such Junior Subordinated Debentures not theretofore delivered to the Trustee for cancellation or that have not become due and payable as described in Section 13.01 shall have been paid by the Company by depositing irrevocably with the Trustee, as trust funds, moneys or an amount of Governmental Obligations sufficient to pay at maturity or upon redemption all such Junior Subordinated Debentures not theretofore delivered to the Trustee for cancellation, including principal and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then after the date such moneys or Governmental Obligations, as the case may be, are deposited with the Trustee the obligations of the Company under this Indenture shall cease to be of further effect except for the provisions of Sections 2.02, 2.03, 2.04, 2.05, 4.01, 4.02, 4.03, 9.06, 9.10 and 13.05 hereof that shall survive until such Junior Subordinated Debentures shall mature and be paid. Thereafter, Sections 9.06 and 13.05 shall survive. 13.03 DEPOSITED MONEYS TO BE HELD IN TRUST. All moneys or Governmental Obligations deposited with the Trustee pursuant to Sections 13.01 or 13.02 shall be held in trust and shall be available for payment as due, either directly or through any paying agent (including the Company acting as its own paying agent), to the Holders of the Junior Subordinated Debentures for the payment or redemption of which such moneys or Governmental Obligations have been deposited with the Trustee. 13.04 PAYMENT OF MONEYS HELD BY PAYING AGENTS. In connection with the satisfaction and discharge of this Indenture all moneys or Governmental Obligations then held by any paying agent under the provisions of this Indenture shall, upon demand of the Company, be paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys or Governmental Obligations. 13.05 REPAYMENT TO COMPANY. Any moneys or Governmental Obligations deposited with any paying agent or the Trustee, or then held by the Company in trust for payment of principal of or interest on the Junior Subordinated Debentures that are not applied but remain unclaimed by the Holders of such Junior Subordinated Debentures for at least two years after the date upon which the principal of or interest on such Junior Subordinated Debentures shall have respectively become due and payable, shall be repaid to the Company on the second annual anniversary of when such payment was originally due or (if then held by the Company) shall be discharged from such trust; and thereupon the paying agent and the Trustee shall be released from all further liability with respect to such moneys or Governmental Obligations, and the Holder of any of the Junior Subordinated Debentures entitled to receive such payment shall thereafter, as an unsecured general creditor, look only to the Company for the payment thereof. 44 ARTICLE XIV IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS 14.01 NO RECOURSE. No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Junior Subordinated Debenture, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director as such, past, present or future, of the Company or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors as such, of the Company or of any predecessor or successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Junior Subordinated Debentures or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Junior Subordinated Debentures or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Junior Subordinated Debentures. ARTICLE XV MISCELLANEOUS PROVISIONS 15.01 EFFECT ON SUCCESSORS AND ASSIGNS. All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company or the Trustee shall bind their respective successors and assigns, whether so expressed or not. 15.02 ACTIONS BY SUCCESSOR. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the corresponding board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Company. 15.03 SURRENDER OF COMPANY POWERS. The Company by instrument in writing executed by authority of two-thirds of its Board of Directors and delivered to the Trustee may surrender any of the powers reserved to the Company, and thereupon such power so surrendered shall terminate both as to the Company and as to any successor corporation. 15.04 NOTICES. Except as otherwise expressly provided herein any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Junior Subordinated Debentures to or on the Company may be given or served by being deposited first class postage prepaid in a post-office letterbox addressed 45 (until another address is filed in writing by the Company with the Trustee), as follows: c/o Blue Valley Ban Corp., 11935 Riley, Overland Park, Kansas 66225-6128, Attention: Chief Executive Officer. Any notice, election, request or demand by the Company or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the Corporate Trust Office of the Trustee. 15.05 GOVERNING LAW. This Indenture and each Junior Subordinated Debenture shall be deemed to be a contract made under the internal laws of the State of Kansas and for all purposes shall be construed in accordance with the laws of said state, provided that the immunities and the standard of care of the Trustee shall be governed by Delaware law. 15.06 TREATMENT OF JUNIOR SUBORDINATED DEBENTURES AS DEBT. It is intended that the Junior Subordinated Debentures will be treated as indebtedness and not as equity for federal income tax purposes. The provisions of this Indenture shall be interpreted to further this intention. 15.07 COMPLIANCE CERTIFICATES AND OPINIONS. (a) Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. (b) Every certificate or opinion delivered to the Trustee with respect to compliance with a condition or covenant in this Indenture shall include (i) a statement that the Person making such certificate or opinion has read such covenant or condition; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the opinion of such Person, such Person has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with. 15.08 PAYMENTS ON BUSINESS DAYS. In any case where the date of maturity of interest or principal of the Junior Subordinated Debentures or the date of redemption of the Junior Subordinated Debentures shall not be a Business Day, then payment of interest or principal will be made on the next succeeding Business Day (without any additional interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date such payment was originally payable. 46 15.09 CONFLICT WITH TRUST INDENTURE ACT. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. 15.10 COUNTERPARTS. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. 15.11 SEPARABILITY. In case any one or more of the provisions contained in this Indenture or in the Junior Subordinated Debentures shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of the Junior Subordinated Debentures, but this Indenture and the Junior Subordinated Debentures shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein. 15.12 ASSIGNMENT. The Company will have the right at all times to assign any of its respective rights or obligations under this Indenture to a direct or indirect wholly owned Subsidiary of the Company, provided that, in the event of any such assignment, the Company will remain liable for all such obligations. Subject to the foregoing, this Indenture is binding upon and inures to the benefit of the parties thereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties hereto. 15.13 ACKNOWLEDGMENT OF RIGHTS. The Company acknowledges that, with respect to any Junior Subordinated Debentures held by the Trust or a trustee of the Trust, if the Property Trustee of the Trust fails to enforce its rights under this Indenture as the Holder of the Junior Subordinated Debentures held as the assets of the Trust, any holder of Preferred Securities may institute legal proceedings directly against the Company to enforce such Property Trustee's rights under this Indenture without first instituting any legal proceedings against such Property Trustee or any other Person or entity. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Company to pay interest or principal on the Junior Subordinated Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, on the redemption date), the Company acknowledges that a holder of Preferred Securities may directly institute a proceeding for enforcement of payment to such holder of the principal of or interest on the Junior Subordinated Debentures having a principal amount equal to the aggregate Liquidation Amount of the Preferred Securities of such holder on or after the respective due date specified in the Junior Subordinated Debentures. This Section 15.13 may not be amended without the prior written consent of the holders of all of the Preferred Securities. ARTICLE XVI SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES 16.01 AGREEMENT TO SUBORDINATE. The Company covenants and agrees, and each Holder of Junior Subordinated Debentures issued hereunder by such Holder's acceptance thereof likewise covenants and agrees, that all Junior Subordinated Debentures shall be issued subject to the provisions of this Article XVI; and each Holder, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. 47 The payment by the Company of the principal of and interest on all Junior Subordinated Debentures issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment to the prior payment in full of all Senior and Subordinated Debt, whether outstanding at the date of this Indenture or thereafter incurred. No provision of this Article XVI shall prevent the occurrence of any default or Event of Default hereunder. 16.02 DEFAULT ON SENIOR AND SUBORDINATED DEBT. In the event and during the continuation of any default by the Company in the payment of principal, premium, interest or any other payment due on any Senior and Subordinated Debt of the Company or in the event that the maturity of any Senior and Subordinated Debt of the Company has been accelerated because of a default, then, in either case, no payment shall be made by the Company with respect to the principal of or interest on the Junior Subordinated Debentures. In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding paragraph of this Section 16.02, subject to Section 16.06, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior and Subordinated Debt or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior and Subordinated Debt may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior and Subordinated Debt (or their representative or representatives or a trustee) notify the Trustee in writing within 90 days of such payment of the amounts then due and owing on the Senior and Subordinated Debt and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior and Subordinated Debt. 16.03 LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment by the Company or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due upon all Senior and Subordinated Debt of the Company shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any payment is made by the Company on account of the principal or interest on the Junior Subordinated Debentures; and upon any such dissolution or winding-up or liquidation or reorganization, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee would be entitled to receive from the Company, except for the provisions of this Article XVI, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders or by the Trustee under the Indenture if received by them or it, directly to the holders of Senior and Subordinated Debt of the Company (pro rata to such holders on the basis of the respective amounts of Senior and Subordinated Debt held by such holders, as calculated by the Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior and Subordinated Debt may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior and Subordinated Debt in full, in money or money's worth, after giving effect to any concurrent payment or 48 distribution to or for the holders of such Senior and Subordinated Debt, before any payment or distribution is made to the Holders or to the Trustee. In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee before all Senior and Subordinated Debt of the Company is paid in full, or provision is made for such payment in money in accordance with its terms, subject to Section 16.06, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of such Senior and Subordinated Debt or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior and Subordinated Debt may have been issued, and their respective interests may appear, as calculated by the Company, for application to the payment of all Senior and Subordinated Debt of the Company, as the case may be, remaining unpaid to the extent necessary to pay such Senior and Subordinated Debt in full in money in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the benefit of the holders of such Senior and Subordinated Debt. For purposes of this Article XVI, the words "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article XVI with respect to the Junior Subordinated Debentures to the payment of all Senior and Subordinated Debt of the Company, as the case may be, that may at the time be outstanding, provided that (a) such Senior and Subordinated Debt is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (b) the rights of the holders of such Senior and Subordinated Debt are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article XII of this Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 16.03 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article XII of this Indenture. Nothing in Section 16.02 or in this Section 16.03 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 9.06 of this Indenture. 16.04 SUBROGATION. Subject to the payment in full of all Senior and Subordinated Debt of the Company, the rights of the Holders of the Junior Subordinated Debentures shall be subrogated to the rights of the holders of such Senior and Subordinated Debt to receive payments or distributions of cash, property or securities of the Company, as the case may be, applicable to such Senior and Subordinated Debt until the principal of and interest on the Junior Subordinated Debentures shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of such Senior and Subordinated Debt of any cash, property or securities to which the Holders of the Junior Subordinated Debentures or the Trustee would be entitled except for the provisions of this Article XVI, and no payment over pursuant to the provisions of this Article XVI to or for the benefit of the holders of such Senior and Subordinated Debt by Holders of the Junior Subordinated Debentures or the Trustee, shall, as 49 between the Company, its creditors other than holders of Senior and Subordinated Debt of the Company, and the Holders of the Junior Subordinated Debentures, be deemed to be a payment by the Company to or on account of such Senior and Subordinated Debt. It is understood that the provisions of this Article XVI are and are intended solely for the purposes of defining the relative rights of the Holders of the Junior Subordinated Debentures, on the one hand, and the holders of such Senior and Subordinated Debt on the other hand. Nothing contained in this Article XVI or elsewhere in this Indenture or in the Junior Subordinated Debentures is intended to or shall impair, as between the Company, its creditors other than the holders of Senior and Subordinated Debt of the Company, and the Holders of the Junior Subordinated Debentures, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Junior Subordinated Debentures the principal of and interest on the Junior Subordinated Debentures as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Junior Subordinated Debentures and creditors of the Company, other than the holders of Senior and Subordinated Debt of the Company, nor shall anything herein or therein prevent the Trustee or the Holder of any Junior Subordinated Debenture from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article XVI of the holders of such Senior and Subordinated Debt in respect of cash, property or securities of the Company, as the case may be, received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article XVI, the Trustee, subject to the provisions of Section 9.01, and the Holders of the Junior Subordinated Debentures shall be entitled to conclusively rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding-up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of the Junior Subordinated Debentures, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of Senior and Subordinated Debt and other indebtedness of the Company, as the case may be, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XVI. 16.05 TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of Junior Subordinated Debentures by such Holder's acceptance thereof authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article XVI and appoints the Trustee such Holder's attorney-in-fact for any and all such purposes. 16.06 NOTICE BY THE COMPANY. The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment of moneys to or by the Trustee in respect of the Junior Subordinated Debentures pursuant to the provisions of this Article XVI. Notwithstanding the provisions of this Article XVI or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of moneys to or by the Trustee in respect of the Junior Subordinated Debentures pursuant to the 50 provisions of this Article XVI, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder or holders of Senior and Subordinated Debt or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 9.01, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 16.06 at least five Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of or interest on any Junior Subordinated Debenture), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which it was received, and shall not be affected by any notice to the contrary that may be received by it within five Business Days prior to such date. The Trustee, subject to the provisions of Section 9.01, shall be entitled to conclusively rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior and Subordinated Debt of the Company (or a trustee on behalf of such holder), to establish that such notice has been given by a holder of such Senior and Subordinated Debt or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of such Senior and Subordinated Debt to participate in any payment or distribution pursuant to this Article XVI, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior and Subordinated Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XVI, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. 16.07 RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR AND SUBORDINATED DEBT. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XVI in respect of any Senior and Subordinated Debt at any time held by it, to the same extent as any other holder of Senior and Subordinated Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior and Subordinated Debt of the Company, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article XVI, and no implied covenants or obligations with respect to the holders of such Senior and Subordinated Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of such Senior and Subordinated Debt and, subject to the provisions of Section 9.01, the Trustee shall not be liable to any holder of such Senior and Subordinated Debt if it shall pay over or deliver to Holders of Junior Subordinated Debentures, the Company or any other Person money or assets to which any holder of such Senior and Subordinated Debt shall be entitled by virtue of this Article XVI or otherwise. 16.08 SUBORDINATION MAY NOT BE IMPAIRED. No right of any present or future holder of any Senior and Subordinated Debt of the Company to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to 51 act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior and Subordinated Debt of the Company may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Junior Subordinated Debentures, without incurring responsibility to the Holders of the Junior Subordinated Debentures and without impairing or releasing the subordination provided in this Article XVI or the obligations hereunder of the Holders of the Junior Subordinated Debentures to the holders of such Senior and Subordinated Debt, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior and Subordinated Debt, or otherwise amend or supplement in any manner such Senior and Subordinated Debt or any instrument evidencing the same or any agreement under which such Senior and Subordinated Debt is outstanding; (b) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior and Subordinated Debt; (c) release any Person liable in any manner for the collection of such Senior and Subordinated Debt; and (d) exercise or refrain from exercising any rights against the Company and any other Person. THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written. BLUE VALLEY BAN CORP. By:________________________________ Robert D. Regnier Chief Executive Officer Attest: _____________________________ _____________________________ Secretary WILMINGTON TRUST COMPANY, as Trustee By:_______________________________ Name:_____________________________ Title:____________________________ Attest: _______________________________ EX-4.4 7 FORM OF ___% SUBORDINATED DEBENTURES EXHIBIT A (FORM OF FACE OF JUNIOR SUBORDINATED DEBENTURE) Registered Principal Amount Registered No. _______________ $__________ CUSIP No. 096065 AA 5 BLUE VALLEY BAN CORP. ____% JUNIOR SUBORDINATED DEBENTURE DUE JUNE 30, 2030 BLUE VALLEY BAN CORP., a Kansas corporation (the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to WILMINGTON TRUST COMPANY as Property Trustee of BVBC Capital Trust I or registered assigns, the principal sum of _________________________ Dollars ($__________) on June 30, 2030 (which date may be shortened as provided in the Indenture, the "Stated Maturity"), and to pay interest on said principal sum from ________________, 2000, or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on March 31, June 30, September 30 and December 31 of each year commencing June 30, 2000, at the rate of ____% per annum until the principal hereof shall have become due and payable, and on any overdue principal and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum compounded quarterly. The amount of each interest payment due with respect to the Junior Subordinated Debentures will include amounts accrued through the date the interest payment is due. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Junior Subordinated Debenture is not a Business Day (as defined in the Indenture), then payment of interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the person in whose name this Junior Subordinated Debenture (or one or more Predecessor Junior Subordinated Debentures, as defined in the Indenture) is registered at the close of business on the regular record date for such interest installment, which shall be the close of business on the business day next preceding such Interest Payment Date unless otherwise provided in the Indenture. The principal of and the interest on this Junior Subordinated Debenture shall be payable at the office or agency of the Trustee (as defined in the Indenture) maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the 52 option of the Company by check mailed to the Registered Holder (as defined in the Indenture) at such address as shall appear in the Securities Register (as defined in the Indenture). Notwithstanding the foregoing, so long as the Holder of this Junior Subordinated Debenture is the Property Trustee (as defined in the Indenture), the payment of the principal of and interest on this Junior Subordinated Debenture will be made at such place and to such account as may be designated by the Property Trustee. The Stated Maturity may be shortened at any time by the Company to any date not earlier than June 30, 2005, subject to the Company having received prior approval of the Federal Reserve (as defined in the Indenture) if then required under applicable capital guidelines or policies of the Federal Reserve. The indebtedness evidenced by this Junior Subordinated Debenture is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior and Subordinated Debt (as defined in the Indenture), and this Junior Subordinated Debenture is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Junior Subordinated Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior and Subordinated Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. This Junior Subordinated Debenture shall not be entitled to any benefit under the Indenture, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee. The provisions of this Junior Subordinated Debenture are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, the Company has caused this instrument to be executed. Dated: _______________ BLUE VALLEY BAN CORP. By:________________________________ ________________________________ Chief Executive Officer Attest: By: _________________________ _____________, Secretary [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION This is one of the Junior Subordinated Debentures described in the within-mentioned Indenture. Dated:__________________ WILMINGTON TRUST COMPANY, as Trustee By:__________________________________ Authorized Signature [FORM OF REVERSE OF JUNIOR SUBORDINATED DEBENTURE] ____% JUNIOR SUBORDINATED DEBENTURE (CONTINUED) This Junior Subordinated Debenture is one of the junior subordinated debentures of the Company (herein sometimes referred to as the "Junior Subordinated Debentures"), specified in the Indenture, all issued under and pursuant to a Subordinated Indenture dated as of ________________, 2000 (the "Indenture") duly executed and delivered between the Company and WILMINGTON TRUST COMPANY, as Trustee (the "Trustee"), to which Indenture reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Junior Subordinated Debentures. The Junior Subordinated Debentures are limited in aggregate principal amount as specified in the Indenture. Because of the occurrence and continuation of a Special Event (as defined in the Indenture), in certain circumstances, this Junior Subordinated Debenture may become due and payable at the option of the Company at the principal amount together with any interest accrued thereon (the "Redemption Price"). The Redemption Price shall be paid prior to 2:00 p.m. Overland Park, Kansas time, on the date of such redemption or at such earlier time as the Company determines. The Company shall have the right to redeem this Junior Subordinated Debenture at the option of the Company, in whole or in part, from time to time, on or after June 30, 2005, at a redemption price equal to 100% of the principal amount to be redeemed plus any accrued but unpaid interest thereon to the date of such redemption. Any redemption pursuant to this paragraph will be made upon not less than 30 days' nor more than 60 days' notice. If the Junior Subordinated Debentures are only partially redeemed by the Company pursuant to this paragraph, the Junior Subordinated Debentures will be redeemed pro rata or by lot or by any other method utilized by the Trustee; provided that if, at the time of redemption, the Junior Subordinated Debentures are registered as a Global Subordinated Debenture (as defined in the Indenture), the Depositary (as defined in the Indenture) shall determine the principal amount of such Junior Subordinated Debentures held by each Junior Subordinated Debenture Holder to be redeemed in accordance with its procedures. In the event of redemption of this Junior Subordinated Debenture in part only, a new Junior Subordinated Debenture for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. In case an Event of Default (as defined in the Indenture), shall have occurred and be continuing, the principal of all of the Junior Subordinated Debentures may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Junior Subordinated Debentures at the time Outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner 53 or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Junior Subordinated Debentures; provided, however, that no such supplemental indenture shall (i) change the stated maturity of the Junior Subordinated Debentures except as provided in the Indenture, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, without the consent of the Holder of each Junior Subordinated Debenture so affected, or (ii) reduce the aforesaid percentage of Junior Subordinated Debentures, the Holders of which are required to consent to any such supplemental indenture, without the consent of the Holders of each Junior Subordinated Debenture then Outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Junior Subordinated Debentures at the time Outstanding, on behalf of all of the Holders of the Junior Subordinated Debentures, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture, and its consequences, except a default in the payment of the principal of or interest on any of the Junior Subordinated Debentures. Any such consent or waiver by the registered Holder of this Junior Subordinated Debenture (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Junior Subordinated Debenture and of any Junior Subordinated Debenture issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Junior Subordinated Debenture. No reference herein to the Indenture and no provision of this Junior Subordinated Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Junior Subordinated Debenture at the time and place and at the rate and in the money herein prescribed. The Company shall have the right at any time during the term of the Junior Subordinated Debentures and from time to time to extend the interest payment period of such Junior Subordinated Debentures for up to 20 consecutive quarters (an "Extended Interest Payment Period"), at the end of which period the Company shall pay all interest then accrued and unpaid (together with interest thereon at the rate specified for the Junior Subordinated Debentures to the extent that payment of such interest is enforceable under applicable law). Before the termination of any such Extended Interest Payment Period, the Company may further extend such Extended Interest Payment Period, provided that such Extended Interest Payment Period together with all such further extensions thereof shall not exceed 20 consecutive quarters or extend beyond the Stated Maturity. At the termination of any such Extended Interest Payment Period and upon the payment of all accrued and unpaid interest and any additional amounts then due, the Company may commence a new Extended Interest Payment Period. The Company has agreed that if at any time (a) there shall have occurred any event of which the Company has actual knowledge that (i) with the giving of notice or the lapse of time, or both, would constitute an Event of Default and (ii) in respect to which the Company shall not have taken reasonable steps to cure, or (b) the Company shall have given notice of its election of an Extended Interest Payment Period as provided herein and shall not have rescinded such notice, or such Extended Interest Payment Period, or any extension thereof, shall be continuing; or (c) while the Junior Subordinated Debentures are held by the Trust, the Company shall be in default with respect to its payment of any obligation under the Preferred Securities Guarantee, then the Company will not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company (including the Junior Subordinated Debentures) that rank pari passu with or junior in interest to the Junior Subordinated Debentures or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any subsidiary of the Company if such guarantee ranks pari passu or junior in interest to the Junior Subordinated Debentures (other than (A) dividends or distributions in common stock, (B) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future or the redemption or repurchase of any such rights pursuant thereto, (C) payments under the Preferred Securities Guarantee and (D) purchases of common stock related to the issuance of common stock or rights under any of the Company's benefit plans for its directors, officers or employees). As provided in the Indenture and subject to certain limitations therein set forth, this Junior Subordinated Debenture is transferable by the registered Holder hereof on the Securities Register of the Company, upon surrender of this Junior Subordinated Debenture for registration of transfer at the office or agency of the Trustee accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Trustee duly executed by the registered Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Junior Subordinated Debentures of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Junior Subordinated Debenture, the Company, the Trustee, any paying agent and the Securities Registrar (as defined in the Indenture) may deem and treat the Registered Holder hereof as the absolute owner hereof (whether or not this Junior Subordinated Debenture shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Securities Registrar) for the purpose of receiving payment of or on account of the principal hereof and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any paying agent nor any Securities Registrar shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of or the interest on this Junior Subordinated Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. The Junior Subordinated Debentures are issuable only in registered form without coupons in denominations of $8 and any integral multiple thereof. All terms used in this Junior Subordinated Debenture that are defined in the Indenture shall have the meanings assigned to them in the Indenture. EX-4.5 8 CERTIFICATE OF TRUST CERTIFICATE OF TRUST OF BVBC CAPITAL TRUST I THIS CERTIFICATE OF TRUST OF BVBC CAPITAL TRUST I (the "Trust"), dated as of March 30, 2000, is being duly executed and filed by WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Delaware trustee, and Robert D. Regnier and Mark A. Fortino, each an individual, as administrative trustees, to form a business trust under the Delaware Business Trust Act (12 Del. C. ss.ss. 3801 et seq.) 1. NAME. The name of the business trust formed hereby is BVBC Capital Trust I. 2. DELAWARE TRUSTEE. The name and business address of the trustee of the Trust in the State of Delaware are Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, New Castle County, Delaware 19890-0001, Attention: Corporate Trust Administration. 3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon the date and timing of filing. 4. COUNTERPARTS. This Certificate of Trust may be executed in one or more counterparts. IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust, have executed this Certificate of Trust as of the date first above written. WILMINGTON TRUST COMPANY, as Delaware trustee /s/ Kathleen A. Pedelini Name: Kathleen A. Pedelini Title: Administrative Account Manager /s/ Robert D. Regnier Robert D. Regnier, Administrative Trustee /s/ Mark A. Fortino Mark A. Fortino, Administrative Trustee EX-4.6 9 AMENDED AND RESTATED TRUST AGREEMENT ---------------------------------------------------------------- BVBC CAPITAL TRUST I AMENDED AND RESTATED TRUST AGREEMENT AMONG BLUE VALLEY BAN CORP., AS DEPOSITOR WILMINGTON TRUST COMPANY, AS PROPERTY TRUSTEE WILMINGTON TRUST COMPANY, AS DELAWARE TRUSTEE AND THE ADMINISTRATIVE TRUSTEES NAMED HEREIN DATED AS OF _______________, 2000 ---------------------------------------------------------------- TABLE OF CONTENTS Page ARTICLE I....................................................................1 1.01 DEFINITIONS..........................................................1 ARTICLE II...................................................................9 2.01 NAME.................................................................9 2.02 OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS..........9 2.03 INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL EXPENSES......9 2.04 ISSUANCE OF THE PREFERRED SECURITIES................................10 2.05 ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE OF JUNIOR SUBORDINATED DEBENTURES.............................................10 2.06 DECLARATION OF TRUST................................................11 2.07 AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS....................11 2.08 ASSETS OF TRUST.....................................................15 2.09 TITLE TO TRUST PROPERTY.............................................15 ARTICLE III.................................................................15 3.01 PAYMENT ACCOUNT.....................................................15 ARTICLE IV..................................................................15 4.01 DISTRIBUTIONS.......................................................15 4.02 REDEMPTION..........................................................16 4.03 SUBORDINATION OF COMMON SECURITIES..................................18 4.04 PAYMENT PROCEDURES..................................................19 4.05 TAX RETURNS AND REPORTS.............................................19 4.06 PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.........................20 4.07 PAYMENTS UNDER INDENTURE............................................20 ARTICLE V...................................................................20 5.01 INITIAL OWNERSHIP...................................................20 5.02 THE TRUST SECURITIES CERTIFICATES...................................20 5.03 EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES.............20 i 5.04 REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES CERTIFICATES...................................................... 20 5.05 MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES CERTIFICATES..21 5.06 PERSONS DEEMED SECURITYHOLDERS......................................22 5.07 ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES..............22 5.08 MAINTENANCE OF OFFICE OR AGENCY.....................................22 5.09 APPOINTMENT OF PAYING AGENT.........................................22 5.10 OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.........................23 5.11 BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON SECURITIES CERTIFICATE.........................................................23 5.12 NOTICES TO CLEARING AGENCY..........................................24 5.13 DEFINITIVE PREFERRED SECURITIES CERTIFICATES........................24 5.14 RIGHTS OF SECURITYHOLDERS...........................................25 ARTICLE VI..................................................................26 6.01 LIMITATIONS ON VOTING RIGHTS........................................26 6.02 NOTICE OF MEETINGS..................................................27 6.03 MEETINGS OF HOLDERS OF PREFERRED SECURITIES.........................27 6.04 VOTING RIGHTS.......................................................27 6.05 PROXIES, ETC........................................................27 6.06 SECURITYHOLDER ACTION BY WRITTEN CONSENT............................28 6.07 RECORD DATE FOR VOTING AND OTHER PURPOSES...........................28 6.08 ACTS OF SECURITYHOLDERS.............................................28 6.09 INSPECTION OF RECORDS...............................................29 ARTICLE VII.................................................................29 7.01 REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY AND THE PROPERTY TRUSTEE............................................29 7.02 REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY AND THE DELAWARE TRUSTEE.............................................................30 7.03 REPRESENTATION AND WARRANTIES OF DEPOSITOR..........................31 ARTICLE VIII................................................................31 8.01 CERTAIN DUTIES AND RESPONSIBILITIES.................................31 8.02 CERTAIN NOTICES.....................................................33 ii 8.03 CERTAIN RIGHTS OF PROPERTY TRUSTEE..................................33 8.04 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES..............35 8.05 MAY HOLD SECURITIES.................................................35 8.06 COMPENSATION; INDEMNITY; FEES.......................................35 8.07 CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES........36 8.08 CONFLICTING INTERESTS...............................................37 8.09 CO-TRUSTEES AND SEPARATE TRUSTEE....................................37 8.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR...................38 8.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR..............................40 8.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.........40 8.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST........40 8.14 REPORTS BY PROPERTY TRUSTEE.........................................40 8.15 REPORTS TO THE PROPERTY TRUSTEE.....................................41 8.16 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT....................41 8.17 NUMBER OF TRUSTEES..................................................41 8.18 DELEGATION OF POWER.................................................42 8.19 VOTING..............................................................42 8.20 MAINTENANCE OF LISTING..............................................42 ARTICLE IX..................................................................42 9.01 DISSOLUTION UPON EXPIRATION DATE....................................42 9.02 EARLY DISSOLUTION...................................................42 9.03 TERMINATION.........................................................43 9.04 LIQUIDATION.........................................................43 9.05 MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST.45 ARTICLE X...................................................................46 10.01 LIMITATION OF RIGHTS OF SECURITYHOLDERS............................46 10.02 AMENDMENT..........................................................46 10.03 SEPARABILITY.......................................................47 10.04 GOVERNING LAW......................................................47 iii 10.05 PAYMENTS DUE ON NON-BUSINESS DAY...................................47 10.06 SUCCESSORS.........................................................47 10.07 HEADINGS...........................................................47 10.08 REPORTS, NOTICES AND DEMANDS.......................................48 10.09 AGREEMENT NOT TO PETITION..........................................48 10.10 TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.............49 10.11 ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND INDENTURE....49 10.12 COUNTERPARTS.......................................................49 10.13 EXCHANGE ACT OBLIGATIONS...........................................49 Exhibits Exhibit A - Certificate of Trust Exhibit B - Form of Certificate Depository Agreement Exhibit C - Form of Common Securities Certificate Exhibit D - Form of Expense Agreement Exhibit E - Form of Preferred Securities Certificate iv AMENDED AND RESTATED TRUST AGREEMENT AMENDED AND RESTATED TRUST AGREEMENT, dated as of ___________, 2000, among (i) BLUE VALLEY BAN CORP., a Kansas corporation (including any successors or assigns, the "Depositor"), (ii) WILMINGTON TRUST COMPANY, a Delaware banking corporation duly organized and existing under the laws of Delaware, as property trustee (the "Property Trustee"), (iii) WILMINGTON TRUST COMPANY, with its home office located in the State of Delaware, as Delaware trustee (the "Delaware Trustee," and, to the extent expressly provided herein, in its separate corporate capacity and not in its capacity as Property Trustee or Delaware Trustee, the "Trust Company"), (iv) Robert D. Regnier, an individual, and Mark A. Fortino, an individual, each of whose address is c/o BLUE VALLEY BAN CORP., 11935 Riley, Overland Park, Kansas 66225-6128 (each an "Administrative Trustee" and collectively the "Administrative Trustees") (the Property Trustee, the Delaware Trustee and the Administrative Trustees referred to collectively as the "Trustees") and (v) the several Holders, as hereinafter defined. WITNESSETH: WHEREAS, the Depositor, the Delaware Trustee, and the Administrative Trustees have heretofore duly formed BVBC Capital Trust I, a business trust (the "Trust"), pursuant to the Delaware Business Trust Act by the entering into of that certain Trust Agreement, dated as of March 30, 2000 (the "Original Trust Agreement"), and by the execution and filing by the Delaware Trustee and the Administrative Trustees with the Secretary of State of the State of Delaware of the Certificate of Trust, filed on March 30, 2000, the form of which is attached as EXHIBIT A; and WHEREAS, the Depositor, the Delaware Trustee and the Administrative Trustees desire to amend and restate the Original Trust Agreement in its entirety as set forth herein to provide for, among other things, (i) the issuance of the Common Securities (as defined below) by the Trust to the Depositor, (ii) the issuance and sale of the Preferred Securities (as defined below) by the Trust pursuant to the Underwriting Agreement, (iii) the acquisition by the Trust from the Depositor of all of the right, title and interest in the Junior Subordinated Debentures (as defined below), and (iv) the appointment of the Property Trustee; NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, each party, for the benefit of the other parties and for the benefit of the Securityholders, hereby amends and restates the Original Trust Agreement in its entirety and agrees as follows: ARTICLE I DEFINED TERMS 1.01..DEFINITIONS. For all purposes of this Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; 1 (b) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (c) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Trust Agreement; and (d) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or other subdivision. "Accelerated Maturity Date" has the meaning set forth in Section 1.01 of the Indenture. "Act" has the meaning specified in Section 6.08. "Additional Amount" means, with respect to Trust Securities of a given Liquidation Amount and a given period, the amount of additional interest accrued on interest in arrears and paid by the Depositor on a Like Amount of Junior Subordinated Debentures for such period. "Additional Sums" has the meaning specified in Section 2.05 of the Indenture. "Administrative Trustee" means each of Robert D. Regnier and Mark A. Fortino, solely in each such person's capacity as Administrative Trustee of the Trust continued hereunder and not in such person's individual capacity, or such Administrative Trustee's successor in interest in such capacity, or any successor Administrative Trustee appointed as herein provided. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Bankruptcy Event" means, with respect to any Person: (a) the entry of a decree or order by a court having jurisdiction in the premises adjudging such Person a bankrupt or insolvent, or approving as properly filed a petition seeking liquidation or reorganization of or in respect of such Person under the United States Bankruptcy Code or any other similar applicable federal or state law, and the continuance of any such decree or order unvacated and unstayed for a period of 90 days; or the commencement of an involuntary case under the United States Bankruptcy Code in respect of such Person, which shall continue undismissed for a period of 90 days or entry of an order for relief in such case; or the entry of a decree or order of a court having jurisdiction in the premises for the appointment on the ground of insolvency or bankruptcy of a receiver, custodian, liquidator, trustee or assignee in bankruptcy or insolvency of such Person or of its property, or for the winding up or liquidation of its affairs, and such decree or order shall have remained in force unvacated and unstayed for a period of 90 days; or 2 (b) the institution by such Person of proceedings to be adjudicated a voluntary bankrupt, or the consent by such Person to the filing of a bankruptcy proceeding against it, or the filing by such Person of a petition or answer or consent seeking liquidation or reorganization under the United States Bankruptcy Code or other similar applicable federal or state law, or the consent by such Person to the filing of any such petition or to the appointment on the ground of insolvency or bankruptcy of a receiver or custodian or liquidator or trustee or assignee in bankruptcy or insolvency of such Person or of its property, or such Person shall make a general assignment for the benefit of creditors. "Bankruptcy Laws" has the meaning specified in Section 10.09. "Book-Entry Preferred Securities Certificates" means certificates representing Preferred Securities issued in global, fully registered form to the Clearing Agency as described in Section 5.11. "Business Day" means a day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the State of Kansas or Delaware are authorized or required by law or executive order to remain closed, or (c) a day on which the Property Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture Trustee is closed for business. "Certificate Depository Agreement" means the agreement among the Trust, the Depositor and The Depository Trust Company, as the initial Clearing Agency, dated as of the Closing Date, relating to the Trust Securities Certificates, substantially in the form attached as EXHIBIT B, as the same may be amended and supplemented from time to time. "Certificate of Trust" means, as stated in the recitals to this Trust Agreement, the certificate of trust filed with the Secretary of State of the State of Delaware with respect to the Trust, in the form attached as EXHIBIT A, as the same may be amended or restated from time to time. "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. The Depository Trust Company will be the initial Clearing Agency. "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "Closing Date" means _____________, 2000. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Trust Agreement such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Security" means a common undivided beneficial interest in the assets of the Trust, having a Liquidation Amount of $8.00 and having the rights provided therefor in this 3 Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. "Common Securities Certificate" means a certificate evidencing ownership of Common Securities, substantially in the form attached as EXHIBIT C. "Corporate Trust Office" means the principal corporate trust office of the Property Trustee located at 1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration. "Debenture Event of Default" means an "Event of Default" as defined in the Indenture. "Debenture Redemption Date" means, with respect to any Junior Subordinated Debentures to be redeemed under the Indenture, the date fixed for redemption under the Indenture. "Debenture Trustee" means Wilmington Trust Company, a Delaware banking corporation, organized under the laws of Delaware and any successor thereto, as trustee under the Indenture. "Definitive Preferred Securities Certificates" means either or both (as the context requires) of (a) Preferred Securities Certificates issued as Book-Entry Preferred Securities Certificates as provided in Section 5.11(a), and (b) Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.13. "Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Section 3801, et. seq. as it may be amended from time to time. "Delaware Trustee" means the corporation identified as the "Delaware Trustee" in the preamble to this Trust Agreement solely in its capacity as Delaware Trustee of the Trust continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor Delaware Trustee appointed as herein provided. "Depositor" has the meaning specified in the preamble to this Trust Agreement. "Distribution Date" has the meaning specified in Section 4.01(a). "Distributions" means amounts payable in respect of the Trust Securities as provided in Section 4.01. "Event of Default" means any one of the following events that shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) the occurrence of a Debenture Event of Default; or (b) default by the Trust in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days; or 4 (c) default by the Trust in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or (d) default in the performance, or breach, in any material respect, of any covenant or warranty of the Property Trustee in this Trust Agreement (other than a covenant or warranty, a default in the performance of which or the breach of which is dealt with in clause (b) or (c), above) and continuation of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the defaulting Property Trustee by the Holders of at least 25% in aggregate Liquidation Amount of the Outstanding Preferred Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) the occurrence of a Bankruptcy Event with respect to the Property Trustee and the failure by the Depositor to appoint a successor Property Trustee within 60 days thereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Expense Agreement" means the Agreement as to Expenses and Liabilities between the Depositor and the Trust, substantially in the form attached as EXHIBIT D, as amended from time to time. "Expiration Date" has the meaning specified in Section 9.01. "Extension Period" means the "Extended Interest Payment Period" as defined in the Indenture. "Global Subordinated Debenture" has the meaning specified in the Indenture. "Guarantee" means the Preferred Securities Guarantee Agreement executed and delivered by the Depositor and Property Trustee, as trustee, contemporaneously with the execution and delivery of this Trust Agreement, for the benefit of the Holders of the Preferred Securities, as amended from time to time. "Holder" means a Securityholder. "Indenture" means the Subordinated Indenture, dated as of ______________, 2000, between the Depositor and the Debenture Trustee, as trustee, as amended or supplemented from time to time. "Investment Company Act" means the Investment Company Act of 1940, as amended. "Junior Subordinated Debentures" means the $10,309,280 aggregate principal amount (or up to $11,855,672 aggregate principal amount if the Underwriter exercises its Option and there is an Option Closing Date) of the Depositor's _____% Junior Subordinated Debentures due 2030, issued pursuant to the Indenture. 5 "Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse ownership interest, hypothecation, assignment, security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever. "Like Amount" means (a) with respect to a redemption of Trust Securities, Trust Securities having a Liquidation Amount equal to the principal amount of Junior Subordinated Debentures to be contemporaneously redeemed in accordance with the Indenture and the proceeds of which will be used to pay the Redemption Price of such Trust Securities and (b) with respect to a distribution of Junior Subordinated Debentures to Holders of Trust Securities in connection with a dissolution or liquidation of the Trust, Junior Subordinated Debentures having a principal amount equal to the Liquidation Amount of the Trust Securities of the Holder to whom such Junior Subordinated Debentures are distributed. "Liquidation Amount" means the stated amount of $8.00 per Trust Security. "Liquidation Date" means the date on which Junior Subordinated Debentures are to be distributed to Holders of Trust Securities in connection with a dissolution and liquidation of the Trust pursuant to Section 9.04(a). "Liquidation Distribution" has the meaning specified in Section 9.04(d). "Maturity Date" has the meaning set forth in Section 2.02 of the Indenture. "Officers' Certificate" means a certificate signed by the Chief Executive Officer, the President or a Vice President and by the Chief Accounting Officer or the Controller or an Assistant Controller or the Secretary or an Assistant Secretary, of the Depositor, and delivered to the appropriate Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 8.16 shall be the principal executive, financial or accounting officer of the Depositor. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (b) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (c) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Trust, the Property Trustee, the Delaware Trustee or the Depositor, but not an employee of any thereof, and who shall be reasonably acceptable to the Property Trustee. 6 "Option" means the grant by the Trust to the Underwriter of an option to purchase all or any portion of an additional 187,500 Preferred Securities pursuant to the terms of the Underwriting Agreement. "Option Closing Date" means the time, date of payment and delivery of the Preferred Securities Certificates purchased pursuant to the Underwriter's exercise of the Option, as more particularly described in the Underwriting Agreement. "Original Trust Agreement" has the meaning specified in the recitals to this Trust Agreement. "Outstanding," when used with respect to Preferred Securities, means, as of the date of determination, all Preferred Securities theretofore executed and delivered under this Trust Agreement, except: (a) Preferred Securities theretofore canceled by the Property Trustee or delivered to the Property Trustee for cancellation; (b) Preferred Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Property Trustee or any Paying Agent for the Holders of such Preferred Securities; provided that, if such Preferred Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Trust Agreement; and (c) Preferred Securities which have been paid or in exchange for or in lieu of which other Preferred Securities have been executed and delivered pursuant to Sections 5.04, 5.05, 5.11 and 5.13; provided, however, that in determining whether the Holders of the requisite Liquidation Amount of the Outstanding Preferred Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Preferred Securities owned by the Depositor, any Trustee, or any Affiliate of the Depositor or any Trustee, shall be disregarded and deemed not to be Outstanding, except that (i) in determining whether any Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Preferred Securities that such Trustee knows to be so owned shall be so disregarded and (ii) the foregoing shall not apply at any time when all of the Outstanding Preferred Securities are owned by the Depositor, one or more of the Trustees and/or any such Affiliate. Preferred Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Administrative Trustees the pledgee's right as to such Preferred Securities so owned. "Owner" means each Person who is the beneficial owner of a Book-Entry Preferred Securities Certificate as reflected in the records of the Clearing Agency or, if a Clearing Agency Participant is not the Owner, then as reflected in the records of a Person maintaining an account with such Clearing Agency (directly or indirectly, in accordance with the rules of such Clearing Agency). "Paying Agent" means any paying agent or co-paying agent appointed pursuant to Section 5.09 and shall initially be the Trust Company. 7 "Payment Account" means a segregated non-interest-bearing corporate trust account maintained by the Property Trustee for the benefit of the Securityholders in which all amounts paid in respect of the Junior Subordinated Debentures will be held and from which the Property Trustee shall make payments to the Securityholders in accordance with Sections 4.01 and 4.02. "Person" means any individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof. "Preferred Security" means a preferred undivided beneficial interest in the assets of the Trust, designated "_____% Cumulative Trust Preferred Securities," having a Liquidation Amount of $8.00 and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. "Preferred Securities Certificate" means a certificate evidencing ownership of Preferred Securities, substantially in the form attached as EXHIBIT E. "Property Trustee" means the commercial bank or trust company identified as the "Property Trustee" in the preamble to this Trust Agreement solely in its capacity as Property Trustee of the Trust heretofore formed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor Property Trustee appointed as herein provided. "Redemption Date" means, with respect to any Trust Security to be redeemed, the date fixed for such redemption by or pursuant to this Trust Agreement; provided that each Debenture Redemption Date and the Maturity Date of the Junior Subordinated Debentures shall be a Redemption Date for a Like Amount of Trust Securities. "Redemption Price" means, with respect to any Trust Security to be redeemed, the Liquidation Amount of such Trust Security, plus accumulated and unpaid Distributions to the Redemption Date allocated on a pro rata basis (based on Liquidation Amounts) among the Trust Securities to be redeemed. "Relevant Trustee" shall have the meaning specified in Section 8.10. "Securities Register" and "Securities Registrar" have the respective meanings specified in Section 5.04. "Securityholder" means a Person in whose name a Trust Security or Trust Securities is registered in the Securities Register; any such Person is a beneficial owner within the meaning of the Delaware Business Trust Act. "Trust" means BVBC Capital Trust I, the Delaware business trust continued hereby and which was created as stated in the recitals to this Trust Agreement. "Trust Agreement" means this Amended and Restated Trust Agreement, as the same may be modified, amended or supplemented in accordance with the applicable provisions hereof, including all exhibits hereto, including, for all purposes of this Trust Agreement and any such 8 modification, amendment or supplement, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this Trust Agreement and any such modification, amendment or supplement, respectively. "Trust Company" has the meaning specified in the preamble to this Trust Agreement. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this Trust Agreement was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trust Property" means (a) the Junior Subordinated Debentures, (b) the rights of the Property Trustee under the Guarantee, (c) any cash on deposit in, or owing to, the Payment Account and (d) all proceeds and rights in respect of the foregoing and any other property and assets for the time being held or deemed to be held by the Property Trustee pursuant to the trusts of this Trust Agreement. "Trust Security" means any one of the Common Securities or the Preferred Securities. "Trust Securities Certificate" means any one of the Common Securities Certificates or the Preferred Securities Certificates. "Trustee" or "Trustees" means, individually or collectively, any of the Property Trustee, the Delaware Trustee and the Administrative Trustees. "Underwriter" means Stifel, Nicolaus & Company, Incorporated. "Underwriting Agreement" means the Underwriting Agreement dated as of __________, 2000, among the Trust, the Depositor and the Underwriter. ARTICLE II ESTABLISHMENT OF THE TRUST 2.01 NAME. The Trust heretofore created and continued hereby shall continue to be known as "BVBC CAPITAL TRUST I," as such name may be modified from time to time by the Administrative Trustees following written notice to the Holders of Trust Securities and the other Trustees, in which name the Trustees may engage in the transactions contemplated hereby, make and execute contracts and other instruments on behalf of the Trust and sue and be sued. 2.02 OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS. The address of the Delaware Trustee in the State of Delaware is 1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration, or such other address in the State of Delaware as the Delaware Trustee may designate by written notice to the Securityholders and the Depositor. The principal executive office of the Trust is c/o BLUE VALLEY BAN CORP., 11935 Riley, Overland Park, Kansas 66225-6128. 2.03 INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL EXPENSES. The Trustees acknowledge receipt in trust from the Depositor in connection with the Original Trust Agreement of the sum of $10, which constituted 9 the initial Trust Property. The Depositor shall pay organizational expenses of the Trust as they arise or shall, upon request of any Trustee, promptly reimburse such Trustee for any such expenses paid by such Trustee. The Depositor shall make no claim upon the Trust Property for the payment of such expenses. 2.04 ISSUANCE OF THE PREFERRED SECURITIES. On _____________, 2000, the Depositor and an Administrative Trustee, on behalf of the Trust and pursuant to the Original Trust Agreement, executed and delivered the Underwriting Agreement. Contemporaneously with the execution and delivery of this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in accordance with Section 5.02 and deliver, in accordance with the Underwriting Agreement, a Preferred Securities Certificate, registered in the name of the nominee of the initial Clearing Agency, in an aggregate amount of Preferred Securities having an aggregate Liquidation Amount of $10,000,000 against receipt of the aggregate purchase price of such Preferred Securities of $10,000,000, which amount such Administrative Trustee shall promptly deliver to the Property Trustee. If the Underwriter exercises its Option and there is an Option Closing Date, then an Administrative Trustee, on behalf of the Trust, shall execute in accordance with Section 5.02 and deliver in accordance with the Underwriting Agreement, Preferred Securities Certificates, registered in the name of the Persons entitled thereto, in an aggregate amount of up to 187,500 Preferred Securities having an aggregate Liquidation Amount of up to $1,500,000 against receipt of the aggregate purchase price of such Preferred Securities equal to the product of $8 multiplied by the number of Preferred Securities purchased pursuant to the Option, which amount such Administrative Trustee shall promptly deliver to the Property Trustee. 2.05 ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE OF JUNIOR SUBORDINATED DEBENTURES. (a) Contemporaneously with the execution and delivery of this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in accordance with Section 5.02 and deliver to the Depositor a Common Securities Certificate, registered in the name of the Depositor, in an aggregate amount of Common Securities having an aggregate Liquidation Amount of $309,280 against payment by the Depositor of such amount. Contemporaneously therewith, an Administrative Trustee, on behalf of the Trust, shall subscribe to and purchase from the Depositor Junior Subordinated Debentures, registered in the name of the Property Trustee on behalf of the Trust and having an aggregate principal amount equal to $10,309,280, and, in satisfaction of the purchase price for such Junior Subordinated Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of $10,309,280. (b) If the Underwriter exercises the Option and there is an Option Closing Date, then an Administrative Trustee, on behalf of the Trust, shall execute in accordance with Section 5.02 and deliver to the Depositor, Common Securities Certificates, registered in the name of the Depositor, in an aggregate amount of up to 5,799 Common Securities having an aggregate Liquidation Amount of up to $46,392 against payment by the Depositor of such amount. Contemporaneously therewith, an Administrative Trustee, on behalf of the Trust, shall subscribe to and purchase from the Depositor, Junior Subordinated Debentures, registered in the name of the Trust and having an aggregate 10 principal amount of up to $1,546,392, and, in satisfaction of the purchase price of such Junior Subordinated Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of $1,546,392. 2.06 DECLARATION OF TRUST. The exclusive purposes and functions of the Trust are (a) to issue and sell Trust Securities and use the proceeds from such sale to acquire the Junior Subordinated Debentures, and (b) to engage in those activities necessary, convenient or incidental thereto. The Depositor hereby appoints the Trustees as trustees of the Trust, to have all the rights, powers and duties to the extent set forth herein, and the Trustees hereby accept such appointment. The Property Trustee hereby declares that it will hold the Trust Property in trust upon and subject to the conditions set forth herein for the benefit of the Securityholders. The Administrative Trustees shall have all rights, powers and duties set forth herein and in accordance with applicable law with respect to accomplishing the purposes of the Trust. The Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities, of the Property Trustee or the Administrative Trustees set forth herein. The Delaware Trustee shall be one of the Trustees of the Trust for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Delaware Business Trust Act. 2.07 AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS. (a) The Trustees shall conduct the affairs of the Trust in accordance with the terms of this Trust Agreement. Subject to the limitations set forth in paragraph (b) of this Section and Article VIII, and in accordance with the following provisions (i) and (ii), the Administrative Trustees shall have the authority to enter into all transactions and agreements determined by the Administrative Trustees to be appropriate in exercising the authority, express or implied, otherwise granted to the Administrative Trustees under this Trust Agreement, and to perform all acts in furtherance thereof, including without limitation, the following: (i) As among the Trustees, each Administrative Trustee, acting singly or jointly, shall have the power and authority to act on behalf of the Trust with respect to the following matters: (A) the issuance and sale of the Trust Securities, including, without limitation, the execution of the Trust Securities on behalf of the Trust in accordance with this Trust Agreement, and complying with the terms of the Underwriting Agreement regarding the issuance and sale of the Trust Securities; (B) to cause the Trust to enter into, and to execute, deliver and perform on behalf of the Trust, the Expense Agreement and the Certificate Depository Agreement and such other agreements or documents as may be necessary or desirable in connection with the purposes and function of the Trust; (C) to assist in the registration of the Preferred Securities under the Securities Act of 1933, as amended, and under state securities or blue 11 sky laws, and the qualification of this Trust Agreement as a trust indenture under the Trust Indenture Act; (D) assisting in the listing of the Preferred Securities upon The American Stock Exchange LLC or such securities exchange or exchanges as shall be determined by the Depositor and, if required, the registration of the Preferred Securities under the Exchange Act, and the preparation and filing of all periodic and other reports and other documents pursuant to the foregoing; (E) the sending of notices (other than notices of default) and other information regarding the Trust Securities and the Junior Subordinated Debentures to the Securityholders in accordance with this Trust Agreement; (F) the appointment of a Paying Agent, authenticating agent and Securities Registrar in accordance with this Trust Agreement; (G) to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust and the preparation, execution and filing of the certificate of cancellation of the Certificate of Trust with the Secretary of State of the State of Delaware; (H) to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Preferred Securities or to enable the Trust to effect the purposes for which the Trust was created; (I) the execution and delivery of an application for a taxpayer identification number for the Trust; and (J) the taking of any action incidental to the foregoing as the Administrative Trustees may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder). (ii) As among the Trustees, the Property Trustee shall have the power, duty and authority to act on behalf of the Trust with respect to the following matters: (A) the establishment of the Payment Account; (B) the receipt of the Junior Subordinated Debentures; 12 (C) the receipt and collection of interest, principal and any other payments made in respect of the Junior Subordinated Debentures in the Payment Account; (D) the distribution of amounts owed to the Securityholders in respect of the Trust Securities in accordance with the terms of this Trust Agreement; (E) the exercise of all of the rights, powers and privileges of a holder of the Junior Subordinated Debentures; (F) the sending of notices of default and other information regarding the Trust Securities and the Junior Subordinated Debentures to the Securityholders in accordance with this Trust Agreement; (G) the distribution of the Trust Property in accordance with the terms of this Trust Agreement; (H) to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust; (I) after an Event of Default (other than under paragraph (b), (c), (d) or (e) of the definition of such term if the Event of Default is by or with respect to the Property Trustee) the taking of any action incidental to the foregoing as the Property Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement and protect and conserve the Trust Property for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder); (J) so long as the Property Trustee is the Securities Registrar, registering transfers of the Trust Securities in accordance with this Trust Agreement; and (K) except as otherwise provided in this Section 2.07(a)(ii), the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Administrative Trustees set forth in Section 2.07(a)(i). (b) So long as this Trust Agreement remains in effect, the Trust (or the Trustees acting on behalf of the Trust) shall not undertake any business, activities or transaction except as expressly provided herein or contemplated hereby. In particular, the Trustees shall not (i) acquire any investments or engage in any activities not authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Securityholders, except as expressly provided herein, (iii) take any action that would cause the Trust to fail or cease to qualify as a "grantor trust" for United States federal income tax purposes, (iv) incur any indebtedness for borrowed money or issue any other debt or (v) take or consent to any action that would result in the placement of a Lien on 13 any of the Trust Property. The Administrative Trustees shall defend all claims and demands of all Persons at any time claiming any Lien on any of the Trust Property adverse to the interest of the Trust or the Securityholders in their capacity as Securityholders. (c) In connection with the issue and sale of the Preferred Securities, the Depositor shall have the right and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Depositor in furtherance of the following prior to the date of this Trust Agreement are hereby ratified and confirmed in all respects): (i) the preparation and filing by the Trust with the Commission and the execution on behalf of the Trust of a registration statement on the appropriate form in relation to the Preferred Securities and the Junior Subordinated Debentures, including any amendments thereto; (ii) the determination of the states in which to take appropriate action to qualify or register for sale all or part of the Preferred Securities and to do any and all such acts, other than actions which must be taken by or on behalf of the Trust, and advise the Trustees of actions they must take on behalf of the Trust, and prepare for execution and filing any documents to be executed and filed by the Trust or on behalf of the Trust, as the Depositor deems necessary or advisable in order to comply with the applicable laws of any such states; (iii) in the discretion of the Depositor, the preparation for filing by the Trust and execution on behalf of the Trust of an application to The American Stock Exchange LLC or a national stock exchange or other organizations for listing upon notice of issuance of any Preferred Securities and to file or cause an Administrative Trustee to file thereafter with such exchange or organization such notifications and documents as may be necessary from time to time; (iv) if required, the preparation for filing by the Trust with the Commission and the execution on behalf of the Trust of a registration statement on Form 8-A relating to the registration of the Preferred Securities under Section 12(b) or 12(g) of the Exchange Act, including any amendments thereto; (v) the negotiation of the terms of, and the execution and delivery of, the Underwriting Agreement providing for the sale of the Preferred Securities; (vi) the negotiation of the terms of, and execution of, the Original Trust Agreement, and the preparation of this Trust Agreement and the selection of the Trustees; and (vii) the taking of any other actions necessary or desirable to carry out any of the foregoing activities. (d) Notwithstanding anything herein to the contrary, the Administrative Trustees are authorized and directed to conduct the affairs of the Trust and to operate the 14 Trust so that the Trust will not be deemed to be an "investment company" required to be registered under the Investment Company Act, will be classified as a "grantor trust" and not as an association taxable as a corporation for United States federal income tax purposes and so that the Junior Subordinated Debentures will be treated as indebtedness of the Depositor for United States federal income tax purposes. In this connection, subject to Section 10.02, the Depositor and the Administrative Trustees are authorized to take any action, not inconsistent with applicable law or this Trust Agreement, that each of the Depositor and the Administrative Trustees determines in their discretion to be necessary or desirable for such purposes. In no event shall the Trustees be liable to the Trust or the Securityholders for any failure to comply with this Section that results from a change in law or regulations or in the interpretation thereof. 2.08 ASSETS OF TRUST. The assets of the Trust shall consist of the Trust Property. 2.09 TITLE TO TRUST PROPERTY. Legal title to all Trust Property shall be vested at all times in the Property Trustee (in its capacity as such) and shall be held and administered by the Property Trustee for the benefit of the Securityholders in accordance with this Trust Agreement. ARTICLE III PAYMENT ACCOUNT 3.01 PAYMENT ACCOUNT. (a) On or prior to the Closing Date, the Property Trustee shall establish the Payment Account. The Property Trustee and any agent of the Property Trustee shall have exclusive control and sole right of withdrawal with respect to the Payment Account for the purpose of making deposits and withdrawals from the Payment Account in accordance with this Trust Agreement. All monies and other property deposited or held from time to time in the Payment Account shall be held by the Property Trustee in the Payment Account for the exclusive benefit of the Securityholders and for distribution as herein provided, including (and subject to) any priority of payments provided for herein. (b) The Property Trustee shall deposit in the Payment Account, promptly upon receipt, all payments of principal of or interest on, and any other payments or proceeds with respect to, the Junior Subordinated Debentures. Amounts held in the Payment Account shall not be invested by the Property Trustee pending distribution thereof. ARTICLE IV DISTRIBUTIONS; REDEMPTION 4.01 DISTRIBUTIONS. (a) Distributions on the Trust Securities shall be cumulative, and will accumulate whether or not there are funds of the Trust available for the payment of Distributions. Distributions shall accumulate from ______________, 2000, and, except during any Extension Period with respect to the Junior Subordinated Debentures, shall be 15 payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing June 30, 2000. The amount of each Distribution due with respect to the Trust Securities will include amounts accrued through the date the Distribution payment is due. If any date on which a Distribution is otherwise payable on the Trust Securities is not a Business Day, then the payment of such Distribution shall be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, payment of such Distribution shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date (each date on which Distributions are payable in accordance with this Section 4.01(a) a "Distribution Date"). (b) The Trust Securities represent undivided beneficial interests in the Trust Property, and, as a practical matter, the Distributions on the Trust Securities shall be payable at a rate of ____% per annum of the Liquidation Amount of the Trust Securities. The amount of Distributions payable for any full period shall be computed on the basis of a 360-day year of twelve 30-day months. The amount of Distributions for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. During any Extension Period with respect to the Junior Subordinated Debentures, Distributions on the Preferred Securities will be deferred for a period equal to the Extension Period. The amount of Distributions payable for any period shall include the Additional Amounts, if any. (c) Distributions on the Trust Securities shall be made by the Property Trustee solely from the Payment Account and shall be payable on each Distribution Date only to the extent that the Trust has funds then on hand and immediately available in the Payment Account for the payment of such Distributions. (d) Distributions on the Trust Securities with respect to a Distribution Date shall be payable to the Holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be one Business Day prior to such Distribution Date; provided, however, that in the event that the Preferred Securities do not remain in book-entry-only form, the relevant record date shall be the 15th day of the month in which the relevant Distribution is payable. 4.02 REDEMPTION. (a) On each Debenture Redemption Date and on the Maturity Date of the Junior Subordinated Debentures, the Trust will be required to redeem a Like Amount of Trust Securities at the Redemption Price. (b) Notice of redemption shall be given by the Property Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date to each Holder of Trust Securities to be redeemed, at such Holder's address appearing in the Securities Register. The Property Trustee shall have no responsibility for the accuracy of any CUSIP number contained in such notice. All notices of redemption shall state: 16 (i) the Redemption Date; (ii) the Redemption Price, or if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price provided pursuant to the Indenture together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the third Business Day prior to the Redemption Date (and, if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date, or as soon as practicable thereafter, that notice of such actual Redemption Price is received pursuant to the Indenture); (iii) the CUSIP number; (iv) if less than all the Outstanding Trust Securities are to be redeemed, the identification and the aggregate Liquidation Amount of the particular Trust Securities to be redeemed; (v) that on the Redemption Date the Redemption Price will become due and payable upon each such Trust Security to be redeemed and that Distributions thereon will cease to accumulate on and after said date, except as provided in Section 4.02(d) below; and (vi) the place or places where Trust Securities are to be surrendered for the payment of the Redemption Price. (c) The Trust Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption of Junior Subordinated Debentures. Redemptions of the Trust Securities shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that the Trust has immediately available funds then on hand and available in the Payment Account for the payment of such Redemption Price. (d) If the Property Trustee gives a notice of redemption in respect of any Preferred Securities, then, by 10:00 a.m., Delaware time, on the Redemption Date, subject to Section 4.02(c), the Property Trustee will, so long as the Preferred Securities are in book-entry-only form, deposit with the Clearing Agency for the Preferred Securities funds sufficient to pay the applicable Redemption Price and will give such Clearing Agency irrevocable instructions and authority to pay the Redemption Price to the Holders thereof. If the Preferred Securities are no longer in book-entry-only form, the Property Trustee, subject to Section 4.02(c), will deposit with the Paying Agent funds sufficient to pay the applicable Redemption Price and will give the Paying Agent irrevocable instructions and authority to pay the Redemption Price to the Holders thereof upon surrender of their Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Securities Register for the Trust Securities on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all rights of Securityholders holding Trust 17 Securities so called for redemption will cease, except the right of such Securityholders to receive the Redemption Price, but without interest on such Redemption Price, and such Securities will cease to be Outstanding. In the event that any date on which any Redemption Price is payable is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of any Trust Securities called for redemption is improperly withheld or refused and not paid either by the Trust or by the Depositor pursuant to the Guarantee, Distributions on such Trust Securities will continue to accumulate, at the then applicable rate, from the Redemption Date originally established by the Trust for such Trust Securities to the date such Redemption Price is actually paid, in which case the actual payment date will be the date fixed for redemption for purposes of calculating the Redemption Price. (e) Payment of the Redemption Price on the Trust Securities shall be made to the record Holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be one Business Day prior to the relevant Redemption Date; provided, however, that in the event that the Preferred Securities do not remain in book-entry-only form, the relevant record date shall be the date fifteen days prior to the relevant Redemption Date. (f) Subject to Section 4.03(a), if less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated on a pro rata basis (based on Liquidation Amounts) among the Common Securities and the Preferred Securities. The particular Preferred Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Property Trustee from the outstanding Preferred Securities not previously called for redemption, by such method (including, without limitation, by lot) as the Property Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $8.00 or an integral multiple of $8.00 in excess thereof) of the Liquidation Amount of Preferred Securities of a denomination larger than $8.00. The Property Trustee shall promptly notify the Securities Registrar in writing of the Preferred Securities selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed. For all purposes of this Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate, in the case of any Preferred Securities redeemed or to be redeemed only in part, to the portion of the Liquidation Amount of Preferred Securities which has been or is to be redeemed. 4.03 SUBORDINATION OF COMMON SECURITIES. (a) Payment of Distributions (including Additional Amounts, if applicable) on, and the Redemption Price of, the Trust Securities, as applicable, shall be made, subject to Section 4.02(f), pro rata among the Common Securities and the Preferred 18 Securities based on the Liquidation Amount of the Trust Securities; provided, however, that if on any Distribution Date or Redemption Date any Event of Default resulting from a Debenture Event of Default shall have occurred and be continuing, no payment of any Distribution (including Additional Amounts, if applicable) on, or Redemption Price of, any Common Security, and no other payment on account of the redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions (including Additional Amounts, if applicable) on all Outstanding Preferred Securities for all Distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price on all Outstanding Preferred Securities then called for redemption, shall have been made or provided for, and all funds immediately available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions (including Additional Amounts, if applicable) on, or the Redemption Price of, Preferred Securities then due and payable. The existence of an Event of Default does not entitle the Holders of Preferred Securities to accelerate the maturity thereof. (b) In the case of the occurrence of any Event of Default resulting from a Debenture Event of Default, the Holder of Common Securities will be deemed to have waived any right to act with respect to any such Event of Default under this Trust Agreement until the effect of all such Events of Default with respect to the Preferred Securities shall have been cured, waived or otherwise eliminated. Until any such Event of Default under this Trust Agreement with respect to the Preferred Securities shall have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of the Preferred Securities and not the Holder of the Common Securities, and only the Holders of the Preferred Securities will have the right to direct the Property Trustee to act on their behalf. 4.04 PAYMENT PROCEDURES. Payments of Distributions (including Additional Amounts, if applicable) in respect of the Preferred Securities shall be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Securities Register or, if the Preferred Securities are held by a Clearing Agency, such Distributions shall be made to the Clearing Agency in immediately available funds, which shall credit the relevant Persons' accounts at such Clearing Agency on the applicable Distribution Dates. Payments in respect of the Common Securities shall be made in such manner as shall be mutually agreed between the Property Trustee and the Holder of the Common Securities. 4.05 TAX RETURNS AND REPORTS. The Administrative Trustees shall prepare (or cause to be prepared), at the Depositor's expense, and file all United States federal, state and local tax and information returns and reports required to be filed by or in respect of the Trust. In this regard, the Administrative Trustees shall (a) prepare and file (or cause to be prepared and filed) the appropriate Internal Revenue Service Form required to be filed in respect of the Trust in each taxable year of the Trust and (b) prepare and furnish (or cause to be prepared and furnished) to each Securityholder the appropriate Internal Revenue Service form required to be furnished to such Securityholder or the information required to be provided on such form. The Administrative Trustees shall provide the Depositor with a copy of all such returns and reports promptly after such filing or furnishing. The Property Trustee shall comply with United States 19 federal withholding and backup withholding tax laws and information reporting requirements with respect to any payments to Securityholders under the Trust Securities. 4.06 PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST. Upon receipt under the Junior Subordinated Debentures of Additional Sums, the Property Trustee, at the direction of an Administrative Trustee or the Depositor, shall promptly pay any taxes, duties or governmental charges of whatsoever nature (other than withholding taxes) imposed on the Trust by the United States or any other taxing authority. 4.07 PAYMENTS UNDER INDENTURE. Any amount payable hereunder to any Holder of Preferred Securities shall be reduced by the amount of any corresponding payment such Holder has directly received under the Indenture pursuant to Section 5.14(b) or (c) hereof. ARTICLE V TRUST SECURITIES CERTIFICATES 5.01 INITIAL OWNERSHIP. Upon the formation of the Trust and the contribution by the Depositor pursuant to Section 2.03 and until the issuance of the Trust Securities, and at any time during which no Trust Securities are outstanding, the Depositor shall be the sole beneficial owner of the Trust. 5.02 THE TRUST SECURITIES CERTIFICATES. The Preferred Securities Certificates shall be issued in minimum denominations of $8.00 Liquidation Amount and integral multiples of $8.00 in excess thereof, and the Common Securities Certificates shall be issued in denominations of $8.00 Liquidation Amount and integral multiples of $8.00 in excess thereof. The Trust Securities Certificates shall be executed on behalf of the Trust by manual signature of at least one Administrative Trustee. Trust Securities Certificates bearing the manual signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefits of this Trust Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the delivery of such Trust Securities Certificates or did not hold such offices at the date of delivery of such Trust Securities Certificates. A transferee of a Trust Securities Certificate shall become a Securityholder, and shall be entitled to the rights and subject to the obligations of a Securityholder hereunder, upon due registration of such Trust Securities Certificate in such transferee's name pursuant to Sections 5.04, 5.11 and 5.13. 5.03 EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES. On the Closing Date, and on the Option Closing Date, if applicable, the Administrative Trustees shall cause Trust Securities Certificates, in an aggregate Liquidation Amount as provided in Sections 2.04 and 2.05, to be executed on behalf of the Trust by at least one of the Administrative Trustees and delivered, without further corporate action by the Depositor, in authorized denominations. 5.04 REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES CERTIFICATES. The Property Trustee shall keep or cause to be kept, at the office or agency maintained pursuant to Section 5.08, a register or registers for the purpose of registering Trust Securities Certificates and transfers and exchanges of Preferred Securities Certificates (herein referred to as the "Securities Register") in which the registrar designated by 20 the Property Trustee (the "Securities Registrar"), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Preferred Securities Certificates and Common Securities Certificates (subject to Section 5.10 in the case of the Common Securities Certificates) and registration of transfers and exchanges of Preferred Securities Certificates as herein provided. The Property Trustee shall be the initial Securities Registrar. Upon surrender for registration of transfer of any Preferred Securities Certificate at the office or agency maintained pursuant to Section 5.08, the Administrative Trustees or any one of them shall execute and deliver, in the name of the designated transferee or transferees, one or more new Preferred Securities Certificates in authorized denominations of a like aggregate Liquidation Amount dated the date of execution by such Administrative Trustee or Trustees. The Securities Registrar shall not be required to register the transfer of any Preferred Securities that have been called for redemption. At the option of a Holder, Preferred Securities Certificates may be exchanged for other Preferred Securities Certificates in authorized denominations of the same class and of a like aggregate Liquidation Amount upon surrender of the Preferred Securities Certificates to be exchanged at the office or agency maintained pursuant to Section 5.08. Every Preferred Securities Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Property Trustee and the Securities Registrar duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Preferred Securities Certificate surrendered for registration of transfer or exchange shall be canceled and subsequently disposed of by the Property Trustee in accordance with its customary practice. The Trust shall not be required to (i) issue, register the transfer of, or exchange any Preferred Securities during a period beginning at the opening of business 15 calendar days before the date of mailing of a notice of redemption of any Preferred Securities called for redemption and ending at the close of business on the day of such mailing or (ii) register the transfer of or exchange any Preferred Securities so selected for redemption, in whole or in part, except the unredeemed portion of any such Preferred Securities being redeemed in part. No service charge shall be made for any registration of transfer or exchange of Preferred Securities Certificates, but the Securities Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Preferred Securities Certificates. 5.05 MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES CERTIFICATES. If (a) any mutilated Trust Securities Certificate shall be surrendered to the Securities Registrar, or if the Securities Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Trust Securities Certificate and (b) there shall be delivered to the Securities Registrar and the Administrative Trustees such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Trust Securities Certificate shall have been acquired by a bona fide purchaser, the Administrative Trustees, or any one of them, on behalf of the Trust shall execute and make available for delivery, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities Certificate of like class, tenor and denomination. In connection with the issuance of any new Trust Securities Certificate under this Section, the Administrative Trustees or the Securities Registrar may require the payment of a sum sufficient 21 to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Trust Securities Certificate issued pursuant to this Section shall constitute conclusive evidence of an undivided beneficial interest in the assets of the Trust, as if originally issued, whether or not the lost, stolen or destroyed Trust Securities Certificate shall be found at any time. 5.06 PERSONS DEEMED SECURITYHOLDERS. The Trustees, the Paying Agent and the Securities Registrar shall treat the Person in whose name any Trust Securities Certificate shall be registered in the Securities Register as the owner of such Trust Securities Certificate for the purpose of receiving Distributions and for all other purposes whatsoever, and neither the Trustees nor the Securities Registrar shall be bound by any notice to the contrary. 5.07 ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES. At any time when the Property Trustee is not also acting as the Securities Registrar, the Administrative Trustees or the Depositor shall furnish or cause to be furnished to the Property Trustee (a) semi-annually on or before January 15 and July 15 in each year, a list, in such form as the Property Trustee may reasonably require, of the names and addresses of the Securityholders as of the most recent regular record date (as provided in Section 4.01(d)) and (b) promptly after receipt by any Administrative Trustee or the Depositor of a request therefor from the Property Trustee, such other information as the Property Trustee may reasonably require in order to enable the Property Trustee to discharge its obligations under this Trust Agreement, in each case to the extent such information is in the possession or control of the Administrative Trustees or the Depositor and is not identical to a previously supplied list or has not otherwise been received by the Property Trustee in its capacity as Securities Registrar. The rights of Securityholders to communicate with other Securityholders with respect to their rights under this Trust Agreement or under the Trust Securities, and the corresponding rights of the Trustee shall be as provided in the Trust Indenture Act. Each Holder, by receiving and holding a Trust Securities Certificate, and each Owner shall be deemed to have agreed not to hold the Depositor, the Property Trustee or the Administrative Trustees accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. 5.08 MAINTENANCE OF OFFICE OR AGENCY. The Administrative Trustees shall maintain an office or offices or agency or agencies where Preferred Securities Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Trustees in respect of the Trust Securities Certificates may be served. The Administrative Trustees initially designate the principal corporate trust office of the Property Trustee, 1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration, as the principal corporate trust office for such purposes. The Administrative Trustees shall give prompt written notice to the Depositor and to the Securityholders of any change in the location of the Securities Register or any such office or agency. 5.09 APPOINTMENT OF PAYING AGENT. The Paying Agent shall make Distributions to Securityholders from the Payment Account and shall report the amounts of such Distributions to the Property Trustee and the Administrative Trustees. Any Paying Agent shall have the revocable power to withdraw funds from the Payment Account for the purpose of making the Distributions referred to above. The Administrative Trustees may revoke such power and remove the Paying Agent if such Trustees determine in their sole discretion that the Paying Agent shall have failed to perform its obligations under this Trust Agreement in any 22 material respect. The Paying Agent shall initially be the Property Trustee, and any co-paying agent chosen by the Property Trustee, and acceptable to the Administrative Trustees and the Depositor. Any Person acting as Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Administrative Trustees, the Property Trustee and the Depositor. In the event that the Property Trustee shall no longer be the Paying Agent or a successor Paying Agent shall resign or its authority to act be revoked, the Administrative Trustees shall appoint a successor that is acceptable to the Property Trustee and the Depositor to act as Paying Agent (which shall be a bank or trust company). The Administrative Trustees shall cause such successor Paying Agent or any additional Paying Agent appointed by the Administrative Trustees to execute and deliver to the Trustees an instrument in which such successor Paying Agent or additional Paying Agent shall agree with the Trustees that as Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Securityholders in trust for the benefit of the Securityholders entitled thereto until such sums shall be paid to such Securityholders. The Paying Agent shall return all unclaimed funds to the Property Trustee and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Property Trustee. The provisions of Sections 8.01, 8.03 and 8.06 shall apply to the Property Trustee also in its role as Paying Agent, for so long as the Property Trustee shall act as Paying Agent and, to the extent applicable, to any other Paying Agent appointed hereunder. Any reference in this Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise. 5.10 OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR. On the Closing Date, the Depositor shall acquire and retain beneficial and record ownership of the Common Securities. To the fullest extent permitted by law, any attempted transfer of the Common Securities (other than a transfer in connection with a merger or consolidation of the Depositor into another corporation pursuant to Section 12.01 of the Indenture) shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE". 5.11 BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON SECURITIES CERTIFICATE. (a) The Preferred Securities Certificates, upon original issuance, will be issued in the form of a typewritten Preferred Securities Certificate or Certificates representing Book-Entry Preferred Securities Certificates, to be delivered to or held on behalf of The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Trust. Such Book-Entry Preferred Securities Certificate or Certificates shall initially be registered on the Securities Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no beneficial owner will receive a Definitive Preferred Securities Certificate representing such beneficial owner's interest in such Preferred Securities, except as provided in Section 5.13. Unless and until Definitive Preferred Securities Certificates have been issued to beneficial owners pursuant to Section 5.13: (i) the provisions of this Section 5.11(a) shall be in full force and effect; (ii) the Securities Registrar, the Paying Agent and the Trustees shall be entitled to deal with the Clearing Agency for all purposes of this Trust 23 Agreement relating to the Book-Entry Preferred Securities Certificates (including the payment of the Liquidation Amount of and Distributions on the Book-Entry Preferred Securities) as the sole Holder of Book-Entry Preferred Securities and shall have no obligations to the Owners thereof; (iii) to the extent that the provisions of this Section 5.11 conflict with any other provisions of this Trust Agreement, the provisions of this Section 5.11 shall control; and (iv) the rights of the Owners of the Book-Entry Preferred Securities Certificates shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Owners and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Certificate Depository Agreement, unless and until Definitive Preferred Securities Certificates are issued pursuant to Section 5.13, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and will receive and transmit payments on the Preferred Securities to such Clearing Agency Participants. Any Clearing Agency designated pursuant hereto will not be deemed an agent of the Trustees for any purpose. (b) A single Common Securities Certificate representing the Common Securities shall be issued to the Depositor in the form of a definitive Common Securities Certificate. 5.12 NOTICES TO CLEARING AGENCY. To the extent that a notice or other communication to the Owners is required under this Trust Agreement, unless and until Definitive Preferred Securities Certificates shall have been issued to Owners pursuant to Section 5.13, the Trustees shall give all such notices and communications specified herein to be given to Owners to the Clearing Agency, and shall have no obligations to the Owners. 5.13 DEFINITIVE PREFERRED SECURITIES CERTIFICATES. If (a) the Depositor advises the Trustees in writing that the Clearing Agency is no longer willing or able to discharge properly its responsibilities with respect to the Preferred Securities Certificates, and the Depositor is unable to locate a qualified successor, (b) the Depositor at its option advises the Trustees in writing that it elects to terminate the book-entry system through the Clearing Agency, or (c) after the occurrence of a Debenture Event of Default, Owners of Preferred Securities Certificates representing beneficial interests aggregating at least a majority of the Liquidation Amount advise the Property Trustee in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Owners of Preferred Securities Certificates, then the Property Trustee shall notify the Clearing Agency, and the Clearing Agency shall notify all Owners of Preferred Securities Certificates, of the occurrence of any such event and of the availability of the Definitive Preferred Securities Certificates to Owners of such class or classes, as applicable, requesting the same. Upon surrender to the Property Trustee of the typewritten Preferred Securities Certificate or Certificates representing the Book-Entry Preferred Securities Certificates by the Clearing Agency, accompanied by registration instructions, the Administrative Trustees, or any one of them, shall execute the Definitive Preferred Securities Certificates in accordance with the instructions of the Clearing Agency. Neither the Securities Registrar nor the Trustees shall be liable for any delay in delivery 24 of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Preferred Securities Certificates, the Trustees shall recognize the Holders of the Definitive Preferred Securities Certificates as Securityholders. The Definitive Preferred Securities Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrative Trustees, as evidenced by the execution thereof by the Administrative Trustees or any one of them. 5.14 RIGHTS OF SECURITYHOLDERS. (a) The legal title to the Trust Property is vested exclusively in the Property Trustee (in its capacity as such) in accordance with Section 2.09, and the Securityholders shall not have any right or title therein other than the undivided beneficial interest in the assets of the Trust conferred by their Trust Securities and they shall have no right to call for any partition or division of property, profits or rights of the Trust except as described below. The Trust Securities shall be personal property giving only the rights specifically set forth therein and in this Trust Agreement. The Trust Securities shall have no preemptive or similar rights. When issued and delivered to Holders of the Preferred Securities against payment of the purchase price therefor, the Preferred Securities will be fully paid and nonassessable interests in the Trust. The Holders of the Preferred Securities, in their capacities as such, shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. (b) For so long as any Preferred Securities remain Outstanding, if, upon a Debenture Event of Default, the Debenture Trustee fails or the holders of not less than 25% in principal amount of the outstanding Junior Subordinated Debentures fail to declare the principal of all of the Junior Subordinated Debentures to be immediately due and payable, the Holders of at least 25% in Liquidation Amount of the Preferred Securities then Outstanding shall have the right to make such declaration by a notice in writing to the Depositor and the Debenture Trustee; and upon any such declaration such principal amount of and the accrued interest on all of the Junior Subordinated Debentures shall become immediately due and payable, provided that the payment of principal and interest on such Junior Subordinated Debentures shall remain subordinated to the extent provided in the Indenture. If, as a result of a Debenture Event of Default, the Debenture Trustee or the holders of not less than 25% in aggregate outstanding principal amount of the Junior Subordinated Debentures have declared the Junior Subordinated Debentures due and payable and if such default has been cured and a sum sufficient to pay all matured installments due (otherwise than by acceleration) under the Junior Subordinated Debentures has been deposited with the Debenture Trustee, then (if the holders of not less than a majority in aggregate outstanding principal amount of Junior Subordinated Debentures have not annulled such declaration and waived such default) the Holders of a majority in aggregate Liquidation Amount of the Preferred Securities may annul such declaration and waive such default. (c) For so long as any Preferred Securities remain outstanding, upon a Debenture Event of Default arising from the failure to pay interest or principal on the Junior Subordinated Debentures, the Holders of any Preferred Securities then 25 Outstanding shall, to the fullest extent permitted by law, have the right to institute directly proceedings for enforcement of payment to such Holders of principal of or interest on the Junior Subordinated Debentures having a principal amount equal to the Liquidation Amount of the Preferred Securities of such Holders. ARTICLE VI ACTS OF SECURITYHOLDERS; MEETINGS; VOTING 6.01 LIMITATIONS ON VOTING RIGHTS. (a) Except as provided in this Section, in Sections 5.14, 8.10 and 10.02 and in the Indenture and as otherwise required by law, no Holder of Preferred Securities shall have any right to vote or in any manner otherwise control the administration, operation and management of the Trust or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Trust Securities Certificates, be construed so as to constitute the Securityholders from time to time as partners or members of an association. (b) So long as any Junior Subordinated Debentures are held by the Property Trustee, the Trustees shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or executing any trust or power conferred on the Debenture Trustee with respect to such Junior Subordinated Debentures, (ii) waive any past default which is waivable under Article Seven of the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Junior Subordinated Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or the Junior Subordinated Debentures, where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of at least a majority in Liquidation Amount of all Outstanding Preferred Securities; provided, however, that where a consent under the Indenture would require the consent of each holder of outstanding Junior Subordinated Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior written consent of each Holder of Preferred Securities. The Trustees shall not revoke any action previously authorized or approved by a vote of the Holders of the Outstanding Preferred Securities, except by a subsequent vote of the Holders of the Outstanding Preferred Securities. The Property Trustee shall notify each Holder of the Outstanding Preferred Securities of any notice of default received from the Debenture Trustee with respect to the Junior Subordinated Debentures. In addition to obtaining the foregoing approvals of the Holders of the Preferred Securities, prior to taking any of the foregoing actions, the Trustees shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that the Trust will continue to be classified as a grantor trust and not as an association taxable as a corporation for United States federal income tax purposes on account of such action. (c) If any proposed amendment to the Trust Agreement provides for, or the Trustees otherwise propose to effect, (i) any action that would adversely affect in any material respect the powers, preferences or special rights of the Preferred Securities, whether by way of amendment to the Trust Agreement or otherwise, or (ii) the dissolution of the Trust, other than pursuant to the terms of this Trust Agreement, then 26 the Holders of Outstanding Preferred Securities as a class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of at least a majority in Liquidation Amount of the Outstanding Preferred Securities. No amendment to this Trust Agreement may be made if, as a result of such amendment, the Trust would cease to be classified as a grantor trust or would be classified as an association taxable as a corporation for United States federal income tax purposes. 6.02 NOTICE OF MEETINGS. Notice of all meetings of the Holders of Preferred Securities, stating the time, place and purpose of the meeting, shall be given by the Property Trustee pursuant to Section 10.08 to each Holder of Preferred Securities of record, at such Securityholder's registered address, at least 15 days and not more than 90 days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice. 6.03 MEETINGS OF HOLDERS OF PREFERRED SECURITIES. No annual meeting of Securityholders is required to be held. The Administrative Trustees, however, shall call a meeting of Securityholders to vote on any matter upon the written request of the Holders of 25% of the Outstanding Preferred Securities (based upon their aggregate Liquidation Amount) and the Administrative Trustees or the Property Trustee may, at any time in their discretion, call a meeting of Holders of the Preferred Securities to vote on any matters as to which the Holders of the Preferred Securities are entitled to vote. Holders of record of 50% of the Outstanding Preferred Securities (based upon their aggregate Liquidation Amount), present in person or by proxy, shall constitute a quorum at any meeting of such Securityholders. If a quorum is present at a meeting, an affirmative vote by the Holders of record present, in person or by proxy, holding more than a majority of the Preferred Securities (based upon their aggregate Liquidation Amount) held by the Holders of Preferred Securities of record present, either in person or by proxy, at such meeting shall constitute the action of the Holders of the Preferred Securities, unless this Trust Agreement requires a greater number of affirmative votes. 6.04 VOTING RIGHTS. Securityholders shall be entitled to one vote for each $8.00 of Liquidation Amount represented by their Trust Securities in respect of any matter as to which such Securityholders are entitled to vote. 6.05 PROXIES, ETC. At any meeting of Securityholders, any Securityholder entitled to vote thereat may vote by proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Administrative Trustees, or with such other officer or agent of the Trust as the Administrative Trustees may direct, for verification prior to the time at which such vote shall be taken. When Trust Securities are held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such Trust Securities, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Trust Securities. A proxy purporting to be executed by or on behalf of a Securityholder shall be deemed valid unless challenged at or prior to its exercise, and, the burden of proving invalidity shall rest on the challenger. No proxy shall be valid more than three years after its date of execution. 27 6.06 SECURITYHOLDER ACTION BY WRITTEN CONSENT. Any action which may be taken by Securityholders at a meeting may be taken without a meeting if Securityholders holding more than a majority of all Outstanding Trust Securities (based upon their aggregate Liquidation Amount) entitled to vote in respect of such action (or such larger proportion thereof as shall be required by any express provision of this Trust Agreement) shall consent to the action in writing (based upon their aggregate Liquidation Amount). 6.07 RECORD DATE FOR VOTING AND OTHER PURPOSES. For the purposes of determining the Securityholders who are entitled to notice of and to vote at any meeting or by written consent, or to participate in any distribution on the Trust Securities in respect of which a record date is not otherwise provided for in this Trust Agreement, or for the purpose of any other action, the Administrative Trustees may from time to time fix a date, not more than 90 days prior to the date of any meeting of Securityholders or the payment of any distribution or other action, as the case may be, as a record date for the determination of the identity of the Securityholders of record for such purposes. 6.08 ACTS OF SECURITYHOLDERS. Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Trust Agreement to be given, made or taken by Securityholders or Owners may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders or Owners in person or by an agent duly appointed in writing; and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to an Administrative Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Securityholders or Owners signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Trust Agreement and (subject to Section 8.01) conclusive in favor of the Trustees, if made in the manner provided in this Section. The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a signer acting in a capacity other than such signer's individual capacity, such certificate or affidavit shall also constitute sufficient proof of such signer's authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which any Trustee receiving the same deems sufficient. The ownership of Preferred Securities shall be proved by the Securities Register. Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Securityholder of any Trust Security shall bind every future Securityholder of the same Trust Security and the Securityholder of every Trust Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustees or the Trust in reliance thereon, whether or not notation of such action is made upon such Trust Security. Without limiting the foregoing, a Securityholder entitled hereunder to take any action hereunder with regard to any particular Trust Security may do so with regard to all or any part of the Liquidation Amount of such Trust Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all 28 or any part of such Liquidation Amount. A Holder of Preferred Securities may institute a legal proceeding directly against the Depositor under the Guarantee to enforce its rights under the Guarantee without first instituting a legal proceeding against the Guarantee Trustee (as defined in the Guarantee), the Trust or any Person. 6.09 INSPECTION OF RECORDS. Upon reasonable notice to the Administrative Trustees and the Property Trustee, the records of the Trust shall be open to inspection by Securityholders during normal business hours for any purpose reasonably related to such Securityholder's interest as a Securityholder. ARTICLE VII REPRESENTATIONS AND WARRANTIES 7.01 REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY AND THE PROPERTY TRUSTEE. The Trust Company, in its separate corporate capacity and as Property Trustee, as of the date hereof, and each successor Property Trustee at the time of the successor Property Trustee's acceptance of its appointment as Property Trustee hereunder (the term "Trust Company" being used hereafter in this Article VII to refer to such successor Property Trustee in its separate corporate capacity and as Property Trustee), hereby represents and warrants (as applicable) for the benefit of the Depositor and the Securityholders that: (a) the Trust Company is a Delaware banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (b) the Trust Company has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement; (c) this Trust Agreement has been duly authorized, executed and delivered by the Trust Company and constitutes the valid and legally binding agreement of the Trust Company enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (d) the execution, delivery and performance by the Trust Company of this Trust Agreement has been duly authorized by all necessary corporate or other action on the part of the Trust Company and does not require any approval of the stockholders of the Trust Company and such execution, delivery and performance will not (i) violate the Trust Company's charter or by-laws, (ii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of, any Lien on any properties included in the Trust Property pursuant to the provisions of, any indenture, mortgage, credit agreement, license or other agreement or instrument to which the Trust Company is a party or by which it is bound, or (iii) violate any law, governmental rule or regulation of the United States or the State of Delaware as the case may be, governing the banking or trust powers of the Trust Company, or any order, judgment or decree applicable to the Trust Company; 29 (e) neither the authorization, execution or delivery by the Trust Company of this Trust Agreement nor the consummation of any of the transactions by the Trust Company contemplated herein or therein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to, any governmental authority or agency under any existing law of the United States or the State of Delaware governing the banking or trust powers of the Trust Company; and (f) there are no proceedings pending or, to the best of the Trust Company's knowledge, threatened against or affecting the Trust Company in any court or before any governmental authority, agency or arbitration board or tribunal which, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Trust Company to enter into or perform its obligations as one of the Trustees under this Trust Agreement. 7.02 REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY AND THE DELAWARE TRUSTEE. The Trust Company in its corporate capacity and as Delaware Trustee, as of the date hereof, and each successor Delaware Trustee at the time of the successor Delaware Trustee's acceptance of its appointment as Delaware Trustee hereunder (the term "Trust Company" being used hereafter in this Article VIII to refer to such successor Delaware Trustee in its separate corporate capacity and as Delaware Trustee), hereby represents and warrants (as applicable) for the benefit of the Depositor and the Securityholders that: (a) the Trust Company is a Delaware banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (b) the Trust Company has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement; (c) this Trust Agreement has been duly authorized, executed and delivered by the Trust Company and constitutes the valid and legally binding agreement of the Trust Company enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (d) the execution, delivery and performance by the Trust Company of this Trust Agreement has been duly authorized by all necessary corporate or other action on the part of the Trust Company and does not require any approval of the stockholders of the Trust Company and such execution, delivery and performance will not (i) violate the Trust Company's charter or by-laws, (ii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of, any Lien on any properties included in the Trust Property pursuant to the provisions of, any indenture, mortgage, credit agreement, license or other agreement or instrument to which the Trust Company is a party or by which it is bound, or (iii) violate any law, governmental rule or regulation of the United States or the State of Delaware, as the case may be, governing the banking or trust powers of the Trust Company, or any order, judgment or decree applicable to the Trust Company; 30 (e) neither the authorization, execution or delivery by the Trust Company of this Trust Agreement nor the consummation of any of the transactions by the Trust Company contemplated herein or therein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to, any governmental authority or agency under any existing law of the State of Delaware governing the banking or trust powers of the Trust Company; and (f) there are no proceedings pending or, to the best of the Trust Company's knowledge, threatened against or affecting the Trust Company in any court or before any governmental authority, agency or arbitration board or tribunal which, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Trust Company to enter into or perform its obligations as one of the Trustees under this Trust Agreement. 7.03 REPRESENTATION AND WARRANTIES OF DEPOSITOR. The Depositor hereby represents and warrants for the benefit of the Securityholders that: (a) the Trust Securities Certificates issued on the Closing Date or the Option Closing Date, if applicable, on behalf of the Trust have been duly authorized and will have been duly and validly executed, issued and delivered by the Administrative Trustees pursuant to the terms and provisions of, and in accordance with the requirements of, this Trust Agreement and the Securityholders will be, as of such date, entitled to the benefits of this Trust Agreement; and (b) there are no taxes, fees or other governmental charges payable by the Trust (or the Trustees on behalf of the Trust) under the laws of the State of Delaware or any political subdivision thereof in connection with the execution, delivery and performance by the Trust Company, the Property Trustee, the Trust Company or the Delaware Trustee, as the case may be, of this Trust Agreement. ARTICLE VIII THE TRUSTEES 8.01 CERTAIN DUTIES AND RESPONSIBILITIES. (a) The duties and responsibilities of the Trustees shall be as provided by this Trust Agreement and, in the case of the Property Trustee, by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Trust Agreement shall require the Trustees to expend or risk their own funds or otherwise incur any financial liability in the performance of any of their duties hereunder, or in the exercise of any of their rights or powers, if they shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. No Administrative Trustee nor the Delaware Trustee shall be liable for such Trustee's acts or omissions hereunder except as a result of such Trustee's own gross negligence or willful misconduct. The Property Trustee's liability shall be determined under the Trust Indenture Act. Whether or not therein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section. To the extent 31 that, at law or in equity, the Delaware Trustee or an Administrative Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to the Securityholders, the Delaware Trustee or such Administrative Trustee shall not be liable to the Trust or to any Securityholder for such Trustee's good faith reliance on the provisions of this Trust Agreement. The provisions of this Trust Agreement, to the extent that they restrict the duties and liabilities of the Delaware Trustee or the Administrative Trustees otherwise existing at law or in equity, are agreed by the Depositor and the Securityholders to replace such other duties and liabilities of the Delaware Trustee and the Administrative Trustees. (b) All payments made by the Property Trustee or a Paying Agent in respect of the Trust Securities shall be made only from the revenue and proceeds from the Trust Property and only to the extent that there shall be sufficient revenue or proceeds from the Trust Property to enable the Property Trustee or a Paying Agent to make payments in accordance with the terms hereof. Each Securityholder, by such Securityholder's acceptance of a Trust Security, agrees that such Securityholder will look solely to the revenue and proceeds from the Trust Property to the extent legally available for distribution to such Securityholder as herein provided and that the Trustees are not personally liable to such Securityholder for any amount distributable in respect of any Trust Security or for any other liability in respect of any Trust Security. This Section 8.01(b) does not limit the liability of the Trustees expressly set forth elsewhere in this Trust Agreement or, in the case of the Property Trustee, in the Trust Indenture Act. (c) No provision of this Trust Agreement shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) the Property Trustee shall not be liable for any error of judgment made in good faith by an authorized officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts; (ii) the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in Liquidation Amount of the Trust Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Trust Agreement; (iii) the Property Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Junior Subordinated Debentures and the Payment Account shall be to deal with such Property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Trust Agreement and the Trust Indenture Act; (iv) the Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree with the Depositor and 32 money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Payment Account maintained by the Property Trustee pursuant to Section 3.01 and except to the extent otherwise required by law; and (v) the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Depositor with their respective duties under this Trust Agreement, nor shall the Property Trustee be liable for the negligence, default or misconduct of the Administrative Trustees or the Depositor. 8.02 CERTAIN NOTICES. (a) Within five Business Days after the Property Trustee learns of occurrence of any Event of Default, the Property Trustee shall transmit, in the manner and to the extent provided in Section 10.08, notice of such Event of Default to the Securityholders, the Administrative Trustees and the Depositor, unless such Event of Default shall have been cured or waived prior to the sending of such notice. For purposes of this Section the term "Event of Default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. (b) The Administrative Trustees shall transmit, to the Securityholders in the manner and to the extent provided in Section 10.08, notice of the Depositor's election to begin or further extend an Extension Period on the Junior Subordinated Debentures (unless such election shall have been revoked) within the time specified for transmitting such notice to the holders of the Junior Subordinated Debentures pursuant to the Indenture as originally executed. (c) In the event the Depositor elects to accelerate the Maturity Date in accordance with Section 2.02 of the Indenture, the Property Trustee shall give notice to each Holder of Trust Securities of the acceleration of the Maturity Date and the Accelerated Maturity Date not later than five Business Days after the Property Trustee receives the notice provided in Section 2.02(c) of the Indenture. 8.03 CERTAIN RIGHTS OF PROPERTY TRUSTEE. Subject to the provisions of Section 8.01: (a) the Property Trustee may rely and shall be protected in acting or refraining from acting in good faith upon any resolution, Opinion of Counsel, certificate, written representation of a Holder or transferee, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) if (i) in performing its duties under this Trust Agreement the Property Trustee is required to decide between alternative courses of action or (ii) in construing any of the provisions of this Trust Agreement the Property Trustee finds the same ambiguous or inconsistent with other provisions contained herein or (iii) the Property Trustee is unsure of the application of any provision of this Trust Agreement, then, 33 except as to any matter as to which the Holders of the Preferred Securities are entitled to vote under the terms of this Trust Agreement, the Property Trustee shall deliver a notice to the Depositor requesting written instructions of the Depositor as to the course of action to be taken and the Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by the Depositor; provided, however, that if the Property Trustee does not receive such instructions of the Depositor within 10 Business Days after it has delivered such notice, or such reasonably shorter period of time set forth in such notice (which to the extent practicable shall not be less than two Business Days), it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Trust Agreement as it shall deem advisable and in the best interests of the Securityholders, in which event the Property Trustee shall have no liability except for its own bad faith, negligence or willful misconduct; (c) any direction or act of the Depositor or the Administrative Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by an Officers' Certificate; (d) whenever in the administration of this Trust Agreement, the Property Trustee shall deem it desirable that a matter be established before undertaking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officer's Certificate which, upon receipt of such request, shall be promptly delivered by the Depositor or the Administrative Trustees; (e) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any re-recording, re-filing or re-registration thereof; (f) the Property Trustee may consult with counsel of its choice and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon and in accordance with such advice (such counsel may be counsel to the Depositor or any of its Affiliates, and may include any of its employees); the Property Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Agreement from any court of competent jurisdiction; (g) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Securityholders pursuant to this Trust Agreement, unless such Securityholders shall have offered to the Property Trustee such reasonable security or indemnity as the Property Trustee may request against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (h) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other evidence of indebtedness or other paper or document, unless requested in writing to do so by one 34 or more Securityholders, but the Property Trustee may make such further inquiry or investigation into such facts or matters as it may see fit; (i) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, provided that the Property Trustee shall be responsible for its own negligence or recklessness with respect to selection of any agent or attorney appointed by it hereunder; (j) whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Property Trustee (i) may request instructions from the Holders of the Trust Securities which instructions may only be given by the Holders of the same proportion in Liquidation Amount of the Trust Securities as would be entitled to direct the Property Trustee under the terms of the Trust Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in acting in accordance with such instructions; and (k) except as otherwise expressly provided by this Trust Agreement, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Trust Agreement. No provision of this Trust Agreement shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Property Trustee shall be construed to be a duty. 8.04 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The recitals contained herein and in the Trust Securities Certificates shall be taken as the statements of the Trust, and the Trustees do not assume any responsibility for their correctness. The Trustees (as such) shall not be accountable for the use or application by the Depositor of the proceeds of the Junior Subordinated Debentures. 8.05 MAY HOLD SECURITIES. Any Trustee or any other agent of any Trustee or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and, subject to Sections 8.08 and 8.13 and except as provided in the definition of the term "Outstanding" in Article I, may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent. 8.06 COMPENSATION; INDEMNITY; FEES. The Depositor agrees: (a) to pay to the Trustees from time to time reasonable compensation for all services rendered by them hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Trustees upon request for all reasonable expenses, disbursements and advances incurred or made 35 by the Trustees in accordance with any provision of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to such Trustee's negligence, bad faith or willful misconduct (or, in the case of the Administrative Trustees or the Delaware Trustee, any such expense, disbursement or advance as may be attributable to its, his or her gross negligence, bad faith or willful misconduct); and (c) to the fullest extent permitted by applicable law, to indemnify and hold harmless (i) each Trustee and any predecessor Trustee, (ii) any Affiliate of any Trustee, (iii) any officer, director, shareholder, employee, representative or agent of any Trustee, and (iv) any employee or agent of the Trust (referred to as an "Indemnified Person") from and against, any loss, damage, liability, tax, penalty, expense or claim of any kind or nature whatsoever incurred by such Indemnified Person arising out of or in connection with the creation, operation or dissolution of the Trust or any act or omission performed or omitted by such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by this Trust Agreement, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of gross negligence, bad faith or willful misconduct with respect to such acts or omissions (or, in the case of the Property Trustee, by reason of negligence, bad faith or willful misconduct with respect to such acts or omissions). The provisions of this Section 8.06 shall survive the termination of this Trust Agreement and the resignation or removal of the Property Trustee or the Delaware Trustee, as the case may be. The Depositor and any Trustee may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of Trust Securities shall have no rights by virtue of the Trust Agreement in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. Neither the Depositor nor any Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and the Depositor or any Trustee shall have the right to take for its own account (individually or as a partner of fiduciary) or to recommend to others any such particular investment or other opportunity. Any Trustee may engage or be interested in any financial or other transaction with the Depositor or any Affiliate of the Depositor, or may act as depository for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Depositor or its Affiliates. No Trustee may claim any Lien on any Trust Property as a result of any amount due pursuant to this Section 8.06. 8.07 CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES. 36 (a) There shall at all times be a Property Trustee hereunder with respect to the Trust Securities. The Property Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50 million. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Property Trustee with respect to the Trust Securities shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. (b) There shall at all times be one or more Administrative Trustees hereunder with respect to the Trust Securities. Each Administrative Trustee shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more persons authorized to bind that entity. (c) There shall at all times be a Delaware Trustee with respect to the Trust Securities. The Delaware Trustee shall either be (i) a natural person who is at least 21 years of age and a resident of the State of Delaware or (ii) a legal entity with its principal place of business in the State of Delaware and that otherwise meets the requirements of applicable Delaware law that shall act through one or more persons authorized to bind such entity. 8.08 CONFLICTING INTERESTS. If the Property Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Property Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Trust Agreement. 8.09 CO-TRUSTEES AND SEPARATE TRUSTEE. Unless an Event of Default shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the Trust Property may at the time be located, the Depositor and the Administrative Trustees shall have power to appoint, and upon the written request of the Property Trustee, the Depositor and the Administrative Trustees shall for such purpose join with the Property Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Property Trustee either to act as co-trustee, jointly with the Property Trustee, of all or any part of such Trust Property, or to the extent required by law to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Depositor and the Administrative Trustees do not join in such appointment within 15 days after the receipt by them of a request so to do, or in case a Debenture Event of Default has occurred and is continuing, the Property Trustee alone shall have power to make such appointment. Any co-trustee or separate trustee appointed pursuant to this Section shall either be (i) a natural person who is at least 21 years of age and a resident of the United States or (ii) a legal entity with its principal place of business in the United States that shall act through one or more persons authorized to bind such entity. 37 Should any written instrument from the Depositor be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right, or power, any and all such instruments shall, on request, be executed, acknowledged, and delivered by the Depositor. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (a) The Trust Securities shall be executed and delivered and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustees specified hereunder, shall be exercised, solely by such Trustees and not by such co-trustee or separate trustee. (b) The rights, powers, duties and obligations hereby conferred or imposed upon the Property Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Property Trustee or by the Property Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Property Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee. (c) The Property Trustee at any time, by an instrument in writing executed by it, with the written concurrence of the Depositor, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section, and, in case a Debenture Event of Default has occurred and is continuing, the Property Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Depositor. Upon the written request of the Property Trustee, the Depositor shall join with the Property Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section 8.09. (d) No co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Property Trustee or any other trustee hereunder. (e) The Property Trustee shall not be liable by reason of any act of a co-trustee or separate trustee. (f) Any Act of Holders delivered to the Property Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee. 8.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. No resignation or removal of any Trustee (the "Relevant Trustee") and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of 38 appointment by the successor Trustee in accordance with the applicable requirements of Section 8.11. Subject to the immediately preceding paragraph, the Relevant Trustee may resign at any time by giving written notice thereof to the Securityholders. If the instrument of acceptance by the successor Trustee required by Section 8.11 shall not have been delivered to the Relevant Trustee within 30 days after the giving of such notice of resignation, the Relevant Trustee may petition, at the expense of the Depositor, any court of competent jurisdiction for the appointment of a successor Relevant Trustee. Unless a Debenture Event of Default shall have occurred and be continuing, any Trustee may be removed at any time by Act of the Holder of the Common Securities. If a Debenture Event of Default shall have occurred and be continuing, the Property Trustee or the Delaware Trustee, or both of them, may be removed at such time by Act of the Holders of a majority in Liquidation Amount of the Preferred Securities, delivered to such Relevant Trustee (in its individual capacity and on behalf of the Trust). An Administrative Trustee may be removed by the Holder of the Common Securities at any time. In no event will the Holders of the Preferred Securities have the right to vote to appoint, remove or replace the Administrative Trustees. If the Relevant Trustee shall resign, be removed or become incapable of acting as Trustee, or if a vacancy shall occur in the office of such Relevant Trustee for any cause, at a time when no Debenture Event of Default shall have occurred and be continuing, the Holder of the Common Securities, by Act of the Holder of the Common Securities delivered to the retiring Relevant Trustee, shall promptly appoint a successor Trustee or Trustees with respect to the Trust Securities and the Trust, and the successor Trustee shall comply with the applicable requirements of Section 8.11. If the Property Trustee or the Delaware Trustee shall resign, be removed or become incapable of continuing to act as the Property Trustee or the Delaware Trustee, as the case may be, at a time when a Debenture Event of Default shall have occurred and is continuing, the Holders of the Preferred Securities by Act of the Holders of a majority in Liquidation Amount of the Preferred Securities then Outstanding delivered to the retiring Relevant Trustee, shall promptly appoint a successor Trustee or Trustees, and such successor Trustee shall comply with the applicable requirements of Section 8.11. If an Administrative Trustee shall resign, be removed or become incapable of acting as Administrative Trustee, at a time when a Debenture Event of Default shall have occurred and be continuing, the Holder of the Common Securities, by Act of the Holder of the Common Securities delivered to an Administrative Trustee, shall promptly appoint a successor Administrative Trustee or Administrative Trustees, and such successor Administrative Trustee or Administrative Trustees shall comply with the applicable requirements of Section 8.11. If no successor Trustee with respect to the Trust Securities shall have been so appointed by the Holder of the Common Securities or the Holders of the Preferred Securities, as the case may be, and accepted appointment in the manner required by Section 8.11, any Securityholder who has been a Securityholder for at least six months may, on behalf of such Securityholder and all others similarly situated, petition a court of competent jurisdiction for the appointment of a successor Trustee. The Property Trustee shall give notice of each resignation and each removal of a Relevant Trustee and each appointment of a successor Trustee to all Securityholders in the 39 manner provided in Section 10.08 and shall give notice to the Depositor. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust office if it is the Property Trustee. Subject to the foregoing or any other provision of this Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee who is a natural person dies or becomes, in the opinion of the Depositor, incompetent or incapacitated, the vacancy created by such death, incompetence or incapacity may be filled by (a) the unanimous act of the remaining Administrative Trustees if there are at least two of them or (b) otherwise by the Depositor (with the successor in each case being a Person who satisfies the eligibility requirement for Administrative Trustees or the Delaware Trustee, as the case may be, set forth in Section 8.07). 8.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. In case of the appointment hereunder of a successor Trustee, the retiring Relevant Trustee and each successor Trustee shall execute and deliver an instrument wherein each successor Trustee shall accept such appointment and which shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Trust Securities and the Trust, and upon the execution and delivery of such instrument, the resignation or removal of the retiring Relevant Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Trust Securities and the Trust; but, on request of the Trust or any successor Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver to such successor Trustee all Trust Property, all proceeds thereof and money held by such retiring Relevant Trustee hereunder with respect to the Trust Securities and the Trust. Upon request of any such successor Trustee, the Trust shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the immediately preceding paragraph, as the case may be. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. 8.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any Person into which a Trustee that is not a natural person may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Relevant Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of such Relevant Trustee, shall be the successor of such Relevant Trustee hereunder, provided such Person shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. 8.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST. If and when the Property Trustee shall be or become a creditor of the Depositor or the Trust (or any other obligor upon the Junior Subordinated Debentures or the Trust Securities), the Property Trustee shall be subject to and shall take all actions necessary in order to comply with the provisions of the Trust Indenture Act regarding the collection of claims against the Depositor or Trust (or any such other obligor). 8.14 REPORTS BY PROPERTY TRUSTEE. 40 (a) Not later than July 31 of each year commencing with July 31, 2001, the Property Trustee shall transmit to all Securityholders in accordance with Section 10.08, and to the Depositor, a brief report dated as of the preceding December 31 with respect to: (i) its eligibility under Section 8.07 or, in lieu thereof, if to the best of its knowledge it has continued to be eligible under said Section, a written statement to such effect; and (ii) any change in the property and funds in its possession as Property Trustee since the date of its last report and any action taken by the Property Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Trust Securities. (b) In addition the Property Trustee shall transmit to Securityholders such reports concerning the Property Trustee and its actions under this Trust Agreement as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. (c) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Property Trustee with each national securities exchange or other organization upon which the Trust Securities may be listed, with the Commission and with the Depositor. 8.15 REPORTS TO THE PROPERTY TRUSTEE. The Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act (if any) and the compliance certificate required by Section 314(a) of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. 8.16 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. Each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with the conditions precedent, if any, provided for in this Trust Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers' Certificate. 8.17 NUMBER OF TRUSTEES. (a) The number of Trustees shall be four, provided that the Holder of the Common Securities by written instrument may increase or decrease the number of Administrative Trustees. The Property Trustee and the Delaware Trustee may be the same Person. (b) If a Trustee ceases to hold office for any reason and the number of Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall occur. The vacancy shall be filled with a Trustee appointed in accordance with Section 8.10. 41 (c) The death, resignation, retirement, removal, bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 8.10, the Administrative Trustees in office, regardless of their number (and notwithstanding any other provision of this Agreement), shall have all the powers granted to the Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Trust Agreement. 8.18 DELEGATION OF POWER. (a) Any Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 2.07(a)(i); and (b) The Administrative Trustees shall have power to delegate from time to time to such of their number or to the Depositor the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. 8.19 VOTING. Except as otherwise provided in this Trust Agreement, the consent or approval of the Administrative Trustees shall require consent or approval by not less than a majority of the Administrative Trustees, unless there are only two, in which case both must consent. 8.20 MAINTENANCE OF LISTING. The Administrative Trustees shall use their best efforts to maintain the listing of the Preferred Securities on The American Stock Exchange LLC or another national exchange or the National Market System of The Nasdaq Stock Market for so long as the Preferred Securities are issued and outstanding; provided, however, that any redemption of the Trust Securities, in whole or in part, effected in accordance with the provisions of this Trust Agreement shall not cause or result in a violation of this Section 8.20. ARTICLE IX DISSOLUTION, LIQUIDATION AND MERGER 9.01 DISSOLUTION UPON EXPIRATION DATE. Unless earlier dissolved, the Trust shall automatically dissolve on _______________, 2035 (the "Expiration Date"), and thereafter the Trust Property shall be distributed in accordance with Section 9.04. 9.02 EARLY DISSOLUTION. The first to occur of any of the following events is an "Early Termination Event," upon the occurrence of which the Trust shall dissolve: (a) the occurrence of a Bankruptcy Event in respect of, or the dissolution or liquidation of, the Depositor; 42 (b) delivery of written direction to the Property Trustee by the Depositor at any time (which direction is wholly optional and within the discretion of the Depositor) to dissolve the Trust and distribute the Junior Subordinated Debentures to Securityholders in exchange for the Preferred Securities in accordance with Section 9.04; (c) the redemption of all of the Preferred Securities in connection with the redemption of all of the Junior Subordinated Debentures; and (d) an order for dissolution of the Trust shall have been entered by a court of competent jurisdiction. 9.03 TERMINATION. The respective obligations and responsibilities of the Trustees and the Trust created and continued hereby shall terminate upon the latest to occur of the following: (a) the distribution by the Property Trustee to Securityholders upon the liquidation of the Trust pursuant to Section 9.04, or upon the redemption of all of the Trust Securities pursuant to Section 4.02, of all amounts required to be distributed hereunder upon the final payment of the Trust Securities; (b) the payment of any expenses owed by the Trust; (c) the discharge of all administrative duties of the Administrative Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Securityholders, and (d) the filing of a certificate of cancellation of the Certificate of Trust by the Administrative Trustee under the Delaware Business Trust Act. 9.04 LIQUIDATION. (a) If an Early Termination Event specified in clause (a), (b), or (d) of Section 9.02 occurs or upon the Expiration Date, the Trust shall be liquidated by the Trustees as expeditiously as the Trustees determine to be possible by distributing, after satisfaction of liabilities to creditors of the Trust as provided by Section 3808(e) of the Delaware Business Trust Act and any other applicable law, to each Securityholder a Like Amount of Junior Subordinated Debentures, subject to Section 9.04(d). Notice of liquidation shall be given by the Property Trustee by first-class mail, postage prepaid, mailed not later than 30 nor more than 60 days prior to the Liquidation Date to each Holder of Trust Securities at such Holder's address appearing in the Securities Register. All notices of liquidation shall: (i) state the Liquidation Date; (ii) state that from and after the Liquidation Date, the Trust Securities will no longer be deemed to be Outstanding and any Trust Securities Certificates not surrendered for exchange will be deemed to represent a Like Amount of Junior Subordinated Debentures; and 43 (iii) provide such information with respect to the mechanics by which Holders may exchange Trust Securities certificates for Junior Subordinated Debentures, or if Section 9.04(d) applies receive a Liquidation Distribution, as the Administrative Trustees or the Property Trustee shall deem appropriate. (b) Except where Section 9.02(c) or 9.04(d) applies, in order to effect the liquidation of the Trust and distribution of the Junior Subordinated Debentures to Securityholders, the Property Trustee shall establish a record date for such distribution (which shall be not more than 45 days prior to the Liquidation Date) and, either itself acting as exchange agent or through the appointment of a separate exchange agent, shall establish such procedures as it shall deem appropriate to effect the distribution of Junior Subordinated Debentures in exchange for the Outstanding Trust Securities Certificates. (c) Except where Section 9.02(c) or 9.04(d) applies, after the Liquidation Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii) certificates (or, at the election of the Depositor a Global Subordinated Debenture, subject to the provisions of the Indenture) representing a Like Amount of Junior Subordinated Debentures will be issued to Holders of Trust Securities Certificates upon surrender of such certificates to the Administrative Trustees or their agent for exchange, (iii) the Depositor shall use its reasonable efforts to have the Junior Subordinated Debentures listed on the American Stock Exchange or on such other securities exchange or other organization as the Preferred Securities may then be listed or traded, (iv) any Trust Securities Certificates not so surrendered for exchange will be deemed to represent a Like Amount of Junior Subordinated Debentures, accruing interest at the rate provided for in the Junior Subordinated Debentures from the last Distribution Date on which a Distribution was made on such Trust Securities Certificates until such certificates are so surrendered (and until such certificates are so surrendered, no payments of interest or principal will be made to Holders of Trust Securities Certificates with respect to such Junior Subordinated Debentures) and (v) all rights of Securityholders holding Trust Securities will cease, except the right of such Securityholders to receive Junior Subordinated Debentures upon surrender of Trust Securities Certificates. (d) In the event that, notwithstanding the other provisions of this Section 9.04, whether because of an order for dissolution entered by a court of competent jurisdiction or otherwise, distribution of the Junior Subordinated Debentures in the manner provided herein is determined by the Property Trustee not to be practical, the Trust shall be dissolved and the Trust Property shall be liquidated by the Property Trustee in such manner as the Property Trustee determines. In such event, on the date of the dissolution of the Trust, Securityholders will be entitled to receive out of the assets of the Trust available for distribution to Securityholders, after satisfaction of liabilities to creditors of the Trust as provided by Section 3808(e) of the Delaware Business Trust Act and any other applicable law, an amount equal to the Liquidation Amount per Trust Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). If, upon any such dissolution, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then, subject to the next succeeding sentence, the amounts payable by the Trust on the Trust Securities shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common Securities will be entitled to receive Liquidation Distributions upon any such dissolution, pro 44 rata (determined as aforesaid) with Holders of Preferred Securities, except that, if a Debenture Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities with respect to any distributions. 9.05 MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST. The Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other Person, except pursuant to this Section 9.05. At the request of the Depositor, with the consent of the Administrative Trustees and without the consent of the Holders of the Preferred Securities, the Property Trustee or the Delaware Trustee, the Trust may merge with or into, consolidate, amalgamate, be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of any state; provided, that (i) such successor entity either (a) expressly assumes all of the obligations of the Trust with respect to the Preferred Securities or (b) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Preferred Securities rank in priority with respect to distributions and payments upon liquidation, redemption and otherwise, (ii) the Depositor expressly appoints a trustee of such successor entity possessing substantially the same powers and duties as the Property Trustee as the holder of the Junior Subordinated Debentures, (iii) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Preferred Securities (including any Successor Securities) in any material respect, (iv) such successor entity has a purpose identical to that of the Trust, (v) the Successor Securities will be listed or traded on any national securities exchange or other organization on which the Preferred Securities may then be listed, (vi) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Depositor has received an Opinion of Counsel experienced in such matters to the effect that (a) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Preferred Securities (including any Successor Securities) in any material respect, and (b) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor such successor entity will be required to register as an "investment company" under the Investment Company Act and (vii) the Depositor owns all of the Common Securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the consent of Holders of 100% in Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to any other Person or permit any other Person to consolidate, amalgamate, merge with or into, or replace it, if such consolidation, amalgamation, merger or replacement would cause the Trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes. 45 ARTICLE X MISCELLANEOUS PROVISIONS 10.01 LIMITATION OF RIGHTS OF SECURITYHOLDERS. The death or incapacity of any Person having an interest, beneficial or otherwise, in Trust Securities shall not operate to terminate this Trust Agreement, nor entitle the legal representatives or heirs of such Person, to claim an accounting, take any action or bring any proceeding in any court for a partition or winding-up of the arrangements contemplated hereby, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them. 10.02 AMENDMENT. (a) This Trust Agreement may be amended from time to time by the Trustees and the Depositor, without the consent of any Securityholders, (i) as provided in Section 8.11 with respect to acceptance of appointment by a successor Trustee, (ii) to cure any ambiguity, correct or supplement any provision herein or therein which may be inconsistent with any other provision herein or therein, or to make any other provisions with respect to matters or questions arising under this Trust Agreement, that shall not be inconsistent with the other provisions of this Trust Agreement, or (iii) to modify, eliminate or add to any provisions of this Trust Agreement to such extent as shall be necessary to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any Trust Securities are Outstanding or to ensure that the Trust will not be required to register as an "investment company" under the Investment Company Act; provided, however, that in the case of clause (ii), such action shall not adversely affect in any material respect the interests of any Securityholder, and any amendments of this Trust Agreement shall become effective when notice thereof is given to the Securityholders. (b) Except as provided in Section 6.01(c) or Section 10.02(c) hereof, any provision of this Trust Agreement may be amended by the Trustees and the Depositor (i) with the consent of Securityholders representing not less than a majority (based upon Liquidation Amounts) of the Trust Securities then Outstanding and (ii) upon receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States federal income tax purposes or the Trust's exemption from status of an "investment company" under the Investment Company Act. (c) In addition to and notwithstanding any other provision in this Trust Agreement, without the consent of each affected Securityholder (such consent being obtained in accordance with Section 6.03 or 6.06 hereof), this Trust Agreement may not be amended to (i) change the amount or timing of any distribution on the Trust Securities or otherwise adversely affect the amount of any distribution required to be made in respect of the Trust Securities as of a specified date or (ii) restrict the right of a Securityholder to institute suit for the enforcement of any such payment on or after such date; notwithstanding any other provision herein, without the unanimous consent of the Securityholders (such consent being obtained in accordance with Section 6.03 or 6.06 hereof), this paragraph (c) of this Section 10.02 may not be amended. 46 (d) Notwithstanding any other provisions of this Trust Agreement, no Trustee shall enter into or consent to any amendment to this Trust Agreement which would cause the Trust to fail or cease to qualify for the exemption from status of an "investment company" under the Investment Company Act or to fail or cease to be classified as a grantor trust for United States federal income tax purposes. (e) Notwithstanding anything in this Trust Agreement to the contrary, without the consent of the Depositor, this Trust Agreement may not be amended in a manner which imposes any additional obligation on the Depositor. (f) In the event that any amendment to this Trust Agreement is made, the Administrative Trustees shall promptly provide to the Depositor a copy of such amendment. (g) Neither the Property Trustee nor the Delaware Trustee shall be required to enter into any amendment to this Trust Agreement which affects its own rights, duties or immunities under this Trust Agreement. The Property Trustee shall be entitled to receive an Opinion of Counsel and an Officers' Certificate stating that any amendment to this Trust Agreement is in compliance with this Trust Agreement. 10.03 SEPARABILITY. In case any provision in this Trust Agreement or in the Trust Securities Certificates shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 10.04 GOVERNING LAW. THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES). 10.05 PAYMENTS DUE ON NON-BUSINESS DAY. If the date fixed for any payment on any Trust Security shall be a day that is not a Business Day, then such payment need not be made on such date but may be made on the next succeeding day which is a Business Day (except as otherwise provided in Sections 4.01(a) and 4.02(d)), with the same force and effect as though made on the date fixed for such payment, and no Distribution shall accumulate thereon for the period after such date. 10.06 SUCCESSORS. This Trust Agreement shall be binding upon and shall inure to the benefit of any successor to the Depositor, the Trust or the Relevant Trustee(s), including any successor by operation of law. Except in connection with a consolidation, merger or sale involving the Depositor that is permitted under Article Twelve of the Indenture and pursuant to which the assignee agrees in writing to perform the Depositor's obligations hereunder, the Depositor shall not assign its obligations hereunder. 10.07 HEADINGS. The Article and Section headings are for convenience only and shall not affect the construction of this Trust Agreement. 47 10.08 REPORTS, NOTICES AND DEMANDS. Any report, notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon any Securityholder or the Depositor may be given or served in writing by deposit thereof, first-class postage prepaid, in the United States mail, hand delivery or facsimile transmission, in each case, addressed, (a) in the case of a Holder of Preferred Securities, to such Securityholder as such Securityholder's name and address may appear on the Securities Register; and (b) in the case of the Holder of the Common Securities or the Depositor, to Blue Valley Ban Corp., 11935 Riley, Overland Park, KS 66225-6128, Attention: Chief Executive Officer; Facsimile No.: (913) 338-2801. Any notice to the Holders of the Preferred Securities shall also be given to such Owners as have, within two years preceding the giving of such notice, filed their names and addresses with the Property Trustee for that purpose. Such notice, demand or other communication to or upon a Securityholder shall be deemed to have been sufficiently given or made, for all purposes, upon hand delivery, mailing or transmission. Any notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon the Trust, the Property Trustee or the Administrative Trustees shall be given in writing addressed (until another address is published by the Trust) as follows: (a) with respect to the Property Trustee to 1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration; (b) with respect to the Delaware Trustee, to 1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration; and (c) with respect to the Administrative Trustees, to them at the address above for notices to the Depositor, marked "Attention: Administrative Trustees of BVBC Capital Trust I." Such notice, demand or other communication to or upon the Trust or the Property Trustee shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by the Trust or the Property Trustee. 10.09 AGREEMENT NOT TO PETITION. Each of the Trustees and the Depositor agree for the benefit of the Securityholders that, until at least one year and one day after the Trust has been terminated in accordance with Article IX, they shall not file, or join in the filing of, a petition against the Trust under any bankruptcy, insolvency, reorganization or other similar law (including, without limitation, the United States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. In the event the Depositor takes action in violation of this Section 10.09, the Property Trustee agrees, for the benefit of Securityholders, that at the expense of the Depositor (which expense shall be paid prior to the filing), it shall file an answer with the bankruptcy court or otherwise properly contest the filing of such petition by the Depositor against the Trust or the commencement of such action and raise the defense that the Depositor has agreed in writing not to take such action and should be stopped and precluded therefrom. The provisions of this Section 10.09 shall survive the termination of this Trust Agreement. 48 10.10 TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT. (a) This Trust Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Trust Agreement and shall, to the extent applicable, be governed by such provisions. (b) The Property Trustee shall be the only Trustee which is a trustee for the purposes of the Trust Indenture Act. (c) If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Trust Agreement by any of the provisions of the Trust Indenture Act, such required provision shall control. If any provision of this Trust Agreement modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Trust Agreement as so modified or to be excluded, as the case may be. (d) The application of the Trust Indenture Act to this Trust Agreement shall not affect the nature of the Trust Securities as equity securities representing undivided beneficial interests in the assets of the Trust. 10.11 ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND INDENTURE. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS. 10.12 COUNTERPARTS. This Trust Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, and all of which counterparts together shall constitute one and the same agreement. 10.13 EXCHANGE ACT OBLIGATIONS. For so long as the Trust Securities shall remain Outstanding, Depositor shall fulfill all reporting and filing obligations under the Securities Exchange Act of 1934, as amended, as applicable to companies having a class of securities registered under Section 12(b) or 12(g) thereunder. 49 BLUE VALLEY BAN CORP., as Depositor By: ______________________________________ Robert D. Regnier Chief Executive Officer WILMINGTON TRUST COMPANY, as Property Trustee By: ______________________________________ Name: ____________________________________ Title: ___________________________________ WILMINGTON TRUST COMPANY, as Delaware Trustee By: ______________________________________ Name: ____________________________________ Title: ___________________________________ __________________________________________ Robert D. Regnier, as Administrative Trustee __________________________________________ Mark A. Fortino, as Administrative Trustee 50 EXHIBIT A CERTIFICATE OF TRUST OF BVBC CAPITAL TRUST I THIS CERTIFICATE OF TRUST OF BVBC CAPITAL TRUST I (the "Trust"), dated as of March 30, 2000, is being duly executed and filed by WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Delaware trustee, and Robert D. Regnier and Mark A. Fortino, each an individual, as administrative trustees, to form a business trust under the Delaware Business Trust Act (12 Del. C. ss.ss. 3801 et seq.) 1. NAME. The name of the business trust formed hereby is BVBC Capital Trust I. 2. DELAWARE TRUSTEE. The name and business address of the trustee of the Trust in the State of Delaware are Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, New Castle County, Delaware 19890-0001, Attention: Corporate Trust Administration. 3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon the date and timing of filing. 4. COUNTERPARTS. This Certificate of Trust may be executed in one or more counterparts. IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust, have executed this Certificate of Trust as of the date first above written. WILMINGTON TRUST COMPANY, as Delaware trustee ___________________________________________ Name: Kathleen A. Pedelini Title: Administrative Account Manager ___________________________________________ Robert D. Regnier, Administrative Trustee ___________________________________________ Mark A. Fortino, Administrative Trustee 51 EXHIBIT B FORM OF CERTIFICATE DEPOSITORY AGREEMENT 52 EXHIBIT C CERTIFICATE NUMBER C-1 NUMBER OF COMMON SECURITIES 38,660 CERTIFICATE EVIDENCING COMMON SECURITIES OF BVBC CAPITAL TRUST I _____% COMMON SECURITIES (LIQUIDATION AMOUNT $8.00 PER COMMON SECURITY) BVBC CAPITAL TRUST I, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Blue Valley Ban Corp. (the "Holder") is the registered owner of Thirty-Eight Thousand Six Hundred Sixty (38,660) securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the _____% Common Securities (liquidation amount $8.00 per Common Security) (the "Common Securities"). In accordance with Section 5.10 of the Trust Agreement (as defined below), the Common Securities are not transferable and any attempted transfer hereof shall be void. The designations, rights, privileges, restrictions, preferences, and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust dated as of ______________, 2000, as the same may be amended from time to time (the "Trust Agreement"), including the designation of the terms of Common Securities as set forth therein. The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder. IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed this certificate this ______ day of ____________, 2000. BVBC CAPITAL TRUST I By:________________________________________ _________________, Administrative Trustee 53 EXHIBIT D AGREEMENT AS TO EXPENSES AND LIABILITIES AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as of ________________, 2000, between BLUE VALLEY BAN CORP., a Kansas corporation (the "Company"), and BVBC CAPITAL TRUST I, a Delaware business trust (the "Trust"). RECITALS WHEREAS, the Trust intends to issue its common securities (the "Common Securities") to, and receive Debentures from, the Company and to issue and sell up to 1,437,500 _____% Cumulative Trust Preferred Securities (the "Preferred Securities") with such powers, preferences and special rights and restrictions as are set forth in the Amended and Restated Trust Agreement of the Trust dated as of ______________, 2000, as the same may be amended from time to time (the "Trust Agreement"); WHEREAS, the Company shall directly or indirectly own all of the Common Securities of the Trust and shall issue the Debentures; NOW, THEREFORE, in consideration of the purchase by each holder of the Preferred Securities, which purchase the Company hereby agrees shall benefit the Company and which purchase the Company acknowledges shall be made in reliance upon the execution and delivery of this Agreement, the Company, including in its capacity as holder of the Common Securities, and the Trust hereby agree as follows: ARTICLE I Section 1.1. Guarantee by the Company. Subject to the terms and conditions hereof, the Company, including in its capacity as holder of the Common Securities, hereby irrevocably and unconditionally guarantees to each person or entity to whom the Trust is now or hereafter becomes indebted or liable (the "Beneficiaries") the full payment when and as due, of any and all Obligations (as hereinafter defined) to such Beneficiaries. As used herein, "Obligations" means any costs, expenses or liabilities of the Trust other than obligations of the Trust to pay to holders of any Preferred Securities or other similar interests in the Trust the amounts due such holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be. This Agreement is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof. Section 1.2. Term of Agreement. This Agreement shall terminate and be of no further force and effect upon the later of (a) the date on which full payment has been made of all amounts payable to all holders of all the Preferred Securities (whether upon redemption, liquidation, exchange or otherwise); and (b) the date on which there are no Beneficiaries remaining; provided, however, that this Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time any holder of 54 Preferred Securities or any Beneficiary must restore payment of any sums paid under the Preferred Securities, under any obligation, under the Preferred Securities Guarantee Agreement dated the date hereof by the Company and Wilmington Trust Company, as guarantee trustee, or under this Agreement for any reason whatsoever. This Agreement is continuing, irrevocable, unconditional and absolute. Section 1.3. Waiver of Notice. The Company hereby waives notice of acceptance of this Agreement and of any obligation to which it applies or may apply, and the Company hereby waives presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 1.4. No Impairment. The obligations, covenants, agreements and duties of the Company under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the extension of time for the payment by the Trust of all or any portion of the Obligations or for the performance of any other obligation under, arising out of, or in connection with, the Obligations; (b) any failure, omission, delay or lack of diligence on the part of the Beneficiaries to enforce, assert or exercise any right, privilege, power or remedy conferred on the Beneficiaries with respect to the Obligations or any action on the part of the Trust granting indulgence or extension of any kind; or (c) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust. There shall be no obligation of the Beneficiaries to give notice to, or obtain the consent of, the Company with respect to the happening of any of the foregoing. Section 1.5. Enforcement. A Beneficiary may enforce this Agreement directly against the Company, and the Company waives any right or remedy to require that any action be brought against the Trust or any other person or entity before proceeding against the Company. ARTICLE II Section 2.1. Binding Effect. All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Company and shall inure to the benefit of the Beneficiaries. 55 Section 2.2. Amendment. So long as there remains any Beneficiary or any Preferred Securities of any series are outstanding, this Agreement shall not be modified or amended in any manner adverse to such Beneficiary or to the holders of the Preferred Securities. Section 2.3. Notices. Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by delivering the same by facsimile transmission (confirmed by mail), telex, or by registered or certified mail, addressed as follows (and if so given, shall be deemed given when mailed or upon receipt of an answer back, if sent by telex): Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Facsimile No.: (302) 651-1576 Attention: Corporate Trust Administration Blue Valley Ban Corp. 11935 Riley Overland Park, Kansas 66225-6128 Facsimile No.: (913) 338-2801 Attention: Robert D. Regnier, Chief Executive Officer Section 2.4. Governing Law. This agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Kansas (without regard to conflict of laws principles). THIS AGREEMENT is executed as of the day and year first above written. BLUE VALLEY BAN CORP. By:_________________________________________ Robert D. Regnier, Chief Executive Officer BVBC CAPITAL TRUST I By:_________________________________________ _________________, Administrative Trustee 56 EXHIBIT E This Preferred Security is a Book-Entry Preferred Securities Certificate within the meaning of the Trust Agreement hereinafter referred to and is registered in the name of The Depository Trust Company, a New York corporation (the "Depositary") or a nominee of the Depositary. This Preferred Security is exchangeable for Preferred Securities registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Trust Agreement (as defined below) and no transfer of this Preferred Security (other than a transfer of this Preferred Security as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary) may be registered except in limited circumstances. Unless this Preferred Security is presented by an authorized representative of the Depositary to BVBC Capital Trust I or its agent for registration of transfer, exchange or payment, and any Preferred Security issued is registered in the name of Cede & Co., or such other name as requested by an authorized representative of the Depositary (and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of the Depositary), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest herein. 57 EX-4.7 10 ___% CUMULATIVE PREFERRED SECURITY CERTIFICATE Certificate Number Number of Preferred Securities **P-1** 1,250,000 CUSIP NO. 124296 20 3 Certificate Evidencing Preferred Securities of BVBC Capital Trust I _____% Cumulative Preferred Securities (liquidation amount $8.00 per Preferred Security) BVBC Capital Trust I, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is the registered owner of One Million Two Hundred Fifty Thousand (1,250,000) preferred securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the _____% Cumulative Preferred Securities (liquidation amount $8.00 per Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.04 of the Trust Agreement (as defined below). The designations, rights, privileges, restrictions, preferences, and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust dated as of __________, 2000, as the same may be amended from time to time (the "Trust Agreement"), including the designation of the terms of Preferred Securities as set forth therein. The Holder is entitled to the benefits of the Preferred Securities Guarantee Agreement entered into by Blue Valley Ban Corp., a Kansas corporation, and Wilmington Trust Company, as guarantee trustee, dated as of ______________, 2000 (the "Guarantee"), to the extent provided therein. The Trust will furnish a copy of the Trust Agreement and the Guarantee to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder. IN WITNESS WHEREOF, the Administrative Trustees of the Trust have executed this certificate this _____ day of ___________, 2000. BVBC CAPITAL TRUST I By:________________________________________ Robert D. Regnier, Administrative Trustee By:________________________________________ Mark A. Fortino, Administrative Trustee 58 EX-4.8 11 TRUST PREFERRED SECURITIES GUARANTEE ----------------------------------------------------------------------- PREFERRED SECURITIES GUARANTEE AGREEMENT BLUE VALLEY BAN CORP. and WILMINGTON TRUST COMPANY Dated: ___________________, 2000 ----------------------------------------------------------------------- TABLE OF CONTENTS Page ARTICLE I....................................................................1 1.01 DEFINITIONS AND INTERPRETATIONS......................................1 ARTICLE II...................................................................5 2.01 TRUST INDENTURE ACT; APPLICATION.....................................5 2.02 LISTS OF HOLDERS OF SECURITIES.......................................5 2.03 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE...........................5 2.04 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE......................5 2.05 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.....................5 2.06 EVENTS OF DEFAULT; WAIVER............................................6 2.07 EVENT OF DEFAULT; NOTICE.............................................6 2.08 CONFLICTING INTERESTS................................................6 ARTICLE III..................................................................6 3.01 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.................6 3.02 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE........................8 3.03 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE...............10 3.04 COMPENSATION AND REIMBURSEMENT......................................10 ARTICLE IV..................................................................11 4.01 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY............................11 4.02 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE TRUSTEES.............................................11 ARTICLE V...................................................................12 5.01 GUARANTEE...........................................................12 5.02 WAIVER OF NOTICE AND DEMAND.........................................12 5.03 OBLIGATIONS NOT AFFECTED............................................13 5.04 RIGHTS OF HOLDERS...................................................13 5.05 GUARANTEE OF PAYMENT................................................14 5.06 SUBROGATION.........................................................14 5.07 INDEPENDENT OBLIGATIONS.............................................14 i ARTICLE VI..................................................................14 6.01 LIMITATION OF TRANSACTIONS..........................................14 6.02 RANKING.............................................................15 ARTICLE VII.................................................................15 7.01 TERMINATION.........................................................15 ARTICLE VIII................................................................15 8.01 SUCCESSORS AND ASSIGNS.............................................15 8.02 AMENDMENTS..........................................................15 8.03 NOTICES.............................................................15 8.04 BENEFIT.............................................................16 8.05 GOVERNING LAW.......................................................16 ii CROSS REFERENCE TABLE Section of Trust Indenture Act of 1939, as Amended Section of Guarantee Agreement 310(a)..............................4.01(a) 310(b)..............................4.01(c), 2.08 310(c)..............................Inapplicable 311(a)..............................2.02(b) 311(b)..............................2.02(b) 311(c)..............................Inapplicable 312(a)..............................2.02(a) 312(b)..............................2.02(b) 313.................................2.03 314(a)..............................2.04 314(b)..............................Inapplicable 314(c)..............................2.05 314(d)..............................Inapplicable 314(e)..............................1.01, 2.05, 3.02 314(f) .............................2.01, 3.02 315(a)..............................3.01(d) 315(b)..............................2.07 315(c)..............................3.01 315(d)..............................3.01(d) 316(a)..............................1.01, 3.06, 5.04 316(b)..............................5.03 316(c)..............................8.02 317(a)..............................Inapplicable 317(b)..............................Inapplicable 318(a)..............................2.01(b) 318(b)..............................2.01 318(c)..............................2.01(a) iii PREFERRED SECURITIES GUARANTEE AGREEMENT This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated as of ___________________, 2000, is executed and delivered by BLUE VALLEY BAN CORP., a Kansas corporation (the "Guarantor"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee (the "Preferred Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of BVBC CAPITAL TRUST I, a Delaware statutory business trust ("BVBC Trust"). WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust Agreement") dated as of ______________, 2000 among the trustees of BVBC Trust named therein, the Guarantor, as sponsor, and the holders from time to time of undivided beneficial interests in the assets of BVBC Trust, BVBC Trust is issuing up to 1,437,500 preferred securities, having an aggregate liquidation amount of up to $11,500,000 designated the _____% Cumulative Trust Preferred Securities (the "Preferred Securities"); and WHEREAS, as incentive for the Holders to purchase the Preferred Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Preferred Securities Guarantee, to pay to the Holders of the Preferred Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the purchase by each Holder of Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Preferred Securities Guarantee for the benefit of the Holders. ARTICLE I DEFINITIONS AND INTERPRETATION 1.01 DEFINITIONS AND INTERPRETATIONS. In this Preferred Securities Guarantee, unless the context otherwise requires: (a) capitalized terms used in this Preferred Securities Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.01; (b) a term defined anywhere in this Preferred Securities Guarantee has the same meaning throughout; (c) all references to "the Preferred Securities Guarantee" or "this Preferred Securities Guarantee" are to this Preferred Securities Guarantee as modified, supplemented or amended from time to time; (d) all references in this Preferred Securities Guarantee to Articles and Sections are to Articles and Sections of this Preferred Securities Guarantee, unless otherwise specified; 1 (e) a term defined in the Trust Indenture Act has the same meaning when used in this Preferred Securities Guarantee, unless otherwise defined in this Preferred Securities Guarantee or unless the context otherwise requires; and (f) a reference to the singular includes the plural and vice versa. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act of 1933, as amended, or any successor rule thereunder. "Business Day" means any day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the State of Kansas are authorized or required by law or executive order to remain closed, or (c) a day on which the Preferred Guarantee Trustee's Corporate Trust Office is closed for business. "Corporate Trust Office" means the office of the Preferred Guarantee Trustee at which the corporate trust business of the Preferred Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Agreement is located at 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration. "Covered Person" means any Holder or beneficial owner of Preferred Securities. "Debt" means with respect to any person, whether recourse is to all or a portion of the assets of such person and whether or not contingent: (a) every obligation of such person for money borrowed; (b) every obligation of such person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (c) every reimbursement obligation of such person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such person; (d) every obligation of such person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (e) every capital lease obligation of such person; and (f) every obligation of the type referred to in clauses (a) through (e) of another person and all dividends of another person the payment of which, in either case, such person has guaranteed or for which such person is responsible or liable, directly or indirectly, as obligor or otherwise. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Preferred Securities Guarantee. "Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by BVBC Trust: (a) any accrued and unpaid Distributions (as defined in the Trust Agreement) that are required to be paid on such Preferred Securities to the extent BVBC Trust shall have funds available therefor, (b) the redemption price, including all accrued and unpaid Distributions to the date of redemption (the "Redemption Price") to the extent BVBC Trust has funds available therefor, with respect to any Preferred Securities called for redemption by BVBC Trust, and (c) upon a voluntary or involuntary dissolution, winding-up or termination of BVBC Trust (other than in connection with the distribution of Junior Subordinated Debentures to the Holders in exchange for Preferred Securities as provided in the Trust Agreement), the lesser of (i) the 2 aggregate of the liquidation amount and all accrued and unpaid Distributions on the Preferred Securities to the date of payment, to the extent BVBC Trust shall have funds available therefor, and (ii) the amount of assets of BVBC Trust remaining available for distribution to Holders in liquidation of BVBC Trust (in either case, the "Liquidation Distribution"). "Holder" shall mean any holder, as registered on the books and records of BVBC Trust of any Preferred Securities; provided, however, that, in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor. "Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate of the Preferred Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Preferred Guarantee Trustee. "Indenture" means the Subordinated Indenture dated as of ___________________, 2000, among the Guarantor (the "Debenture Issuer") and Wilmington Trust Company, as trustee, and any indenture supplemental thereto pursuant to which the Junior Subordinated Debentures are to be issued to the Property Trustee (as defined in the Trust Agreement) of BVBC Trust. "Junior Subordinated Debentures" means the series of junior subordinated deferrable interest debt securities of the Guarantor designated the _____% Junior Subordinated Debentures due 2030 held by the Property Trustee of BVBC Trust. "Majority in liquidation amount of the Preferred Securities" means, except as provided by the Trust Indenture Act, a vote by Holders of Preferred Securities, voting separately as a class, of more than 50% of the liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all Preferred Securities. "Officers' Certificate" means, with respect to any Person, a certificate signed by two Authorized officers of such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Preferred Securities Guarantee shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definition relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. 3 "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Preferred Guarantee Trustee" means Wilmington Trust Company, until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Preferred Securities Guarantee and thereafter means each such Successor Preferred Guarantee Trustee. "Responsible Officer" means, with respect to the Preferred Guarantee Trustee, any officer within the Corporate Trust Office of the Preferred Guarantee Trustee with direct responsibility for the administration of this Preferred Securities Guarantee, including any vice-president, any assistant vice-president, any assistant secretary, the treasurer, any assistant treasurer or other officer of the Corporate Trust Office of the Preferred Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Successor Preferred Guarantee Trustee" means a successor Preferred Guarantee Trustee possessing the qualifications to act as Preferred Guarantee Trustee under Section 4.01. "Senior and Subordinated Debt" means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Guarantor whether or not such claim for post-petition interest is allowed in such proceeding), on Debt of the Guarantor, whether incurred on or prior to the date of the Indenture or thereafter incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of payment to the Preferred Securities Guarantee or to other Debt which is pari passu with, or subordinated to, the Preferred Securities Guarantee; provided, however, that Senior and Subordinated Debt shall not be deemed to include (a) any Debt of the Guarantor which when incurred and without respect to any election under section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was without recourse to the Guarantor, (b) any Debt of the Guarantor to any of its subsidiaries, (c) any Debt to any employee of the Guarantor, (d) any Debt which by its terms is subordinated to trade accounts payable or accrued liabilities arising in the ordinary course of business to the extent that payments made to the holders of such Debt by the holders of the Junior Subordinated Debentures as a result of the subordination provisions of the Indenture would be greater than they otherwise would have been as a result of any obligation of such holders to pay amounts over to the obligees on such trade accounts payable or accrued liabilities arising in the ordinary course of business as a result of the subordination provisions to which such Debt is subject, (e) the Junior Subordinated Debentures, and (f) any other debt securities issued pursuant to the Indenture. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. 4 ARTICLE II TRUST INDENTURE ACT 2.01 TRUST INDENTURE ACT; APPLICATION. (a) This Preferred Securities Guarantee is subject to the provisions of the Trust Indenture Act that are required to be part of this Preferred Securities Guarantee and shall, to the extent applicable, be governed by such provisions; and (b) If and to the extent that any provision of this Preferred Securities Guarantee limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. 2.02 LISTS OF HOLDERS OF SECURITIES. (a) The Guarantor shall provide the Preferred Guarantee Trustee with a list, in such form as the Preferred Guarantee Trustee may reasonably require, of the names and addresses of the Holders of the Preferred Securities ("List of Holders") (i) on or before January 15 and July 15 of each year, and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a List of Holders, as of a date no more than 14 days before such List of Holders is given to the Preferred Guarantee Trustee provided, that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Preferred Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act. 2.03 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE. On or before July 31 of each year, the Preferred Guarantee Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. 2.04 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE. The Guarantor shall provide to the Preferred Guarantee Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act, if any, and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. 2.05 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The Guarantor shall provide to the Preferred Guarantee Trustee such evidence of compliance with the conditions precedent, if any, provided for in this Preferred Securities Guarantee that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act may be given in the form of an Officers' Certificate. 5 2.06 EVENTS OF DEFAULT; WAIVER. The Holders of a Majority in liquidation amount of Preferred Securities may, by vote, on behalf of the Holders of all of the Preferred Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Preferred Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. 2.07 EVENT OF DEFAULT; NOTICE. (a) The Preferred Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee, transmit by mail, first class postage prepaid, to the Holders of the Preferred Securities, notices of all Events of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided, that, the Preferred Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Preferred Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Preferred Securities. (b) The Preferred Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Preferred Guarantee Trustee shall have received a properly addressed written notice, or of which a Responsible Officer of the Preferred Guarantee Trustee charged with the administration of the Trust Agreement shall have obtained actual knowledge. 2.08 CONFLICTING INTERESTS. The Trust Agreement shall be deemed to be specifically described in this Preferred Securities Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE 3.01 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE. (a) This Preferred Securities Guarantee shall be held by the Preferred Guarantee Trustee for the benefit of the Holders of the Preferred Securities, and the Preferred Guarantee Trustee shall not transfer this Preferred Securities Guarantee to any Person except a Holder of Preferred Securities exercising such Holder's rights pursuant to Section 5.04(b) or to a Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred Guarantee Trustee of its appointment to act as Successor Preferred Guarantee Trustee. The right, title and interest of the Preferred Guarantee Trustee shall automatically vest in any Successor Preferred Guarantee Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Preferred Guarantee Trustee. 6 (b) If an Event of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee has occurred and is continuing, the Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee for the benefit of the Holders of the Preferred Securities. (c) The Preferred Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants shall be read into this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06) and is actually known to a Responsible Officer of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such of the rights and powers vested in it by this Preferred Securities Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (d) No provision of this Preferred Securities Guarantee shall be construed to relieve the Preferred Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Preferred Guarantee Trustee shall be determined solely by the express provisions of this Preferred Securities Guarantee, and the Preferred Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants or obligations shall be read into this Preferred Securities Guarantee against the Preferred Guarantee Trustee; and (B) in the absence of bad faith on the part of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Preferred Guarantee Trustee and conforming to the requirements of this Preferred Securities Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Preferred Securities Guarantee; (ii) the Preferred Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Preferred Guarantee 7 Trustee, unless it shall be proved that the Preferred Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Preferred Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Preferred Guarantee Trustee, or exercising any trust or power conferred upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee; and (iv) no provision of this Preferred Securities Guarantee shall require the Preferred Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers if the Preferred Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Preferred Securities Guarantee or indemnity, reasonably satisfactory to the Preferred Guarantee Trustee, against such risk or liability is not reasonably assured to it. 3.02 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE. (a) Subject to the provisions of Section 3.01: (i) The Preferred Guarantee Trustee may conclusively rely upon, and shall be fully protected in acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. (ii) Any direction or act of the Guarantor contemplated by this Preferred Securities Guarantee shall be sufficiently evidenced by an Officers' Certificate. (iii) Whenever, in the administration of this Preferred Securities Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Preferred Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor. (iv) The Preferred Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any re-recording, re-filing or registration thereof). 8 (v) The Preferred Guarantee Trustee may consult with counsel, and the written advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Preferred Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Preferred Securities Guarantee from any court of competent jurisdiction. (vi) The Preferred Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Preferred Securities Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Preferred Guarantee Trustee such security and indemnity, reasonably satisfactory to the Preferred Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses and the expenses of the Preferred Guarantee Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Preferred Guarantee Trustee; provided that, nothing contained in this Section 3.02(a)(vi) shall be taken to relieve the Preferred Guarantee Trustee, upon the occurrence of an Event of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee, of its obligation to exercise the rights and powers vested in it by this Preferred Securities Guarantee. (vii) The Preferred Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Preferred Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. The reasonable expense of every such investigation shall be paid by the Guarantor or, if paid by the Preferred Guarantee Trustee, shall be repaid by the Guarantor upon demand. (viii) The Preferred Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Preferred Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. (ix) Any action taken by the Preferred Guarantee Trustee or its agents hereunder shall bind the Holders of the Preferred Securities, and the signature of the Preferred Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Preferred Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Preferred Securities 9 Guarantee, both of which shall be conclusively evidenced by the Preferred Guarantee Trustee's or its agent's taking such action. (x) Whenever in the administration of this Preferred Securities Guarantee the Preferred Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Preferred Guarantee Trustee (A) may request instructions from the Holders of a Majority in liquidation amount of the Preferred Securities, (B) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (C) shall be protected in conclusively relying on or acting in accordance with such instructions. (xi) The Preferred Guarantee Trustee shall not be charged with knowledge of any default or Event of Default hereunder unless a Responsible Officer of the Guarantee Trustee shall have knowledge of the default or Event of Default. (b) No provision of this Preferred Securities Guarantee shall be deemed to impose any duty or obligation on the Preferred Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Preferred Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Preferred Guarantee Trustee shall be construed to be a duty. 3.03 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE. The recitals contained in this Preferred Securities Guarantee shall be taken as the statements of the Guarantor, and the Preferred Guarantee Trustee does not assume any responsibility for their correctness. The Preferred Guarantee Trustee makes no representation as to the validity or sufficiency of this Preferred Securities Guarantee. 3.04 COMPENSATION AND REIMBURSEMENT. (a) The Guarantor covenants and agrees to pay to the Preferred Guarantor Trustee, and the Preferred Guarantor Trustee shall be entitled to, such reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), as the Guarantor and the Preferred Guarantor Trustee may from time to time agree in writing, for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Preferred Guarantee Trustee, and, except as otherwise expressly provided herein, the Guarantor will pay or reimburse the Preferred Guarantor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Preferred Guarantor Trustee in accordance with any of the provisions of this Preferred Securities Guarantee (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Guarantor also covenants to indemnify the 10 Preferred Guarantor Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Preferred Guarantor Trustee and arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claims of liability in the premises. (b) When the Preferred Guarantor Trustee incurs expenses or renders services after an Event of Default specified in Section 7.01(iv), (v) or (vi) of the Indenture occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under the Bankruptcy Reform Act of 1978 or any successor statute. The provisions of this Section 3.04 shall survive termination of the Preferred Securities Guarantee. ARTICLE IV PREFERRED GUARANTEE TRUSTEE 4.01 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY. (a) There shall at all times be a Preferred Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia, or a corporation or Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.01(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Preferred Guarantee Trustee shall cease to be eligible to so act under Section 4.01(a), the Preferred Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.02(c). (c) If the Preferred Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. 4.02 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE TRUSTEES. 11 (a) Subject to Section 4.02(b), the Preferred Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Preferred Guarantee Trustee shall not be removed in accordance with Section 4.02(a) until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor. (c) The Preferred Guarantee Trustee appointed to office shall hold office until a Successor Preferred Guarantee Trustee shall have been appointed or until its removal or resignation. The Preferred Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Preferred Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor and the resigning Preferred Guarantee Trustee. (d) If no Successor Preferred Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.02 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Preferred Guarantee Trustee may petition any court of competent jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Preferred Guarantee Trustee. (e) No Preferred Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Preferred Guarantee Trustee. (f) Upon termination of this Preferred Securities Guarantee or removal or resignation of the Preferred Guarantee Trustee pursuant to this Section 4.02, the Guarantor shall pay to the Preferred Guarantee Trustee all amounts accrued to the date of such termination, removal or resignation. ARTICLE V GUARANTEE 5.01 GUARANTEE. The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by BVBC Trust), as and when due, regardless of any defense, right of set-off or counterclaim that BVBC Trust may have or assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing BVBC Trust to pay such amounts to the Holders. 5.02 WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives notice of acceptance of this Preferred Securities Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against BVBC Trust or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. 12 5.03 OBLIGATIONS NOT AFFECTED. The obligations, covenants, agreements and duties of the Guarantor under this Preferred Securities Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the Performance or observance by BVBC Trust of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by BVBC Trust; (b) the extension of time for the payment by BVBC Trust of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Junior Subordinated Debentures or any extension of the maturity date of the Junior Subordinated Debentures permitted by the Indenture); (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of BVBC Trust granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, BVBC Trust or any of the assets of BVBC Trust; (e) any invalidity of, or defect or deficiency in, the Preferred Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.03 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing. 5.04 RIGHTS OF HOLDERS. (a) The Holders of a Majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting of any proceeding for any remedy available to the Preferred Guarantee Trustee in respect of this 13 Preferred Securities Guarantee or exercising any trust or power conferred upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee. (b) Any Holder of Preferred Securities may institute a legal proceeding directly against the Guarantor to enforce its rights under this Preferred Securities Guarantee, without first instituting a legal proceeding against BVBC Trust, the Preferred Guarantee Trustee or any other Person. 5.05 GUARANTEE OF PAYMENT. This Preferred Securities Guarantee creates a Guarantee of payment and not of collection. 5.06 SUBROGATION. The Guarantor shall be subrogated to all (if any) rights of the Holders of Preferred Securities against BVBC Trust in respect of any amounts paid to such Holders by the Guarantor under this Preferred Securities Guarantee; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Preferred Securities Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Preferred Securities Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. 5.07 INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of BVBC Trust with respect to the Preferred Securities, and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Preferred Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.03. ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION 6.01 LIMITATION OF TRANSACTIONS. So long as any Preferred Securities remain outstanding, if there shall have occurred and be continuing an Event of Default or an event of default under the Trust Agreement, then (a) the Guarantor shall not declare or pay any dividend or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of its capital stock, (b) the Guarantor shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Guarantor (including other Junior Subordinated Debentures) which rank pari passu with or junior in interest to the Junior Subordinated Debentures or (c) the Guarantor shall not make any guarantee payments with respect to any guarantee by the guarantor of the debt securities of any subsidiary of the Guarantor if such guarantee ranks pari passu or junior in interest to the Junior Subordinated Debentures (other than (i) dividends or distributions in common stock, (ii) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future or the redemption or repurchase of any such rights pursuant thereto, (iii) payments under this Preferred Securities Guarantee and (iv) 14 purchases of common stock related to the issuances of common stock or rights under any of the Guarantor's benefit plans for its directors, officers or employees). 6.02 RANKING. This Preferred Securities Guarantee will constitute an unsecured obligation of the Guarantor and will rank subordinate and junior in right of payment to all Senior and Subordinated Debt of the Guarantor. ARTICLE VII TERMINATION 7.01 TERMINATION. This Preferred Securities Guarantee shall terminate upon (a) full payment of the Redemption Price of all Preferred Securities, (b) upon full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of BVBC Trust or (c) upon distribution of the Junior Subordinated Debentures to the Holders of the Preferred Securities. Notwithstanding the foregoing, this Preferred Securities Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder of Preferred Securities must restore payment of any sums paid under the Preferred Securities or under this Preferred Securities Guarantee. ARTICLE VIII MISCELLANEOUS 8.01 SUCCESSORS AND ASSIGNS. All guaranties and agreements contained in this Preferred Securities Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. 8.02 AMENDMENTS. Except with respect to any changes that do not materially adversely affect the rights of Holders (in which case no consent of Holders will be required), this Preferred Securities Guarantee may only be amended with the prior approval of the Holders of at least a Majority in liquidation amount of the Preferred Securities; provided, however, that no amendment that affects the rights, powers, duties, obligations or immunities of the Preferred Guarantee Trustee shall be effective unless approved in writing by the Preferred Guarantee Trustee. The provisions of Article VI of the Trust Agreement with respect to meetings of Holders of the Securities apply to the giving of such approval. 8.03 NOTICES. All notices provided for in this Preferred Securities Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail, as follows: (a) If given to the Preferred Guarantee Trustee, at the Preferred Guarantee Trustee's mailing address set forth below (or such other address as the Preferred Guarantee Trustee may give notice of to the Holders of the Preferred Securities): 15 WILMINGTON TRUST COMPANY 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration (b) If given to the Guarantor, at the Guarantor's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Preferred Securities): BLUE VALLEY BAN CORP. 11935 Riley Overland Park, Kansas 66225-6128 Attention: Chief Executive Officer (c) If given to any Holder of Preferred Securities, at the address set forth on the books and records of BVBC Trust. All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. 8.04 BENEFIT. This Preferred Securities Guarantee is solely for the benefit of the Holders of the Preferred Securities and, subject to Section 3.01(a), is not separately transferable from the Preferred Securities. 8.05 GOVERNING LAW. THIS PREFERRED SECURITIES GUARANTEE, INCLUDING THE IMMUNITIES AND THE STANDARD OF CARE OF THE TRUSTEE, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF KANSAS. THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year first above written. BLUE VALLEY BAN CORP., as Guarantor By:___________________________________ Robert Regnier Chief Executive Officer 16 WILMINGTON TRUST COMPANY, as Preferred Guarantee Trustee By:___________________________________ Name:_________________________________ Title:________________________________ 17 EX-4.9 12 AGREEMENT AS TO EXPENSES AND LIABILITIES AGREEMENT AS TO EXPENSES AND LIABILITIES AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as of ________________, 2000, between BLUE VALLEY BAN CORP., a Kansas corporation (the "Company"), and BVBC CAPITAL TRUST I, a Delaware business trust (the "Trust"). RECITALS WHEREAS, the Trust intends to issue its common securities (the "Common Securities") to, and receive Debentures from, the Company and to issue and sell up to 1,437,500 _____% Cumulative Trust Preferred Securities (the "Preferred Securities") with such powers, preferences and special rights and restrictions as are set forth in the Amended and Restated Trust Agreement of the Trust dated as of ______________, 2000, as the same may be amended from time to time (the "Trust Agreement"); WHEREAS, the Company shall directly or indirectly own all of the Common Securities of the Trust and shall issue the Debentures; NOW, THEREFORE, in consideration of the purchase by each holder of the Preferred Securities, which purchase the Company hereby agrees shall benefit the Company and which purchase the Company acknowledges shall be made in reliance upon the execution and delivery of this Agreement, the Company, including in its capacity as holder of the Common Securities, and the Trust hereby agree as follows: ARTICLE I Section 1.1. Guarantee by the Company. Subject to the terms and conditions hereof, the Company, including in its capacity as holder of the Common Securities, hereby irrevocably and unconditionally guarantees to each person or entity to whom the Trust is now or hereafter becomes indebted or liable (the "Beneficiaries") the full payment when and as due, of any and all Obligations (as hereinafter defined) to such Beneficiaries. As used herein, "Obligations" means any costs, expenses or liabilities of the Trust other than obligations of the Trust to pay to holders of any Preferred Securities or other similar interests in the Trust the amounts due such holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be. This Agreement is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof. Section 1.2. Term of Agreement. This Agreement shall terminate and be of no further force and effect upon the later of (a) the date on which full payment has been made of all amounts payable to all holders of all the Preferred Securities (whether upon redemption, liquidation, exchange or otherwise); and (b) the date on which there are no Beneficiaries remaining; provided, however, that this Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time any holder of Preferred Securities or any Beneficiary must restore payment of any sums paid under the Preferred Securities, under any obligation, under the Preferred Securities Guarantee Agreement dated the date hereof by the Company and Wilmington Trust Company, as guarantee trustee, or under this Agreement for any reason whatsoever. This Agreement is continuing, irrevocable, unconditional and absolute. Section 1.3. Waiver of Notice. The Company hereby waives notice of acceptance of this Agreement and of any obligation to which it applies or may apply, and the Company hereby waives presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 1.4. No Impairment. The obligations, covenants, agreements and duties of the Company under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the extension of time for the payment by the Trust of all or any portion of the Obligations or for the performance of any other obligation under, arising out of, or in connection with, the Obligations; (b) any failure, omission, delay or lack of diligence on the part of the Beneficiaries to enforce, assert or exercise any right, privilege, power or remedy conferred on the Beneficiaries with respect to the Obligations or any action on the part of the Trust granting indulgence or extension of any kind; or (c) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust. There shall be no obligation of the Beneficiaries to give notice to, or obtain the consent of, the Company with respect to the happening of any of the foregoing. Section 1.5. Enforcement. A Beneficiary may enforce this Agreement directly against the Company, and the Company waives any right or remedy to require that any action be brought against the Trust or any other person or entity before proceeding against the Company. ARTICLE II Section 2.1. Binding Effect. All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Company and shall inure to the benefit of the Beneficiaries. Section 2.2. Amendment. So long as there remains any Beneficiary or any Preferred Securities of any series are outstanding, this Agreement shall not be modified or amended in any manner adverse to such Beneficiary or to the holders of the Preferred Securities. Section 2.3. Notices. Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by delivering the same by facsimile transmission (confirmed by mail), telex, or by registered or certified mail, addressed as follows (and if so given, shall be deemed given when mailed or upon receipt of an answer back, if sent by telex): Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Facsimile No.: (302) 651-1576 Attention: Corporate Trust Administration Blue Valley Ban Corp. 11935 Riley Overland Park, Kansas 66225-6128 Facsimile No.: (913) 338-2801 Attention: Robert D. Regnier, Chief Executive Officer Section 2.4. Governing Law. This agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Kansas (without regard to conflict of laws principles). THIS AGREEMENT is executed as of the day and year first above written. BLUE VALLEY BAN CORP. By:_________________________________________ Robert D. Regnier, Chief Executive Officer BVBC CAPITAL TRUST I By:_________________________________________ _________________, Administrative Trustee EX-5.2 13 OPINION OF MORRIS, NICHOLS, ARSHT & TUNNELL April 7, 2000 BVBC Capital Trust I c/o Blue Valley Ban Corp 11935 Riley Overland Park, Kansas 66225 Re: BVBC Capital Trust I Ladies and Gentlemen: We have acted as special Delaware counsel to BVBC Capital Trust I, a Delaware statutory business trust (the "Trust"), and Blue Valley Ban Corp, a Kansas corporation ("Blue Valley"), in connection with certain matters relating to (i) the formation of the Trust and (ii) the proposed issuance by the Trust of Preferred Securities to beneficial owners pursuant to and as described in the Registration Statement (and the Prospectus forming a part thereof) on Form S-1 filed with the Securities and Exchange Commission on April 7, 2000 (the "Registration Statement") relating to the Preferred Securities. Capitalized terms used herein and not otherwise herein defined are used as defined in the Amended and Restated Trust Agreement of the Trust in the form attached as an exhibit to the Registration Statement (the "Governing Instrument"). In rendering this opinion, we have examined and relied upon copies of the following documents in the forms provided to us: the Certificate of Trust of the Trust as filed in the Office of the Secretary of State of the State of Delaware (the "State Office") on March 30, 2000 (the "Certificate of Trust"); a Trust Agreement of the Trust dated as of March 30, 2000 (the "Original Governing Instrument"); the Governing Instrument; the Subordinated Indenture to be entered into between Blue Valley and Wilmington Trust Company, as Trustee; the Preferred Securities Guarantee Agreement to be entered into between Blue Valley and Wilmington Trust Company, as Trustee; the form of Underwriting Agreement relating to the Preferred Securities among Blue Valley, the Trust and Stifel, Nicolaus & Company (the "Underwriting Agreement"); the Registration Statement; and a certification of good standing of the Trust obtained as of a recent date from the State Office. In such examinations, we have assumed the genuineness of all signatures, the conformity to original documents of all documents submitted to us as drafts or copies or forms of documents to be executed and the legal capacity of natural persons to complete the execution of documents. We have further assumed for purposes of this opinion: (i) BVBC Capital Trust I April 7, 2000 Page 2 the due formation or organization, valid existence and good standing of each entity (other than the Trust) that is a party to any of the documents reviewed by us under the laws of the jurisdiction of its respective formation or organization; (ii) the due authorization, execution and delivery by, or on behalf of, each of the parties thereto of the above-referenced documents (including, without limitation, the due authorization, execution and delivery of the Governing Instrument and the Underwriting Agreement prior to the first issuance of Preferred Securities); (iii) that no event has occurred subsequent to the filing of the Certificate of Trust, or will occur prior to the first issuance of Preferred Securities, that would cause a dissolution or liquidation of the Trust under the Original Governing Instrument or the Governing Instrument, as applicable; (iv) that the activities of the Trust have been and will be conducted in accordance with the Original Governing Instrument or the Governing Instrument, as applicable, and the Delaware Business Trust Act, 12 Del. C. ss.ss. 3801 et seq. (the "Delaware Act"); (v) that payment of the required consideration for the Preferred Securities has, or prior to the first issuance of Preferred Securities will have, been made in accordance with the terms and conditions of the Governing Instrument, the Registration Statement and the Underwriting Agreement and that the Preferred Securities are otherwise issued and sold to the Preferred Security Holders in accordance with the terms, conditions, requirements and procedures set forth in the Governing Instrument, the Registration Statement and the Underwriting Agreement; and (vi) that the documents examined by us are in full force and effect, express the entire understanding of the parties thereto with respect to the subject matter thereof and have not been amended, supplemented or otherwise modified, except as herein referenced. We have not reviewed any documents other than those identified above in connection with this opinion, and we have assumed that there are no other documents that are contrary to or inconsistent with the opinions expressed herein. Further, we express no opinion with respect to, and assume no responsibility for the contents of, the Registration Statement or any other offering material relating to the Preferred Securities. No opinion is expressed herein with respect to the requirements of, or compliance with, federal or state securities or blue sky laws. As to any fact material to our opinion, other than those assumed, we have relied without independent investigation on the above-referenced documents and on the accuracy, as of the date hereof, of the matters therein contained. Based on and subject to the foregoing, and limited in all respects to matters of Delaware law, it is our opinion that: 1. The Trust is a duly formed and validly existing business trust in good standing under the laws of the State of Delaware. 2. Upon issuance, the Preferred Securities will constitute validly issued and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable beneficial interests in the assets of the Trust. 3, Under the Delaware Act and the terms of the Governing Instrument, each Preferred Security Holder of the Trust, in such capacity, will be entitled to the same limitation of personal liability as that extended to stockholders of private corporations for profit organized BVBC Capital Trust I April 7, 2000 Page 3 under the General Corporation Law of the State of Delaware; provided, however, we express no opinion with respect to the liability of any Preferred Security Holder who is, was or may become a named Trustee of the Trust. Notwithstanding the foregoing, we note that, pursuant to the Governing Instrument, Preferred Security Holders may be obligated to make payments or provide indemnity or security under the circumstances set forth therein. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name and reference to our opinion under the heading "LEGAL MATTERS" in the Prospectus forming a part thereof. In giving this consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. This opinion speaks only as of the date hereof and is based on our understandings and assumptions as to present facts, and on our review of the above-referenced documents and the application of Delaware law as the same exist as of the date hereof, and we undertake no obligation to update or supplement this opinion after the date hereof for the benefit of any person or entity with respect to any facts or circumstances that may hereafter come to our attention or any changes in facts or law that may hereafter occur or take effect. This opinion is intended solely for the benefit of the addressee hereof in connection with the matters contemplated hereby and may not be relied on by any other person or entity or for any other purpose without our prior written consent. Very truly yours, MORRIS, NICHOLS, ARSHT & TUNNELL /s/ Jonathan I. Lessner Jonathan I. Lessner EX-8.1 14 OPINION OF BLACKWELL SANDERS BLACKWELL SANDERS PEPER MARTIN LLP 2300 MAIN STREET, SUITE 1000, KANSAS CITY, MO 64108 P.O. BOX 419777, KANSAS CITY, MO 64141-6777 TEL: (816) 983-8000 FAX: (816) 983-8080 WEBSITE: www.bspmlaw.com April 6, 2000 BVBC Capital Trust I Blue Valley Ban Corp 11935 Riley Overland Park, Kansas 66225-6128 Ladies and Gentlemen: We have acted as counsel to Blue Valley Ban Corp (the "Company") and to BVBC Capital Trust I (the "Trust") in connection with the registration statement of the Company and the Trust on Form S-1 (the "Registration Statement"), of which a prospectus ("Prospectus") is a part, filed by the Company and the Trust with the United States Securities and Exchange Commission under the Securities Act of 1933, as amended. This opinion is furnished pursuant to the requirements of Item 601(b)(8) of Regulation S-K. For the purposes of rendering this opinion, we have reviewed and relied upon the Registration Statement and such other documents and instruments as we deemed necessary for the rendering of this opinion. In our examination of relevant documents, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents to all documents submitted to us as copies, the authenticity of such copies and the accuracy and completeness of all corporate records made available to us by the Company and the Trust. Based solely upon our review of such documents, and upon such information as the Company has provided to us (which we have not attempted to verify in any respect), and reliance upon such documents and information, we are of the opinion that the statements contained in the Prospectus under the caption "Material Federal Income Tax Consequences," insofar as such statements constitute matters of law or legal conclusions, constitute an accurate description of the United States federal income tax consequences. Our opinion is limited to the federal income tax matters described above and does not address any other federal income tax considerations or any state, local, foreign, or other tax considerations. If any of the information on which we have relied is incorrect, or if changes in the relevant facts occur after the date hereof, our opinion could be affected thereby. Moreover, our opinion is based on the Internal Revenue Code of 1986, as amended, applicable Treasury regulations promulgated thereunder, and Internal Revenue Service rulings, procedures, and other pronouncements published by the United States Internal Revenue Service. These authorities are all subject to change, and such change may be made with retroactive effect. We can give no assurance that, after such change, our opinion would not be different. We undertake no responsibility to update or supplement our opinion. This opinion is not binding on the Internal Revenue Service, and there can be no assurance, and none is hereby given, that the Internal Revenue Service will not take a position contrary to one or more of the positions reflected in the foregoing opinion, or that our opinion will be upheld by the courts if challenged by the Internal Revenue Service. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. We also consent to the use of our name in the Prospectus under the caption "Material Federal Income Tax Consequences." Very truly yours, /s/ Blackwell Sanders Peper Martin LLP EX-10.1 15 SECURITY AGREEMENT Boatmen's First National Bank of Kansas City 14 West 10th Street Boatmen's Kansas City, Missouri 64105 1439286-0001-B42 "Bank" SECURITY AGREEMENT (Property Other Than Inventory, Accounts and General Intangibles) to Bank To secure payment of all Obligations of the undersigned ("Obligor") to Bank, Obligor by this Security Agreement (this "Agreement") grants to Bank a security interest under the Uniform Commercial Code in, and pledges and assigns to Bank, the following property and such other property as may be described in any exhibit attached hereto, all of Obligor's books and records (including computer data and storage media) pertaining to the foregoing, all rights related thereto, all additions thereto and substitutions therefor, and all interest, dividend or other income, products, and cash and noncash proceeds, of or from said property, and everything that becomes (or is held for the purpose of being) affixed to or installed in any of said property (collectively the "Collateral"): 258,000 SHARES OF BANK OF BLUE VALLEY STOCK THE PROCEEDS OF SHARES OF THE CAPITAL STOCK OF BANK OF BLUE VALLEY INCLUDING, BUT NOT LIMITED TO, ALL ACCRUALS TO SUCH SHARES AND DIVIDENDS, RIGHTS AND PAYMENTS, SHARES AND PROPERTY RECEIVED IN RESPECT THEREOF, INCLUDING THOSE BY WAY OF CORPORATE REORGANIZATION, LIQUIDATION, SPLIT OR CHANGE IN CAPITAL STRUCTURE. Obligor agrees in favor of Bank as follows: 1. OBLIGATIONS. As used herein, the term "Obligations" shall mean all indebtedness (whether principal, interest, fees or otherwise), obligations and liabilities of Obligor to Bank (including without limitation all extensions, renewals, modifications, rearrangements, restructures, replacements and refinancings thereof, whether or not the same involve modifications to interest rates or other payment terms of such indebtedness, obligations and liabilities), whether now existing or hereafter created, absolute or contingent, direct or indirect, joint or several, secured or unsecured, due or not due, contractual or tortious, liquidated or unliquidated, arising by operating of law or otherwise, or acquired by Bank outright, conditionally or as collateral security from another, including but not limited to the obligation of Obligor to repay FUTURE ADVANCES by Bank, whether or not made pursuant to commitment and whether or not presently contemplated by Obligor and Bank, and the obligation to repay advances by Bank under any letters of credit issued for Obligor's account, and (to the extent permitted by law) all costs of collection thereof, including but not limited to reasonable attorney's fees and actual attorney's expenses (whether or not there is litigation), court costs and all costs in connection with any proceedings under the United States Bankruptcy Code pertaining thereto; provided, however, that the term "Obligations" shall not include any indebtedness evidenced by or secured pursuant to any writing which states in effect that such indebtedness is secured only by the property described in such writing, but only if the property so described does not include the Collateral. 2. REPRESENTATIONS AND WARRANTIES. Obligor represents and warrants to Bank that Obligor is the owner of all the Collateral free and clear of any and all liens, encumbrances and security interests, other than the security interest of Bank. 3. SECURITIES AS COLLATERAL. If any of the property which is part of the Collateral is a security: 3.1. Obligor has delivered to Bank the certificates or other instruments representing the securities, together with stock powers or other instruments of transfer satisfactory to Bank executed in blank by Obligor for each such certificate or instrument. 3.2. Bank may transfer the security into its name or the name of its nominee for so long as the security remains part of the Collateral. 3.3. The issuer of any security which is part of the Collateral is hereby granted the authority to make the transfer into Bank's name or the name of Bank's nominee. 3.4. So long as there is no default by Obligor hereunder, Obligor shall have and retain all voting rights with respect to the securities, and all income from the securities shall be paid and delivered to Obligor; provided, however, that any securities received by Obligor by reason of Obligor's ownership of the securities pledged hereunder shall be promptly delivered to Bank as part of the Collateral. 4. ADDITIONAL COLLATERAL. If, in Bank's sole opinion, the Collateral becomes insufficient to secure payment of the Obligations, Bank may require Obligor to assign, pledge and deliver to bank, and to grant Bank a security interest under the Uniform Commercial Code in, additional property satisfactory to Bank as part of the Collateral within twenty-four (24) hours of request by Bank. 5. POSSESSION OF COLLATERAL. Until a default hereunder, Obligor may have possession of the Collateral which is not herewith delivered to Bank and may use each item thereof in any lawful manner not inconsistent with this Agreement or with any policy of insurance covering it. 6. BUSINESS PURPOSE. The Collateral is not and shall not be used for personal, family or household purposes. 7. ADVERSE CONDITIONS AFFECTING COLLATERAL. Obligor shall notify Bank immediately in writing of any adverse fact or condition of which Obligor is aware or should be aware which bears upon the value of the Collateral including without limitation any adverse fact or condition, or the occurrence of any event, which causes loss or depreciation in the value of any Item of the Collateral and the amount of such loss or depreciation. Obligor shall provide such additional information to Bank regarding the amount of any loss or depreciation in value of the Collateral as Bank may reasonably request from time to time. 8. INSURANCE. Obligor shall at all times keep all tangible Collateral insured against loss, damage, theft and other risks (and in the case of motor vehicles, obtain comprehensive and collision insurance), in such amounts and with such companies as shall be satisfactory to Bank. All such policies shall provide that loss proceeds are payable to Bank as its interest appears, and Bank may apply any proceeds of such insurance toward payment of the Obligations, whether or not due, in such order of application as Bank alone determines. Upon Bank's request at any time, Obligor shall furnish to Bank certificates that such insurance is in force and that all premiums due therefor have been paid. Every such insurance policy shall require at least thirty (30) days' written notice to Bank prior to cancellation. If any such insurance policy is canceled, Bank may collect any return premiums and apply them toward payment of the Obligations, whether or not due, in such order of application as Bank alone determines. 9. DISBURSEMENT DIRECTLY TO SELLER OF COLLATERAL. To the extent that Obligor has advised Bank that any Collateral is being acquired with a loan or advance from Bank, such proceeds may be disbursed by Bank directly to the seller of such Collateral. 10. TAXES; TRANSFERS, LIENS AND ENCUMBRANCES. Obligor shall timely pay and discharge all taxes assessed on the Collateral. Obligor shall not transfer, sell, assign or convey the Collateral, or any part thereof or any interest therein, without the prior written consent of Bank. Obligor shall not create or grant or allow to exist any lien, encumbrance or security interest on any Collateral other than the security interest of Bank. Obligor shall not permit Obligor's rights in any of the Collateral to be affected by attachment, levy, garnishment or other judicial process remaining unpaid, unstayed on appeal, undischarged, unbonded or undismissed for more than sixty (60) days, and Obligor shall defend the Collateral against the claims and demands of all persons. 11. OBLIGOR'S CHIEF EXECUTIVE OFFICE; LOCATION OF COLLATERAL. Obligor's home address, if Obligor is an individual, and the address of Obligor's chief executive office is that given at the end of this Agreement ("Obligor's Chief Business Address"). All other places of business of Obligor, if any, are listed on an exhibit attached hereto. Unless Bank otherwise consents in writing, all the tangible Collateral shall be kept at Obligor's Chief Business Address or such other listed places of business. Obligor shall keep at Obligor's Chief Business Address, or at one of such other listed addresses, when not in use, all Collateral which is movable; and without Obligor first making arrangements satisfactory to Bank to protect Bank's security interest therein, Obligor shall not locate any of the Collateral in any other place. If Obligor's name changes, or the location of Obligor's Chief Business Address changes, or Obligor opens other places of business, Obligor shall promptly notify Bank of the same in writing and shall execute such additional documents as Bank may reasonably request in order to maintain a perfected security interest in favor of Bank in the Collateral. 12. INSPECTION. Whenever requested by Bank, Obligor shall permit Bank or any of its authorized representatives to inspect the Collateral and audit the books and records of Obligor pertaining to the Collateral during the normal business hours of Obligor. Upon request of Bank, Obligor shall reimburse Bank for Bank's reasonable costs and expenses incurred in performing such audits and inspections. 13. MAINTENANCE OF COLLATERAL. Obligor shall keep all tangible items of Collateral (if any) in the same condition as existed on the date hereof (or, with respect to hereafter acquired Collateral, in the same condition as existed on the date acquired), ordinary wear and tear excepted. 14. PROTECTION OF SECURITY INTEREST. Bank may file a copy of this Agreement, or a financing statement executed by Bank as agent for Obligor, in any public office deemed necessary by Bank to perfect its security interest in the Collateral. In addition, Obligor shall execute or cause the execution of such additional financing statements and other documents (and pay the cost of filing or recording the same in all public offices deemed necessary by Bank) and do such other acts and things, including execution of applications and certificates of title naming Bank as a secured party and delivery of same to Bank, as Bank may from time to time request or deem necessary to establish and maintain a valid and perfected security interest in the Collateral, and, if any of the property which is part of the Collateral is a security, including sending written notices to advise any registrar, paying agent, trust or like person or entity of the existence of the security interest granted hereunder in the securities and to instruct any such person or entity to make payments, disbursements and distributions in respect of the securities directly to Bank when and as contemplated by this Agreement. Upon the request of Bank, Obligor shall place a notice of the existence of Bank's security interest in the Collateral, in form and by means acceptable to Bank, upon those writings evidencing the Collateral and the books and records of Obligor pertaining to the Collateral, as designated by Bank. 15. PRESERVATION OF COLLATERAL. Bank may, but is not obligated to, perform any obligation of Obligor hereunder which Obligor fails to perform. Bank may also take any other action which it deems necessary for the maintenance or preservation of any of the Collateral or the security interest of Bank therein including, but not limited to, the payment and discharge of taxes, liens, encumbrances and security interests of any kind against the Collateral or the procurement of insurance. Bank may take any action which it deems necessary in order to adjust, settle or cancel any policy of insurance on items of Collateral, or endorse any draft received in connection therewith in payment of a loss, refund or otherwise. Obligor agrees to reimburse Bank on demand for all costs and expenses incurred or paid by Bank pursuant to this paragraph together with interest thereon at the highest rate provided in any instrument, document or agreement evidencing any of the Obligations. Any amount not so reimbursed shall be added to and become a part of the Obligations. Bank may, for the foregoing purposes, act in its own name or in the name of Obligor. Obligor hereby grants to Bank a power of attorney, irrevocable so long as any of the Obligations secured hereby are outstanding, to take any of the actions described or permitted by this paragraph. 16. EVENTS OF DEFAULT. Each of the following events shall constitute a default under this Agreement: 16.1. Obligor fails to pay when due any amount payable on any of the Obligations. 16.2 Obligor fails to pay any obligation to any person or entity other than Bank in full when it becomes due or the maturity of any such obligation is for any reason accelerated. 16.3. Obligor or any other person who has signed any instrument, document or agreement evidencing any of the Obligations as maker, surety, endorser or guarantor dies; or any corporation which has signed, in any capacity, any instrument, document or agreement evidencing any of the Obligations is dissolved or liquidated. 16.4. Obligor, or any guarantor or surety for Obligor, makes an assignment for the benefit of his or its creditors, ceases to operate his or its business, or files or has filed against him or it a petition for relief under the United States Bankruptcy Code or any other federal or state law pertaining to the relief of debtors or a receiver is appointed with respect to any of the Collateral. 16.5. There is loss, theft, damage, destruction, sale or encumbrance to or of any of the Collateral or there is a levy on, seizure of or attachment to any of the Collateral. 16.6. Obligor fails to do anything that Obligor has agreed to do in this Agreement or in an other document, instrument or agreement evidencing or executed in connection with the Obligations, or any warranty, representation or statement made or furnished to Bank by or on behalf of Obligor is found to have been false or untrue in any material respect when made or furnished. 16.7. Bank deems its position with respect to the Obligations or Collateral is or is about to become impaired and Obligor fails to give additional collateral or provide other assurances to bank within twenty-four (24) hours after the same are requested by Bank. 17. REMEDIES. Upon a default under this Agreement, all of the Obligations, at the option of Bank, shall become immediately due and payable, and Bank may enforce full payment of the same and shall have and may exercise any of the rights and remedies of a secured party under the Uniform Commercial Code or otherwise possessed by Bank. Further, Bank may treat all of Obligor's property in Bank's possession as part of the Collateral to secure payment of the Obligations. If Bank so requires, Obligor shall assemble the Collateral and make it available to Bank at a place to be designated by Bank which is reasonably convenient to both parties. 18. CUSTODY AND PRESERVATION OF THE COLLATERAL. Bank shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if it takes such action for that purpose as Obligor requests in writing. Failure of Bank to comply with any such request shall not of itself be deemed a failure to exercise such reasonable care. The failure of Bank to preserve or protect any rights with respect to any of the Collateral against other parties, or to do any act with respect to the preservation of such Collateral not so requested by Obligor, shall not be deemed a failure to exercise reasonable care in the custody or preservation of such Collateral. 19. ATTORNEY'S FEES AND OTHER COSTS. Obligor shall reimburse Bank (to the extent permitted by law) for all expenses incurred by Bank in seeking to collect or enforce the Obligations and any other rights under this Agreement or under any other instrument, document or agreement evidencing any of the Obligations, including reasonable attorney's fees and actual attorney's expenses (whether or not there is litigation), court costs and all costs in connection with any proceedings under the United States Bankruptcy Code and any expenses incurred on account of damage to any property to which any of the Collateral may be affixed and for repairs to such property or reimbursement for such damage. 20. SUBSTITUTION OF COLLATERAL. With Bank's prior written consent, Obligor may substitute for any property which is part of the Collateral other property of equivalent collateral value. Any substitution of Collateral by Obligor shall not affect Bank's rights against any endorser, guarantor or surety on any instrument, document or agreement evidencing any of the Obligations. Neither shall it affect Bank's right to collect on any instrument, document or agreement evidencing any of the Obligations. Bank shall have the same rights in the property that Obligor substitutes as part of the Collateral that it had in the property originally given as collateral under this Agreement. 21. ASSIGNMENT BY BANK. Bank may assign or transfer to another any instrument, document or agreement evidencing any of the Obligations and Bank's rights under this Agreement and may deliver all the property which is part of the Collateral and in its possession to the assignee or transferee. 22. NO RELEASE OR IMPAIRMENT OF COLLATERAL. Bank's security interest hereunder and Bank's rights in connection therewith shall continue unimpaired notwithstanding that Bank takes or releases other security, releases any party primarily or secondarily liable for any of the Obligations, grants or allows extensions, renewals, modifications, rearrangements, restructures, replacements or refinancings thereof, whether or not the same involve modifications to interest rates or other payment terms thereof, or indulgences with respect to the Obligations. Bank may apply to the Obligations in such order as Bank shall determine, any proceeds or other amounts received on account of the Collateral pursuant hereto by the exercise of any right permitted under this Agreement, regardless whether there is any other security for the Obligations. 23. GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the state of Bank's address as listed at the top of this Agreement (the "State"), without regard to choice or conflict of laws rules, including the version of the Uniform Commercial Code adopted in the State. Capitalized terms used and not otherwise defined in this Agreement shall have the meanings given thereto in the Uniform Commercial Code. 24. SUCCESSORS AND ASSIGNS. The obligations and liabilities of Obligor under this Agreement may not be delegated. This Agreement shall inure to the benefit of and shall be enforceable by Bank and Bank's assignees, transferees and successors against Obligor and Obligor's successors, heirs, devisees, beneficiaries, executors and administrators. 25. NOTICES. Any communication by Bank to Obligor shall be deemed given if in writing and when (i) personally delivered to Obligor, or (ii) sent to Obligor at Obligor's Notice Address by certified or registered mail, courier, or telegram, or (iii) sent by facsimile to Obligor's FAX Number, whether received by Obligor or not. No communication from or concerning Obligor shall be deemed for any purpose to have been received by Bank unless it is in writing and actually received by an executive officer of Bank. Whenever applicable provisions of the Uniform Commercial Code or other applicable law require that notice be reasonable, ten (10) days' notice shall be deemed reasonable. Obligor's "Notice Address" is the mailing address shown below Obligor's signature. Obligor's FAX Number is the telephone number for Obligor's facsimile machine shown below Obligor's signature. 26. WAIVERS AND MODIFICATIONS. No waiver by Bank shall be effective unless it is in a writing and signed by an authorized officer of Bank. No such waiver shall operate as a waiver of any other matter or of a similar matter at a future time. This Agreement may not be changed except by a writing executed by both Obligor and an authorized officer of Bank. 27. SEVERABILITY. If any provision of this Agreement is held to be invalid or unenforceable under any applicable law, the rest of this Agreement shall remain fully valid and enforceable. Executed June 7, 1994. OBLIGOR ACKNOWLEDGES RECEIPT OF A COPY OF THIS DOCUMENT. IF THERE IS MORE THAN ONE UNDERSIGNED AS OBLIGOR, ALL REFERENCES HEREIN TO "OBLIGOR" REFER TO ALL OF THE UNDERSIGNED AND TO EACH OF THEM, AND THEIR OBLIGATIONS HEREUNDER ARE JOINT AND SEVERAL. BLUE VALLEY BAN CORP BY: /s/ Robert D. Regnier President Robert D. Regnier Obligor's Notice Address: P O Box 26128, OVERLAND PARK, KS 66225 Telephone Number: 913-338-1000 FAX Number: Obligor's Chief Business Address: P O Box 26128 OVERLAND PARK, KS 66225 EX-10.2 16 AGREEMENT AGREEMENT This Agreement is made this 2nd day of January, 1997, between BLUE VALLEY BANCORP, a Kansas corporation (the "Borrower"), BANK OF BLUE VALLEY, a Kansas corporation (the "Subsidiary Bank"), and BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY (the "Bank"), having its principal office at 14 West 10th Street, Kansas City, Missouri. Subject to the terms and conditions of this Agreement and the Note and Security Agreement hereunder, the Bank agrees to extend credit to the Borrower in an amount not to exceed TWO MILLION EIGHT HUNDRED EIGHTY-SEVEN THOUSAND FIVE HUNDRED DOLLARS ($2,887,500). 1. Promissory Note. The loan to be made hereunder will be evidenced by the Note which will be payable on the following terms: 1.1 Interest. The Note will bear interest on the unpaid balance at Boatmen's First National Bank of Kansas City Corporate Base Rate. The interest rate will change daily. Interest will be payable quarterly commencing March 31, 1996. 1.2 Maturity. The entire unpaid balance of the Note and all accrued interest will be due and payable ON DEMAND, but no later than December 31, 1997. 1.3 It is the Bank's expectation that, if the Borrower reduces the principal amount of the note in the amount of $350,000 on or before December 31, 1997, the Note will be renewed from time to time on principally the same terms and under the same conditions until the Borrower's obligation is paid in full. Notwithstanding the above, the Borrower understands that should the Bank determine, in its absolute discretion, that Borrower's credit standing is unsatisfactory, the Note will not be renewed by the Bank and must be paid in full. 2. Collateral Security. Payment on the Note will be secured by a first pledge and security interest covering TWO HUNDRED FIFTY-EIGHT THOUSAND (258,000) shares of the capital stock of the Bank of Blue Valley. 3. Conditions of Lending. Until payment in full of the Note, the Borrower agrees that, unless the Bank otherwise consents in writing, the Borrower will perform or cause to be performed the following: 3.1 Records. Accurate books and records of account will be maintained by the Borrower and the Subsidiary Bank in accordance with sound accounting practices consistently applied, and the Bank and its designated representatives will have the right to examine such books and records, and to discuss the affairs, finances, accounts, and content of such books and records of the Borrower and the Subsidiary Bank. 3.2 Financial Statements. Furnish within ninety (90) days after the close of each fiscal year of the Borrower, complete copies of the balance sheets as of the close of such fiscal year and the profit and loss statements and surplus reconciliations of the Borrower for such fiscal year prepared in accordance with sound accounting principles by accountants and in form satisfactory to the Bank. 3.3 Reports. Furnish within thirty (30) days after each filing thereof: (a) copies of the FRY-6 Annual Report of the Borrower to the Federal Reserve System; and (b) copies of all Consolidated Reports of Condition and Consolidated Reports of Income and Call Reports filed by the Subsidiary Bank with the appropriate regulatory agency. 3.4 Other Information. Such other information concerning the Borrower and Subsidiary Bank as the Bank might reasonably request. 4. Adverse Change. The Borrower will immediately advise the Bank of any requirement by the regulatory authorities for additional capital in the Subsidiary Bank, or the institution of any agreement, order, or proceeding between any regulatory authority and the Borrower or Subsidiary Bank, whether or not such agreement, order, or proceeding is agreed to by the Borrower or Subsidiary Bank. The Borrower will immediately advise the Bank of any significant litigation or other matter which might result in a material adverse change in the financial condition of the Borrower or the Subsidiary Bank. 5. Change in Ownership. Any change in control of the ownership of the Borrower or any merger or consolidation with or into another corporation or other disposition of property by the Borrower, without the prior written consent of the Bank, shall constitute an event of default and upon such an occurrence the Bank may demand the entire obligation of the Borrower to be immediately due and payable. Borrower agrees to immediately notify Bank of any such change in ownership. 6. In the event additional capital shall be injected in Subsidiary Bank, whether by capital note, stock or in other form, such capital note, stock or other instrument shall be immediately pledged to the Bank. 7. If default shall be made in the due observance or performance of any terms, covenants or agreements in this Agreement, the Bank may demand the entire obligation of the Borrower to be due and payable. No failure on the part of the Bank to exercise and no delay in exercising any right hereunder shall operate as a waiver thereof. 8. This Agreement and the rights and obligations of the parties shall be governed by the interpreted in accordance with the laws of the State of Missouri. 9. This Agreement is the final expression of the agreement between Boatmen's and the Borrower(s). This Agreement may not be contradicted by evidence of any prior oral agreement or of a contemporaneous oral agreement between the parties. All the terms of the final agreement of the parties not set forth above or which vary any terms set forth above, including any previous oral agreements, are as follows: No unwritten oral agreement between the parties exists. BLUE VALLEY BANCORP "Borrower" By: /s/ Robert D. Regnier Title:_________________________________ BANK OF BLUE VALLEY "Subsidiary Bank" By: /s/ Robert D. Regnier Title:_________________________________ BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY "Bank" By: /s/ Deon Pitsor Title: Vice President EX-10.3 17 AMENDMENT OF LOAN DOCUMENTS Amendment of Loan Documents This Amendment is effective as of the 26th day of December, 1997 and is entered into by and among Blue Valley Ban Corp ("Borrower"), Bank of Blue Valley (the "Subsidiary Bank"), and NationsBank, N.A., successor to Boatmen's First National Bank of Kansas City ("Bank"). Whereas, Borrower is indebted to Bank as currently evidenced by a Promissory Note dated December 31, 1996 in the face principal amount of $2,887,500 (the "Note") with a current outstanding principal balance of $2,537,500; Whereas, the loan evidenced by the Note is governed by the terms of an Agreement dated January 2, 1997 by and among Borrower, the Subsidiary Bank, and Bank (the "Loan Agreement"), and the loan is secured by a Security Agreement dated June 7, 1994 and executed by Borrower in favor of Bank (the "Security Agreement") whereby Borrower pledged a security interest in, among other items of collateral, 258,000 shares of Borrower's stock in the Subsidiary Bank; and Whereas, Borrower has, among other requests, requested an additional advance or loan in the amount of $1,500,000 for the purpose of injecting the proceeds thereof into the Subsidiary Bank as a capital contribution, and Bank has agreed to do so upon the terms and conditions hereinafter set forth. Now, therefore, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, Borrower, the Subsidiary Bank, and Bank agree as follows: 1. Amendment of Note. The Note shall be amended as follows: a. Bank shall advance $1,500,000 to Borrower on or aboutthe date hereof; therefore, the face principal amount of the Note shall be and hereby is amended to reflect a face principal amount of $4,387,500. Borrower agrees to pay to Bank the current outstanding principal amount under the Note, as so amended, of $4,037,500 according to the terms of the Note, as herein amended. b. The "Reference Rate" (i. e., the "Corporate Base Rate") described in the Note shall mean the prime rate of interest ("Prime Rate") established from time to time by Bank, which Prime Rate may not be the best or lowest rate charged by Bank to its customers; and the Note shall be and hereby is amended to reflect the foregoing change. c. From the effective date hereof, principal outstanding under the Note, as amended hereby, shall bear interest at the per annum rate equal to Bank's Prime Rate, minus one-half of one percent (0.50%). The interest rate charged under the Note, as amended hereby, shall change as of the date on which Bank makes changes to its Prime Rate. d. The "Final Maturity" date set forth in the Note, at which time all sums due under the Note, as amended, shall be due and payable in full, shall be and hereby is changed from January 31, 1998 to January 31, 1999. e. Notwithstanding anything to the contrary contained in the Note or the Loan Agreement, the payments paragraph of the Note shall be amended and hereby is amended to read as follows: "Borrower shall make a principal payment in the amount of $87,500, plus accrued interest, on January 31, 1998; thereafter, on the 30th day of each April, July, October and January, Borrower shall make a principal payment of $125,000, together with accrued interest outstanding on each such payment date. Borrower shall pay the entire amount outstanding under this Note on January 31, 1999, unless the Final Maturity is extended with Bank's consent." 2. Amendment of Loan Agreement. The Loan Agreement shall be amended as follows: a. Notwithstanding anything to the contrary in the Loan Agreement, the terms thereof shall be changed and hereby are changed to reflect the amended face principal amount of the Note, the amended Maturity Date or Final Maturity, and the amended interest rate, all as more specifically set forth in Section 1 hereof. b. Section 1.3 of the Loan Agreement shall be supplemented by adding the following paragraph thereto: "It is the Bank's expectation that, if the Borrower reduces the outstanding principal amount of the Note, as amended, to not more than $3,450,000 on or before January 31, 1999, the Bank will consider the renewal and extension of the Final Maturity date as set forth in the Note, as amended, along principally the same terms and conditions. Notwithstanding the foregoing, the Borrower understands and agrees with the Bank that should the Bank determine, in its sole discretion, that the Borrower's credit standing is no longer acceptable to the Bank, the Note, as amended, will not be renewed and extended by the Bank." c. Borrower agrees to add, and by the execution hereof adds, two new covenants to the Loan Agreement under Section 3 (Conditions of Lending) as follows: "3.5 Borrower shall not pay any dividends or make distributions of any kind on the stock of Borrower. 3.6 Borrower shall not incur any additional indebtedness." 3. Security Agreement. The collateral provided for in the Security Agreement shall continue to secure the "Obligations" as defined therein, which shall include indebtedness evidenced by the Note, as amended hereby. 4. Except as amended hereby, all other terms and conditions in the Note, the Loan Agreement and the Security Agreement shall remain unchanged and in full force and effect. 5. Borrower represents and warrants to Bank that it is not, as of the effective date hereof, in default under the Note, the Loan Agreement, or the Security Agreement. Borrower further warrants and represents to Bank that as of the effective date hereof Borrower has no claim, counterclaim, defense or set-off with respect to the amounts due to Bank under the Note as amended. Blue Valley Ban Corp By: /s/ Robert D. Regnier Title: President Bank of Blue Valley By: /s/ Robert D. Regier Title: President NationsBank, N.A., successor to Boatmen's First National Bank of Kansas City By: /s/ Deon Pitsor Title: Vice President EX-10.4 18 SECOND AMENDMENT TO LOAN DOCUMENTS Second Amendment to Loan Documents This Amendment is effective as of the 31st day of January, 1999 and is entered into by and among Blue Valley Ban Corp ("Borrower"), Bank of Blue Valley (the "Subsidiary Bank"), and NationsBank, N.A., successor to Boatmen's First National Bank of Kansas City ("Bank"). Whereas, Borrower is indebted to Bank as evidenced by a Promissory Note dated December 31, 1996 in the face principal amount of $2,887,500 and Promissory Note being amended by an Amendment of Loan Documents dated December 26, 1997 which Amendment, among other matters, increased the face principal amount of said Promissory Note to $4,387,500 (as amended, the "Note"), the Note having an anticipated outstanding principal balance of $3,450,000 if and when Borrower shall pay a scheduled principal payment due on January 31, 1999; Whereas, the loan evidenced by the Note is governed by the terms of an Agreement dated January 2, 1997 by and among Borrower, the Subsidiary Bank, and Bank said Loan Agreement being amended by the above described Amendment of Loan Documents dated December 26, 1997 (as amended, the "Loan Agreement"), and the loan is secured by a Security Agreement dated June 7, 1994 and executed by Borrower in favor of Bank (the "Security Agreement") whereby Borrower pledged a security interest in, among other items of collateral, 258,000 shares of Borrower's stock in Subsidiary Bank; and Whereas, Borrower has requested that the Final Maturity (as defined in the Note) date of the Note be extended to January 31, 2000, and Bank has agreed to do so upon the terms and conditions hereinafter set forth. Now, therefore, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, Borrower, the Subsidiary Bank, and Bank agree as follows: 1. Replacement of Note. The Note shall be amended and replaced by a new note to be dated as of the effective date hereof (the "New Note") which shall be in the form of Exhibit A attached hereto, which New Note shall extend the Final Maturity as described above and provide for such other changes as may be provided for therein. All sums outstanding under the Note shall from the effective date of this Amendment be evidenced by the New Note referenced herein, and all terms in the Loan Agreement and the Security Agreement referencing the Note or the Promissory Note shall mean the Note as replaced by the New Note. 2. Amendment of Loan Agreement. The Loan Agreement shall be amended as follows: a. Notwithstanding anything to the contrary in the Loan Agreement, the terms thereof shall be changed and hereby are changed to reflect the amended Maturity Date or Final Maturity, as more specifically set forth in the New Note. b. Section 1.3 of the Loan Agreement shall be supplemented by adding the following paragraph thereto: "It is the Bank's expectation that, if the Borrower reduces the outstanding principal amount of the Note, as amended, to not more than $2,950,000 on or before January 31, 2000, the Bank will consider the renewal and extension of the Final Maturity date as set forth in the Note, as amended, along principally the same terms and conditions. Notwithstanding the foregoing, the Borrower understands and agrees with the Bank that should the Bank determine, in its sole discretion, that the Borrower's credit standing is no longer acceptable to the Bank, the Note, as amended, will not be renewed and extended by the Bank." 3. Security Agreement. The collateral provided for in the Security Agreement shall continue to secure the "Obligations" as defined therein, which shall include indebtedness evidenced by the Note, as replaced by the New Note. 4. Except as amended hereby, all other terms and conditions in the Note, the Loan Agreement and the Security Agreement shall remain unchanged and in full force and effect. 5. Borrower represents and warrants to Bank that it is not, as of the effective date hereof, in default under the Note, the Loan Agreement, or the Security Agreement. Borrower further warrants and represents to Bank that as of the effective date hereof Borrower has no claim, counterclaim, defense or set-off with respect to the amounts due to Bank under the Note as amended. This Second Amendment of Loan Documents shall become effective as of the date set forth above upon Borrower's delivery to Bank of the original executed copies of this Second Amendment and the New Note. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH WITH THE OTHER LOAN DOCUMENTS REFERRED TO IN THIS SECOND AMENDMENT OF LOAN DOCUMENTS IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. Blue Valley Ban Corp By: /s/ Robert D. Regnier Title: President Bank of Blue Valley By: /s/ Robert D. Regnier Title: President NationsBank, N.A., successor to Boatmen's First National Bank of Kansas City By: /s/ Title: Sr. V. P. EX-10.5 19 THIRD AMENDMENT TO LOAN DOCUMENTS THIRD AMENDMENT OF LOAN DOCUMENTS This Amendment is effective as of the 21st day of June, 1999 and is entered into by and among Blue Valley Ban Corp ("Borrower"), Bank of Blue Valley (the "Subsidiary Bank"), and NationsBank, N.A., successor to Boatmen's First National Bank of Kansas City ("Bank"). Whereas, Borrower is indebted to Bank as evidenced by a Promissory Note dated December 31, 1996 in the face principal amount of $2,887,500, said Promissory Note being amended by an Amendment of Loan Documents dated December 26, 1997 which Amendment, among other matters, increased the face principal amount of said Promissory Note to $4,387,500, said Promissory Note being further amended and replaced by that certain Promissory Note dated January 31, 1999 in the face principal amount of $3,450,000 (as amended and replaced, the "Former Note"), the Former Note having an outstanding principal balance of $3,325,000 as of the date hereof; Whereas, the loan evidenced by the Former Note is governed by the terms of an Agreement dated January 2, 1997 by and among Borrower, the Subsidiary Bank, and Bank, said Loan Agreement being amended by the above-described Amendment of Loan Documents dated December 26, 1997 as well as by that certain Second Amendment of Loan Documents dated January 31, 1999 (as amended, the "Loan Agreement"), and the loan evidencing the Former Note is secured by a Security Agreement dated June 7, 1994 and executed by Borrower in favor of Bank (the "Security Agreement") whereby Borrower pledged a security interest in, among other items of collateral, 258,000 shares of Borrower's stock in the Subsidiary Bank; and Whereas, Borrower has requested that the Final Maturity (as defined in the Former Note) date of the Former Note be extended to July 31, 2000, that the face principal amount of the Former Note be increased so as to make additional loan proceeds available to Borrower, and that the interest rate set forth in the Former Note be changed, and Bank has agreed to do so upon the terms and conditions hereinafter set forth. Now, therefore, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, Borrower, the Subsidiary Bank, and Bank agree as follows: 1. Amendment and Restatement of Former Note; Additional Loan Proceeds. The Former Note shall be amended and restated by a new note to be dated as of the effective date hereof (the "New Note") which shall be in the form of Exhibit A attached hereto, which New Note shall increase the principal amount thereof and provide for such other changes as may be provided for therein. All sums outstanding under the Former Note shall from the effective date of this Amendment be evidenced by the New Note referenced herein. Such sums include a principal amount of $3,325,000. Additional loan proceeds in the amount of $2,500,000 shall be made available to Borrower from the date hereof, which additional amount of principal as well as the existing principal balance under the Former Note shall be evidenced by the New Note, with the result that the New Note shall evidence a face principal amount of $5,825,000. All terms in the Loan Agreement and the Security Agreement referencing the "Note" or the "Promissory Note" shall from the date hereof mean the Former Note as amended and replaced by the New Note. 2. Amendment of Loan Agreement. The Loan Agreement shall be amended as follows: a. Notwithstanding anything to the contrary in the Loan Agreement, the terms thereof shall be changed and hereby are changed to reflect the amended Maturity Date or Final Maturity, as more specifically set forth in the New Note. b. Section 1.1 of the Loan Agreement shall be amended to reflect the new interest rate set forth in the New Note, such amended interest rate to take effect as of the effective date of the New Note. c. Section 1.3 of the Loan Agreement shall be supplemented by adding the following paragraph thereto: "It is the Bank's expectation that, if the Borrower reduces the outstanding principal amount of the Note, as amended, to not more than $4,887,500 on or before July 31, 2000, the Bank will consider the renewal and extension of the Final Maturity date as set forth in the Note, as amended, along principally the same terms and conditions. NOTWITHSTANDING THE FOREGOING, THE BORROWER UNDERSTANDS AND AGREES WITH THE BANK THAT SHOULD THE BANK DETERMINE, IN ITS SOLE DISCRETION, THAT THE BORROWER'S CREDIT STANDING IS NO LONGER ACCEPTABLE TO THE BANK, THE NOTE, AS AMENDED, WILL NOT BE RENEWED AND EXTENDED BY THE BANK." 3. Security Agreement. The collateral provided for in the Security Agreement shall continue to secure the "Obligations" as defined therein, which shall include indebtedness evidenced by the Former Note, as replaced by the New Note. 4. Except as amended hereby, all other terms and conditions in the Note, the Loan Agreement and the Security Agreement shall remain unchanged and in full force and effect. 5. Borrower represents and warrants to Bank that it is not, as of the effective date hereof, in default under the Note, the Loan Agreement, or the Security Agreement. Borrower further warrants and represents to Bank that as of the effective date hereof Borrower has no claim, counterclaim, defense or set-off with respect to the amounts due to Bank under the Note as amended. This Third Amendment of Loan Documents shall become effective as of the date set forth above upon Borrower's delivery to Bank of the original executed copies of this Third Amendment and the New Note. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH WITH THE OTHER LOAN DOCUMENTS REFERRED TO IN THIS SECOND AMENDMENT OF LOAN DOCUMENTS IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. Blue Valley Ban Corp By: /s/ Robert D. Regnier Title: President Bank of Blue Valley By: /s/ Robert D. Regnier Title: President NationsBank, N.A., successor to Boatmen's First National Bank of Kansas City By: /s/ Title: Sr. V. P. EX-10.6 20 FOURTH AMENDMENT OF LOAN DOCUMENTS FOURTH AMENDMENT OF LOAN DOCUMENTS This Amendment is effective as of the 30th day of December, 1999 and is entered into by and among Blue Valley Ban Corp ("Borrower"), Bank of Blue Valley (the "Subsidiary Bank"), and Bank of America, N.A., successor to NationsBank, N.A., which was successor to Boatmen's First National Bank of Kansas City ("Bank"). Whereas, Borrower is indebted to Bank as evidenced by a Promissory Note dated December 31, 1996 in the face principal amount of $2,887,500 and Promissory Note being amended by an Amendment of Loan Documents dated December 26, 1997 which Amendment, among other matters, increased the face principal amount of said Promissory Note to $4,387,500, said Promissory Note being further amended and replaced by that certain Promissory Note dated January 31, 1999 in the face principal amount of $3,450,000, and subsequently said Promissory Note being further amended and replaced by that certain Amended and Restated Promissory Note dated June 21st, 1999 ("Former Note"), the Former Note having an outstanding principal balance of $5,450,000 as of the date hereof; Whereas, the loan evidenced by the Former Note is governed by the terms of an Agreement dated January 2, 1997 by and among Borrower, the Subsidiary Bank, and Bank said Loan Agreement being amended by the above described Amendment of Loan Documents dated December 26, 1997 and by that certain Second Amendment of Loan Documents dated January 31, 1999 as well as that certain Third Amendment of Loan Documents (as amended, the "Loan Agreement"), and the loan evidenced by the Former Note is secured by a Security Agreement dated June 7, 1994 and executed by Borrower in favor of Bank (the "Security Agreement") whereby Borrower pledged a security interest in, among other items of collateral, 258,000 shares of Borrower's stock in Subsidiary Bank; and Whereas, Borrower has requested that the face principal amount of the Former Note be increased so as to make additional loan proceeds available to Borrower, and Bank has agreed to do so upon the terms and conditions hereinafter set forth. Now, therefore, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, Borrower, the Subsidiary Bank, and Bank agree as follows: 1. Amendment and Restatement of Former Note: Additional Loan Proceeds. The Former Note shall be amended and restated by a new note to be dated as of the effective date hereof (the "New Note") which shall be in the form of Exhibit A attached hereto, which New Note shall increase the principal amount thereof and provide for such other changes as may be provided for therein. All sums outstanding under the Former Note shall from the effective date of this Amendment be evidenced by the New Note referenced herein. Such sums include a principal amount of $5,450,000. Additional loan proceeds in the amount of $2,000,000 shall be made available to Borrower from the date hereof which additional amount of principal as well as the existing principal balance under the Former Note shall be evidenced by the New Note, with the result that the New Note shall evidence a face principal amount of $7,450,000. All terms in the Loan Agreement and the Security Agreement referencing the "Note" or the "Promissory Note" shall from the date hereof mean the Former Note as amended and replaced by the New Note. 2. Amendment of Loan Agreement. Section 3.6, as added by the Amendment to Loan Documents dated December 26, 1997, shall be amended to specifically allow for Borrower's issuance of up to an aggregate amount of Twelve Million Five Hundred Thousand Dollars ($12,500,000) in junior subordinated debentures, subordinate to Bank, and Borrower's guaranty of a like amount in preferred securities to be issued by BBVC Capital I. 3. Security Agreement. The collateral provided for in the Security Agreement shall continue to secure the "Obligations" as defined therein, which shall include indebtedness evidenced by the Former Note, as replaced by the New Note. 4. Except as amended hereby, all other terms and conditions in the Note, the Loan Agreement and the Security Agreement shall remain unchanged and in full force and effect. 5. Borrower represents and warrants to Bank that it is not, as of the effective date hereof, in default under the Note, the Loan Agreement, or the Security Agreement. Borrower further warrants and represents to Bank that as of the effective date hereof Borrower has no claim, counterclaim, defense or set-off with respect to the amounts due to Bank under the Note as amended. This Fourth Amendment of Loan Documents shall become effective as of the date set forth above upon Borrower's delivery to Bank of the original executed copies of this Fourth Amendment and the New Note. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH WITH THE OTHER LOAN DOCUMENTS REFERRED TO IN THIS SECOND AMENDMENT OF LOAN DOCUMENTS IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. Blue Valley Ban Corp Bank of America, N.A., successor to NationsBank, N.A., successor to Boatmen's First National Bank of Kansas City By: /s/ Robert D. Regnier Title: President By: /s/ William J. Hornung Title: V. P. Bank of Blue Valley By: /s/ Robert D. Regnier Title: President EX-10.7 21 AMENDED AND RESTATED PROMISSORY NOTE EXHIBIT A AMENDED AND RESTATED PROMISSORY NOTE $7,450,000.00 December 30, 1999 The undersigned ("Borrower") promises to pay to the order of Bank of America, N.A., successor to NationsBank, N.A., successor to Boatmen's First National Bank of Kansas City ("Bank"), at such address as Bank shall designate from time to time ("Bank's Address") the principal sum of Seven Million Four Hundred Fifty Thousand Dollars ($7,450,000.00), plus interest thereon as required below. From the effective rate hereof, interest shall accrue on the outstanding principal balance of this Note at the Bank's Prime Rate of interest per annum, as such Prime Rate changes from time to time, minus one per cent (1%). Bank's Prime Rate of interest is that interest rate established by Bank from time to time as its Prime Rate, which rate may not be the best or lowest rate charged by Bank to its customers. Changes in such rate shall be made without notice to the undersigned and shall be effective on the date of each such change. After maturity, whether upon the lapse of time or by acceleration, all past due principal, and interest to the extent permitted by law, shall bear interest until paid at the same rate as would be applicable if it was before maturity, plus 2.0%. All interest shall be calculated on the basis of the days actually elapsed over a year deemed to consist of 360 days. Notwithstanding anything to the contrary contained in this Note, the rate of interest payable under this Note shall not exceed the maximum amount Bank lawfully may charge. If Bank receives anything of value deemed interest under applicable law which would exceed the maximum amount of interest permissible under applicable law, or if application of any variable rate, used of a 360-day year or any other circumstance, including acceleration, prepayment, or demand, would cause the effective interest rate under this Note to exceed such maximum rate, then the interest rate under this Note shall be deemed reduced to such maximum rate, and the excessive interest shall, at the option of Bank, be applied to the reduction of the outstanding principal balance under this Note or refunded to Borrower. The entire outstanding principal balance and all accrued interest thereon shall be due and payable on JULY 31, 2000 ("Final Maturity"). Until Final Maturity, Borrower shall make payments as follows: QUARTERLY principal payments of $187,500 each, plus (at the same time) accrued interest, commencing on July 31, 1999 and continuing on the last day of each quarter-year thereafter, until July 31, 2000, on which date the entire unpaid principal balance and all interest accrued thereon shall be due and payable. This Note is secured by that certain Security Agreement dated June 7, 1994 and the collateral specified therein. This Note is also related tot he terms of that certain Agreement dated January 2, 1997 (as such Agreement has been amended by that certain Amendment of Loan Documents dated December 26, 1997, that certain Second Amendment of Loan Documents dated January 31, 1999, that certain Third Amendment of Loan Documents dated June 21, 1999 and that certain Fourth Amendment of Loan Documents of even date herewith), with this Note being issued by Borrower in favor of Bank pursuant to the provisions set forth in said Fourth Amendment of Loan Documents of even date herewith between Borrower and Bank. There may be other security and Borrower acknowledges that omitting to list it here shall not constitute a waiver or abandonment thereof. The holder of this Note, in addition to any other rights the holder may have, shall have the right to offset against amounts due under this Note all deposit, funds, securities, and other property of Borrower in the possession of the holder. If Borrower does not pay any principal or interest when due hereunder, or if Borrower or any other party defaults under or fails to perform or pay any covenant or obligation in any agreement that secures this Note or has been executed and delivered to the holder hereof in connection with the indebtedness evidenced by this Note, the holder hereof my declare all principal and unpaid accrued interest to be immediately due and payable. Failure to do so at any time shall not constitute a waiver of the right of the holder hereof to do so at any other time. Borrower and all others who are or become parties to this Note, whether as makers, endorsers, or guarantors, by becoming parties to this Note, waive presentment for payment, notice of dishonor, protest, notice of protest, and all other notices and lack of diligence in the enforcement of this Note. Every such party be becoming a party to this Note assents to each and every extension or postponement of the time of payment or other indulgence by the holder of this Note, whenever made, and waives notice thereof. Every such party by becoming a party to this Note further waives any and all defenses which such party may have based on suretyship or impairment of collateral with respect to this Note. If this Note is not paid strictly according to its terms, Borrower shall (to the extent permitted by law) pay all costs of collection, including but not limited to court costs and attorney's fees and expenses (whether or not there is litigation), and all costs of the holder hereof incurred in connection with any proceedings affecting this Note under the United States Bankruptcy Code and under similar sate debtor relief laws. Borrower agrees that it will use the proceeds of this Note for business purposes only, and not for personal, family or household purposes. THIS NOTE AMENDS AND REPLACES THAT CERTAIN PROMISSORY NOTE PERVIOUSLY DATED JUNE 21, 1999 FROM BORROWER TO BANK IN TH FACE PRINCIPAL AMOUNT OF $5,825,000.00. THIS NOTE EVIDENCES OUTSTANDING BALANCES PERVIOUSLY EXISTING UNDER SUCH PRIOR NOTE AS WELL AS ADVANCES OF LOAN PROCEEDS MADE TO BORROWER FROM AND AFTER THE DATE HEREOF ALL AS MORE SPECIFICALLY SET FORTH IN THAT CERTAIN FOURTH AMENDMENT OF LOAN DOCUMENTS DATED OF EVEN DATE HEREWITH. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT BORROWER AND BANK FROM MISUNDERSTANDING OR DISAPPOINTMENTS, ANY AGREEMENTS WE REACH CONCERNING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN BORROWER AND BANK, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. EFFECTIVE: December 30, 1999. BORROWER: Blue Valley Ban Corp By: /s/ Robert D. Regnier Name: Robert D. Regnier Title: President EX-10.8 22 PROMISSORY NOTE PROMISSORY NOTE $2,500,00.00 July 15, 1994 FOR VALUE RECEIVED, the undersigned, BLUE VALLEY BUILDING CORP., a Kansas corporation ("Borrower"), with an address at P.O. Box 26128, Overland Park, Kansas 66225, promises to pay to BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, with an address at c/o Charter American Mortgage Company, 2001 Shawnee Mission Parkway, Mission Hills, Kansas 66205 ("Lender") or to order, the principal sum of Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00), together with interest on the unpaid principal balance of this Note at the "Interest Rate" (as defined below) in the amounts and in the manner set forth herein. 1. Term. (a) The term of this Note (the "Loan Term") shall commence on the date hereof and shall end on August 1, 2009 (the "Maturity Date"). "Loan Year", as used herein, shall mean the twelve (12) month period beginning on the due date of the first "Monthly Payment" (as set forth in Section 3 below) and each consecutive twelve (12) month period thereafter during the Loan Term, and "Loan" shall mean the loan from Lender to Borrower evidenced by this Note. (b) Notwithstanding the provisions of paragraph 1(a) above, Lender shall have the right to accelerate the maturity of this Note and to declare the same due and payable on the last day of the tenth (10th) Loan Year (the "Accelerated Maturity Date"), by giving notice to Borrower not later than one hundred eighty (180) days prior to the Accelerated Maturity Date. The entire outstanding principal balance and all accrued and unpaid interest shall then be due and payable on the Accelerated Maturity Date, without prepayment charge. 2. Interest Rate. (a) This Note shall bear interest at a rate equal to seven and one-half percent (7.50%) per annum (the "Interest Rate"). All payments due under this Note shall be applied first against accrued interest and then against the outstanding principal amount due under this Note. The interest hereunder shall be calculated based on a three hundred sixty (360) day year consisting of twelve (12) months of thirty (30) days each. (b) At Lender's option, the Interest Rate shall be adjusted as of the first (1st) day of the eleventh (11th) Loan Year (the "Adjustment Date") to a rate per annum (the "Adjusted Interest Rate") equivalent to two hundred (200) basis points above the then current yield of U.S. Treasury Securities (i) with an asking price closest to par, (ii) paying interest semi-annually, (iii) not a "zero coupon" obligation or an obligation with an optional prepayment, and (iv) having a maturity date closest to the Maturity Date, as such yield is published in the Wall Street Journal on the Adjustment Date (or the next preceding publication date), such yield rate to be applicable regardless of the schedule of interest payments under this Note and such Treasury Security, but in no event shall the Adjusted Interest Rate be less than seven and one-half percent (7.50%) nor greater than eight and one-half percent (8.50%) per annum. If Lender shall so elect to adjust to the Interest Rate, Lender shall so notify Borrower not later than sixty (60) days prior to the Adjustment Date. Borrower shall thereupon have a period of one hundred eighty (180) days from the Adjustment Date in which Borrower may prepay the Loan in full, without prepayment charge or other penalty. If Borrower shall not so prepay the Loan prior to the expiration of such one hundred eighty (180) day period, Borrower shall be deemed to have accepted the Adjusted Interest Rate, and this Note shall continue in full force and effect in accordance with its terms and the Adjusted Interest Rate. Notwithstanding the election of Borrower to prepay the Loan under this paragraph (b), the Adjusted Interest Rate shall be applicable until the date of such prepayment. 3. Monthly Payment; Final Payment. (a) The outstanding principal balance and accrued interest under this Note shall be repaid in monthly installments of principal and interest of $23,175.31 (the "Monthly Payments"). The first Monthly Payment shall be due and payable on the first day of September, 1994, and on the first day of each succeeding month; provided, however, that on August 1, 1994, Borrower shall make a payment of the accrued interest from the date of closing of the Loan through and including the last day of July, 1994. If not sooner paid, the entire outstanding principal balance and all accrued and unpaid interest under this Note shall be due and payable on the Maturity Date. (b) If the Interest Rate shall be adjusted pursuant to Section 2(b) above, then effective as of the first day of the eleventh (11th) Loan Year, the Monthly Payment shall be adjusted to an amount sufficient to fully amortize the then outstanding principal balance of this Note in equal monthly installments of principal and interest over a period of sixty (60) months at the Adjusted Interest Rate. 4. Prepayment. (a) Borrower shall not have the right to prepay any principal or interest under this Note for the first three (3) Loan Years of the Loan Term. After the third (3rd) Loan Year, Borrower shall have the right to prepay the entire outstanding principal balance of this Note on the following terms and conditions: (1) Delivery of sixty (60) days prior written notice to Lender; (2) Payment of all accrued interest and other charges under this Note and all sums due under all other Loan Documents; and (3) Payment of a percentage of the then outstanding principal balance of this Note, as a prepayment charge, during the fourth (4th) Loan Year and thereafter, of two percent (2%). (b) Notwithstanding the foregoing, Borrower shall have the right, after the third (3rd) Loan Year, to prepay up to five percent (5%) of the then outstanding principal balance of this Note, on a non-cumulative basis, without prepayment charge, on the due date of any monthly payment, upon first complying with the provisions of clauses (1) and (2) of paragraph (a) above. Borrower shall further have the right to prepay the Loan, including all interest and charges thereunder, in full, without prepayment charge, on the last day of the tenth (10th) Loan Year, even though Lender shall not have exercised its right under Section 1(b) above, upon first giving notice to Lender not later than one hundred eighty (180) days prior to the date of prepayment. 5. Security. The indebtedness evidenced by this Note is secured by a Mortgage, Assignment of Leases and Rents, Security Agreement and Financing Statement dated as of the date hereof (the "Mortgage") and by a separate Assignment of Leases and Rents dated as of the date hereof, given by Borrower to Lender and encumbering certain real property and improvements located in the City of Overland Park, County of Johnson, State of Kansas (the "Mortgaged Estate"). This Note, the Mortgage, Assignment of Leases and Rents, Environmental Indemnity and any other instruments or documents that evidence or secure the indebtedness under this Note are herein collectively called the "Loan Documents", and the terms of all Loan Documents are incorporated into this Note by reference. 2 6. Late Charge. If any payment of interest, principal or other charge or cost under this Note or any other Loan Document is not made within ten (10) days of the date such payment is due and payable (calculated by including the due date), Borrower shall pay to Lender, as liquidated damages by reason of such delay in payment, an amount equal to five percent (5%) of the total amount of such delinquent payment (a "Late Charge"). Any such payment on which a Late Charge is payable shall not be deemed to be have been paid until the Late Charge shall have been paid. 7. Default Rate. If any payment of interest, principal, premium or other charge or cost under this Note or any other Loan Document is not made within ten (10) days of the date such payment is due and payable (calculated by including the due date), including payment after acceleration of this Note, such delinquent amount shall accrue interest at a rate (the "Default Rate") equal to the lesser of (i) the Interest Rate (as the same may be adjusted from time to time) plus five percent (5%) or (ii) the maximum rate allowed by law, until the date such payment, including any applicable Late Charge, shall be paid in full. Any such payment on which interest at the Default Rate is payable shall not be deemed to have been paid until all interest accrued at the Default Rate shall have been paid. 8. Events of Default. Each of the following shall be an "Event of Default" under this Note: (i) failure to pay when due any principal, interest or other charge payable under this Note or any other Loan Document within ten (10) days of the date such payment is due and payable (calculated by including the due date); (ii) failure to perform or observe any other covenant or obligation of Borrower under this Note and such default is not completely cured by Borrower within thirty (30) days after notice thereof from Lender specifying such default; or (iii) the occurrence of an "Event of Default" as defined in any other Loan Document or any other default under any other Loan Document which is not cured within the applicable cure period, if any, provided therein. 9. Remedies. Upon the occurrence of an Event of Default, Lender may, at its option, exercise any one or more of the following remedies: (i) declare the entire unpaid principal balance of this Note, together with all accrued and unpaid interest and any other charges or amounts payable under the Loan Documents, to be immediately due and payable, regardless of the Maturity Date; (ii) pursue any other rights and remedies of Lender under the Loan Documents, applicable law, or otherwise; and (iii) offset against any amounts payable under this Note any debts or obligations of Lender to Borrower, or any amounts held by Lender on behalf or for the benefit of Borrower. 10. Reinvestment Fee. If Lender shall exercise its right under Section 9(i) above to accelerate the payment of this Note, then Borrower shall pay to Lender, as a reinvestment fee, an amount equal to ten percent (10%) of the outstanding principal balance of this Note during the first three (3) Loan Years, and thereafter in accordance with the prepayment charge set forth in Section 4(a) above. 11. Waiver by Borrower. Borrower and any guarantor or endorser of this Note hereby waive diligence, demand, presentment for payment, notice of nonpayment, protest, notice of dishonor and notice of protest, and specifically consent to and waive notice of any renewals, modifications or extensions of this Note, whether in favor of Borrower or any other person or persons, and hereby waive any defense by reason of extension of time for payment or other indulgence granted by Lender. 12. No Waiver by Lender. No delay, failure or forbearance on the part of Lender in exercising any right, remedy or privilege under this Note or under any other Loan Document shall affect such right, remedy or privilege, nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, remedy or privilege preclude any further exercise thereof or the exercise of any other rights, remedies or 3 privileges under any Loan Document. The rights, remedies and privileges of Lender hereunder are cumulative and not exclusive of any rights, remedies or privileges which Lender may have and may be exercised and enforced alternatively, successively or concurrently, at the sole discretion of Lender. 13. Notices. All notices, consents or communications required or permitted to be given under this Note shall be in writing and shall be deemed to have been properly given and received (i) if sent by hand delivery, then upon delivery, (ii) if sent by overnight courier or United States Express Mail, then one (1) day after dispatch, and (iii) if mailed by certified or registered U.S. mail, postage prepaid and return receipt requested, then two (2) days after deposit in the mail. All such notices and communications shall be given (x) to Lender at its address set forth in this Note, and (y) to Borrower at its address set forth in this Note, Attn: Robert D. Regnier (with a copy to Buck, Bohm & Stein, 4601 College Boulevard, Suite 200, Leawood, Kansas 66211-1650), or at such other addresses as either party may designate by notice in accordance with the terms of this paragraph. 14. Lender's Costs. Borrower and any guarantor or endorser of this Note agree to pay all costs, charges and expenses, including attorneys' fees, to the extent permitted by law, which may be incurred by Lender for the collection of any sums due under the Loan Documents or enforcing any of Lender's rights under the Loan Documents, together with interest on such sums from the date incurred at the Default Rate. 15. Limited Liability. The liability of Borrower for the repayment of the indebtedness evidenced by this Note and the performance of the Secured Obligations shall be limited to the security given by Borrower and other parties for this Note and other Secured Obligations. Notwithstanding anything to the contrary contained herein, and notwithstanding any delay by Lender in exercising any right, remedy or privilege under any Loan Document, Borrower shall be personally liable beyond its interest in the security granted to Lender to the extent of: (i) any funds received by Borrower or any other person or entity for or on account of Borrower as security deposits under any Leases; (ii) any Rents received or held by Borrower after the occurrence of an Event of Default or any Rents received by Borrower which are prepaid more than one month in advance; (iii) all condemnation awards and payments and insurance proceeds received by Borrower that have not been applied as required by the terms of the Loan Documents; (iv) the cost to repair the Mortgaged Estate as a result of a casualty not reimbursed by insurance to the extent that such insurance is required by the terms of the Loan Documents; (v) any liability, damage, cost or expense (including attorneys' fees) incurred by Lender as a result of any fraud, misrepresentation or bad faith by Borrower or any Guarantor; (vi) any liability, damage, cost or expense (including attorneys' fees) incurred by Lender under the terms of the Environmental Indemnity; (vii) any liability, damage, cost or expense (including attorneys' fees) incurred by Lender due to any waste of the Mortgaged Estate by Borrower or Borrower's representatives or tenants; and (viii) any failure to pay delinquent Taxes. Nothing contained herein shall limit or affect Lender's rights under any guaranty or other collateral which may now or hereafter be given in connection with this Note. 16. Miscellaneous. (a) This Note shall be governed by and construed in accordance with the laws of the State in which the Mortgaged Estate is located. The terms of this Note are severable, and if any provision, or the application or any provision, shall be declared invalid or unenforceable, the remaining provisions and all other applications of such provisions shall remain in full force and effect, and shall not be impaired in any way. (b) This Note may not be amended or modified except by a written agreement signed by Borrower and Lender. 4 (c) In no event shall payments of interest to Lender exceed the maximum rate or amount permitted to be charged under applicable law. If Lender shall receive any payment that is or would be in excess of the interest or other charge permitted to be charged under applicable law, the portion of any such payment received by Lender in excess of the maximum interest permitted by law shall be credited to the principal balance of the Loan. (d) Whenever used herein, the terms "Borrower" and "Lender" shall also mean, to the extent applicable, the heirs, successors, legal representatives and assigns of Borrower and Lender, and the term "including" shall mean "including, without limitation." Unless otherwise defined herein, capitalized terms used herein shall have the respective meanings as set forth in the Mortgage. (e) Time is of the essence of this Note. (f) This Note and every covenant and agreement herein contained shall be jointly and severally binding upon each party or entity executing this Note as or on behalf of Borrower and its and their heirs, successors, legal representatives and assigns, and shall inure to the benefit of Lender and its successors and assigns. BLUE VALLEY BUILDING CORP., a Kansas corporation ATTEST: [SEAL] By: /s/ Robert D. Regnier Robert D. Regnier, President By: Patricia L. Day Secretary 5 EX-10.9 23 MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, ETC. 10060 MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT, made and entered into as of the 15th day of July, 1994, by and among BLUE VALLEY BUILDING CORP., a Kansas corporation ("Borrower"), with an address at P.O. Box 26128, Overland Park, Kansas 66225, as mortgagor, and BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA, a Missouri corporation ("Lender"), with an address at c/o Charter American Mortgage Company, 2001 Shawnee Mission Parkway, Mission Hills, Kansas 66205, as mortgagee (hereinafter, this "Mortgage"). WITNESSETH, THAT in consideration of Lender's agreement to make a loan to Borrower in the original principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000.00) (the "Loan" and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower hereby warrants, represents, covenants and agrees as follows: ARTICLE I Granting Clauses Section 1.01. Grant of Real Estate Security. Borrower hereby irrevocably grants, bargains, sells, mortgages, warrants, transfers, convoys, assigns, sets over and pledges to Lender all of the following described property (the "Mortgaged Estate"): (a) The real property located in the City of Overland Park, County of Johnson, State of Kansas, described on Exhibit A, attached hereto and incorporated herein, and all and singular the tenements, hereditaments and appurtenances thereto, together with all right, title and interest of Borrower in all easements, rights-of-way, gores or strips of land, surface waters, ground waters, watercourses, mineral interests and subsurface rights, alleys, streets and sidewalks, whether now owned or hereafter acquired, either in law or in equity, adjacent or appurtenant to or adjoining such real property (the "Land"); (b) Any and all buildings and improvements now or hereafter erected or located on the Land, including all fixtures, attachments, appliances, equipment, machinery and other articles attached to such buildings and improvements (the "Improvements"); (c) All right, title and interest of Borrower in and to all tangible personal property now owned or hereafter acquired by Borrower and now or at any time hereafter located on the Land or within the Improvements and used in connection therewith, including all building materials stored on the Land, all machinery, motors, elevators, fittings, radiators, awnings, shades, screens, all plumbing, heating, lighting, ventilating, refrigerating, incinerating, air conditioning and sprinkler equipment, all furniture, furnishings, equipment and other personal property owned by Borrower and attached to or otherwise forming a part of the Land or Improvements, and used in connection with the operation of the Mortgaged Estate, and all renewals and replacements 1 thereof (excluding any such property owned by a tenant of the Mortgaged Estate) (the "Personal Property"), all of which property shall, so far as permitted by law, be deemed to form a part and parcel of the real property and for the purpose of this Mortgage to be real estate and covered by this Mortgage; (d) All of Borrower's interest in all existing and future accounts, contract rights, general intangibles, files, books of account, agreements, permits, licenses and certificates necessary or desirable in connection with the acquisition, ownership, leasing, operation or management of the Mortgaged Estate, whether now existing or entered into or obtained after the date hereof, including the "Leases" and "Rents" (as defined herein); (e) All agreements for use and occupancy of any part of the Mortgaged Estate, now existing or hereafter entered into, including any and all extensions or modifications thereto (the "Leases"), and all of the rents, royalties, security deposits, income, receipts, revenues and other sums now due or which may hereafter become due to Borrower under any Lease or arising from the use and enjoyment of any part of the Mortgaged Estate, and all rights and remedies which Borrower may have against any party under the Leases (the "Rents"); and (f) All the estate, interest, right, title or other claim or demand with respect to the proceeds of insurance and any and all awards made for the taking of any part of the Mortgaged Estate by the power of eminent domain, or by any proceeding or purchase in lieu thereof. TO HAVE AND TO HOLD the Mortgaged Estate unto Lender and its successors and assigns, forever. Section 1.02. Grant of Security Interest. With respect to any portion of the Mortgaged Estate which constitutes Personal Property, fixtures or other property or interests governed by the Uniform Commercial Code of the state in which the Mortgaged Estate is located (the "UCC"), this Mortgage shall constitute a security agreement between Borrower, as the debtor, and Lender, as the secured party, and Borrower hereby grants to Lender a security interest in such portion of the Mortgaged Estate. Borrower agrees to execute and deliver to Lender all financing and continuation statements and other information which are from time to time required to establish and maintain the validity and priority of the security interests herein granted. Upon the occurrence of an "Event of Default" (as defined herein), Lender shall have all of the rights and remedies of a secured party available under the UCC with respect to the property encumbered by the security interests; provided, however, Lender may, at its option, dispose of such property in accordance with Lender's rights and remedies under this Mortgage, in lieu of proceeding under the UCC. Borrower hereby appoints Lender as its attorney-in-fact to execute, deliver and file any and all required financing statements, continuation statements and other instruments as Lender may require in order to perfect and maintain the security interests granted herein. Section 1.03. Assignment of Leases and Rents. Borrower hereby assigns and transfers to Lender all of the Leases and Rents. The terms of such assignment are more specifically set forth in the separate Assignment of Leases and Rents dated as of the date hereof, executed by Borrower in favor of Lender and recorded simultaneously with this Mortgage, the terms of which Assignment of Leases and Rents are specifically incorporated herein by this reference. 2 Section 1.04. Secured Obligations. (a) This Mortgage shall secure the following indebtedness and obligations, including all replacements, renewals, amendments, extensions, substitutions and modifications thereof: (1) Payment of all indebtedness and performance of all obligations and covenants of Borrower under or pursuant to (i) the Promissory Note dated as of the date hereof, executed by Borrower in favor of Lender in the aggregate principal amount of the Loan (the "Note"); (ii) this Mortgage; (iii) the Assignment of Leases and Rents; (iv) Environmental Indemnity Agreement dated as of the date hereof between Borrower and Lender (the "Environmental Indemnity"); and (v) all other "Loan Documents" (as defined herein); and (2) Payment of all future advances and all sums advanced by Lender to protect the Mortgaged Estate or otherwise pursuant to the terms of the Loan Documents, with interest on all of the foregoing at the "Default Rate" (as defined in the Note) from the date of Lender's advance to the date of Borrower's repayment of same. (b) The indebtedness and the obligations secured by this Mortgage which are described in paragraph (a) above are hereinafter referred to as the "Secured Obligations." (c) This Mortgage, the Note, the Assignment of Leases and Rents, the Environmental Indemnity, that certain loan commitment letter dated March 1, 1994, as amended, between Lender and Borrower, and any other writing or instrument given to evidence or secure the payment of performance of any of the Secured Obligations are hereinafter collectively referred to as the "Loan Documents." ARTICLE II Payment and Performance Section 2.01. Payment of Secured Obligations. Borrower shall pay all sums due under the Loan Documents without offset, counterclaim or defense, as and when the same shall become due. Borrower shall fully and faithfully observe and perform all of the obligations of Borrower to be observed and performed under the Loan Documents. Section 2.02. Warranty of Title. Borrower warrants and represents that: (i) Borrower has good and marketable title to an indefeasible estate in fee simple in the Land and improvements; (ii) Borrower has good and marketable title to all of the rest of the Mortgaged Estate; and (iii) such title of Borrower is free and clear of any liens or encumbrances except as set forth in Exhibit B, attached hereto and incorporated herein (the "Permitted Encumbrances"). Borrower shall preserve Borrower's title and interest in the Mortgaged Estate and will forever warrant and defend the validity and priority of the lien, security interest and assignments created herein against the claims of all persons whomsoever, subject only to the Permitted Encumbrances. 3 ARTICLE III Taxes and Insurance Section 3.01. Taxes. Borrower shall pay when due and before any penalty attaches or interest accrues, all general taxes, special taxes, assessments, water charges, sewer service charges, and other similar charges against or affecting the Mortgaged Estate or any property or equipment located on the Land, or which might become a lien upon the Mortgaged Estate (the "Taxes"). If any Tax may be legally paid in installments, Borrower shall have the right, at its option, to pay such Tax in installments. Section 3.02. Insurance. (a) Borrower shall at all times keep in full force and effect the following policies of insurance with respect to the Mortgaged Estate: (i) comprehensive general public liability insurance in an amount of not less than $1,000,000, combined single limit coverage for injury to persons and damage to property, with a deductible limit satisfactory to Lender; (ii) standard fire and extended coverage casualty insurance, with vandalism and malicious mischief coverage and so called "all risks" or "DIC" coverage in the amount of the full insurable value of the Mortgaged Estate on a replacement cost basis (but in any event not less than the amount of the Loan); (iii) loss of rents or business interruption insurance covering all Rents for a period of one (1) year; and (iv) such other policies of insurance as Lender may from time to time require. (b) All insurance policies shall: (i) be issued by a company or companies rated "A" or better by A.M. Best & Company and otherwise satisfactory to Lender; (ii) shall name Lender as an additional insured and loss payee; and (iii) shall provide a minimum of thirty (30) days' written notice to Lender prior to the expiration or any cancellation or modification of such policies. Borrower shall provide Lender with certificates evidencing all required insurance. In the event Borrower shall fail to maintain the insurance required by this section, Lender may, but shall not be so obligated, to procure such insurance as Lender shall deem necessary, and any amount so expended by Lender shall be secured by this Mortgage and be repayable by Borrower upon demand, with interest at the "Default Rate" (as defined in the Note.) (c) In the event of any damage or destruction to the Mortgaged Estate, Borrower shall promptly make proof of loss to the insurers, and Borrower shall not adjust or compromise any claim under such insurance without the prior written approval of Lender. All proceeds of such insurance shall be paid directly to Lender, and each insurer is hereby authorized and directed to make such payment directly to Lender. Any proceeds shall be applied first to the payment of all costs and expenses incurred by Lender in obtaining such proceeds. The balance of the proceeds, if any, may be applied at the option of the Lender fill against the Secured Obligations, without prepayment premium, or (ii) to the restoration or the repair of the Mortgaged Estate, in such order as Lender may elect, in its sole discretion. If Lender elects to apply the insurance proceeds to restoration or repair of the Mortgaged Estate, Lender shall have the right to establish requirements for the disbursement of such proceeds as may be imposed by responsible mortgagees or holders of deeds of trust for advances of proceeds of commercial construction loans in the state in which the Mortgaged Estate is located. 4 Section 3.03. Tax and Insurance Escrow. On the first day of each calendar month, Borrower shall deposit with Lender or Lender's designated agent an amount equal to one-twelfth (1/12) of the estimated aggregate annual insurance premiums and Tax payments for the Mortgaged Estate. Such deposits shall be non-interest bearing and are hereby pledged as additional security for the Secured Obligations. Upon receipt of bills, statements or other evidence of insurance premiums or Taxes due, Lender shall pay or cause to be paid such amounts out of the funds so deposited. If at any time such funds are insufficient to pay such amounts, Borrower shall immediately deposit an amount equal to the deficiency. Lender shall not be deemed a trustee of such funds or to be obligated to expend any amount in excess of such funds under this Section. If Borrower fails to deposit sufficient sums as required, Lender may, but shall not be so obligated, advance any amounts required to make up the deficiency, which advances shall be secured by this Mortgage and be repayable by Borrower upon demand, with interest at the Default Rate. ARTICLE IV Maintenance: Alterations: Inspections Section 4.01. Maintenance. Borrower shall: (i) maintain the Mortgaged Estate in good condition and repair, subject to ordinary wear and tear; (ii) not commit or suffer to be committed any waste of the Mortgaged Estate; (iii) comply with all laws, ordinances, regulations and restrictions now or hereafter affecting the Mortgaged Estate; and (iv) not do or permit to be done any act which would otherwise diminish the value of the Mortgaged Estate. Section 4.02. Alterations. Borrower shall not remove, demolish or alter any of the Improvements without the prior written approval of Lender; provided, however, that Borrower may make interior, nonstructural alterations in an amount not to exceed $1,000,000.00 in each calendar year. Borrower shall complete any construction or alteration of the Mortgaged Estate in a good and workmanlike manner. Section 4.03. Inspections. Lender shall have the right at any time, upon reasonable prior notice to Borrower, to enter upon the Mortgaged Estate for the purpose of inspecting the same or to exercise any of its rights and remedies under the Loan Documents. ARTICLE V Eminent Domain Section 5.01. Eminent Domain. If all or any part of the Mortgaged Estate is taken or damaged by the exercise of the power of eminent domain or a conveyance in lieu thereof (a "Condemnation"), or should Borrower receive any notice or other information regarding any such proceeding, Borrower shall give prompt written notice thereof to Lender. Lender may participate in Condemnation proceedings, and Borrower shall consult with Lender and its attorneys and cooperate with them in the carrying on or defense of any such proceedings. All proceeds of Condemnation awards or sales in lieu thereof, and all judgments, decrees and awards for injury or damage to the Mortgaged Estate shall be paid to Lender and shall be applied first to all costs and expenses incurred by Lender in obtaining the proceeds. The balance of the 5 proceeds, if any, may be applied at the option of Lender (i) against the Secured Obligations, without prepayment premium or (ii) to the restoration or repair of the Mortgaged Estate, in such order as Lender may elect, in its sole discretion. Lender shall not be liable or responsible for failure to collect or exercise diligence in the collection of any proceeds, judgments, decrees or awards. ARTICLE VI Events Of Default: Remedies Section 6.01. Events of Default. Each of the following shall be an "Event of Default" under this Mortgage: (a) Failure of Borrower to make any payment of principal or interest or any other payment under the Note or any other sum secured under any Loan Document within ten (10) days of the date such payment shall be due and payable (calculated by including the due date); (b) Failure by Borrower to perform or observe any other covenant or agreement set forth in this Mortgage, and the continuance of such default for thirty (30) days after notice thereof from Lender specifying such default; (c) The occurrence of a default or an "Event of Default" under any Loan Document other than this Mortgage; (d) Any suit or proceeding shall be filed against Borrower or any guarantor of Borrower under any Loan Document which, if adversely determined, could materially impair the ability of Borrower or such guarantor to perform any of its obligations under any Loan Document, in the opinion of Lender, in its sole discretion; (e) Any representation, warranty or statement made by Borrower, any guarantor or other party under any Loan Document or any other affidavit or instrument executed or delivered with respect to the Loan shall be determined by Lender to be false or misleading in any material respect; (f) Borrower shall convey, alienate, transfer, mortgage, encumber, lease or assign ownership or control of all or any part of the Mortgaged Estate or any interest therein, whether legal or equitable, or in Borrower, in violation of Section 7.01 hereof, or Borrower shall be divested of its title or any interest in the Mortgaged Estate in any manner, whether voluntarily or involuntarily, or if there is any merger, consolidation or dissolution affecting Borrower; (g) Borrower (i) shall execute an assignment for the benefit of creditors or an admission in writing of Borrower's inability or failure to pay debts generally as they become due; or (ii) shall allow the levy against the Mortgaged Estate or any part thereof of any execution, attachment, sequestration or other writ or action which is not vacated or discharged within sixty (60) days after such levy; or (iii) shall allow the appointment of a 6 receiver, trustee or custodian of Borrower or the Mortgaged Estate or any part thereof which receiver, trustee or custodian is not discharged within sixty (60) days after such appointment; or (iv) shall file as a debtor a petition, case, proceeding or other action pursuant to, or voluntarily seeks the benefit or benefits of, any law granting relief to any debtor, or takes any action in furtherance thereof; or (v) shall file a petition, complaint, answer or other instrument which seeks to effect a suspension of, or which has the effect of suspending, any of the rights or powers of Lender granted under any Loan Document; or (vi) shall allow the filing of a petition, case, proceeding or other action against Borrower as a debtor under any law granting relief to a debtor, or shall seek or allow appointment of a receiver, trustee, custodian or liquidator of Borrower or of the Mortgaged Estate, or any part thereof, or of any significant portion of Borrower's other property; and (x) Borrower shall admit, acquiesce in or fail to contest diligently the allegations thereof, or (y) such petition, case, proceeding or other action shall result in the entry of an order for relief or order granting the relief sought against Borrower, or (z) such petition, case, proceeding or other action is not permanently dismissed or discharged on or before the earlier of trial thereon or sixty (60) days following the date of filing. (h) The occurrence of any event described in paragraph (g) above with respect to any guarantor of the Secured Obligations or any other person or entity obligated in any manner to pay or perform the Secured Obligations. Section 6.02. Remedies. Upon the occurrence of an Event of Default, Lender shall have the right to take any one or more of the following actions: (a) Declare all Secured Obligations to be due and payable, and the same shall thereupon become due and payable without any presentment, demand, protest or notice of any kind except as otherwise provided herein, and Borrower hereby waives notice of intent to accelerate the Secured Obligations; (b) Commence an action to foreclose this Mortgage, appoint a receiver or specifically enforce any of the covenants of this Mortgage; (c) Exercise any or all of the remedies available to a secured party under the UCC; (d) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon and take possession of the Mortgaged Estate or any part thereof and do any acts which it deems necessary or desirable to protect and preserve Lender's security; (e) Without notice to Borrower or anyone claiming under Borrower, and without regard to the value of the Mortgaged Estate, to apply to any court having jurisdiction to appoint a receiver or receivers of the Mortgaged Estate, and Borrower hereby irrevocably consents to such appointment and waives notice of any application therefore. Any such receiver or receivers shall have all of the usual powers and duties of 7 receivers in like or similar cases and all powers and duties of Lender in case of entry as provided in Section 6.05. (f) If Lender shall exercise its right to declare all Secured Obligations to be due and payable, then in addition to such Secured Obligations, Borrower shall pay Lender a reinvestment fee which shall be equal to ten percent (10%) of the outstanding principal balance of the Note during the first three (3) "Loan Years" (as defined in the Note) and thereafter in accordance with the prepayment charge set forth in the Note. Section 6.03. Remedies Not Exclusive; No Waiver. Every power or remedy given Lender by any of the Loan Documents, or to which Lender may be otherwise entitled, may be exercised without prejudice to any other power or remedy, concurrently, independently, in any order or any manner from time to time and as often as may be deemed expedient by Lender. No remedy or power is intended to be exclusive of any other remedy or power, and Lender may pursue inconsistent remedies. The acceptance by Lender of the payment or performance of any Secured Obligation after the same shall be due shall not constitute a waiver of Lender's right to the prompt payment or performance of same, or to declare a default as herein provided. The acceptance by Lender of any sum in an amount less than the sum then due shall not constitute a waiver of Borrower's obligation to pay the entire sum, and such failure shall continue to be a default by Borrower notwithstanding Lender's acceptance of such partial payment. Consent by Lender to any action or inaction of Borrower which is subject to consent or approval shall not be deemed a waiver of any other or future right of Lender to consent under this Mortgage. Nothing set forth in this Mortgage shall be construed to constitute Lender as a "mortgagee in possession" in the absence of its actual taking possession of the Mortgaged Estate pursuant to the powers granted herein. Section 6.04. Waivers. To the extent permitted by law, Borrower hereby agrees that it shall not at any time insist upon, plead, claim or take any benefit or advantage, in any way whatsoever, whether now or in the future, and Borrower hereby irrevocably waives, all of the following, whether the same exists under federal or state law, or otherwise at law or in equity: (a) Any right of redemption of any of the Mortgaged Estate after sale under this Mortgage; (b) All rights and claims it may have in or to any of the Mortgaged Estate as a "homestead exemption," or similar exemptions; (c) Any stay, extension or moratorium law which may extend the period for enforcement of this Mortgage or any period of redemption; (d) Any and all right to require the marshalling of assets in connection with the exercise of any of Lender's remedies under this Mortgage, it being agreed that Lender shall have the right to determine, in its sole discretion, the order in which any of the Mortgaged Estate shall be sold, or the order in which any Secured Obligations are satisfied from the proceeds of such sale; 8 (e) Any right to trial by jury in any action, proceeding or counterclaim brought by any party against any other party on any matter arising out of or in any way connected with this Mortgage or the Loan Documents, the relationship between Borrower and Lender, or Borrower's use and occupancy of the Mortgaged Estate; (f) Any law providing for the valuation or appraisal of all or any part of the Mortgaged Estate prior to or after any sale or sales made pursuant to this Mortgage; (g) Personal service of process in any action or proceeding at any time commenced to enforce this Mortgage or any of the Loan Documents, Borrower hereby agreeing that such process shall be deemed properly and adequately served if sent to Borrower as provided in Section 7.03 of this Mortgage; (h) All notices not herein specifically required of Borrower's default under any of the Loan Documents, or of Lender's exercise, or election to exercise, any right, option or election under this Mortgage; and (i) Any and all technical or procedural errors, defects and imperfections in any of the Loan Documents or any proceedings instituted by Lender under this Mortgage. Section 6.05. Preservation of Security. Notwithstanding the provisions of this Article VI, and in addition to any other rights or remedies of Borrower under this Mortgage, should Borrower at any time fail to make any payment or perform any obligation under any Loan Document, Lender, in its sole discretion, without obligation to do so and without notice to or demand upon Borrower, and without releasing Borrower from any Secured Obligation or waiving any of Lender's rights under the Loan Documents, may cure such default of Borrower in such manner and to such extent as Lender may deem necessary to protect the security of this Mortgage. In connection therewith, without limiting its general powers, Lender shall have and is hereby given the right, but not the obligation: (a) To enter upon and take possession of the Mortgaged Estate; (b) To direct Borrower to terminate any management agent and employ such management agent as Lender may determine; (c) To make additions, alterations, repairs and improvements to the Mortgaged Estate which Lender may consider necessary or proper to keep the Mortgaged Estate in good condition and repair; (d) To appear and participate in any action or proceeding affecting or which may affect the security hereof or the rights or powers of Lender; (e) To pay, purchase, contest or compromise any encumbrance, claim, charge, lien or debt which in the judgment of Lender may effect the security of this Mortgage or be prior or superior hereto; and 9 (f) In exercising such powers, to pay necessary expenses, including employment of counsel or other necessary or desirable consultants. All costs and expenses incurred by Lender in connection with the exercise of the foregoing rights, including costs of evidence of title, court costs, appraisals, surveys and attorneys' fees, shall be secured by this Mortgage and be repayable by Borrower upon demand, with interest at the Default Rate. ARTICLE VII General Covenants Section 7.01. Prohibition On Transfer. Borrower shall not, by operation of law or otherwise, sell, convey, alienate, transfer, mortgage, encumber, lease or assign ownership or control, or permit the same, of all or any part of the Mortgaged Estate or any interest therein, whether legal or equitable (including rents, issues or profits arising therefrom), or of a controlling interest in Borrower, Blue Valley BanCorp or Bank of Blue Valley (including any general or limited partnership interests, shares of stock or any other equity, beneficial or ownership interest in Borrower) without the prior written approval of Lender, in its sole discretion. Lender may withhold its approval for any reason or Lender may condition its approval upon an increase in the interest rate under the Note and/or the payment of a fee. Notwithstanding the foregoing, such approval of Lender shall not be required for any such transfer by devise or descent, or for the grant of a leasehold interest in the Mortgaged Estate of ten (10) years or less upon then current market terms. Section 7.02. Compliance With Laws. Borrower shall promptly comply with all present and future federal, state and local laws, statutes and ordinances, and all covenants and restrictions of record affecting the Mortgaged Estate, including (i) the Occupational Safety and Health Act (OSHA) 29 U.S.C. ss. 651, and the Americans with Disabilities Act ("ADA) 42 U.S.C. ss. 12101. Borrower shall not initiate or acquiesce in any zoning reclassification or material change in the zoning affecting the Mortgaged Estate without the prior written approval of Lender. Section 7.03. Notices. All notices, approvals or communications required or permitted to be given under this Mortgage shall be in writing and shall be deemed to have been properly given and received (i) if sent by hand delivery, then upon delivery, (ii) if sent by overnight courier or U.S. Express Mail, then one (1) day after dispatch, and (iii) if mailed by registered or certified U.S. mail, postage prepaid and return receipt requested, then one (1) day after deposit in the mail. All such notices and communications shall be given (x) to Lender at its address set forth in this Mortgage, and (y) to Borrower at its address set forth in this Mortgage, Attn: Robert D. Regnier (with a copy to Buck, Bohm & Stein, 4601 College Boulevard, Suite 200, Leawood, Kansas 66211-1650), or at such other addresses as either party may designate by notice in accordance with the terms of this Section. Section 7.04. Legal Existence. If Borrower is a corporation, partnership or other entity, Borrower shall preserve and keep in full force and effect its legal existence and all franchises, 10 rights and privileges under the laws of the state of its incorporation or formation and its standing and/or qualification to do business in the state in which the Mortgaged Estate is located. Section 7.05. Liens. Borrower shall not create, permit to accrue or suffer to exist upon any of the Mortgaged Estate, any security interest, judgment lien, mechanic's or materialman's lien, or any other lien, encumbrance, charge, retention or reservation of title, as security, pledge, hypothecation or assignment as security, and shall promptly pay, when the same shall become due, all claims and demands of contractors, subcontractors, mechanics, materialmen, laborers and others which claims, if unpaid, might result in or permit the creation of a lien upon the Mortgaged Estate, and Borrower shall cause any such lien to be promptly paid and discharged, whether by payment, bonding or otherwise, within thirty (30) days after the filing of same. Section 7.06. Financial Statements. Borrower shall deliver to Lender, with reasonable promptness (and any event within 150 days after the close of Borrower's fiscal year): (i) an income and expense statement with respect to the operation of the Mortgaged Estate for the immediately preceding fiscal year of Borrower, and (ii) a balance sheet and statement of profit and loss of Borrower for the immediately preceding fiscal year of Borrower. Each such operating and expense statement and financial statement shall be certified by the general partner or chief financial officer of Borrower, and shall be prepared in accordance with generally accepted accounting principles. Borrower shall also provide Lender with such additional information or records relating to the Mortgaged Estate or Borrower's financial condition as Lender may from time to time request. Upon request of Lender, Borrower shall furnish financial statements from major tenants under any Leases. Section 7.07. Successors. The terms and provisions of this Mortgage, and the rights and obligations of Borrower and Lender, shall inure to the benefit of and be binding upon Borrower and Lender and their successors and assigns. Section 7.08. Governing Law. This Mortgage shall be governed by and construed in accordance with the laws of the state in which the Mortgaged Estate is located. Section 7.09. Release of Mortgage. Upon payment and performance in full of all of the Secured Obligations, Lender shall, upon demand of Borrower but in no event later than the time prescribed by applicable law, release the Mortgaged Estate from the lien of this Mortgage and shall furnish Borrower with a properly executed and recordable instrument evidencing such release. Section 7.10. Estoppel Certificate. Within twenty (20) days after request by Lender, Borrower shall furnish Lender a duly acknowledged written statement, in form satisfactory to Lender, setting forth the amount of principal and interest then owing under the Note, any other charges payable under any Loan Documents, and stating whether any offsets or defenses exist to the indebtedness secured hereby. Section 7.11. Lender's Approval. In any instance under this Mortgage in which Lender's approval shall be required, such approval may be given or withheld by Lender in Lender's sole discretion, and shall be final and conclusive. The granting of any approval by Lender shall not be 11 deemed a waiver of such right of approval to any future matter, and all approvals by Lender must be in writing. Section 7.12. Severability. If any term or provision of this Mortgage or the application thereof to any person or circumstance shall, to any extent, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof or any other circumstance or situation with respect to this Mortgage, and each remaining term and provision of this Mortgage shall be valid and be enforced to the fullest extent by law. Section 7.13. Limited Liability. The liability of Borrower for the repayment of the indebtedness evidenced by the Note and the performance of the Secured Obligations shall be limited to the security given by Borrower and other parties for the Note and other Secured Obligations. Notwithstanding anything to the contrary contained herein, and notwithstanding any delay by Lender in exercising any right, remedy or privilege under any Loan Document, Borrower shall be personally liable beyond its interest in the security granted to Lender to the extent of: (i) any funds received by Borrower or any other person or entity for or on account of Borrower as security deposits under any Leases; (ii) any Rents received or held by Borrower after the occurrence of an Event of Default or any Rents received by Borrower which are prepaid more than one month in advance; (iii) all condemnation awards and payments and insurance proceeds received by Borrower that have not been applied as required by the terms of the Loan Documents; (iv) the cost to repair the Mortgaged Estate as a result of a casualty not reimbursed by insurance to the extent that such insurance is required by the terms of the Loan Documents; (v) any liability, damage, cost or expense (including attorneys' fees) incurred by Lender as a result of any fraud, misrepresentation or bad faith by Borrower or any Guarantor; (vi) any liability, damage, cost or expense (including attorneys' fees) incurred by Lender under the terms of the Environmental Indemnity; (vii) any liability, damage, cost or expense (including attorneys' fees) incurred by Lender due to any waste of the Mortgaged Estate by Borrower or Borrower's representatives or tenants; and (viii) any failure to pay delinquent Taxes. Nothing contained herein shall limit or affect Lender's rights under any guaranty or other collateral which may now or hereafter be given in connection with the Note. ARTICLE VIII Environmental Indemnity Section 8.01. Hazardous Substances. Borrower shall not generate, store, use or dispose, or permit the generation, storage, use or disposal of, any "Hazardous Substance" (as defined in the Environmental Indemnity) on or about the Mortgaged Estate, unless: (i) the Hazardous Substance is used in minor amounts in the ordinary course of business of Borrower or tenants; (ii) the Hazardous Substance is used in full compliance with all applicable "Environmental Requirements" (as defined in the Environmental Indemnity); and (iii) the proposed presence and use of such Hazardous Substance is specifically disclosed to Lender and has been approved in writing, in advance by Lender. Borrower shall promptly notify Lender of any violation or suspected or alleged violation of any Environmental Requirements on or about the Mortgaged Estate of which Borrower becomes aware. 12 Section 8.02. Indemnity. Borrower shall indemnify, defend and save and hold harmless Lender from and against any and all losses, liabilities, damages, costs and expenses (including costs of remediation or cleanup, loss of property value or defects in title to the Mortgaged Estate, and the reasonable fees and disbursements of Lender's counsel) asserted against or suffered or incurred by Lender and in any way relating to or arising out of the generation, storage, manufacturing, refining, releasing, transportation, treatment, disposal or other presence of any Hazardous Substance on or about or removed from the Mortgaged Estate, which indemnity shall survive: (i) the foreclosure of this Mortgage; (ii) any conveyance of the Mortgaged Estate in lieu of such foreclosure; (iii) the payment and performance of the Secured Obligations, (iv) the release of the lien of this Mortgage; and (v) any other transfer of Borrower's title to or interest in the Mortgaged Estate. The terms and provisions of the Environmental Indemnity are specifically incorporated into this Article VIII and made a part hereof. IN WITNESS WHEREOF, Borrower has caused this Mortgage to be duly executed on the day and year set forth in the acknowledgement attached hereto and to be effective as of the date first set forth above. BLUE VALLEY BUILDING CORP., a Kansas corporation ATTEST: [SEAL] By: /s/ Robert D. Regnier --------------------- Robert D. Regnier, President By: /s/ Patricia L. Day Secretary Acknowledgment Exhibit A: Legal Description Exhibit B: Permitted Encumbrances 13 STATE OF MISSOURI ) ) ss. COUNTY OF JACKSON ) NOW, on this 15th day of July, 1994, before me, a Notary Public, appeared Robert D. Regnier, to me personally known, who being by me duly sworn did say that he is the President of Blue Valley Building Corp., a Kansas corporation, and that said instrument was signed in his capacity as President of said corporation in behalf of said corporation and said Robert D. Regnier acknowledged said instrument to be the free act and deed of said corporation. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the county and state aforesaid, the day and year lost above written. /s/ Kathryn R. Mills Notary Public [SEAL) My Commission Expires: KATHRYN L MILLS Notary Public - Notary Seal ______________________ STATE OF MISSOURI Clay County My Commission Expires: May 24, 1997 14 EXHIBIT A Legal Description Tract B, METCALF AT 119TH STREET DEVELOPMENT, a subdivision in the City of Overland Park, Johnson County, Kansas; and together with an appurtenant easement for access as defined by the Declaration of Cross Easement filed January 26, 1989 in Volume 2932 page 171, described as follows: A tract of land lying in the East 1/2 of the East 1/2 of the Northwest 1/4 of the Northeast 1/4 of Section 19, Township 13 South, Range 25 East, in the City of Overland Park, Johnson County, Kansas, and also being a part of WINDSOR SQUARE, a subdivision in the City of Overland Park, Johnson County, Kansas, more particularly described as follows: Commencing at the Northeast corner of said Northwest 1/4 of the Northeast 1/4; thence South 00 degrees 06' 10" West along the East line of said Northwest 1 /4 of the Northeast 1 /4 a distance of 60.00 feet to the Point of Beginning, said point being the Northeast corner of Lot 1, Block 1, WINDSOR SQUARE; thence continuing South 00 degrees 06' 10" West along the East line of said Northwest 1/4 of the Northeast 1/4 a distance of 455.01 feet; thence South 89 degrees 44' 08" West parallel with the North line of said Northwest 1/4 of the Northeast 1/4 a distance of 32.00 feet; thence North 00 degrees 06' 10" East parallel with the East line of said Northwest 1/4 of the Northeast 1/4 a distance of 174.91 feet; thence on a curve to the left having a radius of 15.00 feet (a chord bearing of North 45 degrees 04' 51" West, a length of 21.28 feet) a distance of 23.66 feet; thence South 89 degrees 44' 08" West parallel with the North line of said Northwest 1/4 of the Northeast 1/4 a distance of 284.00 feet; thence North 00 degrees 07' 42" East a distance of 30.00 feet; thence North 89 degrees 44' 08" East parallel with the North line of said Northwest 1/4 of the Northeast 1/4 a distance of 284.18 feet; thence on a curve to the left having a radius of 15.00 feet (a chord bearing of North 44 degrees 55' 09" East, a length of 21.15 feet) a distance of 23.47 feet; thence North 00 degrees 06' 10" East parallel with the East line of said Northwest 1/4 of the Northeast 1/4 a distance of 148.35 feet; thence North 02 degrees 16' 17" West a distance of 48.28 feet; thence North 00 degrees 06' 10" East parallel with the East line of said Northwest 1/4 of the Northeast 1/4 a distance of 11.50 feet; thence on a curve to the left having a radius of 20.00 feet (a chord bearing of North 18 degrees 17' 11 " West, a length of 12.62 feet) a distance of 12.84 feet; thence North 89 degrees 44' 08" East parallel with the North line of said Northwest 1/4 of the Northeast 1/4 a distance of 37.98 feet to the point of beginning; and also together with the appurtenant easement for access defined as the Access Easement reserved by the document filed August 25, 1992 in Volume 3684 Page 46, described as follows: All that part of the Northeast 1/4 of the Northeast 1/4 of Section 19, Township 13, Range 25, in the City of Overland Park, Johnson County, Kansas, more particularly described as follows: Beginning at the Northwest corner of the Northeast 1/4 of the Northeast 1/4 of said Section 19; thence South 01 degrees 57' 41" East along the West line of the Northeast 1/4 of the Northeast 1/4 of said Section 19, a distance of 310 feet; thence North 88 degrees 02' 19" East, along a line perpendicular to the West line of the Northeast 1/4 of the Northeast 1/4 of said Section 19, a distance of 35 feet; thence North 01 degree 57' 41 " West, along a line 35 feet East of and parallel to the West line of the Northeast 1/4 of the Northeast 1/4 of said Section 19, a distance of 310.22 feet, to a point on the North line thereof; thence South 87 degrees 40' 39" West, along the North line of the Northeast 1/4 of the Northeast 1/4 of said Section 19, a distance of 35 feet to the point of beginning, all subject to that part thereof dedicated for street purposes. 15 EXHIBIT B Permitted Encumbrances 1. General and special taxes and assessments for 1994 and subsequent years, not yet due and payable. 2. Controlled access as defined by document filed in Book of Misc. 169, at page 193. 3. Right-of-way filed October 24, 1983, in Volume 1928, at page 215. 4. Storm Sewer Easement filed November 29, 1988, in Volume 2903, at page 420. 5. Permanent Storm Water Drainage Easement filed November 30, 1988, in Volume 2904, at page 684. 6. Cross Easement filed October 16, 1989, in Volume 3067, at page 384. 7. Cross Easement and Restrictive Covenant Agreement filed October 16, 1989, in Volume 3067, at page 392. 8. Easement Agreement filed October 16, 1989, in Volume 3067, at page 397. 9. Easement filed November 20, 1989, in Volume 3085, at page 651. 10. Easement filed December 18, 1989, in Volume 3098, at page 250. 11. Easement filed June 25, 1993, in Volume 3979, at page 817. 12. Sidewalk Easement filed June 29, 1993, in Volume 3982, at page 940. 13. A 35 foot ingress-egress easement and utility easement along the West lot line and a 30 foot private drive easement affecting the North 15 feet of Tract B as shown on the recorded plat. 16 EX-10.10 24 ASSIGNMENT OF LEASES AND RENTS 10060 ASSIGNMENT OF LEASES AND RENTS THIS ASSIGNMENT OF LEASES AND RENTS (this "Assignment"), dated as of July 15, 1994, is made by BLUE VALLEY BUILDING CORP., a Kansas corporation ("Borrower"), with an address at P.O. Box 26128, Overland Park, Kansas 66225, to and in favor of BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA, a Missouri corporation ("Lender"), with an address at c/o Charter American Mortgage Company, 2001 Shawnee Mission Parkway, Mission Hills, Kansas 66205. RECITALS (A) Lender has agreed to make a loan to Borrower in the amount of $2,500,000.00 (the "Loan"), which will be evidenced by that certain Promissory Note of even date herewith (the "Note") executed by Borrower in favor of Lender in the amount of the Loan and bearing interest and being payable as set forth therein. (B) The Loan will be secured, in part, by that certain Mortgage, Assignment of Leases and Rents, Security Agreement and Financing Statement dated as of the date of the Note (the "Mortgage") between Borrower and Lender, encumbering the Mortgaged Estate, including the Land described on Exhibit A, attached hereto and incorporated herein, and the other Loan Documents, which term includes this Assignment. AGREEMENT NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower hereby agrees as follows: 1. Definitions. Capitalized terms used herein shall have the respective meanings given them in the Mortgage, unless otherwise defined herein. The term "including" shall mean "including, without limitation." 2. Assignment. (a) To further secure the Secured Obligations, Borrower hereby assigns, transfers, conveys and sets over to Lender all of Borrower's estate, right, title and interest in, to and under all leases, whether existing on the date hereof or hereafter entered into (including any extensions, modifications or amendments thereto) relating to the Mortgaged Estate, including the leases, tenancies and other occupancy agreements described on Exhibit B, attached hereto and incorporated herein (the "Leases"), together with all rights, powers, privileges, options and other benefits of Borrower as the landlord under the Leases regarding the current tenants and any future tenants (the "Tenants", and each a "Tenant"), and also together with all guarantees of the Tenants' performance and payment under the Leases, and all the rents, charges, issues, royalties, revenues, profits, and income under the Leases or from the Mortgaged Estate (collectively, the "Rents"), including those now due, past due or to become due. (b) This Assignment is a present, absolute and unconditional assignment, and is not a contingent assignment. The rights of Lender in and to the Leases and Rents are not dependent upon the absence or occurrence of any event. Notwithstanding the foregoing, however, so long as no "Event of Default" (as defined herein) has occurred, Borrower shall have a revocable license to possess and control the Mortgaged Estate and collect and receive all Rents. Upon the occurrence of an Event of Default, such license shall automatically be deemed to be revoked by Lender. 3. Agreements of Borrower. Borrower hereby agrees as follows: (a) Upon the occurrence of an Event of Default, Borrower irrevocably appoints Lender its true and lawful attorney-in-fact, at the option of Lender at any time and from time to time, to take possession and control of the Mortgaged Estate, pursuant to Borrower's rights as lessor under the Leases, and to demand, receive and enforce payment, to give receipts, releases and satisfaction and to sue, in the name of Borrower or Lender, for all Rents; (b) If any of the Leases provide for a security deposit paid by the Tenant thereunder to Borrower, this Assignment shall transfer to the Lender all of Borrower's right, title and interest in and to such security deposits; provided, however, that Borrower shall have the right to retain such security deposits so long as no Event of Default shall have occurred; and provided, further, that Lender shall have no obligation to any such Tenant with respect to such security deposits unless and until Lender comes into actual possession and accepts control of such security deposits by notice to such Tenant; (c) With respect to any Lease or Leases of 7,500 square feet or more (in the aggregate) to any single Tenant, Borrower shall not terminate any such Lease (except pursuant to the terms of such Lease upon a default by the Tenant thereunder), grant concessions or modify or amend any such Lease in any material manner, or consent to an assignment or subletting, without the prior written consent of Lender; (d) Borrower has not and shall not collect any Rent more than one (1) month in advance of the date on which it becomes due under the terms of each Lease, or discount any future accruing Rent, or waive any right of setoff against any Tenant under the Leases; (e) Except with the prior written consent of Lender, Borrower shall not permit a subordination of any Lease to any mortgage, deed of trust or other encumbrance, or any other lease, now or hereafter affecting the Mortgaged Estate or any part thereof, or permit the conversion of any Lease to a sublease; (f) Borrower shall faithfully perform and discharge all obligations of the landlord under the Leases, and shall give prompt written notice to Lender of any notice of Borrower's default received from a Tenant or any other person and shall furnish Lender with a complete copy of said notice; (g) Upon the request of Lender, Borrower shall promptly provide to Lender a true and correct copy of all existing Leases; and (h) Nothing herein shall be construed to constitute Lender as a "mortgagee in possession" in the absence of its taking of actual possession of the Mortgaged Estate pursuant to the powers granted herein, or to impose any liability or obligation on Lender under or with respect to the Leases or the Mortgaged Estate. Borrower shall indemnify and hold Lender harmless from and against any and all liabilities, losses and damages (including attorneys' fees) that Lender may incur under the Leases or by reason of this Assignment, and of and from any and all claims and demands whatsoever that may be asserted against Lender by reason of any alleged obligations to be performed or discharged by Lender under the Leases or this Assignment. Any Rent collected by Lender may be applied by Lender in its discretion in satisfaction of any such liability, loss, damage, claim, demand, costs, expense or fees. Borrower shall appear in and defend, at no cost to Lender, any action or proceeding arising under or in any manner connected with the Leases. If requested by Lender, Borrower shall enforce any Lease and all remedies available to Borrower against the Tenant in the case of default under such Lease by the Tenant thereunder. 2 4. Event of Default. The following shall constitute an Event of Default hereunder: (i) the occurrence of an Event of Default under any Loan Document; or (ii) if at any time any representation or warranty made by Borrower in this Assignment shall be or become materially incorrect; or (iii) the breach of any agreement by Borrower under this Assignment. 5. Remedies of Lender. (a) Upon the occurrence of an Event of Default, Lender shall have the following rights and remedies, all of which are cumulative, in addition to all other rights and remedies provided under the Loan Documents, or any other agreement between Borrower and Lender, or otherwise available at law or in equity or by statute: (i) Lender may, at any time without notice, either in person, by agent or by a court-appointed receiver, regardless of the adequacy of Lender's security, enter upon and take possession and control of the Mortgaged Estate, or any part thereof, to perform all acts necessary and appropriate to operate and maintain the Mortgaged Estate including, but not limited to, execute, cancel or modify the Leases, make repairs to the Mortgaged Estate, execute or terminate contracts providing for the management or maintenance of the Mortgaged Estate, all on such terms as are deemed best to protect the security of this Assignment, in Lender's sole discretion, and in Lender's or Borrower's name, sue for or otherwise collect such Rents from the Mortgaged Estate as specified in this Assignment as the same become due and payable, including, but not limited to, Rents then due and unpaid; and (ii) Lender shall be deemed to be the creditor of each Tenant in respect of any assignments for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership or other debtor-relief proceedings affecting the Tenant (without obligation on the part of Lender, however, to file timely claims in such proceedings or otherwise pursue creditor's rights therein). (b) All Rents collected subsequent to the occurrence of any Event of Default shall be applied at the discretion of, and in such order as determined by, Lender to the costs, if any, of taking possession and control of and managing the Mortgaged Estate and collecting such amounts, including, attorney's fees, receiver's fees, premiums on receiver's bonds, costs of repairs to the Mortgaged Estate, premiums on insurance policies, taxes, assessments and other charges on the Mortgaged Estate, and the costs of discharging any obligation or liability of Borrower as lessor or landlord of the Mortgaged Estate and to the Secured Obligations. Lender or the receiver shall have access to the books and records used in the operation and maintenance of the Mortgaged Estate and shall be liable to account only for those Rents actually received. Lender shall not be liable to Borrower, anyone claiming under or through Borrower or anyone having an interest in the Mortgaged Estate by reason of anything done or left undone by Lender hereunder. (c) Lender shall have the right to notify all Tenants of an Event of Default and to direct the Tenants to thereafter pay all Rents to Lender, and Lender shall be entitled to receive the Rents without appointment of a receiver or other court action. All Tenants and guarantors of Leases are hereby authorized to rely upon and comply with any notice from Lender to begin paying the Rents to Lender, and all such Rents paid to Lender shall be in satisfaction of the Tenants' obligations under the Leases, and Borrower shall have no claim against any Tenant for any such Rents paid to Lender pursuant to such notice. (d) If the Rents are not sufficient to meet the costs, if any, of taking possession and control of and managing the Mortgaged Estate and collecting the same, any funds expended by Lender for such purposes shall become Secured Obligations. 3 (e) Any entering upon and taking possession and control of the Mortgaged Estate by Lender or the receiver and any application of Rents as provided herein shall not cure or waive any Event of Default or invalidate any other right or remedy of Lender. (f) Borrower hereby represents and agrees that it is and will be the sole owner of the entire landlord's interest (or Tenant's interest in the case of Leases with respect to which Borrower is the Tenant) in all Leases, subject only to the Permitted Encumbrances. 6. Lease Provisions. All Leases executed after the date of this Assignment shall contain (i) a provision obligating the Tenant to enter into a subordination and attornment agreement with Lender in form and substance satisfactory to Lender, subordinating such Lease to the lien of the Mortgage and (ii) a provision authorizing the Tenant to pay the Rents to Lender upon notice of an Event of Default under this Assignment. 7. Release. The assignment contained herein and all rights herein assigned to Lender shall cease and terminate as to all Leases: (i) upon the satisfaction of all Secured Obligations; or (ii) upon the release of the Mortgaged Estate subject to such Lease from the lien of the Mortgage covering such Mortgaged Estate pursuant to the provisions of such Mortgage. It is expressly understood that no judgment or decree that may be entered on any Secured Obligation shall operate to abrogate or lessen the effect of this Assignment, but that the same shall continue in full force and effect as herein provided. The provisions of this Assignment shall also remain in full force and effect during the pendency of any proceedings for the foreclosure and/or sale of the Mortgaged Estate, or any part thereof, both before and after sale, until the issuance of a deed pursuant to a decree of foreclosure and/or sale, unless all Secured Obligations are fully satisfied. Lender may take or release other security for the Secured Obligations, may release any party primarily or secondarily liable therefor and may apply any other security held by it to the satisfaction of Secured Obligations, without prejudice to any of its rights under this Assignment. 8. No Waiver. Nothing contained in this Assignment and no act done or omitted by Lender pursuant to the powers and rights granted it hereunder shall prejudice or be deemed to be a waiver by Lender of its rights and remedies under the Loan Documents. A waiver by Lender of any of its rights hereunder or under the Leases or of a breach of any of the covenants and agreements contained herein to be performed by Borrower shall not be construed as a waiver of such rights in any succeeding instance or of any succeeding breach of the same or other covenants, agreements, restrictions or conditions. 9. Further Assurances. Borrower hereby agrees that it shall, whenever and as often as it shall be requested to do so by Lender, execute, acknowledge and deliver, or cause to be executed, acknowledged, and delivered, any and all such further conveyances, approvals, consents, memoranda of the subject matter hereof, duplicate originals hereof, and any and all other documents and to do any and all other acts as may be necessary or appropriate to carry out the terms of this Assignment. 10. Notices. All notices consents or communications permitted required under this Assignment shall be in writing and shall be deemed to have been properly given and received if sent by hand delivery, overnight courier or U.S. Express Mail , or certified mail, postage prepaid, as specified in the Mortgage. 11. Governing Laws; Severability. This Assignment shall be governed by and construed under the laws of the state where the Land is located. In case any of the provisions of this Assignment shall at any time be held by a court of competent jurisdiction to be illegal, invalid, or unenforceable for any reason, such illegality, invalidity or unenforceability shall not affect the remaining provisions of this Assignment, and this Assignment shall be construed and enforced as if all such illegal, invalid or unenforceable provisions had never been inserted herein. 4 12. Assignment By Lender. Lender shall have the right to assign Borrower's right, title and interest under this Assignment in any of the Leases to any subsequent holder of the Note or any participating interest therein or to any person acquiring title to the Mortgaged Estate or any part thereof through foreclosure or otherwise. Any subsequent assignee shall have all the rights and powers herein provided to Lender. 13. Successors. This Assignment shall inure to the benefit of and be binding upon Borrower and Lender, and their respective heirs, successors, legal representatives and assigns. IN WITNESS WHEREOF, Borrower has executed this Assignment as of the date first set for above. BLUE VALLEY BUILDING CORP., a Kansas corporation ATTEST: [SEAL] By: /s/ Robert D. Regnier Robert D. Regnier, President By: /s/ Patricia L. Day Secretary Acknowledgement Exhibit A: Legal Description Exhibit B: Leases 5 STATE OF MISSOURI ) ) ss. COUNTY OF JACKSON ) NOW, on this 15th day of July, 1994, before me, a Notary Public, appeared Robert D. Regnier, to me personally known, who being by me duly sworn did say that he is the President of Blue Valley Building Corp., a Kansas corporation, and that said instrument was signed in his capacity as President of said corporation in behalf of said corporation and said Robert D. Regnier acknowledged said instrument to be the free act and deed of said corporation. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the county and state aforesaid, the day and year last above written. /s/ Kathryn L. Mills Notary Public [SEAL] My Commission Expires: 6 EXHIBIT A Legal Description Tract B, METCALF AT 119TH STREET DEVELOPMENT, a subdivision in the City of Overland Park, Johnson County, Kansas; and together with an appurtenant easement for access as defined by the Declaration of Cross Easement filed January 26, 1989 in Volume 2932 page 171, described as follows: A tract of land lying in the East 1/2 of the East 1/2 of the Northwest 1/4 of the Northeast 1/4 of Section 19, Township 13 South, Range 25 East, in the City of Overland Park, Johnson County, Kansas, and also being a part of WINDSOR SQUARE, a subdivision in the City of Overland Park, Johnson County, Kansas, more particularly described as follows: Commencing at the Northeast corner of said Northwest 1/4 of the Northeast 1/4; thence South 00 degrees 06' 10" West along the East line of said Northwest 1/4 of the Northeast 1/4 a distance of 60.00 feet to the Point of Beginning, said point being the Northeast corner of Lot 1, Block 1, WINDSOR SQUARE; thence continuing South 00 degrees 06' 10" West along the East line of said Northwest 1/4 of the Northeast 1/4 a distance of 455.01 feet; thence South 89 degrees 44' 08" West parallel with the North line of said Northwest 1/4 of the Northeast 1/4 a distance of 32.00 feet; thence North 00 degrees 06' 10" East parallel with the East line of said Northwest 1/4 of the Northeast 1/4 a distance of 174.91 feet; thence on a curve to the left having a radius of 15.00 feet (a chord bearing of North 45 degrees 04' 51" West, a length of 21.28 feet) a distance of 23.66 feet; thence South 89 degrees 44' 08" West parallel with the North line of said Northwest 1/4 of the Northeast 1/4 a distance of 284.00 feet; thence North 00 degrees 07' 42" East a distance of 30.00 feet; thence North 89 degrees 44' 08" East parallel with the North line of said Northwest 1/4 of the Northeast 1/4 a distance of 284.18 feet; thence on a curve to the left having a radius of 15.00 feet (a chord bearing of North 44 degrees 55' 09" East, a length of 21.15 feet) a distance of 23.47 feet; thence North 00 degrees 06' 10" East parallel with the East line of said Northwest 1/4 of the Northeast 1/4 a distance of 148.35 feet; thence North 02 degrees 16' 17" West a distance of 48.28 feet; thence North 00 degrees 06' 10" East parallel with the East line of said Northwest 1/4 of the Northeast 1/4 a distance of 11.50 feet; thence on a curve to the left having a radius of 20.00 feet (a chord bearing of North 18 degrees 17' 11" West, a length of 12.62 feet) a distance of 12.84 feet; thence North 89 degrees 44' 08" East parallel with the North line of said Northwest 1/4 of the Northeast 1/4 a distance of 37.98 feet to the point of beginning; and also together with the appurtenant easement for access defined as the Access Easement reserved by the document filed August 25, 1992 in Volume 3684 Page 46, described as follows: All that part of the Northeast 1/4 of the Northeast 1/4 of Section 19, Township 13, Range 25, in the City of Overland Park, Johnson County, Kansas, more particularly described as follows: Beginning at the Northwest corner of the Northeast 1/4 of the Northeast 1/4 of said Section 19; thence South 01 degrees 57' 41" East along the West line of the Northeast 1/4 of the Northeast 1/4 of said Section 19, a distance of 310 feet; thence North 88 degrees 02' 19" East, along a line perpendicular to the West line of the Northeast 1/4 of the Northeast 1/4 of said Section 19, a distance of 35 feet; thence North 01 degree 57' 41" West, along a line 35 feet East of and parallel to the West line of the Northeast 1/4 of the Northeast 1/4 of said Section 19, a distance of 310.22 feet, to a point on the North line thereof; thence South 87 degrees 40' 39" West, along the North line of the Northeast 1/4 of the Northeast 1/4 of said Section 19, a distance of 35 feet to the point of beginning, all subject to that part thereof dedicated for street purposes. EXHIBIT B Leases 1. Building Lease dated February 17, 1993, by and between Blue Valley Building Corp., as Lessor, and Bank of Blue Valley, as Lessee. 2. Office Building Lease dated September 23, 1992, by and between Blue Valley Building Corp., as Lessor, and Sunburst Realty Partners, Inc., as Lessee. 3. Office Building Lease dated September 29, 1992, by and between Blue Valley Building Corp., as Lessor, and Positive Care Service, Inc., as Lessee. 4. Office Building Lease dated November 1, 1993, by and between Blue Valley Building Corp., as Lessor, and Advance Mortgage Corporation, as Lessee. 5. Office Building Lease dated May 1, 1994, by and between Blue Valley Building Corp., as Lessor, and City Cafe's, Inc., as Lessee. EX-10.11 25 LEASE AGREEMENT LEASE AGREEMENT THIS LEASE AGREEMENT ("Lease"), is made and entered into this 18th day of January, 1999 by and between CMI, INC., a Kansas corporation ("Landlord") and Bank of Blue Valley a state banking association ("Tenant") WITNESSETH THAT: IN CONSIDERATION of the mutual covenants herein contained, the parties hereto hereby agree as follows: 1. PREMISES. A. DEMISED PREMISES. Landlord does hereby demise and lease unto Tenant, and Tenant does lease and take from Landlord the following described premises (hereinafter referred to as the "Demised Premises"), now or hereafter to be erected in and about the Roche Price Chopper at Highway K7 and Johnson Drive and more particularly described in Exhibit "A" attached hereto and by this reference made a part hereof (hereinafter referred to as the "Store Premises"), in the city of Shawnee, Johnson County, Kansas: Branch: a concession unit measuring approximately twenty-five feet (25') in width by a depth of approximately seventeen feet (17') and containing a total area of approximately four hundred twenty-five (425) square feet; and ATM: a free standing automated teller machine located within the Store Premises; The approximate boundaries and location of the Branch, and ATM are outlined in red on the floor plans of the Store Premises building, which floor plans are marked Exhibit "B" and Exhibit "C", respectively, and are attached hereto and made a part hereof. B. COMMON AREAS. In addition to the occupancy of the Demised Premises, Tenant and Tenant's concessionaires, officers', employees, agents, customers, and invitees also shall have the right to the nonexclusive use of automobile parking areas, access roads, truck loading areas, delivery areas, walkways, bus stops, landscaped areas, driveways, sidewalks, restrooms and other common areas which now are or hereafter may be located upon some portion of the Store Premises. (Such parking areas, access roads, truck loading areas, delivery areas, walkways, bus stops, landscaped areas, driveways, sidewalks, restrooms and other common areas are hereinafter collectively referred to as the "Common Areas"). Landlord agrees to make the Common Areas continuously available to the aforementioned groups of persons during the term of this Lease, except when portions thereof temporarily may be unavailable for use by reason of repair work then being underway thereon. The nonexclusive use of the Common Areas by Tenant and Tenant's concessionaires, officers, employees, agents, customers, and invitees at all times shall be subject to such reasonable rules and regulations as Landlord from time to time may establish. 1 2. BRANCH BANK APPLICATION. Landlord acknowledges and agrees that Tenant shall file for Branch Bank status for the Demised Premises, and the approval of such filing by the applicable banking regulatory agency shall be a condition precedent to the commencement of the initial term under this Lease. Tenant shall have the right to use the Store Premises name as part of the business name of the Branch located at the Demised Premises, if required to be established, for purposes of location identification. If Tenant's applications for a Branch on the Demised Premises is rejected by the applicable banking regulatory agency, this Lease shall be null and void and the parties shall be mutually released from any liability or obligation hereunder, provided that Tenant shall immediately begin the application process, and diligently pursue the same, after execution of this Lease. If Tenant has not received regulatory approval as of March 1, 1999, then Landlord may, in its discretion, terminate this Lease. 3. TERM. The initial term of this Lease shall be for three (3) years following the commencement of the term unless sooner terminated as herein provided. 4. RENT. Tenant agrees to pay to Landlord at the office of Landlord or at such other place as may be designated by Landlord for each year of the basic term and the first option period, if so exercised, an annual rental of $30,000.00, payable in advance in equal monthly installments of $2,500.00. If the Lease term commences on a day other than the first day of a calendar month, the rent for that first fractional month shall be prorated and paid on the first day of the month next succeeding, and the last fractional month shall be similarly prorated, but paid in advance. 5. COMMENCEMENT OF TERM. The original term shall begin on the earlier of (i) the day Tenant opens its Branch for business with the general public, or (ii) sixty (60) days following the receipt by Tenant of notice in writing from Landlord that the Demised Premises are ready for occupancy During said sixty (60) day period Tenant may, without opening for business, have access to the Demised Premises for purposes of making appropriate preparation for opening. 6. OPTIONS TO EXTEND. If Tenant is not then in default under any of the terms and provisions of this Lease, Tenant shall have the option to extend the term of this Lease upon the same terms and conditions for an additional term of three (3) years, from and after the expiration of the initial term of this Lease. Tenant's election to exercise the first extension option must be made in writing and delivered to Landlord no less than six (6) months prior to expiration of the initial term of this Lease. Said first extension shall be on the same terms and conditions as the basic term with the exception of rent which shall be $31,500.00 annually for each year of this first option period, payable in advance in equal monthly installments of $2,625.00. If Tenant exercises its first option to extend the term of this Lease and is not then in default under any of the terms and provisions of this Lease, then Tenant shall have the option to further 2 extend the term of this Lease upon the same terms and conditions for a second additional term of three (3) years, from and after the expiration of the first additional term of this Lease. Tenant's election to exercise this second extension must be made in writing and delivered to Landlord no less than six (6) months prior to expiration of the first extension term of this Lease. Said second extension shall be on the same terms and conditions as the basic term with the exception of rent which shall be $33,075.00 annually for each year of. this second option period, payable in advance in equal monthly installments of $2,756.25. If Tenant exercises its second option to extend the term of this Lease and is not then in default under any of the terms and provisions of this Lease, then Tenant shall have the option to further extend the term of this Lease upon the same terms and conditions for a third additional term of three (3) years, from and after the expiration of the second additional term of this Lease. Tenant's election to exercise this third extension must be made in writing and delivered to Landlord no less than six (6) months prior to expiration of the second extension term of this Lease. Said third extension shall be on the same terms and conditions as the basic term with the exception of rent which shall be $34,728.75 annually for each year of this third option period, payable in advance in equal monthly installments of $2,894.07. 7. CONSTRUCTION OF DEMISED PREMISES. A. LANDLORD'S OBLIGATION. Landlord shall at its cost and expense construct in a good and workerlike manner the Demised Premises for Tenant's use and occupancy in accordance with the Outline Specifications entitled "Landlord's and Tenant's Architectural and Construction Work" which by this reference is made a part hereof although not attached hereto. Landlord agrees to indemnify Tenant and hold Tenant harmless against any loss, liability, or damage resulting from such work. B. TENANT'S OBLIGATION. All work to be performed by Tenant pursuant to said Outline Specifications shall be constructed by Tenant in a good and workerlike manner and free of any liens for labor and materials. Tenant may choose its own architect, contractor and materials (which must be compatible with the overall Store Premises' design). Tenant agrees to indemnify Landlord and hold Landlord harmless against any loss, liability, or damage resulting from such work. 8. ATTORNEY IN FACT. Landlord hereby appoints Tenant Landlord's lawful attorney-in-fact for the sole purpose of applying for and securing from any governmental authority having jurisdiction thereover any permit or license which may be necessary in connection with any construction, alteration, addition, repair to or occupancy of the Demised Premises. 9. COVENANT AGAINST MECHANICS LIENS. Tenant shall do all things necessary to prevent the filing of any mechanic's or other liens against the Demised Premises by reason of any work, labor, services performed or any materials supplied or claimed to have been performed or supplied to Tenant, or anyone holding the Demised Premises, or any part thereof, through or under Tenant. If any such lien shall at any time be filed, Tenant shall either cause the 3 same to be vacated and canceled of record within thirty (30) days after the date of the filing thereof or, if Tenant in good faith determines that such lien should be contested, Tenant shall furnish such security by surety bond or otherwise as may be necessary or be prescribed by law to release the same as a lien against the real property and to prevent any foreclosure of such lien during the pendency of such contest. If Tenant shall fail to vacate or release such lien in the manner and within the time period aforesaid, then, in addition to any other right or remedy of Landlord resulting from' Tenant's said default Landlord may, but shall not be obligated to, vacate or release the same either by paying the amount claimed to be due or by procuring the release of such lien by giving security, or in such other manner as may be prescribed by law. Tenant shall repay to Landlord, on demand, all sums disbursed or deposited by Landlord pursuant to the foregoing provisions of this paragraph, including Landlord's cost and expenses and reasonable attorney's fees incurred in connection therewith. However, nothing contained herein shall imply any consent or agreement on the part of Landlord to subject its estate or interest to liability under any mechanic's or other lien law, whether or not the performance or the furnishing of such work, labor, services, or materials to Tenant or anyone holding the Demised Premises, or any part thereof, through or under Tenant, shall have been consented to by Landlord and/or any of such parties. 10. FIXTURES AND MACHINERY. It is mutually agreed that all personal property on the Demised Premises, including merchandise of every kind, nature, and description, furnishings, equipment, trade fixtures, and all other property hereafter placed or kept on the Demised Premises by Tenant, are and shall continue to be the sole property of the Tenant. Tenant may, during the term of this Lease, remove any furniture, fixtures, or equipment as it may so desire, provided Tenant shall repair all damage resulting from such removal, as nothing herein is intended to impose any restrictions on the use of the furniture, fixtures, or equipment as the Tenant may deem necessary or desirable in the operation of its business, 11. PUBLIC LIABILITY INSURANCE. Subject to paragraph 14 hereafter, Tenant, at its expense at all times during the term of, this Lease and any other period of occupancy of the Demised Premises by Tenant, shall provide and maintain with respect to the Demised Premises general public liability insurance in form customarily written for the protection of owners, landlords, and tenants of real estate, with Landlord and Tenant as named insured, which insurance shall provide coverage of not less than $500,000 for personal injury and $250,000 for property damage. 12. INDEMNIFICATION. Landlord and Tenant agree to indemnify each other against and to hold each other harmless from any and all claims or demands of any third party arising from or based upon the act, omission or negligence of the indemnifying party or its contractors, concessionaires, licensees, agents, servants, invitees, employees, or anyone else for whom the indemnifying party may be or alleged to be responsible. In the event that either party shall without fault on its part be made a party to any litigation commenced by any third party against the other party, then such other party shall protect and hold the party without fault harmless from and with respect to such litigation, and shall pay all costs, expenses, and reasonable attorney's fees incurred or paid by the party without fault in connection with such litigation, together with any judgments rendered against the party without fault. 4 13. WAIVER OF SUBROGATION. Neither Landlord nor Tenant shall be liable to the other for any business interruption or any loss or damage to property or injury or death of persons occurring on the Demised Premises, or in any part of the Store Premises, or in any manner growing out of Tenant's use of the Demised Premises or Landlord's use of the Store Premises, whether or not caused by the fault or negligence of the Landlord or Tenant, or their respective agents, employees, subtenants, licensees, or assignees; provided, however, this release shall apply only to the extent that such business interruption, loss or damage to property, or injury or death of persons is covered by insurance, and to the extent that recovery is made of proceeds thereunder, and regardless of whether such insurance protects the Landlord or Tenant or both. Nothing herein shall be construed to impose any other or greater liability upon either of the parties to this Lease than would have existed in the absence of this paragraph. This paragraph shall be effective only so long as its provisions do not adversely affect the right of the insured, whether Landlord or Tenant or both, to recover under the applicable policy or policies of insurance, and if prohibited under the terms of such policy or policies, shall be deemed wholly without force or effect. 14. TAXES. A. LANDLORD'S TAXES. All real estate taxes and special assessments levied and assessed by lawful authority against the Demised Premises shall be timely paid by Landlord. B. TENANT'S TAXES. Tenant shall pay to the proper authorities all taxes, special assessments, and similar charges on the Branch and personal property, consisting of ATM equipment and furniture and fixtures, required to be paid in connection with the operation thereof, except real estate taxes and special assessments hereinbefore covenanted to be paid by Landlord. Tenant shall procure at its expense all permits and licenses required by law for the operation of the Branch and ATMs. 15. UTILITIES. Landlord shall furnish Tenant heat, air conditioning and electricity adequate and reasonable for the Demised Premises during the term hereof at its sole cost and expense. 16. MAINTENANCE AND REPAIRS. A. BY LANDLORD. Landlord shall keep and maintain in good condition and repair the Common Areas of the Store Premises, and the foundations, roof, exterior walls, windows, doors, ceiling, heating, ventilating, and air conditioning equipment, and wiring, and all structural and supporting parts of the Demised Premises. Landlord shall keep the Common Areas free and clear of ice, snow and obstructions. Landlord shall provide and maintain adequate lighting for the Common Areas for the convenience and safety of Tenant and Tenant's officers, employees, agents, concessionaires, customers, and invitees. B. BY TENANT. Subject to the obligations of Landlord as herein above stated, Tenant shall otherwise maintain the Demised Premises in good condition and repair, 5 including without limitation the interior of the Branch comprising a portion of the Demised Premises. Tenant shall repair any damage resulting to the Demised Premises due to the acts or negligence of its employees, agents, invitees, and guests or as a result of any casualty caused due to the presence or conduct of Tenant's operations on the Demised Premises. Upon Tenant's request, Landlord will assign to Tenant any guarantees and warranties Landlord may possess with respect to any structure or equipment in or about the Demised Premises that Tenant is obligated to maintain, repair or restore. Tenant shall be solely responsible, at its cost, for performing servicing and maintenance of the ATMs. Landlord shall permit Tenant, its agents, employees, and contractors free and unobstructed access to and egress from the Demised Premises during normal business hours to service, maintain, repair or replace the ATMs. In connection with the servicing and repair of the ATMs, it is agreed that Tenant shall have access to a telephone on or about the Demised Premises near the ATMs for Tenant's use on a toll-free basis. It is further agreed by the parties hereto that it may be necessary for Tenant to interrupt the operation of the ATMs for such periods as are necessary to perform repairs, maintenance, and daily balancing. Such interruptions may be made without Tenant being deemed to have violated any term of this Lease. Landlord agrees that it will use its best efforts to report to Tenant any need to service the ATMs which has been made known to Landlord. 17. ALTERATIONS OF DEMISED PREMISES. Tenant, at its expense during the term of this Lease, may make such alterations to the Demised Premises as it deems appropriate provided that: (i) the structural integrity of the Store Premises building shall not be affected or diminished; (ii) the value of the Store Premises building is not thereby diminished; (iii) the exterior appearance (including the Store Premises building front) is not thereby altered or changed; and (iv) Tenant shall have secured prior written approval and consent of Landlord before making any alterations, which consent shall not be unreasonably withheld or delayed by Landlord. At the time Landlord's approval of any alterations is sought, Tenant shall submit to Landlord plans and specifications for such Work. All such alterations shall be completed in a good and workerlike manner with first-class materials. Upon the termination of this Lease any additions or alterations made to the interior of the Demised Premises by Tenant shall remain a part of the Demised Premises and be surrendered therewith unless required to be removed by Landlord. 18. REMODELING OF STORE PREMISES. Tenant recognizes that Landlord may from time to time wish to remodel, rearrange, or enlarge the Store Premises to accommodate changes in retailing patterns. In the event that the remodeling, rearranging, or, enlargement may require relocation of the Demised Premises for a purpose other than to provide Tenant's space comprising all or a portion of the Demised Premises to another retail vendor of goods and/or services or to a competitor of Tenant's, Landlord agrees to discuss with Tenant its alteration plans to determine if the Demised Premises can be moved to another location mutually satisfactory to Tenant and Landlord within the Store Premises. If Landlord desires to move Tenant's Demised Premises to an alternate location within the Store Premises and Landlord and Tenant cannot agree upon an alternate location, then either Tenant or Landlord may terminate this Lease effective upon the date of commencement of the remodeling of the Store Premises. In such event, Landlord agrees to reimburse Tenant for the Improvements made by Tenant pursuant 6 to Section 7(B,) above by paying to Tenant an amount equal to 100% of the actual cost of the Improvements. If, however, Landlord desires to move Tenant's Demised Premises within the Store Premises and Landlord and Tenant agree upon an alternate location after remodeling, then Landlord shall pay the entirety of Tenant's relocation and remodeling costs. In no event shall Landlord exercise its rights hereunder for a purpose other than to provide Tenant's space comprising all or a portion of the Demised Premises to another retail vendor of goods and/or services or to a competitor of Tenant's without the prior written consent of Tenant, which consent Tenant may give or withhold by Tenant in its sole discretion. 19. DAMAGE TO THE PREMISES. If the Demised Premises is damaged by fire or other casualty to such an extent as to render the Demised Premises unfit for conducting business or if the Store Premises building within which the Demised Premises is situated is so seriously damaged by fire or other casualty that it shall be necessary to perform major repair or rebuild the Store Premises building, then and in that event Landlord or Tenant may cancel this Lease by giving notice in writing not later than thirty (30) days after the damage to the Demised Premises or Store Premises building shall have occurred; and upon the giving of such notice, this Lease shall terminate and all the rights and obligations of Landlord and Tenant hereunder shall cease and terminate; provided, however, that Tenant shall be responsible for the payment of all rent through the date of such damage. In the event that the Landlord or Tenant shall not elect to cancel. this Lease, Landlord shall commence the repair, rebuilding and/or reconstruction of the Demised Premises or Store Premises building within a reasonable time after the damage to the Demised Premises or Store Premises building. In the event the Demised Premises or Store Premises building should be partially damaged by fire or other casualty, but not to such an extent as to require complete rebuilding or a complete reconstruction of the Demised Premises or Store Premises building it shall be the duty of Landlord to commence within a reasonable time the work of repairing or rebuilding the Demised Premises or Store Premises building to their condition existing before the destruction; provided, however, that throughout any period during which the Demised Premises are fully or partially untenantable, by reason of fire or other casualty resulting in either partial or total destruction, there shall be an abatement of rent in proportion to the portion of the Demised Premises rendered untenantable. Subject to paragraph 14 hereinabove, Tenant shall carry sufficient replacement insurance to pay for rebuilding the Demised Premises, including all of Tenant's fixtures and machinery and other personal property that it owns or leases located in the Demised Premises. 20. CONDEMNATION. If the whole or any part of the Demised Premises is taken or condemned, then Landlord or Tenant shall have the right to terminate this Lease as of the date title thereto vests in the condemnor (or as soon thereafter as is practicable under applicable laws and regulations) by giving to the other party written notice of such termination; but should neither party so terminate this Lease when a portion of the Demised Premises is so taken, this Lease shall terminate as to the part taken, and the rent and other relevant charges reserved herein shall be adjusted for the remainder of the Demised Premises so that Tenant shall be required to pay for the balance of the term that portion of the rent and other relevant charges reserved herein which the value of the portion of the Demised Premises remaining after condemnation bears to the value of the Demised Premises immediately prior to the date of condemnation. The rental and other charges shall be apportioned as aforesaid by agreement between the parties or by arbitration or legal proceedings, but pending such determination or adjudication, Tenant shall 7 pay at the time and in the manner above provided the rental herein reserved, and all other charges herein required to be paid by Tenant, without deduction, and on such determination or legal adjudication, Tenant shall be entitled to credit for any excess rentals or other charges paid, together with interest at the legal rate provided under applicable law. 21. QUIET ENJOYMENT. Landlord covenants that Landlord has full right to lease the Demised Premises for the term aforesaid, and for the term of all extensions permitted to the Tenant hereunder, and that Tenant upon payment of rent and performing Tenant's obligations in this Lease may peaceably and quietly have, hold, and enjoy the said Demised Premises for the same term and all extensions thereof until terminated as provided in this Lease. 22. PERMITTED USE. Tenant may use, occupy, and operate the Demised Premises for a branch bank (including related activities customarily carried on in other supermarket branch banks of Tenant) and ATM facilities, and for no other purpose initially. Tenant shall not use any portion of the Common Areas for the conduct of its business without the prior written consent of Landlord or as provided herein. Tenant agrees to conduct its business at all times to comply with all applicable laws, ordinances and governmental regulations affecting the Demised Premises. Tenant will comply with all lawful requirements of the local Board of Health, Police, Fire Department, and governmental authorities respecting the manner in which it uses the Demised Premises. The Tenant will supply any apparatus, appliance, or material and will have done any work for, in, or about the Demised Premises, which may be required or ordered by any law or lawful authority. 23. STORE RULES TO BE FOLLOWED. Tenant and its employees shall at all times during the term of this Lease or any extension hereof be governed by all reasonable rules prescribed by Landlord for the management of its stores and shall conduct operations with respect to the Branch and ATMs with due regard to the rights of Landlord. Landlord shall provide Tenant with a copy of its store rules. If any of the store rules are inconsistent with any of the terms of this Lease, the Lease terms shall control. 24. ACCESS. A. BY TENANT. Tenant's officers, employees and the Tenant's customers and invitees shall have full and complete access to the Demised Premises during Tenant's business hours. Landlord shall also permit representatives from all appropriate federal and state bank regulatory authorities, when duly authorized by Tenant, reasonable access to the Demised Premises during normal business hours for inspections and for any other purposes for which they have regulatory authority during normal business hours. B. BY LANDLORD. Upon advance notice, Tenant shall allow Landlord reasonable access to the Demised Premises, during Tenant's business hours or other mutually agreed upon times to examine and exhibit the Demised Premises and to make any necessary repairs or alterations to the Demised Premises. Landlord's access, however, as well as its repairs and alterations, shall not unreasonably interfere with the conduct of Tenant's business or breach any security measures implemented by Tenant. 8 25. OPERATION BY TENANT A. CONTINUOUS OPERATION. Tenant agrees that Tenant shall at all times, during the term of this Lease, operate and maintain an ATM that is full service and shall be generally available twenty-four (24) hours a day with due diligence and efficiency. Tenant shall continuously throughout the term hereof provide at the Branch such services as are customarily available in Tenant's supermarket branch banks and shall be open to the public at least ten (10) daytime hours during each weekday, six (6) daytime hours during each Saturday, and four (4) daytime hours during each Sunday. The ATMs shall be full service machines, and shall be generally available twenty-four (24) hours a day. Notwithstanding the foregoing, Tenant shall have the unconditional option to remove an ATM's depository capability upon its advising Landlord of its intent to do so. It is understood that the Tenant's ATM network is currently a member of the Cirrus, Honor, PLUS, VISA and MasterCard networks; provided, however, no guarantee is hereby given that Tenant will choose, or will be chosen, to continue as a member of the Cirrus, Honor, PLUS, VISA and/or MasterCard networks at any given -time in the future. Tenant agrees that, to the extent it has a choice in the matter, it will remain a member of at least one (1) major ATM network throughout the term of this Lease. B. RIGHT TO TERMINATE. If for any reason Landlord or a successor landlord elects to no longer operate a retail grocery store from the Store Premises of which the Demised Premises are a part, then Tenant may elect to terminate this Lease. 26. EMPLOYEE PARKING. Tenant and its employees shall park their motor vehicles only in the areas of the Store Premises parking lots specifically designated by landlord for that purpose; provided, however, that such areas shall be sufficient for such purposes. In all events Landlord agrees to provide a reasonable amount of employee parking on or adjacent to the Store Premises so that the parking by employees of their cars shall not unduly restrict or limit customer parking in the Store Premises. 27. ADVERTISING. Landlord acknowledges that Tenant intends to advertise the Branch and ATM facilities and, subject to the approval of the Landlord hereinafter specified, Landlord hereby authorizes Tenant to advertise the existence of the Branch and ATM facilities and the services offered related thereto in such media and in such manner as it deems desirable. Without limiting the generality of the foregoing, Landlord authorizes Tenant to use Landlord's name and logo in connection with such advertising and to identify the Landlord's store at which the Branch and ATM facilities are located. Other than for purposes of identifying the location of its place of business, Tenant and Landlord agree not to refer to or mention in any way the other's facilities or services provided thereby when advertising its own facilities or services unless previously approved by the other party and unless appropriate procedures are followed with respect to name protection, copyright protection and the like. 28. EXCLUSIVE RIGHT TO PROMOTE BANKING SERVICES. Tenant shall have the exclusive right and privilege of promoting banking services, in such manner as it deems most effective, and within the Store Premises building as it reasonably selects, including, without limitation, through the use product signs and table cards, through the use of public address announcements (by means of the Store Premises PA system), and by "in person" promotions. 9 Landlord covenants and agrees that during the term, of this Lease, no other financial service provider competitive with Tenant shall be given the right or permission to promote any banking or related financial services competitive with those provided (or which may be provided) by Tenant 29. SIGNS. Tenant shall have the right and privilege of attaching, affixing, painting, or exhibiting signs in the Demised Premises (to include, without limitation, the right to hang banner type signs in front of the Branch area) on the exterior of the Store Premises building in which the Demised Premises are located, and as a part of any perimeter pedestal sign erected by Landlord (if structurally possible) provided only: (a) that any and all signs shall comply with the ordinances of the city or municipality in which the property is located and the laws of the State of Kansas; (b) such signs shall not change the structure of the Store Premises building; (c) such signs if and when taken down shall not damage the Store Premises building and/or perimeter pedestal sign; and (d) such signs shall be subject to the written approval of the Landlord, which approval shall not be unreasonably withheld or delayed. It is specifically agreed that Landlord may require such signs conform to Landlord's exterior departmental signage style, size proportions and color. 30. DELAYS IN PERFORMANCE. The performance by Landlord and Tenant of any of their respective obligations or undertakings provided for in this Lease (except the payment of rent or any other sums of money payable by Tenant under this Lease) shall be excused and no default shall be deemed to exist in the event and so long as the performance of any such obligation or undertaking is prevented, delayed or hindered by any act of God, fire, earthquake, flood, explosion, action of the elements, war, riot, failure of transportation, strikes, lockouts, action of labor unions, condemnation, laws, orders of government or civil or military authorities, inability to procure labor, equipment, materials, or supplies in the open market, or any other cause directly beyond the control of Landlord or Tenant, as the case may be. 31. DELINQUENT PAYMENTS. If any rent or other sums due and payable by Tenant under this Lease are not paid within ten (10) days after such rent or other sums are due and payable, then such unpaid rent or other sums shall bear interest at the rate of ten percent (10%) per annum from their respective due dates until paid. 32. TENANT'S DEFAULT. If Tenant defaults in the payment of any rent or other sums due and payable to Landlord under this Lease, and such default continues for a period of five (5) days after written notice of such default has been given by Landlord to Tenant, or if Tenant shall violate or default in the performance of any material covenants, agreements, stipulations, or other conditions contained herein (other than the payment of rent and other sums payable under this Lease) and such violation or default continues for a period of thirty (30) days after written notice of such violation or default has been given by Landlord to Tenant (or, in the case of default not curable within thirty (30) days, if Tenant shall fail to commence to cure the same within thirty (30) days and thereafter proceed diligently to complete the cure thereof), then Landlord at its option may reenter and repossess the Demised Premises with process of law, and declare this Lease terminated and the term of this Lease ended forthwith. Landlord may use such legal force as may be necessary to remove all persons and property then located in the Demised Premises. Notwithstanding such reentry and repossession by Landlord and the holding of such 10 fixtures, inventory, or other personal property, the liability of Tenant for the payment of the rent and other sums due hereunder and for the performance of Tenant's other obligations hereunder for the balance of the term of this Lease shall not be relinquished or extinguished; and Landlord at any time may commence such one or more actions as it may deem necessary to collect any sums due from Tenant under this Lease. In the event of any such reentry and repossession, Landlord shall have the right to relet all or any portion of the Demised Premises upon such terms and conditions as Landlord may deem appropriate; and any such reletting shall not relieve Tenant of any of its obligations to Landlord under this Lease, except to the extent of any net rentals actually received by Landlord from such reletting. after deducting all of Landlord's expenses (including but not limited to legal expenses, brokerage commissions, and the costs of remodeling the Demised Premises so as to render it suitable for reletting) incurred in preparing for and accomplishing such reletting. 33. RIGHT TO CURE DEFAULT. If default shall be made by either party (except for a default in the payment of rent by Tenant) in the performance of or compliance with any of the terms, covenants, or conditions of this Lease, and such default shall have continued for thirty (30) days after written notice thereof from one party to the other, the person aggrieved, in addition to all other remedies provided herein or now or hereafter provided by law, may, but need not, perform such term, covenant, or condition, or make good such default, and any amount advanced shall be repaid forthwith on demand, together with interest at the rate of ten percent (10%) per annum, from date of advance. 34. SURRENDER OF PREMISES AT END OF TERM. Tenant agrees that upon the termination of this Lease it will surrender, yield up, and deliver the Demised Premises in good and clean condition, except the affects of reasonable wear and tear and depreciation arising from lapse of time, or damage without fault or liability of Tenant. Tenant shall remove its inventory, equipment, furniture and fixtures and repair any damage occasioned thereby; and any personal property or fixtures which Tenant in its discretion elects not to remove shall be presumed to be abandoned and shall thereupon be the property of Landlord. 35. HOLDOVER. In the event that Tenant remains in possession of the Demised Premises after the termination of this Lease without the exercise of an option (if any exist) to extend the term of this Lease or without the execution of a new lease in default of the provisions of this Lease, then Tenant shall be deemed to be occupying the Demised Premises as a tenant from month to month, subject to all of the conditions, provisions, and obligations. of this Lease, but without any rights to remain in possession or extend the term of this Lease and be liable to pay to Landlord two times the normal monthly rent. 36. TENANT'S ASSIGNMENT OR SUBLETTING. Tenant shall have the right to assign this Lease to any successor or purchaser in the event of a merger, consolidation, or sale of substantially all of the assets of the Tenant corporation. Otherwise, Tenant shall not assign this Lease, or sublet the Demised Premises, without the written consent of the Landlord, which consent the Landlord will not unreasonably withhold. No assignment or subletting shall release the Tenant from its Lease obligations and agreements hereunder. In no event shall Tenant assign or sublet the Demised Premises or any portion thereof for any use other than the use hereinbefore set forth without the specific approval of Landlord. 11 37. RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent or of partnership or of joint venture between the parties hereto, it being understood and agreed that neither the method of computation of rent, nor any other provision contained herein, nor any acts of the parties hereto shall be deemed to create any relationship between the parties hereto other than the relationship of landlord and tenant. 38. NOTICES. Whenever under this Lease a provision is made for notice of any kind, such notice and the service thereof shall be deemed sufficient if such notice to Tenant is in writing addressed to Bank of Blue Valley, 11935 Riley, P. 0. Box 26128, Overland Park, Kansas 66225-6128, Attention: John K. Doull, and is delivered personally or sent by certified mail with postage prepaid; and if such notice to Landlord is in writing addressed to CMI, Inc. at Highway K7 and Johnson Drive, Shawnee, Kansas 66216, and is delivered personally or sent by certified mail with postage prepaid. Either party may by notice to the other party change the address at which it wishes to receive any notice given under this Lease. 39. TIME OF ESSENCE. Time is of the essence of this Lease, and all provisions of this Lease relating to the time of performance of any obligation under this Lease shall be strictly construed. 40. FURTHER ASSURANCES. Landlord and Tenant agree to execute and deliver any instruments in writing necessary to carry out any agreement, term, condition, or assurance in this Lease whenever occasion shall reasonably arise and request for such instruments shall be reasonably made. 41. BROKERS COMMISSIONS. Tenant covenant's, warrants, and represents to Landlord that there was no broker instrumental in consummating this Lease and that no conversations or prior negotiations were had by Tenant with any broker concerning the renting of the Demised Premises. Tenant agrees to indemnify and hold Landlord harmless against and from all liabilities, including reasonable attorney's fees, arising from any claims for brokerage commissions or finder's fees resulting from or arising out of any conversations or negotiations had by Tenant directly or indirectly with any broker. Landlord covenants, warrants, and represents to Tenant that there was no broker instrumental in consummating this Lease and that no conversations or prior negotiations were had by Landlord with any broker concerning the renting of the Demised Premises. Landlord agrees to indemnify and hold Tenant harmless against and from all liabilities, including reasonable attorney's fees, arising from any claims for brokerage commissions or finder's fees resulting from or arising out of any conversations or negotiations had by Landlord directly or indirectly with any broker. 42. NUMBER AND GENDER. Where the context of this Lease requires, singular words shall be read as if plural, plural words shall be read as if singular, and words of neuter gender shall be read as if masculine or feminine. 43. PARAGRAPH TITLES. The titles of the various paragraphs of this Lease have been inserted merely as a matter of convenience and for reference only, and shall not be deemed 12 in any manner to define, limit, or describe the scope or intent of the particular paragraphs to which they refer or to affect the meaning or construction of the language contained in the body of such paragraphs. 44. SEVERABILITY. If any provision of this Lease shall be declared legally invalid or unenforceable, then the remaining provisions of this Lease nevertheless shall continue in full force and effect and shall be enforceable to the fullest extent permitted by law. 45. CUMULATIVE RIGHTS. The rights, options, elections, and remedies of both parties contained in this Lease shall be cumulative and may be exercised on one or more occasions; and none of them shall be construed as excluding any other or any additional right, priority, or remedy allowed or provided by law. 46. WAIVERS. One or more waivers by Landlord or Tenant of a breach of any covenant or condition by the other of them shall not be construed as a waiver of the subsequent breach of the same covenant or condition, and the consent or approval by Landlord or Tenant to or of any act by either requiring the other's consent or approval shall not be deemed to waiver or render unnecessary either party's consent to or approval of any subsequent similar act by the other party. 47. BINDING AGREEMENT. All rights and liabilities herein given to or imposed upon the respective parties hereto shall extend to and bind the respective heirs, executors, administrators, personal representatives, successors, and assigns of such parties. No rights, however, shall inure to the benefit of any assigns of Tenant unless the assignment thereof to such assignee has been approved by Landlord in writing, if such approval is required by this Lease. 48. ENTIRE AGREEMENT. Tenant and Landlord hereby agree that this Lease as written represents the entire agreement between the parties hereto and that there are no other agreements, written or verbal, between the parties hereto pertaining to the Demised Premises or the subject matter hereof. This Lease may not be amended or supplemented orally but only by an agreement in writing which has been signed by both parties. 49. EXECUTION REQUIRED. The submission of this document for examination does not constitute an offer to lease, or a reservation of or option for the Demised Premises and shall become effective only upon execution by both Tenant and Landlord. 50. EXECUTION BY TENANT. The person(s) executing the Lease on behalf of Tenant hereby covenant, represent, and warrant that Tenant is a duly constituted state banking association under the laws of the United States of America and authorized to transact business in the State of Kansas, and the person(s) executing this Lease on behalf of Tenant is an officer or are officers of such Tenant, and that he or they as such officer(s) is/are duly authorized to sign and execute this Lease (a copy of a resolution of the same to be supplied to Landlord upon request) 51. EXECUTION BY LANDLORD. The person(s) executing the Lease on behalf of Landlord hereby covenant, represent, and warrant that Landlord is duly incorporated under the 13 laws of the state of Kansas and that the person(s) executing this Lease on behalf of Landlord is an officer or are officers of such Landlord, and that he or they as such officer(s) is/are duly authorized to sign and execute this Lease (a copy of a resolution of the same to be supplied to Tenant upon request) 52. MULTIPLE COUNTERPARTS. This Lease may be executed in multiple counterparts, each of which shall be deemed to be an original for all purposes. 53. GOVERNING LAW. This Lease shall be governed by and construed in accordance with the laws of the state in which the Demised Premises are located. IN WITNESS WHEREOF, the parties hereto have set their hands the date and year first above written. LANDLORD: CMI, INC. By: /s/ Edward D. Roche II Title: President TENANT: By: /s/ John K. Doull John K. Doull Title: Executive Vice President 14 5600 Hedge Lane Terrace, Shawnee, Kansas 66226 Exhibit A EX-12.1 26 RATIO OF EARNINGS TO FIXED CHARGES
RATIO OF EARNINGS TO FIXED CHARGES YEAR ENDED DECEMBER 31, ---------------------------------------------- 1999 1998 1997 1996 1995 ------- ------- ------- ------- -------- (Dollars in thousands) Earnings 1. Income before income taxes $ 4,604 $ 4,202 $ 3,431 $ 2,540 $ 1,620 2. Plus interest expense 11,204 9,205 7,258 5,796 4,895 ------- ------- ------- ------- -------- 3. Earnings including interest on 15,808 13,407 10,689 8,336 6,515 deposits 4. Less interest on deposits 9,832 8,232 6,634 5,191 4,175 ------- ------- ------- ------- -------- 5. Earnings excluding interest on $ 5,976 $ 5,175 $ 4,055 $ 3,145 $ 2,340 deposits ======= ======= ======= ======= ======== Fixed Charges: 6. Including interest on deposits excluding capitalized interest $ 11,204 $ 9,205 $ 7,258 $ 5,796 $ 4,895 7. Less interest on deposits 9,832 8,232 6,634 5,191 4,175 (Line 4) ------- ------- ------- ------- -------- 8. Excluding interest on deposits $ 1,372 973 624 605 720 ======= ======= ======= ======= ======== Ratio of Earnings to Fixed Charges: Including interest on deposits (Line 3 divided by Line 6) 1.41 1.46 1.47 1.44 1.33 ======= ======= ======= ======= ======== Excluding interest on deposits (Line 5 divided by Line 8) 4.36 5.32 6.50 5.20 3.25 ======= ======= ======= ======= ======== PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES YEAR ENDED DECEMBER 31, 1999 ----------------------- (Dollars in thousands) Earnings 1. Income before income taxes $ 4,604 2. Plus interest expense 11,204 ------------ 3. Earnings including interest on deposits 15,808 4. Plus interest expense on the junior subordinated 1,000 debentures 5. Less Historical Interest Expense on $7.3 million in 335 debt ------------ 6. Earnings after debt issuance and retirement 16,473 7. Less interest on deposits 9,832 ------------ 8. Earnings excluding interest on deposits $ 6,641 ============ Fixed Charges: 9. Including interest on deposits excluding capitalized $ 11,204 interest 10. Plus interest expense on the junior subordinated 1,000 debentures 11. Less Historical Interest Expense on $7.3 million of 335 debt (line 5) ------------ 12. Fixed Charges after debt issuance and retirement 11,869 13. Less interest on deposits 9,832 ------------ 14. Excluding interest on deposits $ 2,037 ============ Pro Forma Ratio of Earnings to Fixed Charges: Including interest on deposits (Line 6 divided by Line 1.39 12) ============ Excluding interest on deposits (Line 8 divided by Line 3.26 14) ============
EX-21.1 27 LIST OF SUBSIDIARIES OF BLUE VALLEY BAN CORP Exhibit 21.1 Blue Valley Ban Corp. Subsidiaries of the Registrant Subsidiaries of Blue Valley Ban Corp. 1. Bank of Blue Valley - Incorporated in Kansas 2. Blue Valley Building Corp. - Incorporated in Kansas 3. BVBC Capital Trust I - Organized under the laws of the State of Delaware Subsidiary of Bank of Blue Valley 1. Blue Valley Investment Corporation - Incorporated in Kansas EX-23.3 28 CONSENT OF BAIRD, KURTZ & DOBSON CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the inclusion in this Amendment 1 to the registration statement on Form S-1 of our report dated March 1, 2000, on our audits of the consolidated financial statements of BLUE VALLEY BAN CORP. We also consent to the reference to our firm under the caption "Experts." /s/ Baird, Kurtz & Dobson Kansas City, Missouri April 7, 2000 EX-24.1 29 POWER OF ATTORNEY SIGNATURES Each individual whose signature appears below hereby designates and appoints Robert D. Regnier, Mark A. Fortino and John K. Doull, and each of them, any one of whom may act without the joinder of the other, as such person's true and lawful attorney-in-fact and agents (the "Attorneys-in-Fact") with full power of substitution and re-substitution, for such person and in such person's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, which amendments may make changes in this Registration Statement as either Attorney-in-Fact deems appropriate, and registration statements relating to the same offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and requests to accelerate the effectiveness of such registration statements, and to file each such amendment with all exhibits thereto, and all documents in connection therewith, the Securities and Exchange Commission, granting unto such Attorneys-in-Fact and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that such Attorneys-in-Fact or either of them, or their substitution or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ Robert D. Regnier President, Chief Executive April 5, 2000 Robert D. Regnier Officer & Director /s/ Donald H. Alexander Director April 5, 2000 Donald H. Alexander /s/ Wayne A. Henry, Jr. Director April 5, 2000 Wayne A. Henry, Jr. /s/ C. Ted McCarter Director April 4, 2000 C. Ted McCarter /s/ Thomas A. McDonnell Director April 3, 2000 Thomas A. McDonnell /s/ Mark A. Fortino Treasurer and Principal April 4, 2000 Mark A. Fortino Finance and Accounting Officer SIGNATURES Each individual whose signature appears below hereby designates and appoints Robert D. Regnier, Mark A. Fortino and John K. Doull, and each of them, any one of whom may act without the joinder of the other, as such person's true and lawful attorney-in-fact and agents (the "Attorneys-in-Fact") with full power of substitution and re-substitution, for such person and in such person's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, which amendments may make changes in this Registration Statement as either Attorney-in-Fact deems appropriate, and registration statements relating to the same offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and requests to accelerate the effectiveness of such registration statements, and to file each such amendment with all exhibits thereto, and all documents in connection therewith, the Securities and Exchange Commission, granting unto such Attorneys-in-Fact and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that such Attorneys-in-Fact or either of them, or their substitution or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ Robert D. Regnier Administrative Trustee April 5, 2000 Robert D. Regnier /s/ Mark A. Fortino Administrative Trustee April 4, 2000 Mark A. Fortino EX-25.1 30 FORM T-1 FOR TRUST PREFERRED SECURITIES Registration No. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) WILMINGTON TRUST COMPANY (Exact name of trustee as specified in its charter) Delaware 51-0055023 (State of incorporation) (I.R.S. employer identification no.) Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 (Address of principal executive offices) Cynthia L. Corliss Vice President and Trust Counsel Wilmington Trust Company Rodney Square North Wilmington, Delaware 19890 (302) 651-8516 (Name, address and telephone number of agent for service) BLUE VALLEY BAN CORP (Exact name of obligor as specified in its charter) Kansas 48-1070996 (State of incorporation) (I.R.S. employer identification no.) 11935 Riley Overland Park, Kansas 66225-6128 (Address of principal executive offices) (Zip Code) Junior Subordinated Debentures of Blue Valley Ban Corp. (Title of the indenture securities) ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Deposit Insurance Co. State Bank Commissioner Five Penn Center Dover, Delaware Suite #2901 Philadelphia, PA (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each affiliation: Based upon an examination of the books and records of the trustee and upon information furnished by the obligor, the obligor is not an affiliate of the trustee. ITEM 3. LIST OF EXHIBITS. List below all exhibits filed as part of this Statement of Eligibility and Qualification. A. Copy of the Charter of Wilmington Trust Company, which includes the certificate of authority of Wilmington Trust Company to commence business and the authorization of Wilmington Trust Company to exercise corporate trust powers. B. Copy of By-Laws of Wilmington Trust Company. C. Consent of Wilmington Trust Company required by Section 321(b) of Trust Indenture Act. D. Copy of most recent Report of Condition of Wilmington Trust Company. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wilmington Trust Company, a corporation organized and existing under the laws of Delaware, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Wilmington and State of Delaware on the 7th day of April , 2000. [SEAL] WILMINGTON TRUST COMPANY Attest: /s/Patricia A. Evans By: /s/James P. Lawler Name: Patricia A. Evans Name: James P. Lawler Title: Assistant Secretary Title: Vice President 2 EXHIBIT A AMENDED CHARTER Wilmington Trust Company Wilmington, Delaware As existing on May 9, 1987 Amended Charter or Act of Incorporation of Wilmington Trust Company Wilmington Trust Company, originally incorporated by an Act of the General Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which company was changed to "Wilmington Trust Company" by an amendment filed in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act of Incorporation of which company has been from time to time amended and changed by merger agreements pursuant to the corporation law for state banks and trust companies of the State of Delaware, does hereby alter and amend its Charter or Act of Incorporation so that the same as so altered and amended shall in its entirety read as follows: First: - The name of this corporation is Wilmington Trust Company. Second: - The location of its principal office in the State of Delaware is at Rodney Square North, in the City of Wilmington, County of New Castle; the name of its resident agent is Wilmington Trust Company whose address is Rodney Square North, in said City. In addition to such principal office, the said corporation maintains and operates branch offices in the City of Newark, New Castle County, Delaware, the Town of Newport, New Castle County, Delaware, at Claymont, New Castle County, Delaware, at Greenville, New Castle County Delaware, and at Milford Cross Roads, New Castle County, Delaware, and shall be empowered to open, maintain and operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in the City of Wilmington, New Castle County, Delaware, and such other branch offices or places of business as may be authorized from time to time by the agency or agencies of the government of the State of Delaware empowered to confer such authority. Third: - (a) The nature of the business and the objects and purposes proposed to be transacted, promoted or carried on by this Corporation are to do any or all of the things herein mentioned as fully and to the same extent as natural persons might or could do and in any part of the world, viz.: (1) To sue and be sued, complain and defend in any Court of law or equity and to make and use a common seal, and alter the seal at pleasure, to hold, purchase, convey, mortgage or otherwise deal in real and personal estate and 1 property, and to appoint such officers and agents as the business of the Corporation shall require, to make by-laws not inconsistent with the Constitution or laws of the United States or of this State, to discount bills, notes or other evidences of debt, to receive deposits of money, or securities for money, to buy gold and silver bullion and foreign coins, to buy and sell bills of exchange, and generally to use, exercise and enjoy all the powers, rights, privileges and franchises incident to a corporation which are proper or necessary for the transaction of the business of the Corporation hereby created. (2) To insure titles to real and personal property, or any estate or interests therein, and to guarantee the holder of such property, real or personal, against any claim or claims, adverse to his interest therein, and to prepare and give certificates of title for any lands or premises in the State of Delaware, or elsewhere. (3) To act as factor, agent, broker or attorney in the receipt, collection, custody, investment and management of funds, and the purchase, sale, management and disposal of property of all descriptions, and to prepare and execute all papers which may be necessary or proper in such business. (4) To prepare and draw agreements, contracts, deeds, leases, conveyances, mortgages, bonds and legal papers of every description, and to carry on the business of conveyancing in all its branches. (5) To receive upon deposit for safekeeping money, jewelry, plate, deeds, bonds and any and all other personal property of every sort and kind, from executors, administrators, guardians, public officers, courts, receivers, assignees, trustees, and from all fiduciaries, and from all other persons and individuals, and from all corporations whether state, municipal, corporate or private, and to rent boxes, safes, vaults and other receptacles for such property. (6) To act as agent or otherwise for the purpose of registering, issuing, certificating, countersigning, transferring or underwriting the stock, bonds or other obligations of any corporation, association, state or municipality, and may receive and manage any sinking fund therefor on such terms as may be agreed upon between the two parties, and in like manner may act as Treasurer of any corporation or municipality. (7) To act as Trustee under any deed of trust, mortgage, bond or other instrument issued by any state, municipality, body politic, corporation, association or person, either alone or in conjunction with any other person or persons, corporation or corporations. (8) To guarantee the validity, performance or effect of any contract or 2 agreement, and the fidelity of persons holding places of responsibility or trust; to become surety for any person, or persons, for the faithful performance of any trust, office, duty, contract or agreement, either by itself or in conjunction with any other person, or persons, corporation, or corporations, or in like manner become surety upon any bond, recognizance, obligation, judgment, suit, order, or decree to be entered in any court of record within the State of Delaware or elsewhere, or which may now or hereafter be required by any law, judge, officer or court in the State of Delaware or elsewhere. (9) To act by any and every method of appointment as trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity in the receiving, holding, managing, and disposing of any and all estates and property, real, personal or mixed, and to be appointed as such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian or bailee by any persons, corporations, court, officer, or authority, in the State of Delaware or elsewhere; and whenever this Corporation is so appointed by any person, corporation, court, officer or authority such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity, it shall not be required to give bond with surety, but its capital stock shall be taken and held as security for the performance of the duties devolving upon it by such appointment. (10) And for its care, management and trouble, and the exercise of any of its powers hereby given, or for the performance of any of the duties which it may undertake or be called upon to perform, or for the assumption of any responsibility the said Corporation may be entitled to receive a proper compensation. (11) To purchase, receive, hold and own bonds, mortgages, debentures, shares of capital stock, and other securities, obligations, contracts and evidences of indebtedness, of any private, public or municipal corporation within and without the State of Delaware, or of the Government of the United States, or of any state, territory, colony, or possession thereof, or of any foreign government or country; to receive, collect, receipt for, and dispose of interest, dividends and income upon and from any of the bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property held and owned by it, and to exercise in respect of all such bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property, any and all the rights, powers and privileges of individual owners thereof, including the right to vote thereon; to invest and deal in and with any of the moneys of the Corporation upon such securities and in such manner as it may think fit and proper, and from time to time to vary or realize such investments; to issue 3 bonds and secure the same by pledges or deeds of trust or mortgages of or upon the whole or any part of the property held or owned by the Corporation, and to sell and pledge such bonds, as and when the Board of Directors shall determine, and in the promotion of its said corporate business of investment and to the extent authorized by law, to lease, purchase, hold, sell, assign, transfer, pledge, mortgage and convey real and personal property of any name and nature and any estate or interest therein. (b) In furtherance of, and not in limitation, of the powers conferred by the laws of the State of Delaware, it is hereby expressly provided that the said Corporation shall also have the following powers: (1) To do any or all of the things herein set forth, to the same extent as natural persons might or could do, and in any part of the world. (2) To acquire the good will, rights, property and franchises and to undertake the whole or any part of the assets and liabilities of any person, firm, association or corporation, and to pay for the same in cash, stock of this Corporation, bonds or otherwise; to hold or in any manner to dispose of the whole or any part of the property so purchased; to conduct in any lawful manner the whole or any part of any business so acquired, and to exercise all the powers necessary or convenient in and about the conduct and management of such business. (3) To take, hold, own, deal in, mortgage or otherwise lien, and to lease, sell, exchange, transfer, or in any manner whatever dispose of property, real, personal or mixed, wherever situated. (4) To enter into, make, perform and carry out contracts of every kind with any person, firm, association or corporation, and, without limit as to amount, to draw, make, accept, endorse, discount, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or transferable instruments. (5) To have one or more offices, to carry on all or any of its operations and businesses, without restriction to the same extent as natural persons might or could do, to purchase or otherwise acquire, to hold, own, to mortgage, sell, convey or otherwise dispose of, real and personal property, of every class and description, in any State, District, Territory or Colony of the United States, and in any foreign country or place. (6) It is the intention that the objects, purposes and powers specified and clauses contained in this paragraph shall (except where otherwise expressed in said paragraph) be nowise limited or restricted by reference to or inference from 4 the terms of any other clause of this or any other paragraph in this charter, but that the objects, purposes and powers specified in each of the clauses of this paragraph shall be regarded as independent objects, purposes and powers. Fourth: - (a) The total number of shares of all classes of stock which the Corporation shall have authority to issue is forty-one million (41,000,000) shares, consisting of: (1) One million (1,000,000) shares of Preferred stock, par value $10.00 per share (hereinafter referred to as "Preferred Stock"); and (2) Forty million (40,000,000) shares of Common Stock, par value $1.00 per share (hereinafter referred to as "Common Stock"). (b) Shares of Preferred Stock may be issued from time to time in one or more series as may from time to time be determined by the Board of Directors each of said series to be distinctly designated. All shares of any one series of Preferred Stock shall be alike in every particular, except that there may be different dates from which dividends, if any, thereon shall be cumulative, if made cumulative. The voting powers and the preferences and relative, participating, optional and other special rights of each such series, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding; and, subject to the provisions of subparagraph 1 of Paragraph (c) of this Article Fourth, the Board of Directors of the Corporation is hereby expressly granted authority to fix by resolution or resolutions adopted prior to the issuance of any shares of a particular series of Preferred Stock, the voting powers and the designations, preferences and relative, optional and other special rights, and the qualifications, limitations and restrictions of such series, including, but without limiting the generality of the foregoing, the following: (1) The distinctive designation of, and the number of shares of Preferred Stock which shall constitute such series, which number may be increased (except where otherwise provided by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors; (2) The rate and times at which, and the terms and conditions on which, dividends, if any, on Preferred Stock of such series shall be paid, the extent of the preference or relation, if any, of such dividends to the dividends payable on any other class or classes, or series of the same or other class of stock and whether such dividends shall be cumulative or non-cumulative; (3) The right, if any, of the holders of Preferred Stock of such series to convert the same into or exchange the same for, shares of any other class or classes or of any series of the same or any other class or classes of stock of the Corporation and the terms and conditions of such conversion or exchange; 5 (4) Whether or not Preferred Stock of such series shall be subject to redemption, and the redemption price or prices and the time or times at which, and the terms and conditions on which, Preferred Stock of such series may be redeemed. (5) The rights, if any, of the holders of Preferred Stock of such series upon the voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution or winding-up, of the Corporation. (6) The terms of the sinking fund or redemption or purchase account, if any, to be provided for the Preferred Stock of such series; and (7) The voting powers, if any, of the holders of such series of Preferred Stock which may, without limiting the generality of the foregoing include the right, voting as a series or by itself or together with other series of Preferred Stock or all series of Preferred Stock as a class, to elect one or more directors of the Corporation if there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such circumstances and on such conditions as the Board of Directors may determine. (c) (1) After the requirements with respect to preferential dividends on the Preferred Stock (fixed in accordance with the provisions of section (b) of this Article Fourth), if any, shall have been met and after the Corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts (fixed in accordance with the provisions of section (b) of this Article Fourth), and subject further to any conditions which may be fixed in accordance with the provisions of section (b) of this Article Fourth, then and not otherwise the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors. (2) After distribution in full of the preferential amount, if any, (fixed in accordance with the provisions of section (b) of this Article Fourth), to be distributed to the holders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up, of the Corporation, the holders of the Common Stock shall be entitled to receive all of the remaining assets of the Corporation, tangible and intangible, of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. (3) Except as may otherwise be required by law or by the provisions of such resolution or resolutions as may be adopted by the Board of Directors pursuant to section (b) of this Article Fourth, each holder of Common Stock shall have one vote in respect of each share of Common Stock held on all matters voted upon by the stockholders. 6 (d) No holder of any of the shares of any class or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series or any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or series, or bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for stock of the Corporation of any class or series, or carrying any right to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock or securities convertible into or exchangeable for stock, or carrying any right to purchase stock, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations or associations, whether such holders or others, and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its sole discretion. (e) The relative powers, preferences and rights of each series of Preferred Stock in relation to the relative powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in section (b) of this Article Fourth and the consent, by class or series vote or otherwise, of the holders of such of the series of Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock whether or not the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in the resolution or resolutions as to any series of Preferred Stock adopted pursuant to section (b) of this Article Fourth that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of any or all other series of Preferred Stock. (f) Subject to the provisions of section (e), shares of any series of Preferred Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (g) Shares of Common Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (h) The authorized amount of shares of Common Stock and of Preferred Stock may, without a class or series vote, be increased or decreased from time to time by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to 7 vote thereon. Fifth: - (a) The business and affairs of the Corporation shall be conducted and managed by a Board of Directors. The number of directors constituting the entire Board shall be not less than five nor more than twenty-five as fixed from time to time by vote of a majority of the whole Board, provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in office, and provided further, that the number of directors constituting the whole Board shall be twenty-four until otherwise fixed by a majority of the whole Board. (b) The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the whole Board permits, with the term of office of one class expiring each year. At the annual meeting of stockholders in 1982, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next annual election of directors. At such election, the stockholders shall elect a successor to such director to hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director. (c) Notwithstanding any other provisions of this Charter or Act of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Charter or Act of Incorporation or the By-Laws of the Corporation), any director or the entire Board of Directors of the Corporation may be removed at any time without cause, but only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose. (d) Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Such nominations shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation not less than 14 days nor more than 50 days prior to any meeting of the stockholders called for the election of directors; provided, however, that if less than 21 days' notice of the meeting is given to stockholders, such written notice shall be delivered or mailed, as prescribed, to the Secretary of the Corporation not later than the close of the seventh day following the 8 day on which notice of the meeting was mailed to stockholders. Notice of nominations which are proposed by the Board of Directors shall be given by the Chairman on behalf of the Board. (e) Each notice under subsection (d) shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of such nominee and (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee. (f) The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. (g) No action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. Sixth: - The Directors shall choose such officers, agents and servants as may be provided in the By-Laws as they may from time to time find necessary or proper. Seventh: - The Corporation hereby created is hereby given the same powers, rights and privileges as may be conferred upon corporations organized under the Act entitled "An Act Providing a General Corporation Law", approved March 10, 1899, as from time to time amended. Eighth: - This Act shall be deemed and taken to be a private Act. Ninth: - This Corporation is to have perpetual existence. Tenth: - The Board of Directors, by resolution passed by a majority of the whole Board, may designate any of their number to constitute an Executive Committee, which Committee, to the extent provided in said resolution, or in the By-Laws of the Company, shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Eleventh: - The private property of the stockholders shall not be liable for the payment of corporate debts to any extent whatever. Twelfth: - The Corporation may transact business in any part of the world. Thirteenth: - The Board of Directors of the Corporation is expressly authorized to 9 make, alter or repeal the By-Laws of the Corporation by a vote of the majority of the entire Board. The stockholders may make, alter or repeal any By-Law whether or not adopted by them, provided however, that any such additional By-Laws, alterations or repeal may be adopted only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class). Fourteenth: - Meetings of the Directors may be held outside of the State of Delaware at such places as may be from time to time designated by the Board, and the Directors may keep the books of the Company outside of the State of Delaware at such places as may be from time to time designated by them. Fifteenth: - (a) (1) In addition to any affirmative vote required by law, and except as otherwise expressly provided in sections (b) and (c) of this Article Fifteenth: (A) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with or into (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Stockholder), which, after such merger or consolidation, would be an Affiliate (as hereinafter defined) of an Interested Stockholder, or (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate fair market value of $1,000,000 or more, or (C) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of related transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $1,000,000 or more, or (D) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation, or (E) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any 10 Interested Stockholder, or any Affiliate of any Interested Stockholder, shall require the affirmative vote of the holders of at least two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, considered for the purpose of this Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. (2) The term "business combination" as used in this Article Fifteenth shall mean any transaction which is referred to in any one or more of clauses (A) through (E) of paragraph 1 of the section (a). (b) The provisions of section (a) of this Article Fifteenth shall not be applicable to any particular business combination and such business combination shall require only such affirmative vote as is required by law and any other provisions of the Charter or Act of Incorporation or By-Laws if such business combination has been approved by a majority of the whole Board. (c) For the purposes of this Article Fifteenth: (1) A "person" shall mean any individual, firm, corporation or other entity. (2) "Interested Stockholder" shall mean, in respect of any business combination, any person (other than the Corporation or any Subsidiary) who or which as of the record date for the determination of stockholders entitled to notice of and to vote on such business combination, or immediately prior to the consummation of any such transaction: (A) is the beneficial owner, directly or indirectly, of more than 10% of the Voting Shares, or (B) is an Affiliate of the Corporation and at any time within two years prior thereto was the beneficial owner, directly or indirectly, of not less than 10% of the then outstanding voting Shares, or (C) is an assignee of or has otherwise succeeded in any share of capital stock of the Corporation which were at any time within two years prior thereto beneficially owned by any Interested Stockholder, and such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. (3) A person shall be the "beneficial owner" of any Voting Shares: 11 (A) which such person or any of its Affiliates and Associates (as hereafter defined) beneficially own, directly or indirectly, or (B) which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding, or (C) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation. (4) The outstanding Voting Shares shall include shares deemed owned through application of paragraph (3) above but shall not include any other Voting Shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options or otherwise. (5) "Affiliate" and "Associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981. (6) "Subsidiary" shall mean any corporation of which a majority of any class of equity security (as defined in Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981) is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Investment Stockholder set forth in paragraph (2) of this section (c), the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. (d) majority of the directors shall have the power and duty to determine for the purposes of this Article Fifteenth on the basis of information known to them, (1) the number of Voting Shares beneficially owned by any person (2) whether a person is an Affiliate or Associate of another, (3) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in paragraph (3) of section (c), or (4) whether the assets subject to any business combination or the consideration received for the issuance or transfer of securities by the Corporation, or any Subsidiary has an aggregate fair market value of $1,000,000 or more. (e) Nothing contained in this Article Fifteenth shall be construed to relieve any 12 Interested Stockholder from any fiduciary obligation imposed by law. Sixteenth: Notwithstanding any other provision of this Charter or Act of Incorporation or the By-Laws of the Corporation (and in addition to any other vote that may be required by law, this Charter or Act of Incorporation by the By-Laws), the affirmative vote of the holders of at least two-thirds of the outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this Charter or Act of Incorporation. Seventeenth: (a) a Director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Laws as the same exists or may hereafter be amended. (b) Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a Director of the Corporation existing hereunder with respect to any act or omission occurring prior to the time of such repeal or modification." 13 EXHIBIT B BY-LAWS WILMINGTON TRUST COMPANY WILMINGTON, DELAWARE AS EXISTING ON JANUARY 20, 2000 BY-LAWS OF WILMINGTON TRUST COMPANY ARTICLE I STOCKHOLDERS' MEETINGS Section 1. The Annual Meeting of Stockholders shall be held on the third Thursday in April each year at the principal office at the Company or at such other date, time, or place as may be designated by resolution by the Board of Directors. Section 2. Special meetings of all stockholders may be called at any time by the Board of Directors, the Chairman of the Board or the President. Section 3. Notice of all meetings of the stockholders shall be given by mailing to each stockholder at least ten (10) days before said meeting, at his last known address, a written or printed notice fixing the time and place of such meeting. Section 4. A majority in the amount of the capital stock of the Company issued and outstanding on the record date, as herein determined, shall constitute a quorum at all meetings of stockholders for the transaction of any business, but the holders of a small number of shares may adjourn, from time to time, without further notice, until a quorum is secured. At each annual or special meeting of stockholders, each stockholder shall be entitled to one vote, either in person or by proxy, for each share of stock registered in the stockholder's name on the books of the Company on the record date for any such meeting as determined herein. ARTICLE II DIRECTORS Section 1. The number and classification of the Board of Directors shall be as set forth in the Charter of the Bank. No more than two Directors may also be employees of the Company or any affiliate thereof. Section 2. No person who has attained the age of seventy-two (72) years shall be nominated for election to the Board of Directors of the Company, provided, however, that this limitation shall not apply to any person who was serving as director of the Company on September 16, 1971. The Chairman of the Board of Directors shall not be qualified to continue to serve as a Director upon the termination for any reason of his or her services in that office. Section 3. The class of Directors so elected shall hold office for three years or until their successors are elected and qualified. Section 4. The affairs and business of the Company shall be managed and conducted by the Board of Directors. Section 5. The Board of Directors shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Board of Directors or the President. Section 6. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors or by the President, and shall be called upon the written request of a majority of the directors. Section 7. A majority of the directors elected and qualified shall be necessary to constitute a quorum for the transaction of business at any meeting of the Board of Directors. Section 8. Written notice shall be sent by mail to each director of any special meeting of the Board of Directors, and of any change in the time or place of any regular meeting, stating the time and place of such meeting, which shall be mailed not less than two days before the time of holding such meeting. Section 9. In the event of the death, resignation, removal, inability to act, or disqualification of any director, the Board of Directors, although less than a quorum, shall have the right to elect the successor who shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, and until such director's successor shall have been duly elected and qualified. Section 10. The Board of Directors at its first meeting after its election by the stockholders shall appoint an Executive Committee, a Trust Committee, an Audit Committee and a Compensation Committee, and shall elect from its own members a Chairman of the Board of Directors and a President who may be the same person. The Board of Directors shall also elect at such meeting a Secretary and a Treasurer, who may be the same person, may appoint at any time such other committees and elect or appoint such other officers as it may deem advisable. The Board of Directors may also elect at such meeting one or more Associate Directors. 2 Section 11. The Board of Directors may at any time remove, with or without cause, any member of any Committee appointed by it or any associate director or officer elected by it and may appoint or elect his successor. Section 12. The Board of Directors may designate an officer to be in charge of such of the departments or divisions of the Company as it may deem advisable. ARTICLE III COMMITTEES Section 1. Executive Committee (A) The Executive Committee shall be composed of not more than nine members who shall be selected by the Board of Directors from its own members and who shall hold office during the pleasure of the Board. (B) The Executive Committee shall have all the powers of the Board of Directors when it is not in session to transact all business for and in behalf of the Company that may be brought before it. (C) The Executive Committee shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Executive Committee or at the call of the Chairman of the Board of Directors. The majority of its members shall be necessary to constitute a quorum for the transaction of business. Special meetings of the Executive Committee may be held at any time when a quorum is present. (D) Minutes of each meeting of the Executive Committee shall be kept and submitted to the Board of Directors at its next meeting. (E) The Executive Committee shall advise and superintend all investments that may be made of the funds of the Company, and shall direct the disposal of the same, in accordance with such rules and regulations as the Board of Directors from time to time make. (F) In the event of a state of disaster of sufficient severity to prevent the conduct and management of the affairs and business of the Company by its directors and officers as contemplated by these By-Laws any two available members of the Executive Committee as constituted immediately prior to such disaster shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Company in accordance with the provisions of Article III of these By-Laws; and if less than three members of the Trust Committee is constituted immediately prior to such disaster shall be available for the transaction of its business, such Executive Committee shall also be empowered to exercise 3 all of the powers reserved to the Trust Committee under Article III Section 2 hereof. In the event of the unavailability, at such time, of a minimum of two members of such Executive Committee, any three available directors shall constitute the Executive Committee for the full conduct and management of the affairs and business of the Company in accordance with the foregoing provisions of this Section. This By-Law shall be subject to implementation by Resolutions of the Board of Directors presently existing or hereafter passed from time to time for that purpose, and any provisions of these By-Laws (other than this Section) and any resolutions which are contrary to the provisions of this Section or to the provisions of any such implementary Resolutions shall be suspended during such a disaster period until it shall be determined by any interim Executive Committee acting under this section that it shall be to the advantage of the Company to resume the conduct and management of its affairs and business under all of the other provisions of these By-Laws. Section 2. Audit Committee (A) The Audit Committee shall be composed of five members who shall be selected by the Board of Directors from its own members, none of whom shall be an officer of the Company, and shall hold office at the pleasure of the Board. (B) The Audit Committee shall have general supervision over the Audit Division in all matters however subject to the approval of the Board of Directors; it shall consider all matters brought to its attention by the officer in charge of the Audit Division, review all reports of examination of the Company made by any governmental agency or such independent auditor employed for that purpose, and make such recommendations to the Board of Directors with respect thereto or with respect to any other matters pertaining to auditing the Company as it shall deem desirable. (C) The Audit Committee shall meet whenever and wherever the majority of its members shall deem it to be proper for the transaction of its business, and a majority of its Committee shall constitute a quorum. Section 3. Compensation Committee (A) The Compensation Committee shall be composed of not more than five (5) members who shall be selected by the Board of Directors from its own members who are not officers of the Company and who shall hold office during the pleasure of the Board. (B) The Compensation Committee shall in general advise upon all matters of policy concerning the Company brought to its attention by the management and from time to time review the management of the Company, major organizational matters, including salaries and employee benefits and specifically shall administer the Executive Incentive Compensation Plan. 4 (C) Meetings of the Compensation Committee may be called at any time by the Chairman of the Compensation Committee, the Chairman of the Board of Directors, or the President of the Company. Section 4. Associate Directors (A) Any person who has served as a director may be elected by the Board of Directors as an associate director, to serve during the pleasure of the Board. (B) An associate director shall be entitled to attend all directors meetings and participate in the discussion of all matters brought to the Board, with the exception that he would have no right to vote. An associate director will be eligible for appointment to Committees of the Company, with the exception of the Executive Committee, Audit Committee and Compensation Committee, which must be comprised solely of active directors. Section 5. Absence or Disqualification of Any Member of a Committee (A) In the absence or disqualification of any member of any Committee created under Article III of the By-Laws of this Company, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. ARTICLE IV OFFICERS Section 1. The Chairman of the Board of Directors shall preside at all meetings of the Board and shall have such further authority and powers and shall perform such duties as the Board of Directors may from time to time confer and direct. He shall also exercise such powers and perform such duties as may from time to time be agreed upon between himself and the President of the Company. Section 2. The Vice Chairman of the Board. The Vice Chairman of the Board of Directors shall preside at all meetings of the Board of Directors at which the Chairman of the Board shall not be present and shall have such further authority and powers and shall perform such duties as the Board of Directors or the Chairman of the Board may from time to time confer and direct. Section 3. The President shall have the powers and duties pertaining to the office of the President conferred or imposed upon him by statute or assigned to him by the Board of Directors. In the absence of the Chairman of the Board the President shall have the powers and duties of the Chairman of the Board. 5 Section 4. The Chairman of the Board of Directors or the President as designated by the Board of Directors, shall carry into effect all legal directions of the Executive Committee and of the Board of Directors, and shall at all times exercise general supervision over the interest, affairs and operations of the Company and perform all duties incident to his office. Section 5. There may be one or more Vice Presidents, however denominated by the Board of Directors, who may at any time perform all the duties of the Chairman of the Board of Directors and/or the President and such other powers and duties as may from time to time be assigned to them by the Board of Directors, the Executive Committee, the Chairman of the Board or the President and by the officer in charge of the department or division to which they are assigned. Section 6. The Secretary shall attend to the giving of notice of meetings of the stockholders and the Board of Directors, as well as the Committees thereof, to the keeping of accurate minutes of all such meetings and to recording the same in the minute books of the Company. In addition to the other notice requirements of these By-Laws and as may be practicable under the circumstances, all such notices shall be in writing and mailed well in advance of the scheduled date of any other meeting. He shall have custody of the corporate seal and shall affix the same to any documents requiring such corporate seal and to attest the same. Section 7. The Treasurer shall have general supervision over all assets and liabilities of the Company. He shall be custodian of and responsible for all monies, funds and valuables of the Company and for the keeping of proper records of the evidence of property or indebtedness and of all the transactions of the Company. He shall have general supervision of the expenditures of the Company and shall report to the Board of Directors at each regular meeting of the condition of the Company, and perform such other duties as may be assigned to him from time to time by the Board of Directors of the Executive Committee. Section 8. There may be a Controller who shall exercise general supervision over the internal operations of the Company, including accounting, and shall render to the Board of Directors at appropriate times a report relating to the general condition and internal operations of the Company. There may be one or more subordinate accounting or controller officers however denominated, who may perform the duties of the Controller and such duties as may be prescribed by the Controller. Section 9. The officer designated by the Board of Directors to be in charge of the Audit Division of the Company with such title as the Board of Directors shall prescribe, shall report to and be directly responsible only to the Board of Directors. 6 There shall be an Auditor and there may be one or more Audit Officers, however denominated, who may perform all the duties of the Auditor and such duties as may be prescribed by the officer in charge of the Audit Division. Section 10. There may be one or more officers, subordinate in rank to all Vice Presidents with such functional titles as shall be determined from time to time by the Board of Directors, who shall ex officio hold the office Assistant Secretary of this Company and who may perform such duties as may be prescribed by the officer in charge of the department or division to whom they are assigned. Section 11. The powers and duties of all other officers of the Company shall be those usually pertaining to their respective offices, subject to the direction of the Board of Directors, the Executive Committee, Chairman of the Board of Directors or the President and the officer in charge of the department or division to which they are assigned. ARTICLE V STOCK AND STOCK CERTIFICATES Section 1. Shares of stock shall be transferrable on the books of the Company and a transfer book shall be kept in which all transfers of stock shall be recorded. Section 2. Certificates of stock shall bear the signature of the President or any Vice President, however denominated by the Board of Directors and countersigned by the Secretary or Treasurer or an Assistant Secretary, and the seal of the corporation shall be engraved thereon. Each certificate shall recite that the stock represented thereby is transferrable only upon the books of the Company by the holder thereof or his attorney, upon surrender of the certificate properly endorsed. Any certificate of stock surrendered to the Company shall be cancelled at the time of transfer, and before a new certificate or certificates shall be issued in lieu thereof. Duplicate certificates of stock shall be issued only upon giving such security as may be satisfactory to the Board of Directors or the Executive Committee. Section 3. The Board of Directors of the Company is authorized to fix in advance a record date for the determination of the stockholders entitled to notice of, and to vote at, any meeting of stockholders and any adjournment thereof, or entitled to receive payment of any dividend, or to any allotment or rights, or to exercise any rights in respect of any change, conversion or exchange of capital stock, or in connection with obtaining the consent of stockholders for any purpose, which record date shall not be more than 60 nor less than 10 days proceeding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent. 7 ARTICLE VI SEAL Section 1. The corporate seal of the Company shall be in the following form: Between two concentric circles the words "Wilmington Trust Company" within the inner circle the words "Wilmington, Delaware." ARTICLE VII FISCAL YEAR Section 1. The fiscal year of the Company shall be the calendar year. ARTICLE VIII EXECUTION OF INSTRUMENTS OF THE COMPANY Section 1. The Chairman of the Board, the President or any Vice President, however denominated by the Board of Directors, shall have full power and authority to enter into, make, sign, execute, acknowledge and/or deliver and the Secretary or any Assistant Secretary shall have full power and authority to attest and affix the corporate seal of the Company to any and all deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes, mortgages and all other instruments incident to the business of this Company or in acting as executor, administrator, guardian, trustee, agent or in any other fiduciary or representative capacity by any and every method of appointment or by whatever person, corporation, court officer or authority in the State of Delaware, or elsewhere, without any specific authority, ratification, approval or confirmation by the Board of Directors or the Executive Committee, and any and all such instruments shall have the same force and validity as though expressly authorized by the Board of Directors and/or the Executive Committee. ARTICLE IX COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES Section 1. Directors and associate directors of the Company, other than salaried officers of the Company, shall be paid such reasonable honoraria or fees for attending meetings of the Board of Directors as the Board of Directors may from time to time determine. Directors and associate directors who serve as members of committees, other than salaried employees of the Company, shall be paid such reasonable honoraria or fees for services as members of committees as the Board of Directors shall from time to time determine and directors and associate directors may be employed by the Company for such special services as the Board of Directors may from time to time determine and shall be paid for such special 8 services so performed reasonable compensation as may be determined by the Board of Directors. ARTICLE X INDEMNIFICATION Section 1. (A) The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding") by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person. The Corporation shall indemnify a person in connection with a proceeding initiated by such person only if the proceeding was authorized by the Board of Directors of the Corporation. (B) The Corporation shall pay the expenses incurred in defending any proceeding in advance of its final disposition, provided, however, that the payment of expenses incurred by a Director or officer in his capacity as a Director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Director or officer to repay all amounts advanced if it should be ultimately determined that the Director or officer is not entitled to be indemnified under this Article or otherwise. (C) If a claim for indemnification or payment of expenses, under this Article X is not paid in full within ninety days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification of payment of expenses under applicable law. (D) The rights conferred on any person by this Article X shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Charter or Act of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested Directors or otherwise. (E) Any repeal or modification of the foregoing provisions of this Article X shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. 9 ARTICLE XI AMENDMENTS TO THE BY-LAWS Section 1. These By-Laws may be altered, amended or repealed, in whole or in part, and any new By-Law or By-Laws adopted at any regular or special meeting of the Board of Directors by a vote of the majority of all the members of the Board of Directors then in office. 10 EXHIBIT C SECTION 321(B) CONSENT Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended, Wilmington Trust Company hereby consents that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon requests therefor. WILMINGTON TRUST COMPANY Dated: April 7, 2000 By: /s/James P. Lawler Name: James P. Lawler Title: Vice President EXHIBIT D NOTICE This form is intended to assist state nonmember banks and savings banks with state publication requirements. It has not been approved by any state banking authorities. Refer to your appropriate state banking authorities for your state publication requirements. R E P O R T O F C O N D I T I O N Consolidating domestic subsidiaries of the WILMINGTON TRUST COMPANY of WILMINGTON - ---------------------------------------------- ---------- Name of Bank City in the State of DELAWARE , at the close of business on December 31, 1999. ------------
ASSETS Thousands of dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coins.....................................213,700 Interest-bearing balances................................................................... 0 Held-to-maturity securities...................................................................... 30,232 Available-for-sale securities..................................................................1,628,889 Federal funds sold and securities purchased under agreements to resell...........................390,650 Loans and lease financing receivables: Loans and leases, net of unearned income. . . . . . . 4,374,777 LESS: Allowance for loan and lease losses. . . . . . 71,368 LESS: Allocated transfer risk reserve. . . . . . . . 0 Loans and leases, net of unearned income, allowance, and reserve......................4,303,409 Assets held in trading accounts........................................................................0 Premises and fixed assets (including capitalized leases).........................................122,273 Other real estate owned........................................................................... 576 Investments in unconsolidated subsidiaries and associated companies................................1,511 Customers' liability to this bank on acceptances outstanding...........................................0 Intangible assets................................................................................. 5,100 Other assets.....................................................................................133,449 Total assets...................................................................................6,829,789 CONTINUED ON NEXT PAGE LIABILITIES Deposits: In domestic offices............................................................................5,186,079 Noninterest-bearing . . . . . . . . 986,667 Interest-bearing. . . . . . . . . . 4,199,412 Federal funds purchased and Securities sold under agreements to repurchase...................... 269,343 Demand notes issued to the U.S. Treasury..........................................................95,000 Trading liabilities (from Schedule RC-D)...............................................................0 Other borrowed money:............................................................................/////// With original maturity of one year or less..............................................670,000 With original maturity of more than one year.............................................43,000 Bank's liability on acceptances executed and outstanding...............................................0 Subordinated notes and debentures......................................................................0 Other liabilities (from Schedule RC-G)......................................................... 151,436 Total liabilities..............................................................................6,414,858 EQUITY CAPITAL Perpetual preferred stock and related surplus..........................................................0 Common Stock.........................................................................................500 Surplus (exclude all surplus related to preferred stock)..........................................62,118 Undivided profits and capital reserves...........................................................386,485 Net unrealized holding gains (losses) on available-for-sale securities..........................(34,172) Total equity capital.............................................................................414,931 Total liabilities, limited-life preferred stock, and equity capital............................6,829,789
EX-25.2 31 FORM T-1 FOR JUNIOR SUBORDINATED DEBENTURES Registration No. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) WILMINGTON TRUST COMPANY (Exact name of trustee as specified in its charter) Delaware 51-0055023 (State of incorporation) (I.R.S. employer identification no.) Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 (Address of principal executive offices) Cynthia L. Corliss Vice President and Trust Counsel Wilmington Trust Company Rodney Square North Wilmington, Delaware 19890 (302) 651-8516 (Name, address and telephone number of agent for service) BLUE VALLEY BAN CORP BVBC CAPITAL TRUST I (Exact name of obligor as specified in its charter) Kansas 48-1070996 Delaware Applied For (State of incorporation) (I.R.S. employer identification no.) 11935 Riley Overland Park, Kansas 66225-6128 (Address of principal executive offices) (Zip Code) Trust Preferred Securities of BVBC Capital Trust I (Title of the indenture securities) ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Deposit Insurance Co. State Bank Commissioner Five Penn Center Dover, Delaware Suite #2901 Philadelphia, PA (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each affiliation: Based upon an examination of the books and records of the trustee and upon information furnished by the obligor, the obligor is not an affiliate of the trustee. ITEM 3. LIST OF EXHIBITS. List below all exhibits filed as part of this Statement of Eligibility and Qualification. A. Copy of the Charter of Wilmington Trust Company, which includes the certificate of authority of Wilmington Trust Company to commence business and the authorization of Wilmington Trust Company to exercise corporate trust powers. B. Copy of By-Laws of Wilmington Trust Company. C. Consent of Wilmington Trust Company required by Section 321(b) of Trust Indenture Act. D. Copy of most recent Report of Condition of Wilmington Trust Company. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wilmington Trust Company, a corporation organized and existing under the laws of Delaware, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Wilmington and State of Delaware on the 7th day of April, 2000. [SEAL] WILMINGTON TRUST COMPANY Attest: /s/Patricia A. Evans By: /s/James P. Lawler Name: Patricia A. Evans Name: James P. Lawler Title: Assistant Secretary Title: Vice President 2 EXHIBIT A AMENDED CHARTER Wilmington Trust Company Wilmington, Delaware As existing on May 9, 1987 Amended Charter or Act of Incorporation of Wilmington Trust Company Wilmington Trust Company, originally incorporated by an Act of the General Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which company was changed to "Wilmington Trust Company" by an amendment filed in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act of Incorporation of which company has been from time to time amended and changed by merger agreements pursuant to the corporation law for state banks and trust companies of the State of Delaware, does hereby alter and amend its Charter or Act of Incorporation so that the same as so altered and amended shall in its entirety read as follows: First: - The name of this corporation is Wilmington Trust Company. Second: - The location of its principal office in the State of Delaware is at Rodney Square North, in the City of Wilmington, County of New Castle; the name of its resident agent is Wilmington Trust Company whose address is Rodney Square North, in said City. In addition to such principal office, the said corporation maintains and operates branch offices in the City of Newark, New Castle County, Delaware, the Town of Newport, New Castle County, Delaware, at Claymont, New Castle County, Delaware, at Greenville, New Castle County Delaware, and at Milford Cross Roads, New Castle County, Delaware, and shall be empowered to open, maintain and operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in the City of Wilmington, New Castle County, Delaware, and such other branch offices or places of business as may be authorized from time to time by the agency or agencies of the government of the State of Delaware empowered to confer such authority. Third: - (a) The nature of the business and the objects and purposes proposed to be transacted, promoted or carried on by this Corporation are to do any or all of the things herein mentioned as fully and to the same extent as natural persons might or could do and in any part of the world, viz.: (1) To sue and be sued, complain and defend in any Court of law or equity and to make and use a common seal, and alter the seal at pleasure, to hold, purchase, convey, mortgage or otherwise deal in real and personal estate and 1 property, and to appoint such officers and agents as the business of the Corporation shall require, to make by-laws not inconsistent with the Constitution or laws of the United States or of this State, to discount bills, notes or other evidences of debt, to receive deposits of money, or securities for money, to buy gold and silver bullion and foreign coins, to buy and sell bills of exchange, and generally to use, exercise and enjoy all the powers, rights, privileges and franchises incident to a corporation which are proper or necessary for the transaction of the business of the Corporation hereby created. (2) To insure titles to real and personal property, or any estate or interests therein, and to guarantee the holder of such property, real or personal, against any claim or claims, adverse to his interest therein, and to prepare and give certificates of title for any lands or premises in the State of Delaware, or elsewhere. (3) To act as factor, agent, broker or attorney in the receipt, collection, custody, investment and management of funds, and the purchase, sale, management and disposal of property of all descriptions, and to prepare and execute all papers which may be necessary or proper in such business. (4) To prepare and draw agreements, contracts, deeds, leases, conveyances, mortgages, bonds and legal papers of every description, and to carry on the business of conveyancing in all its branches. (5) To receive upon deposit for safekeeping money, jewelry, plate, deeds, bonds and any and all other personal property of every sort and kind, from executors, administrators, guardians, public officers, courts, receivers, assignees, trustees, and from all fiduciaries, and from all other persons and individuals, and from all corporations whether state, municipal, corporate or private, and to rent boxes, safes, vaults and other receptacles for such property. (6) To act as agent or otherwise for the purpose of registering, issuing, certificating, countersigning, transferring or underwriting the stock, bonds or other obligations of any corporation, association, state or municipality, and may receive and manage any sinking fund therefor on such terms as may be agreed upon between the two parties, and in like manner may act as Treasurer of any corporation or municipality. (7) To act as Trustee under any deed of trust, mortgage, bond or other instrument issued by any state, municipality, body politic, corporation, association or person, either alone or in conjunction with any other person or persons, corporation or corporations. (8) To guarantee the validity, performance or effect of any contract or 2 agreement, and the fidelity of persons holding places of responsibility or trust; to become surety for any person, or persons, for the faithful performance of any trust, office, duty, contract or agreement, either by itself or in conjunction with any other person, or persons, corporation, or corporations, or in like manner become surety upon any bond, recognizance, obligation, judgment, suit, order, or decree to be entered in any court of record within the State of Delaware or elsewhere, or which may now or hereafter be required by any law, judge, officer or court in the State of Delaware or elsewhere. (9) To act by any and every method of appointment as trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity in the receiving, holding, managing, and disposing of any and all estates and property, real, personal or mixed, and to be appointed as such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian or bailee by any persons, corporations, court, officer, or authority, in the State of Delaware or elsewhere; and whenever this Corporation is so appointed by any person, corporation, court, officer or authority such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity, it shall not be required to give bond with surety, but its capital stock shall be taken and held as security for the performance of the duties devolving upon it by such appointment. (10) And for its care, management and trouble, and the exercise of any of its powers hereby given, or for the performance of any of the duties which it may undertake or be called upon to perform, or for the assumption of any responsibility the said Corporation may be entitled to receive a proper compensation. (11) To purchase, receive, hold and own bonds, mortgages, debentures, shares of capital stock, and other securities, obligations, contracts and evidences of indebtedness, of any private, public or municipal corporation within and without the State of Delaware, or of the Government of the United States, or of any state, territory, colony, or possession thereof, or of any foreign government or country; to receive, collect, receipt for, and dispose of interest, dividends and income upon and from any of the bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property held and owned by it, and to exercise in respect of all such bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property, any and all the rights, powers and privileges of individual owners thereof, including the right to vote thereon; to invest and deal in and with any of the moneys of the Corporation upon such securities and in such manner as it may think fit and proper, and from time to time to vary or realize such investments; to issue 3 bonds and secure the same by pledges or deeds of trust or mortgages of or upon the whole or any part of the property held or owned by the Corporation, and to sell and pledge such bonds, as and when the Board of Directors shall determine, and in the promotion of its said corporate business of investment and to the extent authorized by law, to lease, purchase, hold, sell, assign, transfer, pledge, mortgage and convey real and personal property of any name and nature and any estate or interest therein. (b) In furtherance of, and not in limitation, of the powers conferred by the laws of the State of Delaware, it is hereby expressly provided that the said Corporation shall also have the following powers: (1) To do any or all of the things herein set forth, to the same extent as natural persons might or could do, and in any part of the world. (2) To acquire the good will, rights, property and franchises and to undertake the whole or any part of the assets and liabilities of any person, firm, association or corporation, and to pay for the same in cash, stock of this Corporation, bonds or otherwise; to hold or in any manner to dispose of the whole or any part of the property so purchased; to conduct in any lawful manner the whole or any part of any business so acquired, and to exercise all the powers necessary or convenient in and about the conduct and management of such business. (3) To take, hold, own, deal in, mortgage or otherwise lien, and to lease, sell, exchange, transfer, or in any manner whatever dispose of property, real, personal or mixed, wherever situated. (4) To enter into, make, perform and carry out contracts of every kind with any person, firm, association or corporation, and, without limit as to amount, to draw, make, accept, endorse, discount, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or transferable instruments. (5) To have one or more offices, to carry on all or any of its operations and businesses, without restriction to the same extent as natural persons might or could do, to purchase or otherwise acquire, to hold, own, to mortgage, sell, convey or otherwise dispose of, real and personal property, of every class and description, in any State, District, Territory or Colony of the United States, and in any foreign country or place. (6) It is the intention that the objects, purposes and powers specified and clauses contained in this paragraph shall (except where otherwise expressed in said paragraph) be nowise limited or restricted by reference to or inference from 4 the terms of any other clause of this or any other paragraph in this charter, but that the objects, purposes and powers specified in each of the clauses of this paragraph shall be regarded as independent objects, purposes and powers. Fourth: - (a) The total number of shares of all classes of stock which the Corporation shall have authority to issue is forty-one million (41,000,000) shares, consisting of: (1) One million (1,000,000) shares of Preferred stock, par value $10.00 per share (hereinafter referred to as "Preferred Stock"); and (2) Forty million (40,000,000) shares of Common Stock, par value $1.00 per share (hereinafter referred to as "Common Stock"). (b) Shares of Preferred Stock may be issued from time to time in one or more series as may from time to time be determined by the Board of Directors each of said series to be distinctly designated. All shares of any one series of Preferred Stock shall be alike in every particular, except that there may be different dates from which dividends, if any, thereon shall be cumulative, if made cumulative. The voting powers and the preferences and relative, participating, optional and other special rights of each such series, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding; and, subject to the provisions of subparagraph 1 of Paragraph (c) of this Article Fourth, the Board of Directors of the Corporation is hereby expressly granted authority to fix by resolution or resolutions adopted prior to the issuance of any shares of a particular series of Preferred Stock, the voting powers and the designations, preferences and relative, optional and other special rights, and the qualifications, limitations and restrictions of such series, including, but without limiting the generality of the foregoing, the following: (1) The distinctive designation of, and the number of shares of Preferred Stock which shall constitute such series, which number may be increased (except where otherwise provided by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors; (2) The rate and times at which, and the terms and conditions on which, dividends, if any, on Preferred Stock of such series shall be paid, the extent of the preference or relation, if any, of such dividends to the dividends payable on any other class or classes, or series of the same or other class of stock and whether such dividends shall be cumulative or non-cumulative; (3) The right, if any, of the holders of Preferred Stock of such series to convert the same into or exchange the same for, shares of any other class or classes or of any series of the same or any other class or classes of stock of the Corporation and the terms and conditions of such conversion or exchange; 5 (4) Whether or not Preferred Stock of such series shall be subject to redemption, and the redemption price or prices and the time or times at which, and the terms and conditions on which, Preferred Stock of such series may be redeemed. (5) The rights, if any, of the holders of Preferred Stock of such series upon the voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution or winding-up, of the Corporation. (6) The terms of the sinking fund or redemption or purchase account, if any, to be provided for the Preferred Stock of such series; and (7) The voting powers, if any, of the holders of such series of Preferred Stock which may, without limiting the generality of the foregoing include the right, voting as a series or by itself or together with other series of Preferred Stock or all series of Preferred Stock as a class, to elect one or more directors of the Corporation if there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such circumstances and on such conditions as the Board of Directors may determine. (c) (1) After the requirements with respect to preferential dividends on the Preferred Stock (fixed in accordance with the provisions of section (b) of this Article Fourth), if any, shall have been met and after the Corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts (fixed in accordance with the provisions of section (b) of this Article Fourth), and subject further to any conditions which may be fixed in accordance with the provisions of section (b) of this Article Fourth, then and not otherwise the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors. (2) After distribution in full of the preferential amount, if any, (fixed in accordance with the provisions of section (b) of this Article Fourth), to be distributed to the holders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up, of the Corporation, the holders of the Common Stock shall be entitled to receive all of the remaining assets of the Corporation, tangible and intangible, of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. (3) Except as may otherwise be required by law or by the provisions of such resolution or resolutions as may be adopted by the Board of Directors pursuant to section (b) of this Article Fourth, each holder of Common Stock shall have one vote in respect of each share of Common Stock held on all matters voted upon by the stockholders. 6 (d) No holder of any of the shares of any class or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series or any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or series, or bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for stock of the Corporation of any class or series, or carrying any right to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock or securities convertible into or exchangeable for stock, or carrying any right to purchase stock, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations or associations, whether such holders or others, and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its sole discretion. (e) The relative powers, preferences and rights of each series of Preferred Stock in relation to the relative powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in section (b) of this Article Fourth and the consent, by class or series vote or otherwise, of the holders of such of the series of Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock whether or not the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in the resolution or resolutions as to any series of Preferred Stock adopted pursuant to section (b) of this Article Fourth that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of any or all other series of Preferred Stock. (f) Subject to the provisions of section (e), shares of any series of Preferred Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (g) Shares of Common Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (h) The authorized amount of shares of Common Stock and of Preferred Stock may, without a class or series vote, be increased or decreased from time to time by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to 7 vote thereon. Fifth: - (a) The business and affairs of the Corporation shall be conducted and managed by a Board of Directors. The number of directors constituting the entire Board shall be not less than five nor more than twenty-five as fixed from time to time by vote of a majority of the whole Board, provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in office, and provided further, that the number of directors constituting the whole Board shall be twenty-four until otherwise fixed by a majority of the whole Board. (b) The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the whole Board permits, with the term of office of one class expiring each year. At the annual meeting of stockholders in 1982, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next annual election of directors. At such election, the stockholders shall elect a successor to such director to hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director. (c) Notwithstanding any other provisions of this Charter or Act of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Charter or Act of Incorporation or the By-Laws of the Corporation), any director or the entire Board of Directors of the Corporation may be removed at any time without cause, but only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose. (d) Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Such nominations shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation not less than 14 days nor more than 50 days prior to any meeting of the stockholders called for the election of directors; provided, however, that if less than 21 days' notice of the meeting is given to stockholders, such written notice shall be delivered or mailed, as prescribed, to the Secretary of the Corporation not later than the close of the seventh day following the 8 day on which notice of the meeting was mailed to stockholders. Notice of nominations which are proposed by the Board of Directors shall be given by the Chairman on behalf of the Board. (e) Each notice under subsection (d) shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of such nominee and (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee. (f) The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. (g) No action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. Sixth: - The Directors shall choose such officers, agents and servants as may be provided in the By-Laws as they may from time to time find necessary or proper. Seventh: - The Corporation hereby created is hereby given the same powers, rights and privileges as may be conferred upon corporations organized under the Act entitled "An Act Providing a General Corporation Law", approved March 10, 1899, as from time to time amended. Eighth: - This Act shall be deemed and taken to be a private Act. Ninth: - This Corporation is to have perpetual existence. Tenth: - The Board of Directors, by resolution passed by a majority of the whole Board, may designate any of their number to constitute an Executive Committee, which Committee, to the extent provided in said resolution, or in the By-Laws of the Company, shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Eleventh: - The private property of the stockholders shall not be liable for the payment of corporate debts to any extent whatever. Twelfth: - The Corporation may transact business in any part of the world. Thirteenth: - The Board of Directors of the Corporation is expressly authorized to 9 make, alter or repeal the By-Laws of the Corporation by a vote of the majority of the entire Board. The stockholders may make, alter or repeal any By-Law whether or not adopted by them, provided however, that any such additional By-Laws, alterations or repeal may be adopted only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class). Fourteenth: - Meetings of the Directors may be held outside of the State of Delaware at such places as may be from time to time designated by the Board, and the Directors may keep the books of the Company outside of the State of Delaware at such places as may be from time to time designated by them. Fifteenth: - (a) (1) In addition to any affirmative vote required by law, and except as otherwise expressly provided in sections (b) and (c) of this Article Fifteenth: (A) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with or into (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Stockholder), which, after such merger or consolidation, would be an Affiliate (as hereinafter defined) of an Interested Stockholder, or (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate fair market value of $1,000,000 or more, or (C) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of related transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $1,000,000 or more, or (D) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation, or (E) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any 10 Interested Stockholder, or any Affiliate of any Interested Stockholder, shall require the affirmative vote of the holders of at least two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, considered for the purpose of this Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. (2) The term "business combination" as used in this Article Fifteenth shall mean any transaction which is referred to in any one or more of clauses (A) through (E) of paragraph 1 of the section (a). (b) The provisions of section (a) of this Article Fifteenth shall not be applicable to any particular business combination and such business combination shall require only such affirmative vote as is required by law and any other provisions of the Charter or Act of Incorporation or By-Laws if such business combination has been approved by a majority of the whole Board. (c) For the purposes of this Article Fifteenth: (1) A "person" shall mean any individual, firm, corporation or other entity. (2) "Interested Stockholder" shall mean, in respect of any business combination, any person (other than the Corporation or any Subsidiary) who or which as of the record date for the determination of stockholders entitled to notice of and to vote on such business combination, or immediately prior to the consummation of any such transaction: (A) is the beneficial owner, directly or indirectly, of more than 10% of the Voting Shares, or (B) is an Affiliate of the Corporation and at any time within two years prior thereto was the beneficial owner, directly or indirectly, of not less than 10% of the then outstanding voting Shares, or (C) is an assignee of or has otherwise succeeded in any share of capital stock of the Corporation which were at any time within two years prior thereto beneficially owned by any Interested Stockholder, and such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. (3) A person shall be the "beneficial owner" of any Voting Shares: 11 (A) which such person or any of its Affiliates and Associates (as hereafter defined) beneficially own, directly or indirectly, or (B) which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding, or (C) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation. (4) The outstanding Voting Shares shall include shares deemed owned through application of paragraph (3) above but shall not include any other Voting Shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options or otherwise. (5) "Affiliate" and "Associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981. (6) "Subsidiary" shall mean any corporation of which a majority of any class of equity security (as defined in Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981) is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Investment Stockholder set forth in paragraph (2) of this section (c), the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. (d) majority of the directors shall have the power and duty to determine for the purposes of this Article Fifteenth on the basis of information known to them, (1) the number of Voting Shares beneficially owned by any person (2) whether a person is an Affiliate or Associate of another, (3) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in paragraph (3) of section (c), or (4) whether the assets subject to any business combination or the consideration received for the issuance or transfer of securities by the Corporation, or any Subsidiary has an aggregate fair market value of $1,000,000 or more. (e) Nothing contained in this Article Fifteenth shall be construed to relieve any 12 Interested Stockholder from any fiduciary obligation imposed by law. Sixteenth: Notwithstanding any other provision of this Charter or Act of Incorporation or the By-Laws of the Corporation (and in addition to any other vote that may be required by law, this Charter or Act of Incorporation by the By-Laws), the affirmative vote of the holders of at least two-thirds of the outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this Charter or Act of Incorporation. Seventeenth: (a) a Director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Laws as the same exists or may hereafter be amended. (b) Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a Director of the Corporation existing hereunder with respect to any act or omission occurring prior to the time of such repeal or modification." 13 EXHIBIT B BY-LAWS WILMINGTON TRUST COMPANY WILMINGTON, DELAWARE AS EXISTING ON JANUARY 20, 2000 BY-LAWS OF WILMINGTON TRUST COMPANY ARTICLE I STOCKHOLDERS' MEETINGS Section 1. The Annual Meeting of Stockholders shall be held on the third Thursday in April each year at the principal office at the Company or at such other date, time, or place as may be designated by resolution by the Board of Directors. Section 2. Special meetings of all stockholders may be called at any time by the Board of Directors, the Chairman of the Board or the President. Section 3. Notice of all meetings of the stockholders shall be given by mailing to each stockholder at least ten (10) days before said meeting, at his last known address, a written or printed notice fixing the time and place of such meeting. Section 4. A majority in the amount of the capital stock of the Company issued and outstanding on the record date, as herein determined, shall constitute a quorum at all meetings of stockholders for the transaction of any business, but the holders of a small number of shares may adjourn, from time to time, without further notice, until a quorum is secured. At each annual or special meeting of stockholders, each stockholder shall be entitled to one vote, either in person or by proxy, for each share of stock registered in the stockholder's name on the books of the Company on the record date for any such meeting as determined herein. ARTICLE II DIRECTORS Section 1. The number and classification of the Board of Directors shall be as set forth in the Charter of the Bank. No more than two Directors may also be employees of the Company or any affiliate thereof. Section 2. No person who has attained the age of seventy-two (72) years shall be nominated for election to the Board of Directors of the Company, provided, however, that this limitation shall not apply to any person who was serving as director of the Company on September 16, 1971. The Chairman of the Board of Directors shall not be qualified to continue to serve as a Director upon the termination for any reason of his or her services in that office. Section 3. The class of Directors so elected shall hold office for three years or until their successors are elected and qualified. Section 4. The affairs and business of the Company shall be managed and conducted by the Board of Directors. Section 5. The Board of Directors shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Board of Directors or the President. Section 6. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors or by the President, and shall be called upon the written request of a majority of the directors. Section 7. A majority of the directors elected and qualified shall be necessary to constitute a quorum for the transaction of business at any meeting of the Board of Directors. Section 8. Written notice shall be sent by mail to each director of any special meeting of the Board of Directors, and of any change in the time or place of any regular meeting, stating the time and place of such meeting, which shall be mailed not less than two days before the time of holding such meeting. Section 9. In the event of the death, resignation, removal, inability to act, or disqualification of any director, the Board of Directors, although less than a quorum, shall have the right to elect the successor who shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, and until such director's successor shall have been duly elected and qualified. Section 10. The Board of Directors at its first meeting after its election by the stockholders shall appoint an Executive Committee, a Trust Committee, an Audit Committee and a Compensation Committee, and shall elect from its own members a Chairman of the Board of Directors and a President who may be the same person. The Board of Directors shall also elect at such meeting a Secretary and a Treasurer, who may be the same person, may appoint at any time such other committees and elect or appoint such other officers as it may deem advisable. The Board of Directors may also elect at such meeting one or more Associate Directors. 2 Section 11. The Board of Directors may at any time remove, with or without cause, any member of any Committee appointed by it or any associate director or officer elected by it and may appoint or elect his successor. Section 12. The Board of Directors may designate an officer to be in charge of such of the departments or divisions of the Company as it may deem advisable. ARTICLE III COMMITTEES Section 1. Executive Committee (A) The Executive Committee shall be composed of not more than nine members who shall be selected by the Board of Directors from its own members and who shall hold office during the pleasure of the Board. (B) The Executive Committee shall have all the powers of the Board of Directors when it is not in session to transact all business for and in behalf of the Company that may be brought before it. (C) The Executive Committee shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Executive Committee or at the call of the Chairman of the Board of Directors. The majority of its members shall be necessary to constitute a quorum for the transaction of business. Special meetings of the Executive Committee may be held at any time when a quorum is present. (D) Minutes of each meeting of the Executive Committee shall be kept and submitted to the Board of Directors at its next meeting. (E) The Executive Committee shall advise and superintend all investments that may be made of the funds of the Company, and shall direct the disposal of the same, in accordance with such rules and regulations as the Board of Directors from time to time make. (F) In the event of a state of disaster of sufficient severity to prevent the conduct and management of the affairs and business of the Company by its directors and officers as contemplated by these By-Laws any two available members of the Executive Committee as constituted immediately prior to such disaster shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Company in accordance with the provisions of Article III of these By-Laws; and if less than three members of the Trust Committee is constituted immediately prior to such disaster shall be available for the transaction of its business, such Executive Committee shall also be empowered to exercise 3 all of the powers reserved to the Trust Committee under Article III Section 2 hereof. In the event of the unavailability, at such time, of a minimum of two members of such Executive Committee, any three available directors shall constitute the Executive Committee for the full conduct and management of the affairs and business of the Company in accordance with the foregoing provisions of this Section. This By-Law shall be subject to implementation by Resolutions of the Board of Directors presently existing or hereafter passed from time to time for that purpose, and any provisions of these By-Laws (other than this Section) and any resolutions which are contrary to the provisions of this Section or to the provisions of any such implementary Resolutions shall be suspended during such a disaster period until it shall be determined by any interim Executive Committee acting under this section that it shall be to the advantage of the Company to resume the conduct and management of its affairs and business under all of the other provisions of these By-Laws. Section 2. Audit Committee (A) The Audit Committee shall be composed of five members who shall be selected by the Board of Directors from its own members, none of whom shall be an officer of the Company, and shall hold office at the pleasure of the Board. (B) The Audit Committee shall have general supervision over the Audit Division in all matters however subject to the approval of the Board of Directors; it shall consider all matters brought to its attention by the officer in charge of the Audit Division, review all reports of examination of the Company made by any governmental agency or such independent auditor employed for that purpose, and make such recommendations to the Board of Directors with respect thereto or with respect to any other matters pertaining to auditing the Company as it shall deem desirable. (C) The Audit Committee shall meet whenever and wherever the majority of its members shall deem it to be proper for the transaction of its business, and a majority of its Committee shall constitute a quorum. Section 3. Compensation Committee (A) The Compensation Committee shall be composed of not more than five (5) members who shall be selected by the Board of Directors from its own members who are not officers of the Company and who shall hold office during the pleasure of the Board. (B) The Compensation Committee shall in general advise upon all matters of policy concerning the Company brought to its attention by the management and from time to time review the management of the Company, major organizational matters, including salaries and employee benefits and specifically shall administer the Executive Incentive Compensation Plan. 4 (C) Meetings of the Compensation Committee may be called at any time by the Chairman of the Compensation Committee, the Chairman of the Board of Directors, or the President of the Company. Section 4. Associate Directors (A) Any person who has served as a director may be elected by the Board of Directors as an associate director, to serve during the pleasure of the Board. (B) An associate director shall be entitled to attend all directors meetings and participate in the discussion of all matters brought to the Board, with the exception that he would have no right to vote. An associate director will be eligible for appointment to Committees of the Company, with the exception of the Executive Committee, Audit Committee and Compensation Committee, which must be comprised solely of active directors. Section 5. Absence or Disqualification of Any Member of a Committee (A) In the absence or disqualification of any member of any Committee created under Article III of the By-Laws of this Company, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. ARTICLE IV OFFICERS Section 1. The Chairman of the Board of Directors shall preside at all meetings of the Board and shall have such further authority and powers and shall perform such duties as the Board of Directors may from time to time confer and direct. He shall also exercise such powers and perform such duties as may from time to time be agreed upon between himself and the President of the Company. Section 2. The Vice Chairman of the Board. The Vice Chairman of the Board of Directors shall preside at all meetings of the Board of Directors at which the Chairman of the Board shall not be present and shall have such further authority and powers and shall perform such duties as the Board of Directors or the Chairman of the Board may from time to time confer and direct. Section 3. The President shall have the powers and duties pertaining to the office of the President conferred or imposed upon him by statute or assigned to him by the Board of Directors. In the absence of the Chairman of the Board the President shall have the powers and duties of the Chairman of the Board. 5 Section 4. The Chairman of the Board of Directors or the President as designated by the Board of Directors, shall carry into effect all legal directions of the Executive Committee and of the Board of Directors, and shall at all times exercise general supervision over the interest, affairs and operations of the Company and perform all duties incident to his office. Section 5. There may be one or more Vice Presidents, however denominated by the Board of Directors, who may at any time perform all the duties of the Chairman of the Board of Directors and/or the President and such other powers and duties as may from time to time be assigned to them by the Board of Directors, the Executive Committee, the Chairman of the Board or the President and by the officer in charge of the department or division to which they are assigned. Section 6. The Secretary shall attend to the giving of notice of meetings of the stockholders and the Board of Directors, as well as the Committees thereof, to the keeping of accurate minutes of all such meetings and to recording the same in the minute books of the Company. In addition to the other notice requirements of these By-Laws and as may be practicable under the circumstances, all such notices shall be in writing and mailed well in advance of the scheduled date of any other meeting. He shall have custody of the corporate seal and shall affix the same to any documents requiring such corporate seal and to attest the same. Section 7. The Treasurer shall have general supervision over all assets and liabilities of the Company. He shall be custodian of and responsible for all monies, funds and valuables of the Company and for the keeping of proper records of the evidence of property or indebtedness and of all the transactions of the Company. He shall have general supervision of the expenditures of the Company and shall report to the Board of Directors at each regular meeting of the condition of the Company, and perform such other duties as may be assigned to him from time to time by the Board of Directors of the Executive Committee. Section 8. There may be a Controller who shall exercise general supervision over the internal operations of the Company, including accounting, and shall render to the Board of Directors at appropriate times a report relating to the general condition and internal operations of the Company. There may be one or more subordinate accounting or controller officers however denominated, who may perform the duties of the Controller and such duties as may be prescribed by the Controller. Section 9. The officer designated by the Board of Directors to be in charge of the Audit Division of the Company with such title as the Board of Directors shall prescribe, shall report to and be directly responsible only to the Board of Directors. 6 There shall be an Auditor and there may be one or more Audit Officers, however denominated, who may perform all the duties of the Auditor and such duties as may be prescribed by the officer in charge of the Audit Division. Section 10. There may be one or more officers, subordinate in rank to all Vice Presidents with such functional titles as shall be determined from time to time by the Board of Directors, who shall ex officio hold the office Assistant Secretary of this Company and who may perform such duties as may be prescribed by the officer in charge of the department or division to whom they are assigned. Section 11. The powers and duties of all other officers of the Company shall be those usually pertaining to their respective offices, subject to the direction of the Board of Directors, the Executive Committee, Chairman of the Board of Directors or the President and the officer in charge of the department or division to which they are assigned. ARTICLE V STOCK AND STOCK CERTIFICATES Section 1. Shares of stock shall be transferrable on the books of the Company and a transfer book shall be kept in which all transfers of stock shall be recorded. Section 2. Certificates of stock shall bear the signature of the President or any Vice President, however denominated by the Board of Directors and countersigned by the Secretary or Treasurer or an Assistant Secretary, and the seal of the corporation shall be engraved thereon. Each certificate shall recite that the stock represented thereby is transferrable only upon the books of the Company by the holder thereof or his attorney, upon surrender of the certificate properly endorsed. Any certificate of stock surrendered to the Company shall be cancelled at the time of transfer, and before a new certificate or certificates shall be issued in lieu thereof. Duplicate certificates of stock shall be issued only upon giving such security as may be satisfactory to the Board of Directors or the Executive Committee. Section 3. The Board of Directors of the Company is authorized to fix in advance a record date for the determination of the stockholders entitled to notice of, and to vote at, any meeting of stockholders and any adjournment thereof, or entitled to receive payment of any dividend, or to any allotment or rights, or to exercise any rights in respect of any change, conversion or exchange of capital stock, or in connection with obtaining the consent of stockholders for any purpose, which record date shall not be more than 60 nor less than 10 days proceeding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent. 7 ARTICLE VI SEAL Section 1. The corporate seal of the Company shall be in the following form: Between two concentric circles the words "Wilmington Trust Company" within the inner circle the words "Wilmington, Delaware." ARTICLE VII FISCAL YEAR Section 1. The fiscal year of the Company shall be the calendar year. ARTICLE VIII EXECUTION OF INSTRUMENTS OF THE COMPANY Section 1. The Chairman of the Board, the President or any Vice President, however denominated by the Board of Directors, shall have full power and authority to enter into, make, sign, execute, acknowledge and/or deliver and the Secretary or any Assistant Secretary shall have full power and authority to attest and affix the corporate seal of the Company to any and all deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes, mortgages and all other instruments incident to the business of this Company or in acting as executor, administrator, guardian, trustee, agent or in any other fiduciary or representative capacity by any and every method of appointment or by whatever person, corporation, court officer or authority in the State of Delaware, or elsewhere, without any specific authority, ratification, approval or confirmation by the Board of Directors or the Executive Committee, and any and all such instruments shall have the same force and validity as though expressly authorized by the Board of Directors and/or the Executive Committee. ARTICLE IX COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES Section 1. Directors and associate directors of the Company, other than salaried officers of the Company, shall be paid such reasonable honoraria or fees for attending meetings of the Board of Directors as the Board of Directors may from time to time determine. Directors and associate directors who serve as members of committees, other than salaried employees of the Company, shall be paid such reasonable honoraria or fees for services as members of committees as the Board of Directors shall from time to time determine and directors and associate directors may be employed by the Company for such special services as the Board of Directors may from time to time determine and shall be paid for such special 8 services so performed reasonable compensation as may be determined by the Board of Directors. ARTICLE X INDEMNIFICATION Section 1. (A) The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding") by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person. The Corporation shall indemnify a person in connection with a proceeding initiated by such person only if the proceeding was authorized by the Board of Directors of the Corporation. (B) The Corporation shall pay the expenses incurred in defending any proceeding in advance of its final disposition, provided, however, that the payment of expenses incurred by a Director or officer in his capacity as a Director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Director or officer to repay all amounts advanced if it should be ultimately determined that the Director or officer is not entitled to be indemnified under this Article or otherwise. (C) If a claim for indemnification or payment of expenses, under this Article X is not paid in full within ninety days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification of payment of expenses under applicable law. (D) The rights conferred on any person by this Article X shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Charter or Act of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested Directors or otherwise. (E) Any repeal or modification of the foregoing provisions of this Article X shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. 9 ARTICLE XI AMENDMENTS TO THE BY-LAWS Section 1. These By-Laws may be altered, amended or repealed, in whole or in part, and any new By-Law or By-Laws adopted at any regular or special meeting of the Board of Directors by a vote of the majority of all the members of the Board of Directors then in office. 10 EXHIBIT C SECTION 321(B) CONSENT Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended, Wilmington Trust Company hereby consents that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon requests therefor. WILMINGTON TRUST COMPANY Dated: April 7, 2000 By: /s/James P. Lawler Name: James P. Lawler Title: Vice President EXHIBIT D NOTICE This form is intended to assist state nonmember banks and savings banks with state publication requirements. It has not been approved by any state banking authorities. Refer to your appropriate state banking authorities for your state publication requirements. R E P O R T O F C O N D I T I O N Consolidating domestic subsidiaries of the WILMINGTON TRUST COMPANY of WILMINGTON - ---------------------------------------------- ---------- Name of Bank City in the State of DELAWARE , at the close of business on December 31, 1999. ------------
ASSETS Thousands of dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coins.....................................213,700 Interest-bearing balances................................................................... 0 Held-to-maturity securities...................................................................... 30,232 Available-for-sale securities..................................................................1,628,889 Federal funds sold and securities purchased under agreements to resell...........................390,650 Loans and lease financing receivables: Loans and leases, net of unearned income. . . . . . . 4,374,777 LESS: Allowance for loan and lease losses. . . . . . 71,368 LESS: Allocated transfer risk reserve. . . . . . . . 0 Loans and leases, net of unearned income, allowance, and reserve......................4,303,409 Assets held in trading accounts........................................................................0 Premises and fixed assets (including capitalized leases).........................................122,273 Other real estate owned........................................................................... 576 Investments in unconsolidated subsidiaries and associated companies................................1,511 Customers' liability to this bank on acceptances outstanding...........................................0 Intangible assets................................................................................. 5,100 Other assets.....................................................................................133,449 Total assets...................................................................................6,829,789 CONTINUED ON NEXT PAGE LIABILITIES Deposits: In domestic offices............................................................................5,186,079 Noninterest-bearing . . . . . . . . 986,667 Interest-bearing. . . . . . . . . . 4,199,412 Federal funds purchased and Securities sold under agreements to repurchase...................... 269,343 Demand notes issued to the U.S. Treasury..........................................................95,000 Trading liabilities (from Schedule RC-D)...............................................................0 Other borrowed money:............................................................................/////// With original maturity of one year or less..............................................670,000 With original maturity of more than one year.............................................43,000 Bank's liability on acceptances executed and outstanding...............................................0 Subordinated notes and debentures......................................................................0 Other liabilities (from Schedule RC-G)......................................................... 151,436 Total liabilities..............................................................................6,414,858 EQUITY CAPITAL Perpetual preferred stock and related surplus..........................................................0 Common Stock.........................................................................................500 Surplus (exclude all surplus related to preferred stock)..........................................62,118 Undivided profits and capital reserves...........................................................386,485 Net unrealized holding gains (losses) on available-for-sale securities..........................(34,172) Total equity capital.............................................................................414,931 Total liabilities, limited-life preferred stock, and equity capital............................6,829,789
EX-25.3 32 FORM T-1 FOR GUARANTEE Registration No. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) WILMINGTON TRUST COMPANY (Exact name of trustee as specified in its charter) Delaware 51-0055023 (State of incorporation) (I.R.S. employer identification no.) Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 (Address of principal executive offices) Cynthia L. Corliss Vice President and Trust Counsel Wilmington Trust Company Rodney Square North Wilmington, Delaware 19890 (302) 651-8516 (Name, address and telephone number of agent for service) BLUE VALLEY BAN CORP (Exact name of obligor as specified in its charter) Kansas 48-1070996 (State of incorporation) (I.R.S. employer identification no.) 11935 Riley Overland Park, Kansas 66225-6128 (Address of principal executive offices) (Zip Code) Guarantee of Trust Preferred Securities by Blue Valley Ban Corp. (Title of the indenture securities) ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Deposit Insurance Co. State Bank Commissioner Five Penn Center Dover, Delaware Suite #2901 Philadelphia, PA (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each affiliation: Based upon an examination of the books and records of the trustee and upon information furnished by the obligor, the obligor is not an affiliate of the trustee. ITEM 3. LIST OF EXHIBITS. List below all exhibits filed as part of this Statement of Eligibility and Qualification. A. Copy of the Charter of Wilmington Trust Company, which includes the certificate of authority of Wilmington Trust Company to commence business and the authorization of Wilmington Trust Company to exercise corporate trust powers. B. Copy of By-Laws of Wilmington Trust Company. C. Consent of Wilmington Trust Company required by Section 321(b) of Trust Indenture Act. D. Copy of most recent Report of Condition of Wilmington Trust Company. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wilmington Trust Company, a corporation organized and existing under the laws of Delaware, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Wilmington and State of Delaware on the 7th day of April , 2000. [SEAL] WILMINGTON TRUST COMPANY Attest: /s/Patricia A. Evans By: /s/James P. Lawler Name: Patricia A. Evans Name: James P. Lawler Title: Assistant Secretary Title: Vice President 2 EXHIBIT A AMENDED CHARTER Wilmington Trust Company Wilmington, Delaware As existing on May 9, 1987 Amended Charter or Act of Incorporation of Wilmington Trust Company Wilmington Trust Company, originally incorporated by an Act of the General Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which company was changed to "Wilmington Trust Company" by an amendment filed in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act of Incorporation of which company has been from time to time amended and changed by merger agreements pursuant to the corporation law for state banks and trust companies of the State of Delaware, does hereby alter and amend its Charter or Act of Incorporation so that the same as so altered and amended shall in its entirety read as follows: First: - The name of this corporation is Wilmington Trust Company. Second: - The location of its principal office in the State of Delaware is at Rodney Square North, in the City of Wilmington, County of New Castle; the name of its resident agent is Wilmington Trust Company whose address is Rodney Square North, in said City. In addition to such principal office, the said corporation maintains and operates branch offices in the City of Newark, New Castle County, Delaware, the Town of Newport, New Castle County, Delaware, at Claymont, New Castle County, Delaware, at Greenville, New Castle County Delaware, and at Milford Cross Roads, New Castle County, Delaware, and shall be empowered to open, maintain and operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in the City of Wilmington, New Castle County, Delaware, and such other branch offices or places of business as may be authorized from time to time by the agency or agencies of the government of the State of Delaware empowered to confer such authority. Third: - (a) The nature of the business and the objects and purposes proposed to be transacted, promoted or carried on by this Corporation are to do any or all of the things herein mentioned as fully and to the same extent as natural persons might or could do and in any part of the world, viz.: (1) To sue and be sued, complain and defend in any Court of law or equity and to make and use a common seal, and alter the seal at pleasure, to hold, purchase, convey, mortgage or otherwise deal in real and personal estate and 1 property, and to appoint such officers and agents as the business of the Corporation shall require, to make by-laws not inconsistent with the Constitution or laws of the United States or of this State, to discount bills, notes or other evidences of debt, to receive deposits of money, or securities for money, to buy gold and silver bullion and foreign coins, to buy and sell bills of exchange, and generally to use, exercise and enjoy all the powers, rights, privileges and franchises incident to a corporation which are proper or necessary for the transaction of the business of the Corporation hereby created. (2) To insure titles to real and personal property, or any estate or interests therein, and to guarantee the holder of such property, real or personal, against any claim or claims, adverse to his interest therein, and to prepare and give certificates of title for any lands or premises in the State of Delaware, or elsewhere. (3) To act as factor, agent, broker or attorney in the receipt, collection, custody, investment and management of funds, and the purchase, sale, management and disposal of property of all descriptions, and to prepare and execute all papers which may be necessary or proper in such business. (4) To prepare and draw agreements, contracts, deeds, leases, conveyances, mortgages, bonds and legal papers of every description, and to carry on the business of conveyancing in all its branches. (5) To receive upon deposit for safekeeping money, jewelry, plate, deeds, bonds and any and all other personal property of every sort and kind, from executors, administrators, guardians, public officers, courts, receivers, assignees, trustees, and from all fiduciaries, and from all other persons and individuals, and from all corporations whether state, municipal, corporate or private, and to rent boxes, safes, vaults and other receptacles for such property. (6) To act as agent or otherwise for the purpose of registering, issuing, certificating, countersigning, transferring or underwriting the stock, bonds or other obligations of any corporation, association, state or municipality, and may receive and manage any sinking fund therefor on such terms as may be agreed upon between the two parties, and in like manner may act as Treasurer of any corporation or municipality. (7) To act as Trustee under any deed of trust, mortgage, bond or other instrument issued by any state, municipality, body politic, corporation, association or person, either alone or in conjunction with any other person or persons, corporation or corporations. (8) To guarantee the validity, performance or effect of any contract or 2 agreement, and the fidelity of persons holding places of responsibility or trust; to become surety for any person, or persons, for the faithful performance of any trust, office, duty, contract or agreement, either by itself or in conjunction with any other person, or persons, corporation, or corporations, or in like manner become surety upon any bond, recognizance, obligation, judgment, suit, order, or decree to be entered in any court of record within the State of Delaware or elsewhere, or which may now or hereafter be required by any law, judge, officer or court in the State of Delaware or elsewhere. (9) To act by any and every method of appointment as trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity in the receiving, holding, managing, and disposing of any and all estates and property, real, personal or mixed, and to be appointed as such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian or bailee by any persons, corporations, court, officer, or authority, in the State of Delaware or elsewhere; and whenever this Corporation is so appointed by any person, corporation, court, officer or authority such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity, it shall not be required to give bond with surety, but its capital stock shall be taken and held as security for the performance of the duties devolving upon it by such appointment. (10) And for its care, management and trouble, and the exercise of any of its powers hereby given, or for the performance of any of the duties which it may undertake or be called upon to perform, or for the assumption of any responsibility the said Corporation may be entitled to receive a proper compensation. (11) To purchase, receive, hold and own bonds, mortgages, debentures, shares of capital stock, and other securities, obligations, contracts and evidences of indebtedness, of any private, public or municipal corporation within and without the State of Delaware, or of the Government of the United States, or of any state, territory, colony, or possession thereof, or of any foreign government or country; to receive, collect, receipt for, and dispose of interest, dividends and income upon and from any of the bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property held and owned by it, and to exercise in respect of all such bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property, any and all the rights, powers and privileges of individual owners thereof, including the right to vote thereon; to invest and deal in and with any of the moneys of the Corporation upon such securities and in such manner as it may think fit and proper, and from time to time to vary or realize such investments; to issue 3 bonds and secure the same by pledges or deeds of trust or mortgages of or upon the whole or any part of the property held or owned by the Corporation, and to sell and pledge such bonds, as and when the Board of Directors shall determine, and in the promotion of its said corporate business of investment and to the extent authorized by law, to lease, purchase, hold, sell, assign, transfer, pledge, mortgage and convey real and personal property of any name and nature and any estate or interest therein. (b) In furtherance of, and not in limitation, of the powers conferred by the laws of the State of Delaware, it is hereby expressly provided that the said Corporation shall also have the following powers: (1) To do any or all of the things herein set forth, to the same extent as natural persons might or could do, and in any part of the world. (2) To acquire the good will, rights, property and franchises and to undertake the whole or any part of the assets and liabilities of any person, firm, association or corporation, and to pay for the same in cash, stock of this Corporation, bonds or otherwise; to hold or in any manner to dispose of the whole or any part of the property so purchased; to conduct in any lawful manner the whole or any part of any business so acquired, and to exercise all the powers necessary or convenient in and about the conduct and management of such business. (3) To take, hold, own, deal in, mortgage or otherwise lien, and to lease, sell, exchange, transfer, or in any manner whatever dispose of property, real, personal or mixed, wherever situated. (4) To enter into, make, perform and carry out contracts of every kind with any person, firm, association or corporation, and, without limit as to amount, to draw, make, accept, endorse, discount, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or transferable instruments. (5) To have one or more offices, to carry on all or any of its operations and businesses, without restriction to the same extent as natural persons might or could do, to purchase or otherwise acquire, to hold, own, to mortgage, sell, convey or otherwise dispose of, real and personal property, of every class and description, in any State, District, Territory or Colony of the United States, and in any foreign country or place. (6) It is the intention that the objects, purposes and powers specified and clauses contained in this paragraph shall (except where otherwise expressed in said paragraph) be nowise limited or restricted by reference to or inference from 4 the terms of any other clause of this or any other paragraph in this charter, but that the objects, purposes and powers specified in each of the clauses of this paragraph shall be regarded as independent objects, purposes and powers. Fourth: - (a) The total number of shares of all classes of stock which the Corporation shall have authority to issue is forty-one million (41,000,000) shares, consisting of: (1) One million (1,000,000) shares of Preferred stock, par value $10.00 per share (hereinafter referred to as "Preferred Stock"); and (2) Forty million (40,000,000) shares of Common Stock, par value $1.00 per share (hereinafter referred to as "Common Stock"). (b) Shares of Preferred Stock may be issued from time to time in one or more series as may from time to time be determined by the Board of Directors each of said series to be distinctly designated. All shares of any one series of Preferred Stock shall be alike in every particular, except that there may be different dates from which dividends, if any, thereon shall be cumulative, if made cumulative. The voting powers and the preferences and relative, participating, optional and other special rights of each such series, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding; and, subject to the provisions of subparagraph 1 of Paragraph (c) of this Article Fourth, the Board of Directors of the Corporation is hereby expressly granted authority to fix by resolution or resolutions adopted prior to the issuance of any shares of a particular series of Preferred Stock, the voting powers and the designations, preferences and relative, optional and other special rights, and the qualifications, limitations and restrictions of such series, including, but without limiting the generality of the foregoing, the following: (1) The distinctive designation of, and the number of shares of Preferred Stock which shall constitute such series, which number may be increased (except where otherwise provided by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors; (2) The rate and times at which, and the terms and conditions on which, dividends, if any, on Preferred Stock of such series shall be paid, the extent of the preference or relation, if any, of such dividends to the dividends payable on any other class or classes, or series of the same or other class of stock and whether such dividends shall be cumulative or non-cumulative; (3) The right, if any, of the holders of Preferred Stock of such series to convert the same into or exchange the same for, shares of any other class or classes or of any series of the same or any other class or classes of stock of the Corporation and the terms and conditions of such conversion or exchange; 5 (4) Whether or not Preferred Stock of such series shall be subject to redemption, and the redemption price or prices and the time or times at which, and the terms and conditions on which, Preferred Stock of such series may be redeemed. (5) The rights, if any, of the holders of Preferred Stock of such series upon the voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution or winding-up, of the Corporation. (6) The terms of the sinking fund or redemption or purchase account, if any, to be provided for the Preferred Stock of such series; and (7) The voting powers, if any, of the holders of such series of Preferred Stock which may, without limiting the generality of the foregoing include the right, voting as a series or by itself or together with other series of Preferred Stock or all series of Preferred Stock as a class, to elect one or more directors of the Corporation if there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such circumstances and on such conditions as the Board of Directors may determine. (c) (1) After the requirements with respect to preferential dividends on the Preferred Stock (fixed in accordance with the provisions of section (b) of this Article Fourth), if any, shall have been met and after the Corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts (fixed in accordance with the provisions of section (b) of this Article Fourth), and subject further to any conditions which may be fixed in accordance with the provisions of section (b) of this Article Fourth, then and not otherwise the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors. (2) After distribution in full of the preferential amount, if any, (fixed in accordance with the provisions of section (b) of this Article Fourth), to be distributed to the holders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up, of the Corporation, the holders of the Common Stock shall be entitled to receive all of the remaining assets of the Corporation, tangible and intangible, of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. (3) Except as may otherwise be required by law or by the provisions of such resolution or resolutions as may be adopted by the Board of Directors pursuant to section (b) of this Article Fourth, each holder of Common Stock shall have one vote in respect of each share of Common Stock held on all matters voted upon by the stockholders. 6 (d) No holder of any of the shares of any class or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series or any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or series, or bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for stock of the Corporation of any class or series, or carrying any right to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock or securities convertible into or exchangeable for stock, or carrying any right to purchase stock, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations or associations, whether such holders or others, and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its sole discretion. (e) The relative powers, preferences and rights of each series of Preferred Stock in relation to the relative powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in section (b) of this Article Fourth and the consent, by class or series vote or otherwise, of the holders of such of the series of Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock whether or not the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in the resolution or resolutions as to any series of Preferred Stock adopted pursuant to section (b) of this Article Fourth that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of any or all other series of Preferred Stock. (f) Subject to the provisions of section (e), shares of any series of Preferred Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (g) Shares of Common Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (h) The authorized amount of shares of Common Stock and of Preferred Stock may, without a class or series vote, be increased or decreased from time to time by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to 7 vote thereon. Fifth: - (a) The business and affairs of the Corporation shall be conducted and managed by a Board of Directors. The number of directors constituting the entire Board shall be not less than five nor more than twenty-five as fixed from time to time by vote of a majority of the whole Board, provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in office, and provided further, that the number of directors constituting the whole Board shall be twenty-four until otherwise fixed by a majority of the whole Board. (b) The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the whole Board permits, with the term of office of one class expiring each year. At the annual meeting of stockholders in 1982, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next annual election of directors. At such election, the stockholders shall elect a successor to such director to hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director. (c) Notwithstanding any other provisions of this Charter or Act of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Charter or Act of Incorporation or the By-Laws of the Corporation), any director or the entire Board of Directors of the Corporation may be removed at any time without cause, but only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose. (d) Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Such nominations shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation not less than 14 days nor more than 50 days prior to any meeting of the stockholders called for the election of directors; provided, however, that if less than 21 days' notice of the meeting is given to stockholders, such written notice shall be delivered or mailed, as prescribed, to the Secretary of the Corporation not later than the close of the seventh day following the 8 day on which notice of the meeting was mailed to stockholders. Notice of nominations which are proposed by the Board of Directors shall be given by the Chairman on behalf of the Board. (e) Each notice under subsection (d) shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of such nominee and (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee. (f) The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. (g) No action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. Sixth: - The Directors shall choose such officers, agents and servants as may be provided in the By-Laws as they may from time to time find necessary or proper. Seventh: - The Corporation hereby created is hereby given the same powers, rights and privileges as may be conferred upon corporations organized under the Act entitled "An Act Providing a General Corporation Law", approved March 10, 1899, as from time to time amended. Eighth: - This Act shall be deemed and taken to be a private Act. Ninth: - This Corporation is to have perpetual existence. Tenth: - The Board of Directors, by resolution passed by a majority of the whole Board, may designate any of their number to constitute an Executive Committee, which Committee, to the extent provided in said resolution, or in the By-Laws of the Company, shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Eleventh: - The private property of the stockholders shall not be liable for the payment of corporate debts to any extent whatever. Twelfth: - The Corporation may transact business in any part of the world. Thirteenth: - The Board of Directors of the Corporation is expressly authorized to 9 make, alter or repeal the By-Laws of the Corporation by a vote of the majority of the entire Board. The stockholders may make, alter or repeal any By-Law whether or not adopted by them, provided however, that any such additional By-Laws, alterations or repeal may be adopted only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class). Fourteenth: - Meetings of the Directors may be held outside of the State of Delaware at such places as may be from time to time designated by the Board, and the Directors may keep the books of the Company outside of the State of Delaware at such places as may be from time to time designated by them. Fifteenth: - (a) (1) In addition to any affirmative vote required by law, and except as otherwise expressly provided in sections (b) and (c) of this Article Fifteenth: (A) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with or into (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Stockholder), which, after such merger or consolidation, would be an Affiliate (as hereinafter defined) of an Interested Stockholder, or (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate fair market value of $1,000,000 or more, or (C) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of related transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $1,000,000 or more, or (D) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation, or (E) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any 10 Interested Stockholder, or any Affiliate of any Interested Stockholder, shall require the affirmative vote of the holders of at least two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, considered for the purpose of this Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. (2) The term "business combination" as used in this Article Fifteenth shall mean any transaction which is referred to in any one or more of clauses (A) through (E) of paragraph 1 of the section (a). (b) The provisions of section (a) of this Article Fifteenth shall not be applicable to any particular business combination and such business combination shall require only such affirmative vote as is required by law and any other provisions of the Charter or Act of Incorporation or By-Laws if such business combination has been approved by a majority of the whole Board. (c) For the purposes of this Article Fifteenth: (1) A "person" shall mean any individual, firm, corporation or other entity. (2) "Interested Stockholder" shall mean, in respect of any business combination, any person (other than the Corporation or any Subsidiary) who or which as of the record date for the determination of stockholders entitled to notice of and to vote on such business combination, or immediately prior to the consummation of any such transaction: (A) is the beneficial owner, directly or indirectly, of more than 10% of the Voting Shares, or (B) is an Affiliate of the Corporation and at any time within two years prior thereto was the beneficial owner, directly or indirectly, of not less than 10% of the then outstanding voting Shares, or (C) is an assignee of or has otherwise succeeded in any share of capital stock of the Corporation which were at any time within two years prior thereto beneficially owned by any Interested Stockholder, and such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. (3) A person shall be the "beneficial owner" of any Voting Shares: 11 (A) which such person or any of its Affiliates and Associates (as hereafter defined) beneficially own, directly or indirectly, or (B) which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding, or (C) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation. (4) The outstanding Voting Shares shall include shares deemed owned through application of paragraph (3) above but shall not include any other Voting Shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options or otherwise. (5) "Affiliate" and "Associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981. (6) "Subsidiary" shall mean any corporation of which a majority of any class of equity security (as defined in Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981) is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Investment Stockholder set forth in paragraph (2) of this section (c), the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. (d) majority of the directors shall have the power and duty to determine for the purposes of this Article Fifteenth on the basis of information known to them, (1) the number of Voting Shares beneficially owned by any person (2) whether a person is an Affiliate or Associate of another, (3) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in paragraph (3) of section (c), or (4) whether the assets subject to any business combination or the consideration received for the issuance or transfer of securities by the Corporation, or any Subsidiary has an aggregate fair market value of $1,000,000 or more. (e) Nothing contained in this Article Fifteenth shall be construed to relieve any 12 Interested Stockholder from any fiduciary obligation imposed by law. Sixteenth: Notwithstanding any other provision of this Charter or Act of Incorporation or the By-Laws of the Corporation (and in addition to any other vote that may be required by law, this Charter or Act of Incorporation by the By-Laws), the affirmative vote of the holders of at least two-thirds of the outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this Charter or Act of Incorporation. Seventeenth: (a) a Director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Laws as the same exists or may hereafter be amended. (b) Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a Director of the Corporation existing hereunder with respect to any act or omission occurring prior to the time of such repeal or modification." 13 EXHIBIT B BY-LAWS WILMINGTON TRUST COMPANY WILMINGTON, DELAWARE AS EXISTING ON JANUARY 20, 2000 BY-LAWS OF WILMINGTON TRUST COMPANY ARTICLE I STOCKHOLDERS' MEETINGS Section 1. The Annual Meeting of Stockholders shall be held on the third Thursday in April each year at the principal office at the Company or at such other date, time, or place as may be designated by resolution by the Board of Directors. Section 2. Special meetings of all stockholders may be called at any time by the Board of Directors, the Chairman of the Board or the President. Section 3. Notice of all meetings of the stockholders shall be given by mailing to each stockholder at least ten (10) days before said meeting, at his last known address, a written or printed notice fixing the time and place of such meeting. Section 4. A majority in the amount of the capital stock of the Company issued and outstanding on the record date, as herein determined, shall constitute a quorum at all meetings of stockholders for the transaction of any business, but the holders of a small number of shares may adjourn, from time to time, without further notice, until a quorum is secured. At each annual or special meeting of stockholders, each stockholder shall be entitled to one vote, either in person or by proxy, for each share of stock registered in the stockholder's name on the books of the Company on the record date for any such meeting as determined herein. ARTICLE II DIRECTORS Section 1. The number and classification of the Board of Directors shall be as set forth in the Charter of the Bank. No more than two Directors may also be employees of the Company or any affiliate thereof. Section 2. No person who has attained the age of seventy-two (72) years shall be nominated for election to the Board of Directors of the Company, provided, however, that this limitation shall not apply to any person who was serving as director of the Company on September 16, 1971. The Chairman of the Board of Directors shall not be qualified to continue to serve as a Director upon the termination for any reason of his or her services in that office. Section 3. The class of Directors so elected shall hold office for three years or until their successors are elected and qualified. Section 4. The affairs and business of the Company shall be managed and conducted by the Board of Directors. Section 5. The Board of Directors shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Board of Directors or the President. Section 6. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors or by the President, and shall be called upon the written request of a majority of the directors. Section 7. A majority of the directors elected and qualified shall be necessary to constitute a quorum for the transaction of business at any meeting of the Board of Directors. Section 8. Written notice shall be sent by mail to each director of any special meeting of the Board of Directors, and of any change in the time or place of any regular meeting, stating the time and place of such meeting, which shall be mailed not less than two days before the time of holding such meeting. Section 9. In the event of the death, resignation, removal, inability to act, or disqualification of any director, the Board of Directors, although less than a quorum, shall have the right to elect the successor who shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, and until such director's successor shall have been duly elected and qualified. Section 10. The Board of Directors at its first meeting after its election by the stockholders shall appoint an Executive Committee, a Trust Committee, an Audit Committee and a Compensation Committee, and shall elect from its own members a Chairman of the Board of Directors and a President who may be the same person. The Board of Directors shall also elect at such meeting a Secretary and a Treasurer, who may be the same person, may appoint at any time such other committees and elect or appoint such other officers as it may deem advisable. The Board of Directors may also elect at such meeting one or more Associate Directors. 2 Section 11. The Board of Directors may at any time remove, with or without cause, any member of any Committee appointed by it or any associate director or officer elected by it and may appoint or elect his successor. Section 12. The Board of Directors may designate an officer to be in charge of such of the departments or divisions of the Company as it may deem advisable. ARTICLE III COMMITTEES Section 1. Executive Committee (A) The Executive Committee shall be composed of not more than nine members who shall be selected by the Board of Directors from its own members and who shall hold office during the pleasure of the Board. (B) The Executive Committee shall have all the powers of the Board of Directors when it is not in session to transact all business for and in behalf of the Company that may be brought before it. (C) The Executive Committee shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Executive Committee or at the call of the Chairman of the Board of Directors. The majority of its members shall be necessary to constitute a quorum for the transaction of business. Special meetings of the Executive Committee may be held at any time when a quorum is present. (D) Minutes of each meeting of the Executive Committee shall be kept and submitted to the Board of Directors at its next meeting. (E) The Executive Committee shall advise and superintend all investments that may be made of the funds of the Company, and shall direct the disposal of the same, in accordance with such rules and regulations as the Board of Directors from time to time make. (F) In the event of a state of disaster of sufficient severity to prevent the conduct and management of the affairs and business of the Company by its directors and officers as contemplated by these By-Laws any two available members of the Executive Committee as constituted immediately prior to such disaster shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Company in accordance with the provisions of Article III of these By-Laws; and if less than three members of the Trust Committee is constituted immediately prior to such disaster shall be available for the transaction of its business, such Executive Committee shall also be empowered to exercise 3 all of the powers reserved to the Trust Committee under Article III Section 2 hereof. In the event of the unavailability, at such time, of a minimum of two members of such Executive Committee, any three available directors shall constitute the Executive Committee for the full conduct and management of the affairs and business of the Company in accordance with the foregoing provisions of this Section. This By-Law shall be subject to implementation by Resolutions of the Board of Directors presently existing or hereafter passed from time to time for that purpose, and any provisions of these By-Laws (other than this Section) and any resolutions which are contrary to the provisions of this Section or to the provisions of any such implementary Resolutions shall be suspended during such a disaster period until it shall be determined by any interim Executive Committee acting under this section that it shall be to the advantage of the Company to resume the conduct and management of its affairs and business under all of the other provisions of these By-Laws. Section 2. Audit Committee (A) The Audit Committee shall be composed of five members who shall be selected by the Board of Directors from its own members, none of whom shall be an officer of the Company, and shall hold office at the pleasure of the Board. (B) The Audit Committee shall have general supervision over the Audit Division in all matters however subject to the approval of the Board of Directors; it shall consider all matters brought to its attention by the officer in charge of the Audit Division, review all reports of examination of the Company made by any governmental agency or such independent auditor employed for that purpose, and make such recommendations to the Board of Directors with respect thereto or with respect to any other matters pertaining to auditing the Company as it shall deem desirable. (C) The Audit Committee shall meet whenever and wherever the majority of its members shall deem it to be proper for the transaction of its business, and a majority of its Committee shall constitute a quorum. Section 3. Compensation Committee (A) The Compensation Committee shall be composed of not more than five (5) members who shall be selected by the Board of Directors from its own members who are not officers of the Company and who shall hold office during the pleasure of the Board. (B) The Compensation Committee shall in general advise upon all matters of policy concerning the Company brought to its attention by the management and from time to time review the management of the Company, major organizational matters, including salaries and employee benefits and specifically shall administer the Executive Incentive Compensation Plan. 4 (C) Meetings of the Compensation Committee may be called at any time by the Chairman of the Compensation Committee, the Chairman of the Board of Directors, or the President of the Company. Section 4. Associate Directors (A) Any person who has served as a director may be elected by the Board of Directors as an associate director, to serve during the pleasure of the Board. (B) An associate director shall be entitled to attend all directors meetings and participate in the discussion of all matters brought to the Board, with the exception that he would have no right to vote. An associate director will be eligible for appointment to Committees of the Company, with the exception of the Executive Committee, Audit Committee and Compensation Committee, which must be comprised solely of active directors. Section 5. Absence or Disqualification of Any Member of a Committee (A) In the absence or disqualification of any member of any Committee created under Article III of the By-Laws of this Company, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. ARTICLE IV OFFICERS Section 1. The Chairman of the Board of Directors shall preside at all meetings of the Board and shall have such further authority and powers and shall perform such duties as the Board of Directors may from time to time confer and direct. He shall also exercise such powers and perform such duties as may from time to time be agreed upon between himself and the President of the Company. Section 2. The Vice Chairman of the Board. The Vice Chairman of the Board of Directors shall preside at all meetings of the Board of Directors at which the Chairman of the Board shall not be present and shall have such further authority and powers and shall perform such duties as the Board of Directors or the Chairman of the Board may from time to time confer and direct. Section 3. The President shall have the powers and duties pertaining to the office of the President conferred or imposed upon him by statute or assigned to him by the Board of Directors. In the absence of the Chairman of the Board the President shall have the powers and duties of the Chairman of the Board. 5 Section 4. The Chairman of the Board of Directors or the President as designated by the Board of Directors, shall carry into effect all legal directions of the Executive Committee and of the Board of Directors, and shall at all times exercise general supervision over the interest, affairs and operations of the Company and perform all duties incident to his office. Section 5. There may be one or more Vice Presidents, however denominated by the Board of Directors, who may at any time perform all the duties of the Chairman of the Board of Directors and/or the President and such other powers and duties as may from time to time be assigned to them by the Board of Directors, the Executive Committee, the Chairman of the Board or the President and by the officer in charge of the department or division to which they are assigned. Section 6. The Secretary shall attend to the giving of notice of meetings of the stockholders and the Board of Directors, as well as the Committees thereof, to the keeping of accurate minutes of all such meetings and to recording the same in the minute books of the Company. In addition to the other notice requirements of these By-Laws and as may be practicable under the circumstances, all such notices shall be in writing and mailed well in advance of the scheduled date of any other meeting. He shall have custody of the corporate seal and shall affix the same to any documents requiring such corporate seal and to attest the same. Section 7. The Treasurer shall have general supervision over all assets and liabilities of the Company. He shall be custodian of and responsible for all monies, funds and valuables of the Company and for the keeping of proper records of the evidence of property or indebtedness and of all the transactions of the Company. He shall have general supervision of the expenditures of the Company and shall report to the Board of Directors at each regular meeting of the condition of the Company, and perform such other duties as may be assigned to him from time to time by the Board of Directors of the Executive Committee. Section 8. There may be a Controller who shall exercise general supervision over the internal operations of the Company, including accounting, and shall render to the Board of Directors at appropriate times a report relating to the general condition and internal operations of the Company. There may be one or more subordinate accounting or controller officers however denominated, who may perform the duties of the Controller and such duties as may be prescribed by the Controller. Section 9. The officer designated by the Board of Directors to be in charge of the Audit Division of the Company with such title as the Board of Directors shall prescribe, shall report to and be directly responsible only to the Board of Directors. 6 There shall be an Auditor and there may be one or more Audit Officers, however denominated, who may perform all the duties of the Auditor and such duties as may be prescribed by the officer in charge of the Audit Division. Section 10. There may be one or more officers, subordinate in rank to all Vice Presidents with such functional titles as shall be determined from time to time by the Board of Directors, who shall ex officio hold the office Assistant Secretary of this Company and who may perform such duties as may be prescribed by the officer in charge of the department or division to whom they are assigned. Section 11. The powers and duties of all other officers of the Company shall be those usually pertaining to their respective offices, subject to the direction of the Board of Directors, the Executive Committee, Chairman of the Board of Directors or the President and the officer in charge of the department or division to which they are assigned. ARTICLE V STOCK AND STOCK CERTIFICATES Section 1. Shares of stock shall be transferrable on the books of the Company and a transfer book shall be kept in which all transfers of stock shall be recorded. Section 2. Certificates of stock shall bear the signature of the President or any Vice President, however denominated by the Board of Directors and countersigned by the Secretary or Treasurer or an Assistant Secretary, and the seal of the corporation shall be engraved thereon. Each certificate shall recite that the stock represented thereby is transferrable only upon the books of the Company by the holder thereof or his attorney, upon surrender of the certificate properly endorsed. Any certificate of stock surrendered to the Company shall be cancelled at the time of transfer, and before a new certificate or certificates shall be issued in lieu thereof. Duplicate certificates of stock shall be issued only upon giving such security as may be satisfactory to the Board of Directors or the Executive Committee. Section 3. The Board of Directors of the Company is authorized to fix in advance a record date for the determination of the stockholders entitled to notice of, and to vote at, any meeting of stockholders and any adjournment thereof, or entitled to receive payment of any dividend, or to any allotment or rights, or to exercise any rights in respect of any change, conversion or exchange of capital stock, or in connection with obtaining the consent of stockholders for any purpose, which record date shall not be more than 60 nor less than 10 days proceeding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent. 7 ARTICLE VI SEAL Section 1. The corporate seal of the Company shall be in the following form: Between two concentric circles the words "Wilmington Trust Company" within the inner circle the words "Wilmington, Delaware." ARTICLE VII FISCAL YEAR Section 1. The fiscal year of the Company shall be the calendar year. ARTICLE VIII EXECUTION OF INSTRUMENTS OF THE COMPANY Section 1. The Chairman of the Board, the President or any Vice President, however denominated by the Board of Directors, shall have full power and authority to enter into, make, sign, execute, acknowledge and/or deliver and the Secretary or any Assistant Secretary shall have full power and authority to attest and affix the corporate seal of the Company to any and all deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes, mortgages and all other instruments incident to the business of this Company or in acting as executor, administrator, guardian, trustee, agent or in any other fiduciary or representative capacity by any and every method of appointment or by whatever person, corporation, court officer or authority in the State of Delaware, or elsewhere, without any specific authority, ratification, approval or confirmation by the Board of Directors or the Executive Committee, and any and all such instruments shall have the same force and validity as though expressly authorized by the Board of Directors and/or the Executive Committee. ARTICLE IX COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES Section 1. Directors and associate directors of the Company, other than salaried officers of the Company, shall be paid such reasonable honoraria or fees for attending meetings of the Board of Directors as the Board of Directors may from time to time determine. Directors and associate directors who serve as members of committees, other than salaried employees of the Company, shall be paid such reasonable honoraria or fees for services as members of committees as the Board of Directors shall from time to time determine and directors and associate directors may be employed by the Company for such special services as the Board of Directors may from time to time determine and shall be paid for such special 8 services so performed reasonable compensation as may be determined by the Board of Directors. ARTICLE X INDEMNIFICATION Section 1. (A) The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding") by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person. The Corporation shall indemnify a person in connection with a proceeding initiated by such person only if the proceeding was authorized by the Board of Directors of the Corporation. (B) The Corporation shall pay the expenses incurred in defending any proceeding in advance of its final disposition, provided, however, that the payment of expenses incurred by a Director or officer in his capacity as a Director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Director or officer to repay all amounts advanced if it should be ultimately determined that the Director or officer is not entitled to be indemnified under this Article or otherwise. (C) If a claim for indemnification or payment of expenses, under this Article X is not paid in full within ninety days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification of payment of expenses under applicable law. (D) The rights conferred on any person by this Article X shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Charter or Act of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested Directors or otherwise. (E) Any repeal or modification of the foregoing provisions of this Article X shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. 9 ARTICLE XI AMENDMENTS TO THE BY-LAWS Section 1. These By-Laws may be altered, amended or repealed, in whole or in part, and any new By-Law or By-Laws adopted at any regular or special meeting of the Board of Directors by a vote of the majority of all the members of the Board of Directors then in office. 10 EXHIBIT C SECTION 321(B) CONSENT Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended, Wilmington Trust Company hereby consents that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon requests therefor. WILMINGTON TRUST COMPANY Dated: April 7, 2000 By: /s/James P. Lawler Name: James P. Lawler Title: Vice President EXHIBIT D NOTICE This form is intended to assist state nonmember banks and savings banks with state publication requirements. It has not been approved by any state banking authorities. Refer to your appropriate state banking authorities for your state publication requirements. R E P O R T O F C O N D I T I O N Consolidating domestic subsidiaries of the WILMINGTON TRUST COMPANY of WILMINGTON - ---------------------------------------------- ---------- Name of Bank City in the State of DELAWARE , at the close of business on December 31, 1999. ------------
ASSETS Thousands of dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coins.....................................213,700 Interest-bearing balances................................................................... 0 Held-to-maturity securities...................................................................... 30,232 Available-for-sale securities..................................................................1,628,889 Federal funds sold and securities purchased under agreements to resell...........................390,650 Loans and lease financing receivables: Loans and leases, net of unearned income. . . . . . . 4,374,777 LESS: Allowance for loan and lease losses. . . . . . 71,368 LESS: Allocated transfer risk reserve. . . . . . . . 0 Loans and leases, net of unearned income, allowance, and reserve......................4,303,409 Assets held in trading accounts........................................................................0 Premises and fixed assets (including capitalized leases).........................................122,273 Other real estate owned........................................................................... 576 Investments in unconsolidated subsidiaries and associated companies................................1,511 Customers' liability to this bank on acceptances outstanding...........................................0 Intangible assets................................................................................. 5,100 Other assets.....................................................................................133,449 Total assets...................................................................................6,829,789 CONTINUED ON NEXT PAGE LIABILITIES Deposits: In domestic offices............................................................................5,186,079 Noninterest-bearing . . . . . . . . 986,667 Interest-bearing. . . . . . . . . . 4,199,412 Federal funds purchased and Securities sold under agreements to repurchase...................... 269,343 Demand notes issued to the U.S. Treasury..........................................................95,000 Trading liabilities (from Schedule RC-D)...............................................................0 Other borrowed money:............................................................................/////// With original maturity of one year or less..............................................670,000 With original maturity of more than one year.............................................43,000 Bank's liability on acceptances executed and outstanding...............................................0 Subordinated notes and debentures......................................................................0 Other liabilities (from Schedule RC-G)......................................................... 151,436 Total liabilities..............................................................................6,414,858 EQUITY CAPITAL Perpetual preferred stock and related surplus..........................................................0 Common Stock.........................................................................................500 Surplus (exclude all surplus related to preferred stock)..........................................62,118 Undivided profits and capital reserves...........................................................386,485 Net unrealized holding gains (losses) on available-for-sale securities..........................(34,172) Total equity capital.............................................................................414,931 Total liabilities, limited-life preferred stock, and equity capital............................6,829,789
EX-27 33 FDS -- BLUE VALLEY BAN CORP WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
9 Appendix C to Item 601(c) of Regulation S-K Bank Holding Companies and Savings and Loan Holding Companies \ Article 9 to Regulation S-X 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 15,460 0 8,000 0 48,646 0 0 250,410 3,817 332,613 268,145 17,450 2,422 11,908 0 0 2,138 0 332,613 20,422 2,755 0 23,608 9,832 11,204 12,404 2,144 3 0 4,604 4,604 0 0 3,083 1.45 1.42 8.99 487 50 0 0 2,341 772 104 3,817 3,817 0 0
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