Filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-154414
PROSPECTUS SUPPLEMENT NO. 2 TO PROSPECTUS DATED NOVEMBER 10, 2008
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Nontransferable Subscription Rights for up to
334,000 Shares of Common Stock
This Prospectus Supplement No. 2 (the "Prospectus Supplement") supplements our
prospectus dated November 10, 2008 (the "Prospectus"), as supplemented by
Prospectus Supplement No. 1 dated November 25, 2008, relating to the
distribution to our stockholders of nontransferable subscription rights to
purchase shares of our common stock at a cash subscription price of $18.00 per
share (the "Rights Offering"). This Prospectus Supplement provides new
information regarding both the Company and the timeline for the Rights Offering.
Recent Events
On December 5, 2008, we issued and sold to the United States Department of the
Treasury (the "Treasury") 21,750 shares of preferred stock (the "Preferred
Shares"), along with a warrant (the "Warrant") to purchase 111,083 shares of the
Company's common stock for $29.37 per share for a total cash price of
$21,750,000 (the "Transaction"). The Transaction occurred pursuant to, and is
governed by, the Treasury's Capital Purchase Program (the "CPP"), which is
designed to attract broad participation by healthy institutions, to stabilize
the financial system, and to increase lending for the benefit of the U.S.
economy. Part of the proceeds received in the Transaction allowed us to pay off
in full our loans with J.P. Morgan Chase totaling approximately $17.5 million
and the remaining proceeds will be used for future expansion and capital
enhancement as needed at our wholly-owned bank, Bank of Blue Valley, and for
general corporate purposes.
In connection with the Transaction, we entered into a letter agreement (the
"Letter Agreement") with the Treasury which includes, as Exhibit A, a Securities
Purchase Agreement - Standard Terms (the "SPA"). The designation, powers,
preferences and rights of the Preferred Shares are set forth in the Certificate
of Designation (the "Designation"). Significant terms of the Letter Agreement,
the Designation, the Warrant, and the SPA, include the following:
a. The Preferred Shares carry a 5% per year cumulative preferred dividend
rate, payable quarterly. The dividend rate increases to 9% after five
years. Dividends compound if they accrue and are not paid. The Preferred
Shares have a liquidation preference of $1,000 per share, plus accrued
unpaid dividends.
b. The Preferred Shares have no redemption date and the holder of the
Preferred Shares has no right to compel the Company to purchase or redeem
the Preferred Shares. The holder may have certain registration rights to
facilitate a sale of the Preferred Shares upon written request to the
Company. If requested by the Treasury, the Preferred Shares may need to be
listed on a national securities exchange.
c. During the first three years after the Transaction, the Company may not
redeem the Preferred Shares except in conjunction with a qualified equity
offering meeting certain requirements. This Rights Offering is a qualified
equity offering. After three years, the Company may redeem the Preferred
Shares for $1,000 per share, plus accrued unpaid dividends, in whole or in
part, subject to the approval of the Company's primary federal banking
regulator.
d. During the time that the Preferred Shares are outstanding, a number of
restrictions apply to the Company, including, among others:
1) The Preferred Shares have a senior rank. The Company is not free to
issue other preferred stock that is senior to the Preferred Shares.
2) Until the third anniversary of the sale of the Preferred Shares,
unless the Preferred Shares have been redeemed in whole or the
Treasury has transferred all of them, the Company may not increase its
common stock cash dividend or repurchase common stock or other equity
shares (subject to certain limited exceptions) without Treasury's
approval.
3) If the Company were to pay a cash dividend in the future, any such
dividend would have to be discontinued if a Preferred Share dividend
were missed. Thereafter, dividends on common stock could be resumed
only if all Preferred Share dividends in arrears were paid. Similar
restrictions apply to the Company's ability to repurchase common stock
if Preferred Share dividends are missed.
4) Failure to pay the Preferred Share dividend is not an event of
default. However, a failure to pay a total of six Preferred Share
dividends, whether or not consecutive, gives the holders of the
Preferred Shares the right to elect two directors to the Company's
Board of Directors. That right would continue until the Company pays
all dividends in arrears.
5) In conformity with requirements of the SPA and Section 111(b) of the
Emergency Economic Stabilization Act of 2008 (the "EESA"), Bank of
Blue Valley, the Company and each of its Senior Executive Officers
agreed to limit certain compensation, bonus, incentive and other
benefits plans, arrangements, and policies with respect to the Senior
Executive Officers during the period that the Treasury owns any debt
or equity securities acquired in connection with the Transaction. The
applicable Senior Executive Officers have entered into letter
agreements with the Company consenting to the foregoing and have
executed a waiver voluntarily waiving any claim against the Treasury
or the Company for any changes to such Senior Executive Officer's
compensation or benefits that are required to comply with Section
111(b) of EESA.
e. The Preferred Shares generally are non-voting, other than in connection
with proposals to issue preferred stock senior to the Preferred Shares,
certain merger transactions, amendments to the rights of the holder of the
Preferred Shares, and other than in connection with the Board
representation rights mentioned in d.4. above, or as required by Kansas
law.
f. The Warrant is exercisable immediately and expires in ten years. The
Warrant has anti-dilution protections and certain other protections for the
holder, as well as potential registration rights upon written request from
the Treasury. If requested by the Treasury, the Warrant (and the underlying
common stock) may need to be listed on a national securities exchange. The
Treasury has agreed not to exercise voting rights with respect to common
shares it may acquire upon exercise of the Warrant. The number of common
shares covered by the Warrant may be reduced by up to 50% if the Company
completes an equity offering meeting certain requirements (which may
include this Rights Offering) by December 31, 2009. If the Preferred Shares
are redeemed in whole, the Company has the right to purchase any common
shares held by the Treasury at their fair market value at that time.
The foregoing summary of the Letter Agreement, SPA, Designation and Warrant is
not intended to be complete and is qualified in its entirety by reference to
such documents which are attached as Exhibits to the Registration Statement on
Form S-1 and are incorporated by reference herein.
Change in Rights Offering Expiration Date
To provide our stockholders adequate time to consider the benefits of our
participation in the CPP, the expiration date of the Rights Offering has been
extended. The revised expiration date for the Rights Offering is 5:00 p.m,
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Eastern time on December 22, 2008. Notwithstanding the foregoing, as to all
rights relating to restricted shares and shares held by participants in our ESPP
program, the expiration date for the Rights Offering is 5:00 p.m, Eastern time
on December 17, 2008.
Enclosed Election Form
If you wish to participate in this Rights Offering, you will need to complete
and return the enclosed Election Form by the revised expiration date described
above. You must use the enclosed election form and not the form previously
distributed.
(1) IF YOU HAVE PREVIOUSLY RETURNED YOUR RIGHTS CERTIFICATE, you need to (i)
indicate whether your subscription shall remain as previously made; (ii)
indicate whether your subscription should be withdrawn and your payment
refunded; or (iii) indicate whether your subscription should be modified,
and, if so, in what amount.
-OR-
(2) IF YOU HAVE NOT PREVIOUSLY RETURNED YOUR RIGHTS CERTIFICATE BUT WISH TO
PARTICIPATE, you need to (i) indicate whether you fully subscribe and, if
so, what dollar amount will be invested; and (ii) indicate whether you want
to apply for additional shares pursuant to the oversubscription privilege,
and, if so, what dollar amount will be invested; or (iii) indicate whether
you are subscribing for an amount less than full entitlement, and, if so,
what dollar amount will be invested.
PLEASE BE ADVISED, IF YOU HAVE ALREADY SENT IN YOUR RIGHTS CERTIFICATE AND
PAYMENT AND DO NOT COMPLETE THE ENCLOSED ELECTION FORM IN ACCORDANCE WITH CLAUSE
(1) ABOVE AND MAIL IT BACK TO THE TRANSFER AGENT, YOUR SUBSCRIPTION WILL BE
REVOKED AND YOUR PAYMENT REFUNDED.
This Prospectus Supplement should be read in conjunction with, and may not be
utilized without, the Prospectus. This Prospectus Supplement is qualified by
reference to the Prospectus.
Investing in our Common Stock involves a high degree of risk. See "Risk Factors"
beginning on page 21 of the Prospectus. The shares of our Common Stock offered
are not deposits, savings accounts, or other obligations of a bank or savings
association and are not insured by the FDIC or any other governmental agency.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus Supplement or the Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense. This Prospectus Supplement
and the Prospectus shall not constitute an offer to sell a security in any state
unless such offer, or any resulting sale, is exempt from the securities
registration requirements of such state.
This Prospectus Supplement is dated December 9, 2008
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