<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1998
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
GOLD BANC CORPORATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
KANSAS 6712 48-1008593
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
11301 NALL AVENUE
LEAWOOD, KANSAS 66211
(913) 451-8050
(ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
MICHAEL W. GULLION
11301 NALL AVENUE
LEAWOOD, KANSAS 66211
(913) 451-8050
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
STEVEN F. CARMAN, ESQ.
BLACKWELL SANDERS PEPER MARTIN LLP
TWO PERSHING SQUARE
2300 MAIN, SUITE 1100
KANSAS CITY, MISSOURI 64108
(816) 983-8153
FAX: (816) 983-9153
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this registration statement is declared
effective and all other conditions to the Merger (as defined herein) have been
satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, 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(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. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT* PRICE* FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $1.00
per share................... 210,409 $14.12 $2,970,480 $976
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</TABLE>
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*Pursuant to Rules 457(f)(2) and (3) under the Securities Act of 1933, and
solely for the purpose of calculating the registration fee, the proposed
maximum aggregate offering price represents (i) the book value of the
maximum amount of common stock, $100.00 par value per share of Tri-County
Bancshares, Inc., estimated to be outstanding immediately prior to, and to
be canceled in, the Merger as of , 1998 and (ii) $140.00 cash
per share of Tri-County Bancshares, Inc. common stock to be received in the
Merger.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
GOLD BANC CORPORATION, INC.
CROSS REFERENCE SHEET FOR PROSPECTUS/PROXY STATEMENT
<TABLE>
<CAPTION>
FORM S-4 REGISTRATION STATEMENT
ITEM LOCATION IN PROSPECTUS/PROXY STATEMENT
------------------------------- --------------------------------------
<C> <S> <C>
1. Forepart of Registration
Statement and Outside Front Facing page, Cross Reference Sheet; Cover
Cover Page of Prospectus.... Page of Prospectus/Proxy Statement.
2. Inside Front and Outside Back
Cover Pages of Prospectus... Available Information; Table of Contents.
3. Risk Factors, Ratio of
Earnings to Fixed Charges
and Other Information....... Risk Factors; Summary.
4. Terms of the Transaction..... Summary; The Merger.
5. Pro Forma Financial
Information................. Pro Forma Unaudited Financial Statements.
6. Material Contracts with the
Company Being Acquired...... The Merger.
7. Additional Information
Required for Reoffering by
Persons and Parties Deemed
to be Underwriters.......... Not Applicable.
8. Interests of Named Experts
and Counsel................. Not Applicable.
9. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities................. Not Applicable.
10. Information with Respect to
S-3 Registrants............. The Companies.
11. Incorporation of Certain
Information by Reference.... Incorporation By Reference.
12. Information with Respect to
S-2 or S-3 Registrants...... Not Applicable.
13. Incorporation of Certain
Information by Reference.... Not Applicable.
14. Information with Respect to
Registrants Other Than S-3
or S-2 Registrants.......... Not Applicable.
15. Information with Respect to
S-3 Companies............... Not Applicable.
16. Information with Respect to
S-2 or S-3 Companies........ Not Applicable.
17. Information with Respect to
Companies Other than S-2 or The Companies; Comparative Stock Prices;
S-3 Companies............... Comparative Per Share Data; Management's
Discussion and Analysis of Consolidated
Financial Condition and Results of
Operations; Financial Statements.
18. Information if Proxies,
Consents or Authorizations Tri-County Special Meeting; Securities
Are to Be Solicited......... Ownership of Tri-County Common Stock; The
Merger; Rights of Dissenting Stockholders.
19. Information if Proxies,
Consents or Authorizations
Are Not to Be Solicited or
in an Exchange Offer........ Not Applicable.
</TABLE>
<PAGE>
[LOGO]
, 1998
Dear Tri-County Bancshares, Inc. Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
Tri-County Bancshares, Inc. ("Tri-County") which will be held at the Linn City
Building, 104 5th Street, Linn, Kansas, on , , 1998,
commencing at a.m., local time. At this important meeting, holders of
common stock of Tri-County will be asked to consider and vote on a proposal
relating to the merger of Tri-County with and into Gold Banc Acquisition
Corporation II, Inc., a wholly-owned subsidiary of Gold Banc Corporation, Inc.
This merger is subject to certain required regulatory approvals and other
conditions. The merger will be consummated shortly after the necessary
regulatory approvals are obtained and other conditions to the merger are
satisfied or waived. Under Kansas law, holders of common stock of Tri-County
have dissenters' rights of appraisal if the merger is completed.
The enclosed Prospectus/Proxy Statement describes the terms of the
transaction in more detail. You should review the Prospectus/Proxy Statement
carefully. Your board of directors has carefully reviewed and considered the
terms and conditions of the transaction and believes that it is fair and in
the best interests of Tri-County and its shareholders and unanimously
recommends that shareholders vote "FOR" the proposal.
A majority vote of all outstanding shares of Tri-County common stock is
required to approve the transaction. To ensure your shares will be represented
at the meeting, whether or not you plan to attend, I urge you to promptly
sign, date and mail your proxy in the enclosed self-addressed envelope, which
requires no postage. You may cancel your proxy by attending the meeting and
voting in person.
Sincerely,
Don R. Moser
President
<PAGE>
TRI-COUNTY BANCSHARES, INC.
To the Stockholders of Tri-County Bancshares, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of the stockholders of Tri-
County Bancshares, Inc. ("Tri-County") will be held at the Linn City Building,
104 5th Street, Linn, Kansas, on , 1998, commencing at
a.m., local time (the "Special Meeting"). At the Special Meeting, stockholders
will be asked to consider and vote upon the following matter, which is more
fully described in the accompanying Prospectus/Proxy Statement:
A proposal to approve the Restated Agreement and Plan of Reorganization,
dated as of April 29, 1998 (the "Agreement"), by and among Gold Banc
Corporation, Inc., Gold Banc Acquisition Corporation II, Inc., and Tri-
County, a copy of which is attached as Annex A to the accompanying
Prospectus/Proxy Statement.
Pursuant to the Agreement, Tri-County will be merged with and into Gold Banc
Acquisition Corporation II, Inc. Holders of Tri-County common stock of record
at the close of business on , 1998, will be entitled to notice of
and to vote at the Special Meeting or any adjournment or postponement thereof.
Approval of the Agreement, which is a condition to the consummation of the
transactions contemplated by the Agreement, requires the affirmative vote of
the holders of a majority of the outstanding shares of Tri-County common
stock. Pursuant to K.S.A. (S) 17-6712, a copy of which is attached as Annex B
to the accompanying Prospectus/Proxy Statement, Tri-County stockholders are
entitled to dissenters' rights.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AGREEMENT.
By Order of the Board of Directors
James R. Pachta
Corporate Secretary
Linn, Kansas
, 1998
<PAGE>
SUBJECT TO COMPLETION DATED JUNE , 1998
PROSPECTUS
210,409 COMMON SHARES OF
$1.00 PAR VALUE
GOLD BANC CORPORATION, INC.
----------------
PROXY STATEMENT OF
TRI-COUNTY BANCSHARES, INC.
----------------
This Prospectus/Proxy Statement relates to the issuance of up to 210,409
shares of $1.00 par value common stock (the "Company Common Stock") of Gold
Banc Corporation, Inc. (the "Company"), in exchange for shares of $100.00 par
value common stock (the "Tri-County Common Stock") of Tri-County Bancshares,
Inc. ("Tri-County") in the merger described herein, pursuant to which Tri-
County will be merged into Gold Banc Acquisition Corporation II, Inc. ("Sub"),
a wholly-owned subsidiary of the Company (the "Merger").
This Prospectus/Proxy Statement is also a proxy statement furnished at the
direction of the Board of Directors of Tri-County in connection with the
solicitation of proxies from its stockholders to be voted at a special meeting
of stockholders of Tri-County to be held on , 1998, and at
any adjournment thereof, for the purpose of considering and voting upon
approval of the agreement described herein.
STOCKHOLDERS OF TRI-COUNTY SHOULD CAREFULLY CONSIDER THE INFORMATION UNDER
"RISK FACTORS" BEGINNING ON PAGE .
Company Common Stock is listed for trading on the Nasdaq National Market
("NASDAQ") under the symbol "GLDB." On , 1998, the last reported
sale price of Company common stock on NASDAQ was $ .
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus/Proxy Statement is , 1998, and it
is first being mailed on or about , 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). Such reports, proxy statements
and other information can be inspected and copied at the offices of the SEC at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549; Room 1400, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center,
New York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. The SEC maintains an Internet web site that
contains reports, proxy and information statements and other information
regarding issuers who file electronically with the SEC. The address of that
site is http://www.sec.gov.
The Company has filed a Registration Statement on Form S-4 with the SEC with
respect to the Company Common Stock to be issued in connection with the
Merger. This Prospectus/Proxy Statement (the "Prospectus") does not contain
all the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the SEC. The
Registration Statement and any amendments thereto, including exhibits filed as
a part thereof, are available at the SEC for inspection and copying as set
forth above.
----------------
INCORPORATION BY REFERENCE
This Prospectus incorporates documents by reference that are not presented
herein or delivered herewith. Copies of such documents relating to the
Company, and the exhibits to such documents, are available without charge to
each person to whom a copy of this Prospectus has been delivered upon written
or oral request of any such person, from Gold Banc Corporation, Inc., 11301
Nall Avenue, Leawood, Kansas 66211, Attention: Keith E. Bouchey, Telephone
Number: (913) 451-8050. In order to ensure timely delivery of the documents,
any request should be made by , 1998.
The following documents filed by the Company with the SEC are hereby
incorporated by reference herein:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997.
(b) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1998.
(c) The description of the Company Common Stock set forth in the Form 8-
A12G Registration Statement as filed with the SEC on November 1, 1996.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the date of the Tri-County Special Meeting shall be
deemed to be incorporated by reference into this Prospectus from the date of
filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified, to constitute a part of this Prospectus.
----------------
No person is authorized to give any information or to make any
representation not contained in this Prospectus, and, if given or made, such
information or representation should not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell, or
solicitation of an offer to purchase, the securities offered by this
Prospectus, or the solicitation of a proxy, in any jurisdiction, to or from
any person to whom it is unlawful to make such offer, solicitation of an offer
or proxy solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any distribution of the securities pursuant to this Prospectus
shall, under any circumstances, create an implication that there has been no
change in the information set forth herein since the date of this Prospectus.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION...................................................... 1
INCORPORATION BY REFERENCE................................................. 1
SUMMARY.................................................................... 4
The Companies............................................................ 4
Tri-County Special Meeting............................................... 4
The Merger............................................................... 5
Stock Certificates; Dividend Withholding................................. 5
Conditions to the Merger................................................. 5
Recommendation of the Board of Directors................................. 5
Dissenters' Rights of Appraisal.......................................... 5
Accounting Treatment..................................................... 5
Federal Income Tax Consequences.......................................... 6
Risk Factors............................................................. 6
Comparative Stock Prices................................................. 6
Comparative Per Share Data............................................... 7
Pro Forma and Selected Financial Data.................................... 8
RISK FACTORS............................................................... 9
Key Personnel............................................................ 9
Control of the Company by Mr. Gullion.................................... 9
Anti-Takeover Measures................................................... 9
Limited Trading History.................................................. 9
Year 2000 Risks.......................................................... 9
Integration of Acquired Banks and Businesses; Business Combinations...... 10
THE COMPANIES.............................................................. 10
The Company.............................................................. 10
The Company Subsidiaries................................................. 10
Brokerage Services....................................................... 11
Pending Acquisitions..................................................... 11
Stock Split.............................................................. 12
Legal Proceedings........................................................ 12
Tri-County............................................................... 12
Sub...................................................................... 12
TRI-COUNTY SPECIAL MEETING................................................. 12
Purpose of the Special Meeting........................................... 12
Solicitation and Revocation of Proxies................................... 13
Voting of Proxies, Persons Entitled to Vote, and Vote Required........... 13
THE MERGER................................................................. 13
General.................................................................. 13
Conversion of Tri-County Common Stock.................................... 13
Exchange of Stock Certificates........................................... 13
Fractional Shares........................................................ 14
Background of Negotiations............................................... 14
Reasons for the Merger................................................... 15
Operations and Management After the Merger............................... 15
Conditions to the Merger................................................. 16
Conduct of Business Pending the Merger................................... 16
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
No Solicitation......................................................... 16
Waiver and Amendment.................................................... 16
Termination of the Merger............................................... 17
Effective Time.......................................................... 17
Federal Securities Laws Consequences.................................... 17
Fees and Expenses of the Merger......................................... 17
Rights of Dissenting Stockholders....................................... 17
Transactions Between the Company and Tri-County......................... 18
Accounting Treatment.................................................... 18
FEDERAL INCOME TAX CONSEQUENCES........................................... 19
SECURITY OWNERSHIP OF TRI-COUNTY COMMON STOCK............................. 20
COMPARATIVE RIGHTS OF STOCKHOLDERS........................................ 22
General................................................................. 22
Number of Directors and Term............................................ 22
Election of Directors................................................... 22
Removal of Directors.................................................... 22
Special Meetings........................................................ 22
Amendment of Articles of Incorporation.................................. 22
Action by Stockholders.................................................. 23
Amendment of Bylaws..................................................... 23
Notice of Stockholder Proposals; Nominations of Directors............... 23
PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS..................... 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF TRI-COUNTY................................................. 27
LEGAL OPINION............................................................. 36
EXPERTS................................................................... 36
Independent Public Accountants for Gold Banc Corporation, Inc........... 36
Independent Public Accountants for Tri-County Bancshares, Inc........... 36
STOCKHOLDER PROPOSALS..................................................... 36
FINANCIAL STATEMENTS OF TRI-COUNTY BANCSHARES & SUBSIDIARY................ F-1
ANNEXES
Annex A: Restated Agreement and Plan of Reorganization.................. A-1
Annex B: Kansas Statutes Annotated Section 17-6712...................... B-1
</TABLE>
3
<PAGE>
SUMMARY
The following is a brief summary of certain information in this
Prospectus/Proxy Statement (the "Prospectus"). This summary is qualified in its
entirety by the more detailed information, including "Risk Factors," appearing
elsewhere in this Prospectus, the information contained in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's financial statements (including the notes thereto) appearing in
the Company's Form 10-K, which are incorporated by reference herein, and the
information contained in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of Tri-County and Tri-County's financial
statements (including the notes thereto) appearing elsewhere in this
Prospectus.
THE COMPANIES
Gold Banc Corporation, Inc. (the "Company") is a Kansas corporation organized
on December 5, 1985 and is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended. The Company, through its ownership of
its banking subsidiaries (the "Company Subsidiaries"), is engaged primarily in
a general commercial banking business, and its primary source of earnings is
derived from income generated by the Company Subsidiaries. The Company also
provides brokerage services through a wholly-owned non-bank subsidiary, which
operates as a broker-dealer in securities. As of December 31, 1997, the Company
had total assets of $514.6 million, total loans of $346.2 million, total
deposits of $419.1 million, and stockholders' equity of $41.7 million. The
Company and the Company Subsidiaries employ 202 persons on a full-time
equivalent basis. The principal executive offices of the Company are located at
11301 Nall Avenue, Leawood, Kansas 66211 (telephone number (913) 451-8050).
Tri-County Bancshares, Inc. ("Tri-County") is a registered bank holding
company headquartered in Linn, Kansas. Tri-County owns all of the issued and
outstanding common stock of Tri-County National Bank (the "Bank"), a national
bank headquartered in Washington, Kansas, with locations in Concordia and Linn,
Kansas. The total assets of Tri-County on a consolidated basis, as of December
31, 1997 were approximately $43.7 million and net loss for the year ended
December 31, 1997, was approximately $(22,000). The principal executive offices
of Tri-County are located at 408 4th Street, Linn, Kansas 66953 (telephone
number (785) 348-5521).
Gold Banc Acquisition Corporation II, Inc. ("Sub") is a wholly owned
subsidiary of the Company. Pursuant to the Restated Agreement and Plan of
Reorganization among the Company, Tri-County, and Sub dated April 29, 1998 (the
"Agreement"), Tri-County will be merged into Sub (the "Merger"). The principal
executive offices of Sub are located at 11301 Nall Avenue, Leawood, Kansas
66211 (telephone number (913) 451-8050).
TRI-COUNTY SPECIAL MEETING
A special meeting of the stockholders of Tri-County will be held at the Linn
City Building, 104 5th Street, Linn, Kansas on , , 1998, at
a.m., local time (the "Tri-County Special Meeting"), for the purpose of
approving the Agreement.
Only holders of record of Tri-County common stock, par value $100.00 per
share ("Tri-County Common Stock") at the close of business on ,
1998, will be entitled to notice of and to vote at the Tri-County Special
Meeting. At the Tri-County Special Meeting, each holder of Tri-County Common
Stock will be entitled to one vote for each share held, and the affirmative
vote of a majority of the outstanding shares of Tri-County Common Stock is
required to approve the Agreement. Abstentions and failures to vote will have
the same effect as votes cast against approval of the Agreement. On
, 1998, directors and executive officers of Tri-County
beneficially owned approximately 48% of the outstanding shares of Tri-County
Common Stock. All directors of Tri-County owning Tri-County Common Stock have
indicated they intend to vote in favor of the Agreement.
4
<PAGE>
THE MERGER
The Company, Sub and Tri-County have entered into the Agreement, a copy of
which is attached hereto as Annex A and incorporated herein by reference,
pursuant to which Tri-County will be merged with and into Sub, which will be
the surviving corporation. As more fully set forth below, the Agreement
provides, generally, that each of the shares of Tri-County Common Stock
outstanding immediately prior to the Effective Time (as defined in the
Agreement) of the Merger will be exchanged for seventeen (17) shares of the
Company common stock, par value $1.00 per share (the "Company Common Stock"),
and $140.00 in cash. See "The Merger--General;--Conversion of Tri-County Common
Stock."
Fractional shares of the Company Common Stock will not be issued in
connection with the Merger. Holders of Tri-County Common Stock otherwise
entitled to a fractional share will be paid the value of the fractional share
in cash. See "The Merger--Fractional Shares."
STOCK CERTIFICATES; DIVIDEND WITHHOLDING
Stockholders of Tri-County other than those Tri-County stockholders who
perfect their dissenters' rights of appraisal must surrender to the Company the
certificates for their shares of Tri-County Common Stock, and inform the
Company of their federal taxpayer identification number, before receiving any
cash or a certificate for the number of shares of the Company Common Stock to
which such stockholders are entitled. Until a Tri-County stockholder surrenders
the certificates for his Tri-County Common Stock and informs the Company of his
or her federal taxpayer identification number, the Company may withhold the
$140.00 per share cash portion of the consideration and the payment of any or
all dividends otherwise payable to such stockholder as a stockholder of the
Company. See "The Merger--Exchange of Stock Certificates."
CONDITIONS TO THE MERGER
The Merger is subject to certain conditions, including approval of the
Agreement by the stockholders of Tri-County and by appropriate state and
federal banking authorities. Applications have been filed with appropriate
state and federal banking authorities seeking their approval of the Merger. See
"The Merger--Conditions to the Merger."
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of Tri-County believes that the Merger is in the best
interests of Tri-County and its stockholders and unanimously recommends that
stockholders vote FOR the approval of the Agreement. See "The Merger--Reasons
for the Merger."
DISSENTERS' RIGHTS OF APPRAISAL
Holders of Tri-County Common Stock who are opposed to the Merger have the
right to dissent from the Merger in accordance with Section 17-6712 of the
Kansas General Corporation Code ("KGCC"), which provides that a stockholder
shall be entitled to receive the fair value of his shares as of the day prior
to the day on which the Merger is approved by the other Tri-County stockholders
if such stockholder: (1) delivers a written demand for appraisal of such shares
to Tri-County prior to the vote on the Agreement at the Tri-County Special
Meeting; (2) does not vote in favor of the Merger; and (3) makes written demand
for payment of the fair value of his shares within twenty (20) days after
receiving notice that the Merger became effective. See "The Merger--Rights of
Dissenting Stockholders."
ACCOUNTING TREATMENT
The Merger will be treated by the Company as a purchase for accounting
purposes.
5
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a reorganization under Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended (the "Code"). Payne & Jones,
Chartered will deliver as a condition of closing of the Merger an opinion,
based upon certain customary assumptions and representations, to the effect
that, for federal income tax purposes, no gain or loss will be recognized by
the Tri-County stockholders as a result of the Merger to the extent they
receive the Company Common Stock solely in exchange for their Tri-County Common
Stock. With respect to cash paid in accordance with the terms of the Agreement
and cash paid to the holders of Tri-County Common Stock as the result of the
exercise of dissenters' rights, normal recognition and gain and loss treatment
will apply. For a more complete description of the federal income tax
consequences, see "Federal Income Tax Consequences."
RISK FACTORS
In determining whether to exchange Tri-County Common Stock for Company Common
Stock, the Tri-County stockholders should consider carefully the information
set forth under the caption "Risk Factors" and all information contained in
this Prospectus before making any decision to acquire Company Common Stock. See
"Risk Factors."
COMPARATIVE STOCK PRICES
Shares of the Company Common Stock are listed on the NASDAQ National Market
("NASDAQ"). The last sale price of the Company Common Stock as reported on
NASDAQ on April 28, 1998 (the last trading day preceding the execution of the
Agreement, which was also the date preceding the announcement of the execution
of the Agreement), was $28.25 (or $14.12 adjusted for the 2 for 1 stock split
completed on May 18, 1998). The last sale price for the Company Common Stock as
reported by NASDAQ on , 1998 (the most recent date for which it was
practicable to obtain market price data prior to the printing of this
Prospectus), was $ .
As of , 1998, there were forty-one holders of record of Tri-County
Common Stock. There is no established trading market for the shares of Tri-
County Common Stock and, other than approximately fourteen (14) sales made
pursuant to stockholders' agreements, management is aware of no other arm's
length sales of Tri-County Common Stock since formation of Tri-County in
.
Because the exchange ratio is fixed, a change in the market price of the
Company Common Stock before the Effective Time will affect the market value of
the Company Common Stock to be received in the Merger in exchange for the Tri-
County Common Stock. THERE CAN BE NO ASSURANCE AS TO THE MARKET PRICE OF THE
COMPANY COMMON STOCK AT ANY TIME BEFORE, AT OR AFTER THE EFFECTIVE TIME. TRI-
COUNTY STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR COMPANY
COMMON STOCK. THE COMPANY COMMON STOCK ISSUED IN CONNECTION WITH THE MERGER IS
EXPECTED TO BE LISTED ON NASDAQ.
6
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth per share data of the Company and Tri-County
on both an historical and on a pro forma basis and on an equivalent pro forma
basis for Tri-County. This table should be read in conjunction with the
historical financial statements and notes thereto for the Company incorporated
herein by reference and for Tri-County contained herein. Pro forma combined and
equivalent pro forma per share data reflect the combined results of the Company
and Tri-County presented as though they were one company for all periods shown.
Pro forma and equivalent pro forma cash dividends paid per share reflect the
Company's cash dividends paid in the periods indicated. The pro forma amounts
do not include any adjustments for estimated operating efficiencies or revenue
enhancements resulting from the Merger.
The following pro forma and equivalent pro forma information is based on the
Exchange Ratio of 17 shares of Company Common Stock for each share of Tri-
County Common Stock. The equivalent pro forma data does not include cash of
$140 per share that will be received for each share of Tri-County Common Stock
outstanding. See "The Merger--General; --Conversion of Tri-County Common
Stock."
<TABLE>
<CAPTION>
HISTORICAL
------------------
TRI-COUNTY EQUIVALENT
BANCSHARES PRO FORMA PRO FORMA
COMPANY COMMON COMPANY TRI-COUNTY
------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Basic net income per common share:
Twelve months ended:
December 31, 1997.................. $0.39 $ (1.71) $0.37 $ 6.23
December 31, 1996.................. 0.38 20.07 0.40 6.77
December 31, 1995.................. 0.24 19.48 0.26 4.45
December 31, 1994.................. 0.38 22.86 0.40 6.82
December 31, 1993.................. 0.36 24.12 0.39 6.68
Three months ended:
March 31, 1998..................... 0.11 5.99 0.11 1.90
March 31, 1997..................... 0.08 (4.58) 0.07 1.23
Dividends paid per common share:
Twelve months ended:
December 31, 1997.................. $0.05 -- $0.05 $ 0.77
December 31, 1996.................. 0.00 -- 0.00 0.00
December 31, 1995.................. 0.00 -- 0.00 0.00
December 31, 1994.................. 0.00 -- 0.00 0.00
December 31, 1993.................. 0.00 -- 0.00 0.00
Three months ended:
March 31, 1998..................... 0.02 -- 0.02 0.26
March 31, 1997..................... 0.00 -- 0.00 0.00
Book value per common share at:
December 31, 1997.................. $4.12 $235.22 $4.29 $72.85
December 31, 1996.................. 3.58 237.09 3.78 64.24
December 31, 1995.................. 2.97 217.00 3.33 56.63
December 31, 1994.................. 2.51 198.99 2.81 47.70
December 31, 1993.................. 2.41 177.65 2.75 46.67
March 31, 1998..................... 4.58 241.20 4.73 80.39
March 31, 1997..................... 3.64 232.08 3.83 65.04
</TABLE>
- --------
(1) On May 18, 1998, the Company completed a 2 for 1 stock split. All per share
data presented above has been restated for the effect of the stock split.
(2) In addition to the proposed merger with Tri-County, the Company has other
pending acquisitions. See "The Companies--Pending Acquisitions."
7
<PAGE>
PRO FORMA AND SELECTED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE)
(UNAUDITED)
The following table presents for the Company and Tri-County on an historical
basis, selected consolidated financial data and unaudited pro forma combined
amounts reflecting the Merger. The pro forma amounts assume the Merger had been
effective during the periods presented. Pro forma per share amounts assume an
Exchange Ratio of 17 shares of Company Common Stock for each share of Tri-
County Common Stock. See "The Merger--General; --Conversion of Tri-County
Common Stock."
<TABLE>
<CAPTION>
THREE MONTHS
ENDED FOR THE YEAR ENDED DECEMBER 31,
----------------- ---------------------------------------------
3/31/98 3/31/97 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income and
other income:
Company................ $ 6,053 $ 3,844 $ 18,032 $ 14,186 $ 12,862 $ 8,977 $ 5,407
Tri-County Bancshares.. 462 485 1,944 1,971 1,691 1,345 1,431
Pro Forma.............. $ 6,517 $ 4,331 $ 19,981 $ 16,162 $ 14,558 $ 10,328 $ 6,845
Net income (loss):
Company................ $ 1,135 $ 785 $ 3,731 $ 2,078 $ 1,218 $ 1,749 $ 1,318
Tri-County Bancshares.. 74 (58) (22) 256 240 272 287
Pro Forma.............. $ 1,193 $ 711 $ 3,643 $ 2,268 $ 1,392 $ 1,956 $ 1,541
Basic net income per
common share:
Company................ $ 0.11 $ 0.08 $ 0.39 $ 0.38 $ 0.24 $ 0.38 $ 0.36
Tri-County Bancshares.. 5.99 (4.58) (1.71) 20.07 19.48 22.86 24.12
Pro Forma.............. $ 0.11 $ 0.07 $ 0.37 $ 0.40 $ 0.26 $ 0.40 $ 0.39
Historical dividends
paid per common share:
Company................ $ 0.02 $ 0.00 $ 0.05 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Tri-County Bancshares.. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Pro Forma.............. $ 0.02 $ 0.00 $ 0.05 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Total assets (end of
period):
Company................ $566,680 $381,713 $514,597 $376,858 $332,902 $290,515 $176,952
Tri-County Bancshares.. 43,675 42,976 43,727 43,533 38,474 34,473 31,246
Pro Forma.............. $609,843 $424,177 $557,812 $419,879 $370,864 $324,476 $207,686
Long-term borrowings
(end of period):
Company (2)............ $ 38,857 $ 4,609 $ 32,086 $ 4,893 $ 12,392 $ 12,833 $ 4,987
Tri-County Bancshares.. 194 120 194 120 180 210 250
Pro Forma.............. $ 38,857 $ 1,819 $ 32,086 $ 4,893 $ 12,392 $ 12,833 $ 4,987
Total stockholders'
equity (end of period):
Company................ $ 48,949 $ 34,864 $ 41,733 $ 34,340 $ 14,887 $ 12,746 $ 8,868
Tri-County Bancshares.. 2,985 2,964 2,911 3,028 2,772 2,368 2,114
Pro Forma.............. $ 51,616 $ 37,510 $ 44,326 $ 37,050 $ 17,341 $ 14,796 $ 10,664
Book value per common
share (end of period):
Company................ $ 4.58 $ 3.64 $ 4.12 $ 3.58 $ 2.97 $ 2.51 $ 2.41
Tri-County Bancshares.. 241.20 232.08 235.22 237.09 217.00 198.99 177.65
Pro Forma.............. $ 4.73 $ 3.83 $ 4.29 $ 3.78 $ 3.33 $ 2.81 $ 2.75
</TABLE>
- --------
(1) On May 18, 1998, the Company completed a 2 for 1 stock split. All per
share data presented above has been restated for the effect of the stock
split.
(2) The long term borrowings of the Company include $28.8 million of 8.75%
junior subordinated interest debentures issued on December 15, 1997.
(3) In addition to the proposed merger with Tri-County, the Company has other
pending acquisitions. See "The Companies--Pending Acquisitions."
8
<PAGE>
RISK FACTORS
KEY PERSONNEL
Continued profitability of the Company after the Merger will be dependent on
the retention of a limited number of key persons, including Michael W.
Gullion, the Chairman, President and Chief Executive Officer of the Company,
and Keith E. Bouchey, the Executive Vice President, Secretary and Chief
Financial Officer of the Company. There will likely be a difficult transition
period if the Company lost the services of either or both men. In recognition
of this risk, the Company owns and is the beneficiary of an insurance policy
on the life of Mr. Gullion providing death benefits of $1.5 million and has
entered into employment agreements with Mr. Gullion and Mr. Bouchey. The
Company also places great value on the experience of presidents of the Company
Subsidiaries and the branches of the Company Subsidiaries and on their
relationships with the communities served by the Company Subsidiaries. The
loss of these key persons could negatively impact the affected banking
locations. There is no assurance the Company will be able to retain its
current key personnel or attract additional qualified key persons as needed.
CONTROL OF THE COMPANY BY MR. GULLION
Following completion of the Merger, and assuming the issuance of 210,409
shares in the Merger, Michael Gullion will directly own 6.10% of the
outstanding stock of the Company, and through certain agreements will have the
right to vote an additional 10.65% of the Company Common Stock, for a total
voting power of 16.75% of the Company Common Stock. As a result, Mr. Gullion
will be in a position to control the management policy and conduct of the
business of the Company following the Merger.
ANTI-TAKEOVER MEASURES
The Company has adopted certain provisions in its Amended and Restated
Articles of Incorporation and Restated Bylaws that may be considered as having
the effect of discouraging attempts to take over control of the Company. In
addition, the employment agreements of Mr. Gullion and Mr. Bouchey may require
the Company to make certain cash payments to them following a change in
control of the Company. Such provisions may benefit the Company's stockholders
if a takeover were attempted with a view to impose a merger, a sale of all or
substantially any part of the assets of the Company, or a similar transaction
that may not be in the best interests of all of the stockholders. On the other
hand, the anti-takeover provisions could adversely affect stockholders of the
Company by discouraging takeovers that are structured in a way that would be
favorable to the interests of the stockholders.
LIMITED TRADING HISTORY
The Company's Common Stock has been listed on NASDAQ since November 1996.
Prior to that time there was no public market for the Company Common Stock.
There is no assurance that the Company Common Stock will experience in the
future the trading performance experienced since November 1996. Public markets
such as that on which the Company Common Stock is traded from time to time
experience price and volume volatility. These fluctuations may be unrelated to
the operating performance of particular companies whose shares are traded on
such markets. The market price could be subject to significant fluctuations in
response to the Company's operating results, the results of its competitors,
government regulations, litigation, and other factors.
YEAR 2000 RISKS
Certain of the Company's older computer programs identify years with two
digits instead of four. This is likely to cause problems because the programs
may recognize the year 2000 as the year 1900. As with other financial
institutions, the Company engages in a significant amount of business and
reporting activity that depends on accurate date information, such as interest
and other calculations pertaining to loans, deposits, assets and investments.
As a result, Year 2000 problems could result in a system failure or
miscalculations that disrupt
9
<PAGE>
operations. The Company is taking steps to implement permanent solutions
during 1998, rather than waiting until potential problems develop. A task
force began work on identifying and assessing potential issues in 1997, and
the Company is currently evaluating hardware and software solutions.
Appropriate resources are being allocated for hardware systems and software as
needed at each of the Company's Subsidiaries. The Company expects to be fully
Year 2000 compliant by late 1998, prior to any anticipated impact on operating
systems. Although the Company does not expect Year 2000 issues to have a
material adverse affect on its internal operations, it is possible that Year
2000 issues could have a material adverse affect on (i) the Company's
suppliers and their ability to service the Company, to accurately invoice for
services rendered and to accurately process payments received; and (ii) the
Company's customers in their ability to continue to utilize the Company's
services. The cumulative effect of such problems, if they occur, could have a
material adverse affect on the Company and the value of the Company Common
Stock and its other securities.
INTEGRATION OF ACQUIRED BANKS AND BUSINESSES; BUSINESS COMBINATIONS
As part of its general strategy, the Company may, from time to time, acquire
community banks and other businesses that it believes provide a strategic fit
with its business. In fact, the Company currently has commitments or
agreements with respect to acquisitions other than Tri-County, and it has
reviewed potential acquisition candidates and has held preliminary discussions
with a number of these candidates. The acquisition of Tri-County and any other
banks or businesses will be accompanied by the risks commonly associated with
acquisitions. These risks include potential exposure to unknown liabilities of
acquired banks and businesses, the difficulty and expense of integrating the
operations and personnel of the banks or businesses, the potential disruption
to the business of the Company, the potential diversion of management time and
attention, the impairments of relationships with and the possible loss of key
employees and customers of the acquired banks or businesses, the incurrence of
amortization expenses if an acquisition is accounted for as a purchase and
dilution to the stockholders of the Company if the acquisition is made for
stock. The risks associated with the acquisition of Tri-County (as well as
other acquisitions) could have a material adverse affect on the Company and
the value of the Company Common Stock and its other securities. See "The
Companies--Pending Acquisitions."
THE COMPANIES
THE COMPANY
The Company is a Kansas corporation organized on December 5, 1985 and is a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended. The Company, through its ownership of the Company Subsidiaries, is
engaged primarily in a general commercial banking business, and its primary
source of earnings is derived from income generated by the Company
Subsidiaries. As of December 31, 1997, the Company had total assets of $514.6
million, total loans of $346.2 million, total deposits of $419.1 million, and
stockholders' equity of $41.7 million. The Company and the Company
Subsidiaries employ 202 persons on a full-time equivalent basis. See
"Incorporation By Reference." The principal executive offices of the Company
are at 11301 Nall Avenue, Leawood, Kansas 66211 (telephone number (913) 451-
8050).
THE COMPANY SUBSIDIARIES
Exchange National Bank ("Exchange Bank"). Exchange Bank has four locations
and is headquartered in Marysville, Kansas. The Marysville location's loan
portfolio as of December 31, 1997 consisted primarily of agricultural,
commercial and industrial loans and residential real estate loans. Since April
1992 and October 1995, Exchange Bank has been operating branches in Shawnee
and Leawood, Kansas, respectively. These branches are located in Johnson
County, the rapidly developing suburbs southwest of Kansas City, Missouri. In
addition, Exchange Bank opened a new Shawnee branch on March 2, 1998. The
three Johnson County, Kansas branches of Exchange Bank's loan portfolio as of
December 31, 1997 consisted primarily of commercial, real estate construction
and residential real estate loans. As of December 31, 1997, Exchange Bank had
assets of $226.4 million.
10
<PAGE>
Provident Bank f.s.b. ("Provident Bank"). Provident Bank, a federally
chartered savings and loan, has one location in the city of St. Joseph,
Missouri. Provident Bank's loan portfolio as of December 31, 1997 consisted
primarily of real estate loans. As of December 31, 1997, Provident Bank had
assets of $82.9 million.
Citizens State Bank ("Citizens"). Citizens has two locations in the town of
Seneca, Kansas. As of December 31, 1997 Citizens' loan portfolio consisted
primarily of the agricultural sector, including farm real estate, agricultural
production and agricultural industrial and residential home loans. As of
December 31, 1997, Citizens had assets of $57.3 million.
Peoples National Bank ("Peoples"). Peoples has one location in the town of
Clay Center, Kansas. Peoples was acquired by the Company on August 22, 1997,
As of December 31, 1997, Peoples' loan portfolio consisted primarily of real
estate and agricultural loans. As of December 31, 1997, Peoples had assets of
$71.0 million.
Farmers National Bank ("Farmers"). Farmers has two locations and is
headquartered in Oberlin, Kansas. Farmers was acquired by the Company on
October 1, 1997. As of December 31, 1997, Farmers' loan portfolio consisted
primarily of agricultural and real estate loans. As of December 31, 1997,
Farmers had assets of $53.6 million.
Farmers National in Alma ("Alma"). Alma has one location in the town Alma,
Kansas. Alma was acquired by the Company on February 19, 1998. As of December
31, 1997 Alma's loan portfolio consisted primarily of agricultural and real
estate loans. As December 31, 1997, Alma had assets of $30.1 million.
BROKERAGE SERVICES
The Company provides brokerage services through Midwest Capital Management,
Inc. ("Midwest Capital"), a wholly-owned nonbank subsidiary, which operates as
a broker-dealer in securities. Customers consist primarily of financial
institutions located throughout the United States, with concentration in the
midwestern section of the United States. Midwest Capital manages a wide
variety of stock, bond and money market portfolios for clients that currently
include a significant number of commercial banks located primarily in Kansas,
Missouri, Oklahoma, Nebraska and Iowa, as well as trust, pension plans,
insurance companies, commercial businesses, government entities, foundations
and high net worth individuals. Midwest Capital is registered with the
National Association of Securities Dealers as a broker/dealer and investment
advisor.
PENDING ACQUISITIONS
On April 29, 1998, the Company announced a definitive stock purchase
agreement with Intra Financial Corp. to acquire all outstanding shares of
common stock of Farmers State Bancshares of Sabetha, Inc. ("Farmers State
Bancshares"). The Company will pay $8.5 million in cash to acquire Farmers
State Bancshares. The transaction is expected to close in the third quarter of
1998. Regulatory approval was granted by the Federal Reserve Bank of Kansas
City on June 18, 1998, subject only to statutory waiting periods required by
the Department of Justice. Farmers State Bank, Sabetha, a wholly-owned
subsidiary of Farmers State Bancshares, had total assets of $48.7 million,
deposits of $42.7 million and loans of $22.1 million as of March 31, 1998.
On May 14, 1998, the Company entered into a definitive merger agreement with
Northwest Bancshares, Inc. ("Northwest Bancshares") to acquire Northwest
Bancshares and its wholly-owned subsidiary, Peoples State Bank of Colby,
Kansas in a tax-free stock exchange valued at approximately $2.95 million. The
transaction is expected to close in the third quarter of 1998. Under the terms
of the agreement stockholders of Northwest Bancshares will receive twenty-
eight shares of Company Common Stock for each outstanding share of common
stock of Northwest Bancshares. Regulatory approvals are pending. As of March
31, 1998, Peoples State Bank of Colby had total assets of $21.4 million,
deposits of $19.3 million and loans of $16.4 million.
Also, on May 19, 1998, the Company entered into a definitive merger
agreement with First State Bancorp, Inc. ("First State Bancorp") of Pittsburg,
Kansas. The transaction, a tax-free stock exchange valued at
11
<PAGE>
approximately $25.0 million, is expected to close in the fourth quarter of
1998. Under the terms of the agreement, First State Bancorp stockholders will
receive 19.6082 shares of Company Common Stock for each outstanding share of
common stock of First State Bancorp. Regulatory approvals are pending. First
State Bank & Trust Company, a wholly-owned subsidiary of First State Bancorp,
had total assets of $108.8 million, deposits of $95.9 million and loans of
$63.5 million as of March 31, 1998.
STOCK SPLIT
The Company recently announced a 2 for 1 stock split in the form of a 100%
stock dividend distributed on May 18, 1998 to stockholders of record as of May
6, 1998. In addition, the Company declared a $.02 cash dividend on post-split
shares to stockholders of record as of May 20, 1998, payable on May 29, 1998.
All share and per share information has been restated to reflect the stock
split.
LEGAL PROCEEDINGS
Exchange Bank, along with approximately 24 other persons and entities
including a number of depository institutions, is a named defendant in a case
filed in the United States District Count for the District of Kansas on
September 11, 1997 on behalf of a putative class of over 2,400 persons who
allegedly invested at least $14,900 each in entities known as Parade of Toys
and Bandero Cigar Company. The complaint alleges violations of the Racketeer
Influenced Corrupt Organizations ("RICO") statute (18 U.S.C. 1962(c)),
conspiracy to violate RICO, negligent misrepresentation, fraud, civil
conspiracy and negligence on the part of the defendants. The plaintiffs
contend that the defendants, including Exchange Bank, were listed in trade
reference sheets provided to plaintiffs by Parade of Toys and Bandero Cigar
Company and that the defendants made false and misleading representations on
which they relied to their detriment. In each count, the plaintiffs have
sought actual damages in an amount in excess of $75,000 each, treble damages
under RICO, and punitive damages. Exchange Bank denies liability and is in the
process of vigorously defending this claim. A hearing was conducted on March
25, 1998, on the issue of class certification. On June 17, 1998, the
Magistrate issued a report and recommendation that the Court overrule the
plaintiff's motion for class certification. The parties now have ten days from
the date of such recommendation to file objections and the recommendation will
then be submitted to the trial judge for a determination of the motion.
TRI-COUNTY
Tri-County is a registered bank holding company headquartered in Linn,
Kansas. Tri-County owns all of the issued and outstanding common stock of the
Bank, a national bank headquartered in Washington, Kansas with locations in
Concordia and Linn, Kansas. The total assets of Tri-County on a consolidated
basis, as of December 31, 1997 were approximately $43.7 million and net loss
for the year ended December 31, 1997 was approximately $(22,000). See
"Financial Statements of Tri-County Bancshares and subsidiary" The principal
executive offices of Tri-County Bancshares are at 408 4th Street, Linn, Kansas
66953 (telephone number (785) 348-5521).
SUB
Sub is a wholly owned subsidiary of the Company. Pursuant to the Agreement
Tri-County will be merged into Sub.
TRI-COUNTY SPECIAL MEETING
PURPOSE OF THE SPECIAL MEETING
The purpose of the Tri-County Special Meeting is to consider and vote upon a
proposal to approve the Agreement which provides, among other things, for the
merger of Tri-County with and into Sub and in which Sub will be the surviving
corporation. Stockholders of Tri-County will receive seventeen (17) shares of
the Company Common Stock and $140.00 in cash for each share of Tri-County
Common Stock exchanged in the Merger.
12
<PAGE>
SOLICITATION AND REVOCATION OF PROXIES
This Prospectus is being furnished to the stockholders of Tri-County in
connection with the solicitation of proxies by the Board of Directors of Tri-
County for use at the Tri-County Special Meeting to be held at a.m., local
time, on , 1998 at the Linn City Building, 104 5th Street, Linn,
Kansas and at any adjournment or adjournments thereof. Any proxy given does
not affect the right to vote in person at the Tri-County Special Meeting and
may be revoked at any time before it is exercised; there is no formal method
required for revocation. The cost of solicitation of proxies for the Tri-
County Special Meeting will be borne by Tri-County. In addition to
solicitation by mail, Tri-County may cause proxies to be solicited personally
or by telephone or facsimile by Tri-County's regular employees.
VOTING OF PROXIES, PERSONS ENTITLED TO VOTE, AND VOTE REQUIRED
All shares represented by a proxy given pursuant to this solicitation will
be voted as specified thereon at the Tri-County Special Meeting. If no
specification is given, such shares will be voted in favor of the proposal to
approve the Agreement. The Board of Directors of Tri-County is not aware of
any other business to be presented at the Tri-County Special Meeting. Should
any such other business be presented at the Tri-County Special Meeting, the
person or persons named in the proxy will vote the same in accordance with
their judgment.
The affirmative vote of the holders of at least a majority of the
outstanding shares of Tri-County Common Stock is required to approve the
Agreement. Only holders of Tri-County Common Stock of record as of the close
of business on , 1998 are entitled to vote at the Tri-County
Special Meeting. At the close of business on that date, 12,377 shares of Tri-
County Common Stock were outstanding. Holders of shares of Tri-County Common
Stock are entitled to one vote for each share held on the record date.
THE MERGER
GENERAL
The Agreement and certain related matters are summarized below. This summary
does not purport to be a complete statement of the terms and conditions of the
Merger and is qualified in its entirety by, and made subject to, the more
complete information set forth in the Agreement attached as Annex A to this
Prospectus and incorporated herein by reference.
At the Effective Time, Tri-County will merge with and into Sub, the separate
corporate existence of Tri-County will cease and Sub will survive and continue
to exist as a wholly-owned subsidiary of the Company. The Agreement has been
structured so that the aggregate value of the Company Common Stock to be
issued to Tri-County stockholders in the Merger will be uncertain.
Stockholders of Tri-County will receive seventeen (17) shares of Company
Common Stock and $140.00 cash for each share of Tri-County Common Stock. As a
result, Sub will pay to the stockholders of Tri-County a total of $1,732,780
in cash (excluding any amounts paid in cash to dissenting Tri-County
stockholders).
CONVERSION OF TRI-COUNTY COMMON STOCK
At the Effective Time, automatically by virtue of the Merger and without any
action on the part of any party or stockholder, each share of Tri-County
Common Stock (excluding (i) shares held by Tri-County or by the Company or any
of the Company Subsidiaries, in each case other than in a fiduciary capacity
and (ii) any shares with respect to which dissenters' rights are being
exercised) issued and outstanding immediately prior to the Effective Time will
be converted into seventeen (17) shares of the Company Common Stock.
EXCHANGE OF STOCK CERTIFICATES
At the Effective Time, certificates evidencing shares of Tri-County Common
Stock to be exchanged for shares of the Company Common Stock will be deemed
for all corporate purposes, other than the payment of
13
<PAGE>
dividends and other distributions on such stock, to evidence ownership of such
shares of the Company Common Stock. As soon as practicable after the Effective
Time, the Company or its agent, as the exchange agent, will send a notice and
transmittal form to each record holder of certificates for Tri-County Common
Stock advising such holder of the procedures for surrendering Tri-County
certificates to the Company or its agent in exchange for a certificate for the
number of whole shares of the Company Common Stock and a check for the cash
amount to which such holder is entitled. The shares of the Company Common
Stock will be deemed to have been issued at the Effective Time. Promptly
following the surrender of the Tri-County certificates, the Company or its
agent will deliver to the surrendering Tri-County stockholders certificates
evidencing whole shares of the Company Common Stock and a check for the total
of $140.00 per share plus the cash amount of any fractional interest, (See "--
Fractional Shares") all in accordance with the notice and transmittal form.
Holders of Tri-County Common Stock will be entitled to dividends, without
interest, that may be declared and payable to holders of record of the Company
Common Stock after the Effective Time; provided, however, that any such
dividends will be remitted to each Tri-County stockholder entitled thereto,
without interest, at the time that such certificates representing shares of
Tri-County Common Stock are surrendered for exchange, subject to any
applicable abandoned property, escheat or similar law.
FRACTIONAL SHARES
Neither certificates nor scrip representing fractional shares of the Company
Common Stock will be issued, but in lieu thereof, each holder of shares of
Tri-County Common Stock who would otherwise have been entitled to a fraction
of a share of the Company Common Stock will be paid the cash value of such
fraction determined by multiplying such fraction by the Average Company Price.
The Average Company Price means the average of the closing sale prices of the
Company Common Stock as reported by NASDAQ on each of the ten (10) consecutive
trading days preceding the third trading day prior to the Effective Time. The
Company will make available to the exchange agent, as required from time to
time, any cash necessary for this purpose.
BACKGROUND OF NEGOTIATIONS
During the second half of 1997, Mr. Keith E. Bouchey, Executive Vice
President and Chief Financial Officer of the Company, initially contacted Mr.
James R. Pachta, Treasurer and Secretary of Tri-County, about a possible
business combination. On September 5, 1997, Mr. Bouchey made an oral
presentation to the Tri-County Board of Directors (the "Tri-County Board").
His presentation outlined the history of the Company and its present
strategies, including its strategy to grow through acquisitions and internal
expansion. In addition, he described the Company's goal of maintaining banks
with a local identity and board of directors and with management involved in
social and charitable activities of the communities served by the banks. The
Tri-County Board, after conferring with Terry White of GRA, Thompson, White &
Co. in Kansas City ("GRA") about value and timing issues, determined that no
action would be taken at that time.
In January 1998, the Tri-County Board decided to explore possible sale
options and instructed management to begin discussions with potential
acquirers. Management, with the assistance of GRA, compiled a list of
potential acquirers, focusing on organizations that seemed compatible with the
communities where the Bank operates. Accordingly, management then entered into
discussions with three bank holding companies that operate in Kansas,
including the Company. As a result, the Company and two other bank holding
companies signed confidentiality agreements and began preliminary due
diligence in February 1998.
The Company submitted its formal bid on March 10, 1998, and then revised its
offer, however, to include a combination of Company Common Stock and cash on
April 2, 1998. After completing its due diligence, the Company lowered the
terms of its offer to reflect concerns over asset quality as a result of a
recently completed regulatory examination. The Tri-County Board received one
other bid that it determined provided less value to Tri-County stockholders
than the Company's bid. The third bank holding company failed to submit a bid.
On April 20, 1998 the parties reached an agreement in principle and
immediately began drafting the Agreement. The Tri-County Board negotiated to
ensure that Tri-County stockholders would receive freely-
14
<PAGE>
transferable registered Company Common Stock in a tax-free transaction. After
satisfying themselves that the business plan of the Company was consistent
with all of their objectives for Tri-County and its stockholders, the Tri-
County Board authorized the execution of the Agreement.
REASONS FOR THE MERGER
Tri-County. The Tri-County Board believes that the terms of the Agreement
are fair to, and in the best interests of, Tri-County and its stockholders. In
considering the terms and conditions of the Agreement, the Tri-County Board
considered a number of factors. They did not assign any relative or specific
weights to the factors considered. The material factors considered were:
The Financial Terms and Structure of the Merger. The Tri-County Board is
of the view that, based on historical and anticipated trading ranges for
the Company Common Stock, the value of the consideration to be received by
Tri-County stockholders represents a fair multiple of Tri-County's per
share book value and earnings. Additionally, the Board recognized that the
shares of the Company Common Stock are listed for trading on NASDAQ and
provide a liquid investment as compared to shares of Tri-County Common
Stock. The Tri-County Board also considered that, except for the cash to be
received by Tri-County stockholders, the Merger would qualify as a tax-free
reorganization under the Internal Revenue Code of 1986, as amended (the
"Code"). See "Federal Income Tax Consequences."
The Non-Financial Terms of the Merger. The Tri-County Board considered
the social and economic effect on the employees, depositors and customers
of, and others dealing with, the Bank and on the community in which the
Bank operates. They concluded that because of its large menu of banking and
banking related products, strong management, transaction experience and
history of operating acquired banking locations as community banks, the
Company would be an excellent successor to the existing Bank owners.
The Company. In approving the Agreement, management of the Company
considered the price, financial condition of the Bank, projected synergies the
Company anticipates will result from the Merger and the compatibility of the
businesses of the two banking organizations. The management of the Company
concluded that the Merger is consistent with its strategy to acquire community
banks with strong existing management located in county seat towns.
THE TRI-COUNTY BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT TRI-COUNTY
STOCKHOLDERS VOTE "FOR" APPROVAL OF THE AGREEMENT.
OPERATIONS AND MANAGEMENT AFTER THE MERGER
At the Effective Time, the separate corporate existence of Tri-County will
terminate and all of the assets and liabilities of Tri-County will become
assets and liabilities of Sub. The Articles of Incorporation and Bylaws of Sub
as in effect immediately prior to the Effective Time shall be and remain the
Articles of Incorporation and Bylaws of the surviving corporation from and
after the Effective Time until amended as provided by law. The officers and
directors of Sub will become the officers and directors of the surviving
corporation from and after the Effective Time. The Bank will receive
assistance in bringing new methods and systems to the Bank. The Company also
expects to enhance the net interest margin and non-interest income of the Bank
by expanding the products and services offered.
The Company will analyze the Bank's operations for potential efficiencies.
The Company anticipates achieving operating cost savings through the proposed
consolidation and the elimination of redundant costs. While there can be no
assurances that operating cost savings will be realized or in what fiscal
period the savings will actually be recorded, plans are currently being
developed to realize operating cost savings. It is expected that the
annualized level of operating cost savings achieved will be realized unevenly
throughout the period of consolidation, with the majority of any savings
realized in the latter part of the period. The extent to which
15
<PAGE>
operating cost savings will be achieved depends, among other things, on the
regulatory environment and economic conditions, and may be affected by
unanticipated changes in business activities, inflation and operating costs.
CONDITIONS TO THE MERGER
Consummation of the Merger is subject to the fulfillment of certain
conditions set forth in the Agreement, including the following:
(a) Approval of the Agreement by the holders of a majority of all the
outstanding shares of Tri-County Common Stock;
(b) The accuracy of representations of the Company and Tri-County made in
the Agreement and the performance of their respective obligations
thereunder;
(c) The absence of a material adverse event since April 29, 1998,
effecting the financial condition, properties, assets, liabilities, rights,
business or prospects of the Company, Tri-County or the Bank;
(d) The absence on the closing date, except as previously disclosed, of
(1) any actions, suits, claims, demands or other proceedings or
investigations threatened against or affecting the properties, assets,
rights or business of Tri-County or the Bank or the right to carry on their
respective businesses; (2) any debt, liability or obligation of Tri-County
or the Bank not reflected in their financial statements or not occurred in
the ordinary course of business; and (3) any material breach or default of
Tri-County or the Bank under any agreement or commitment.
(e) The receipt by the Company, Tri-County and the Bank of an opinion
from Payne & Jones, Chartered relating to certain tax matters;
(f) The receipt by the Company of an opinion from Monty and Eyer as to
certain corporate matters regarding Tri-County and the Bank;
(g) The receipt of necessary regulatory approvals;
(h) A minimum tangible net worth and minimum loan loss reserve of the
Bank; and
(i) The absence of any pending or threatened litigation that could
reasonably result in restraining, enjoining or prohibiting consummation of
the Merger.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Agreement, Tri-County has agreed to carry on its business in
the usual, regular and ordinary course in substantially the same manner as
conducted prior to the execution of the Agreement.
NO SOLICITATION
The Agreement provides that, unless and until the Merger has been
terminated, neither Tri-County nor the Bank will solicit or encourage or,
subject to the fiduciary duties of their directors as advised by counsel, hold
discussions or negotiations with, or provide information to, any person in
connection with any proposal from any person relating to the transaction of
all or a substantial portion of the business, assets or stock of Tri-County or
the Bank. Tri-County is required to promptly advise the Company of the receipt
of, and the substance of, any such proposal or inquiry.
WAIVER AND AMENDMENT
Prior to or at the Effective Time, any provision of the Agreement,
including, without limitation, the conditions to consummation of the Merger,
may be (i) waived, to the extent permitted under law, in writing by the party
which is entitled to the benefits thereof; or (ii) amended at any time by
written agreement of the parties, whether before or after approval of the
Agreement by the stockholders of Tri-County; provided, however, that
16
<PAGE>
after any such approval, no such amendment or modification shall alter the
amount or change the form of the consideration or alter or change any of the
terms of the Agreement if such alteration or change would adversely affect the
holders of Tri-County Common Stock. It is anticipated that a condition to
consummate the Merger would be waived only in those circumstances where the
Board of Directors of the Company, Sub, or Tri-County, as the case may be,
deems such waiver to be in the best interests of such company and its
stockholders.
TERMINATION OF THE MERGER
The Agreements and the Merger may be terminated at any time prior to the
closing date by:
(i) The mutual consents of the Boards of Directors of the Company, Sub
and Tri-County;
(ii) The Company, if any regulatory approval shall be denied or if any
such regulatory approval shall be conditioned or restricted in any manner
which would materially adversely affect the operations of or would be
unduly burdensome to the Company;
(iii) Tri-County or the Company if the other party has materially
breached the Agreement and has not cured such breach;
(iv) Tri-County or the Company upon written notice to the other of any
other condition imposed for the benefit of such party that shall not have
been satisfied or waived prior to the closing date; or
(v) Tri-County or the Company if the Merger has not been consummated by
December 31, 1998.
EFFECTIVE TIME
It is presently anticipated that the Effective Time of the Merger will occur
sometime in the third quarter of 1998, but no assurance can be given to that
effect.
FEDERAL SECURITIES LAWS CONSEQUENCES
The shares of the Company to be issued pursuant to the Merger have been
registered under the Securities Act of 1933, as amended (the "Securities
Act"). The provisions of Rule 145 under the Securities Act allow such shares
to be sold without restriction by stockholders of Tri-County who are not
deemed to be "affiliates" (as that term is defined in the rules under the
Securities Act) of Tri-County and who do not become affiliates of the Company.
The shares of the Company to be issued to affiliates of Tri-County may be
resold only pursuant to an effective registration statement, pursuant to Rule
145 under the Securities Act, or in transactions otherwise exempt from
registration under the Securities Act. The Company will not be obligated and
does not intend to register its shares under the Securities Act for resale by
stockholders who are affiliates.
FEES AND EXPENSES OF THE MERGER
Except as set forth as follows, each party is responsible for its own
expenses in connection with the Merger. However, if the Merger does not close
for any reason, Tri-County will pay $30,000.00 of the total cost associated
with (i) the certified audit of the financial statements of Tri-County and
(ii) the preparation and filing of the Registration Statement and Prospectus.
If the Merger closes, then such $30,000.00 payment will be made by the
stockholders of Tri-County (on a pro rata basis).
RIGHTS OF DISSENTING STOCKHOLDERS
In order to have dissenters' rights, a holder of Tri-County Common Stock
must not vote his or her shares in favor of the Agreement or deliver an
unmarked, but signed proxy. If the Merger is approved, holders of shares of
Tri-County Common Stock will possess the right to seek appraisal of their
shares pursuant to Section 17-6712 of the KGCC ("Section 17-6712").
17
<PAGE>
THE FOLLOWING IS A SUMMARY OF THE PROVISIONS OF SECTION 17-6712 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH SECTION, A
COPY OF WHICH IS ATTACHED TO THIS PROSPECTUS AS ANNEX B. THE FAILURE TO COMPLY
WITH THE PROVISIONS OF SECTION 17-6712 MAY RESULT IN A TERMINATION OR LOSS OF
APPRAISAL RIGHTS THEREUNDER.
A holder of record of shares of Tri-County Common Stock who elects to
exercise appraisal rights under Section 17-6712 must deliver a written
objection to the Agreement to Tri-County prior to the vote on the Agreement by
the holders of Tri-County Common Stock at the Tri-County Special Meeting to be
held on , 1998. Any such objection should be sent to Tri-County at
the Linn City Building, 104 5th Street, Linn, Kansas 66953, Attention: Don R.
Moser.
Within 10 days after the Effective Date, Sub, as the surviving corporation
in the Merger, will give written notice to each former holder of shares of
Tri-County Common Stock who has complied with the written notice requirement
that the Merger has become effective and that dissenters' rights are available
for any or all of such holder's shares in connection therewith. Within 20 days
after the date of the mailing of the notice, such holder must demand in
writing to Sub the payment of the fair value of such holder's shares of Tri-
County Common Stock. Any such demand should be sent to Sub at 11301 Nall
Avenue, Leawood, Kansas 66211, Attention: Keith E. Bouchey. Within 30 days
after the expiration of the 20 day period, Sub shall pay to such holder the
value of such holder's shares, exclusive of any element of value arising from
the expectation or accomplishment of the Merger.
If Sub and a dissenting stockholder fail to agree upon the fair value of the
Tri-County Common Stock, within four months after the Effective Time of the
Merger, but not thereafter, either Sub or any stockholder entitled to
dissenters' rights under Section 17-6712 may file a petition in the District
Court of Kansas demanding a determination of the value of the stock of all
stockholders entitled to appraisal. Inasmuch as Sub has no obligation to file
such a petition, the failure of a stockholder to do so within the period
specified could nullify such stockholder's previous written demand for
appraisal.
If a petition for appraisal described above is timely filed by a
stockholder, Sub is obligated to provide the stockholder with a verified list
of all stockholders who have demanded appraisal. After notice to such
stockholders, the court is empowered to conduct a hearing upon the petition,
to determine those stockholders entitled to appraisal and to determine the
"fair value" of the shares held by them as of the date on which the Merger is
consummated, which under the KGCC would be determined exclusive of any element
of value arising from accomplishment or expectation of the Merger.
When the "fair value" is so determined, the court will direct the payment by
Sub of such value, with interest thereon if the court so determines, to the
stockholders entitled to receive the same, upon surrender to Sub by such
stockholders of the certificates representing their shares of Tri-County
Common Stock to Sub at the address specified above. Upon application of Sub or
any stockholder entitled to participate in the appraisal proceeding, the court
may in its discretion permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of those
other stockholders entitled to an appraisal who have complied with the above
conditions.
TRANSACTIONS BETWEEN THE COMPANY AND TRI-COUNTY
No shares of Tri-County Common Stock are presently owned by the Company or
by any of its subsidiaries or principals, or by trustees for the benefit of
the Company or any of its subsidiaries, stockholders or employees as a class
or by an escrow arrangement instituted by the Company.
ACCOUNTING TREATMENT
It is intended that the Merger will qualify as a purchase for financial
reporting purposes.
18
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based upon the provisions of the Code, the
applicable regulations thereunder, judicial authority, current administrative
rulings and practice as of the date hereof and the opinion to be provided by
Payne & Jones, Chartered. The opinion of Payne & Jones, Chartered will be
based upon certain assumptions and representations by the management of each
of Tri-County and the Company and by certain holders of the outstanding Tri-
County Common Stock. A ruling from the Internal Revenue Service concerning the
tax consequences of the Merger will not be requested. The following discussion
does not address the federal income tax consequences to special classes of
taxpayers including, without limitation, foreign corporations, tax exempt
entities and persons who acquired their Tri-County Common Stock pursuant to
the exercise of an employee option or otherwise as compensation.
In the opinion of Payne & Jones, Chartered, the Merger will constitute a
reorganization within the meaning of Section 368(a)(1)(A) (as amplified by
Section 368(a)(2)(D)) of the Code. Consequently:
1. Stockholders of Tri-County will not recognize gain or loss upon the
receipt of the Company Common Stock in exchange for their shares of Tri-
County Common Stock.
2. The basis of the Company Common Stock received by stockholders of Tri-
County in the Merger will equal the basis of their stock exchanged.
3. The tax holding period of the Company Common Stock received by
stockholders of Tri-County in the Merger will include the holding period of
their stock exchanged.
4. Cash paid under the terms of the Agreement, to holders of shares of
Tri-County who dissent from the Merger and to holders of shares of Tri-
County in lieu of fractional shares will be treated as proceeds of sales on
which gain or loss will be recognized.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH TRI-COUNTY STOCKHOLDER SHOULD CONSULT HIS OR HER OWN
TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM OR HER,
INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE AND LOCAL AND OTHER TAX
LAWS.
19
<PAGE>
SECURITY OWNERSHIP OF TRI-COUNTY COMMON STOCK
The following information pertains to Tri-County Common Stock beneficially
owned, directly or indirectly, by (i) each director and executive officer,
(ii) all directors and executive officers of Tri-County as a group and (iii)
each person known to Tri-County to own beneficially more than 5% of Tri-County
Common Stock as of , 1998. Except as noted below, beneficial
owners have sole voting and investment power.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL NUMBER OF SHARES PERCENTAGE OF SHARES
OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED (1)
------------------------------ ------------------ ----------------------
<S> <C> <C>
F.M. Beam (2).................. 112 *
1805 Quivera Rd.
Washington, KS 66968
Frank H. Blaha (3)............. 914 7.38%
104 N. Elm St.
Linn, KS 66953
John F. Davis (4).............. 1,150 9.29%
338 W. 7th
Concordia, KS 66901
Melvin J. Hatesohl (5)......... 900 7.27%
201 N. Pine
Linn, KS 66953
Carmen Johnson (6)............. 265 2.14%
R.R. #1, Box 31
Concordia, KS 67417
Dale R. Keesecker (7).......... 1,184 9.57%
1866 17th Rd.
Washington, KS 66968
Arden N. Krohn................. 1,270 10.26%
R.R. #3, Box 286
Clyde, KS 66938
Brice Leonard (8).............. 458 3.70%
214 E. 4th St.
Washington, KS 66968
Don R. Moser (9)............... 326 2.63%
1672 Rainbow Rd.
Washington, KS 66968
James R. Pachta (10)........... 310 2.50%
P.O. Box 23
Linn, KS 66953
Calvin Schou (11).............. 1,138 9.19%
R.R. #3, Box 500
Agenda, KS 66930
Robert Stanton (12)............ 679 5.49%
318 S. Martin
Morrowville, KS 66958
Calvin H. Wilgers (13)......... 319 2.58%
1330 King Rd.
Washington, KS 66968
All Directors and Executive
Officers as a group........... 5,938 47.98%
</TABLE>
20
<PAGE>
- --------
*Less than one percent.
(1) At the close of business on , 1998, there were 12,377 shares of
Tri-County Common Stock outstanding.
(2) F.M. Beam is a director of Tri-County. Includes 102 shares held by Mr.
Beam jointly with his wife, Virginia Beam. Mr. Beam has shared voting and
investment power with respect to such shares.
(3) Frank H. Blaha is a director of Tri-County. Includes 904 shares held by
Mr. Blaha jointly with his wife, Beverly J. Blaha. Mr. Blaha has shared
voting and investment power with respect to such shares.
(4) John F. Davis is a director of Tri-County.
(5) Melvin J. Hatesohl is a director of Tri-County. Includes 890 shares held
by Melvin J. Hatesohl as trustee of the Melvin J. Hatesohl Revocable
Trust.
(6) Carmen Johnson is a director of Tri-County. Includes 255 shares held by
Mrs. Johnson jointly with her husband, Harold Johnson. Mrs. Johnson has
shared voting and investment power with respect to such shares.
(7) Dale R. Keesecker is a director of Tri-County. Includes 1,174 shares held
by Mr. Keesecker jointly with his wife, Lila J. Keesecker. Mr. Keesecker
has shared voting and investment power with respect to such shares.
(8) Brice Leonard is a director of Tri-County.
(9) Don R. Moser is a director and the President of Tri-County. Includes 316
shares held by Mr. Moser jointly with his wife, Jean I. Moser. Mr. Moser
has shared voting and investment power with respect to such shares.
(10) James R. Pachta is a director and the Treasurer and Secretary of Tri-
County. Includes 300 shares held by Mr. Pachta as co-trustee of the James
R. Pachta and Marilyn R. Pachta Trust. Mr. Pachta has shared voting and
investment power with respect to such shares.
(11) All shares are held by Calvin Schou as trustee of the Calvin Schou Trust.
Mr. Schou has voting and investment power with respect to such shares.
(12) All shares are held by Robert Stanton as trustee of the Alice Stanton
Trust No. 1. Mr. Stanton has voting and investment power with respect to
such shares.
(13) Calvin H. Wilgers is a director of Tri-County. All shares are held by Mr.
Wilgers as trustee of the Calvin H. Wilgers Trust. Mr. Wilgers has voting
and investment power with respect to such shares.
21
<PAGE>
COMPARATIVE RIGHTS OF STOCKHOLDERS
GENERAL
Tri-County is incorporated in the State of Kansas. Tri-County stockholders,
whose rights are currently governed by Kansas law (including the KGCC), the
Tri-County Articles of Incorporation (the "Tri-County Articles") and the Tri-
County bylaws (the "Tri-County Bylaws"), will, upon consummation of the
Merger, become stockholders of the Company. After such time, their rights will
continue to be governed by Kansas law; however, they will be subject to the
provisions of the Company Amended and Restated Articles of Incorporation (the
"Company Articles") and the Company Amended and Restated Bylaws (the "Company
Bylaws").
Material differences that may affect the rights and interests of
stockholders of Tri-County are set forth below. This summary is not intended
to be an exhaustive description of the provisions discussed. It is qualified
in its entirety by reference to the Tri-County Articles, the Tri-County
Bylaws, the Company Articles and the Company Bylaws.
NUMBER OF DIRECTORS AND TERM
Under the Tri-County Bylaws, the Tri-County Board consists of eleven
directors, each of whom serve a term of one year. Under the Company Articles
and the Company Bylaws, the Company Board consists of at least three, but not
more than fifteen directors. Currently, the Company Board consists of five
directors. The Company Bylaws provide that directors are elected to a three
year term. The Company Articles and the Company Bylaws provide for a staggered
Board of Directors comprised of three classes as nearly equal in size as
practicable. Each class holds office until the third annual meeting for
election of directors following the election of such class.
ELECTION OF DIRECTORS
The Tri-County Bylaws provide for the use of cumulative voting by Tri-County
stockholders in any election of directors. Under the Company Articles,
stockholders of the Company are not entitled to use cumulative voting on any
matter.
REMOVAL OF DIRECTORS
Under the Tri-County Bylaws, directors may be removed by the stockholders
for good cause; provided, however, no director may be removed if the votes
cast against removal would be sufficient to elect the director if then
cumulatively voted at a regular election of the entire Tri-County Board. The
Company Articles provide that any director or the entire board of directors
may only be removed for "cause," as defined in the Company Articles.
SPECIAL MEETINGS
The Tri-County Bylaws provide that the President, the Tri-County Board, or
one or more stockholders holding not less than one-fifth of the voting power
may call a special meeting of the Tri-County stockholders. The Company Bylaws
provide that special meetings of the Company stockholders may only be called
by the chief executive officer, the Company Board, or the written request of
the holders of fifty-five percent of the outstanding shares.
AMENDMENT OF ARTICLES OF INCORPORATION
Under the KGCC, the Tri-County Articles may be amended upon a resolution of
the Tri-County Board proposing the amendment and its submission to the Tri-
County stockholders for their approval by the majority of the shares of Tri-
County Common Stock entitled to vote.
22
<PAGE>
The Company Articles provide that certain provisions of the Company Articles
may not be repealed or amended without the affirmative vote of holders of at
least two-thirds of the outstanding shares of voting stock. Company
stockholders holding a majority of the Company Common Stock may otherwise
amend, alter, change or repeal any provision of the Company Articles.
ACTION BY STOCKHOLDERS
The Tri-County Bylaws permit any action that may be taken at a meeting of
the stockholders, except for certain fundamental matters outlined in the Tri-
County Bylaws, to be taken without a meeting if authorized in writing by all
stockholders entitled to vote upon such action at the meeting.
The Company Articles provide that any action required or permitted to be
taken by the stockholders of the Company must be effected at a duly called
annual or special meeting and may not be effected by any consent in writing by
such stockholders.
AMENDMENT OF BYLAWS
The Tri-County Bylaws provide that the stockholders may make, alter, amend
or repeal their bylaws by a majority vote. The Company Articles authorize the
Company Board to make, alter and repeal bylaws, subject to the rights of
stockholders at any regular or special meeting to alter or repeal bylaws made
by the Company Board. Stockholders of the Company may make, alter, amend or
repeal the Company Bylaws by a majority vote, except that the amendment of
certain provisions requires a two-thirds vote.
NOTICE OF STOCKHOLDER PROPOSALS; NOMINATIONS OF DIRECTORS
The Tri-County Bylaws do not contain special requirements for providing
advance notice of the introduction by stockholders of business to be
transacted at stockholder meetings.
The Company Bylaws provide that any stockholder who intends to bring a
matter before the annual meeting of stockholders must deliver written notice
of such stockholder's intent to the Secretary of the Company. Such notice must
be received by the Secretary not later than 120 days prior to the day
corresponding to the date on which the Company released its proxy statement in
connection with the previous years annual meeting. Such written notice must
set forth (i) a brief description of the proposal and the reasons for it, (ii)
the name and address of the stockholder, (iii) the class and number of shares
of capital stock of the Company beneficially owned by the stockholder, (iv)
any arrangement between such stockholder and any other person in connection
with the proposal and any material interest of the stockholder in the proposed
business described in the notice, (v) a representation that such stockholder
will appear in person or proxy at the annual meeting and (vi) if such business
is a nomination for director, each nomination sought to be made, together with
a description of the qualifications and business or professional experience of
each proposed nominee and disclosing the information about him or her that is
required by the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder, to be disclosed in the proxy materials for the meeting
involved as if he or she were a nominee of the corporation for election as one
of its directors.
PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma financial information combines the
historical consolidated balance sheets and statements of income of the Company
and Tri-County, including their respective subsidiaries, after giving effect
to the Merger. The unaudited pro forma consolidated balance sheet at March 31,
1998 gives effect to the Merger as if it had occurred at March 31, 1998. The
unaudited pro forma consolidated statements of income for the year ended
December 31, 1997 and the three-month period ended March 31, 1998, give effect
to the Merger as if it had occurred at January 1, 1997. These statements are
prepared on the basis of accounting for the Merger as a purchase transaction
and are based on assumptions set forth in the notes thereto.
23
<PAGE>
PRO FORMA UNAUDITED CONSOLIDATING BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
THE TRI-COUNTY -------------- THE COMPANY
COMPANY CONSOLIDATED DR CR CONSOLIDATED
-------- ------------ ----- ----- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from
banks................ $ 14,144 1,419 1,927(1,3) 13,636
Federal funds sold and
interest-bearing
deposits............. 15,796 2,937 18,733
Held-to-maturity
securities........... 100 10,419 10,519
Available-for-sale
securities........... 126,296 1,534 127,830
Trading securities.... 1,709 -- 1,709
Other investment
securities........... 2,902 -- 2,902
Investment in
subsidiary........... --
Mortgage loans held
for sale............. 1,943 -- 1,943
Loans, net............ 367,610 26,030 393,640
Premises and
equipment, net....... 17,418 614 18,032
Accrued interest and
other assets......... 18,762 722 1,415(2) 20,899
-------- ------ ----- ----- -------
Total assets........ $566,680 43,675 1,415 1,927 609,843
======== ====== ===== ===== =======
LIABILITIES
Deposits.............. $455,084 40,392 495,476
Securities sold under
agreements to
repurchase........... 4,268 -- 4,268
Federal funds
purchased and FHLB
advances............. 15,139 -- 15,139
Long-term debt........ 10,107 194 194(3) 10,107
Accrued interest and
other liabilities.... 4,383 104 4,487
-------- ------ ----- ----- -------
Total liabilities... $488,981 40,690 194 529,477
-------- ------ ----- ----- -------
Junior subordinated
deferrable interest
debentures............. 28,750 -- 28,750
STOCKHOLDERS' EQUITY
Common stock.......... $ 10,704 1,277 1,277(2) 210(1) 10,914
Additional paid-in
capital.............. 22,610 338 338(2) 2,457(1) 25,067
Retained earnings..... 15,580 1,465 1,465(2) 15,580
Unrealized gain (loss)
on available for sale
securities........... 291 -- 291
Less: treasury stock,
at cost.............. -- (95) 95(2) --
Unearned Compensation. (236) -- (236)
-------- ------ ----- ----- -------
Total stockholders'
equity............. $ 48,949 2,985 3,080 2,762 51,616
-------- ------ ----- ----- -------
Total liabilities
and stockholders'
equity............. $566,680 43,675 3,274 2,762 609,843
======== ====== ===== ===== =======
</TABLE>
- --------
(1) Represents cash paid of $1.7 million and 210,409 new shares issued to Tri-
County stockholders.
(2) Adjustment of Tri-County's assets and liabilities to fair value,
elimination of Tri-County equity and the recognition of goodwill resulting
from the Merger. The following table summarizes the goodwill computation:
<TABLE>
<S> <C>
Purchase price:
Cash............................................................ $1,733
Gold Banc Corporation, Inc. common stock........................ 2,667
------
Total purchase price.......................................... 4,400
Fair value of Tri-County's net assets............................. 2,985
------
Excess of purchase price over net assets acquired................. $1,415
======
</TABLE>
(3) Retirement of Tri-County notes payable with the Company's cash.
24
<PAGE>
PRO FORMA UNAUDITED CONSOLIDATING INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
THE TRI-COUNTY -------------- PRO FORMA
COMPANY CONSOLIDATED DR CR THE COMPANY
------- ------------ ----- ----- -----------
<S> <C> <C> <C> <C> <C>
Interest income
Loans, including fees.... $ 8,426 627 9,053
Investment securities.... 1,760 174 1,934
Other.................... 228 43 3(1) 268
------- ---- ----- ----- ------
10,414 844 3 11,255
------- ---- ----- ----- ------
Interest expense
Deposits................. 4,830 451 5,281
Borrowings and other..... 945 5 5(1) 945
------- ---- ----- ----- ------
5,775 456 5 6,226
------- ---- ----- ----- ------
Net interest income.... 4,639 388 3 5 5,029
Provision for loan losses.. (360) (16) (376)
------- ---- ----- ----- ------
Net interest income
after provision for
loan losses........... 4,279 372 3 5 4,653
------- ---- ----- ----- ------
Other income
Service fees............. 302 58 360
Net gains on sale of
mortgage loans.......... 225 -- 225
Net securities gains
(losses)................ 1 -- 1
Net unrealized gains on
trading assets.......... 49 -- 49
Investment trading fees
and commissions......... 691 -- 691
Other.................... 146 16 162
------- ---- ----- ----- ------
1,414 74 1,488
------- ---- ----- ----- ------
Other expense
Salaries and employee
benefits................ 2,258 166 2,424
Occupancy expense........ 550 49 599
Federal deposit insurance
premiums................ 22 -- 22
Other.................... 1,181 100 18(2) 1,299
------- ---- ----- ----- ------
4,011 315 18 4,344
------- ---- ----- ----- ------
Earnings before income
taxes................. 1,682 131 21 5 1,797
Income tax expense
(benefit)................. 547 57 604
------- ---- ----- ----- ------
Net earnings (losses)...... $ 1,135 74 21 5 1,193
======= ==== ===== ===== ======
Earnings per share......... $ 0.11 5.99 0.11
======= ==== ======
</TABLE>
- --------
(1) To reflect the reduction in interest expense on long-term debt by Tri-
County based on the Company's intention to pay off the notes payable
subsequent to the Merger. Additionally, a reduction in other interest
income is made to reflect the decrease in interest income earned on funds
which were assumed to have been used to payoff the debt.
(2) To reflect the amortization of goodwill created in the merger between the
Company and Tri-County. Total goodwill recorded in the transaction will be
approximately $1.4 million and will be amortized over a 20-year period.
25
<PAGE>
PRO FORMA UNAUDITED CONSOLIDATING INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
THE TRI-COUNTY -------------- THE
COMPANY CONSOLIDATED DR CR COMPANY
------- ------------ ----- ----- ---------
<S> <C> <C> <C> <C> <C>
Interest income
Loans, including fees...... $25,871 2,611 28,482
Investment securities...... 5,408 696 6,104
Other...................... 669 127(1) 9(1) 805
------- ----- ----- ----- ------
31,948 3,434 9 35,373
------- ----- ----- ----- ------
Interest expense
Deposits................... 15,160 1,816 16,976
Borrowings and other....... 1,532 14 14(1) 1,532
------- ----- ----- ----- ------
16,692 1,830 14 18,508
------- ----- ----- ----- ------
Net interest income...... 15,256 1,604 9 14 16,865
Provision for loan losses.... (865) (759) (1,624)
------- ----- ----- ----- ------
Net interest income after
provision for loan
losses.................. 14,391 845 9 14 15,241
------- ----- ----- ----- ------
Other income
Service fees............... 1,060 266 1,326
Net gain on sale of
mortgage loans............ 679 -- 679
Net securities gains
(losses).................. 104 -- 104
Unrealized gains on trading
securities................ 229 -- 229
Gain of sale of other
assets.................... 198 -- 198
Other...................... 506 73 579
------- ----- ----- ----- ------
2,776 339 3,115
------- ----- ----- ----- ------
Other expense
Salaries and employee
benefits.................. 6,244 714 6,958
Net occupancy expense...... 1,931 193 2,124
Federal deposit insurance
premiums.................. 96 -- 96
Other...................... 3,277 346 71(2) 3,694
------- ----- ----- ----- ------
11,548 1,253 71 12,872
------- ----- ----- ----- ------
Earnings before income
taxes................... 5,619 (69) 80 14 5,484
Income tax expense (benefit). 1,888 (47) 1,841
------- ----- ----- ----- ------
Net earnings (losses)........ $ 3,731 (22) 80 14 3,643
======= ===== ===== ===== ======
Earnings per share........... $ 0.39 (1.71) 0.37
======= ===== ======
</TABLE>
- --------
(1) To reflect the reduction in interest expense on long-term debt by Tri-
County based on the Company's intention to pay off the notes payable
subsequent to the Merger. Additionally, a reduction in other interest
income is made to reflect the decrease in interest income earned on funds
which were assumed to have been used to payoff the debt.
(2) To reflect the amortization of goodwill created in the Merger between the
Company and Tri-County. Total goodwill recorded in the transaction will be
approximately $1.4 million and will be amortized over a 20-year period.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF TRI-COUNTY
The following discussion of financial condition and results of operations
should be read in conjunction with the consolidated financial statements of
Tri-County and the Bank (together, "Tri-County") and the notes thereto, which
are included elsewhere in this prospectus.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND
1997
General
Tri-County's consolidated net earnings totaled $74,000 for the three months
ended March 31, 1998 compared to a $58,000 net loss for the same period in
1997. Earnings before income taxes were $131,000 for the first three months of
1998 compared to losses totaling $99,000 for the same period in 1997. The
primary reason for higher earnings before tax and net earnings is a decrease
in provision for loan losses of $233,000.
Net Interest Margin
Total interest income was $844,000 for each of the three month periods ended
March 31, 1998 and 1997. Interest income on loans decreased $20,000, or 3.1%,
primarily due to a $1.1 million decrease in the average balance of loans
outstanding during the period ended March 31, 1998 compared to the same period
ended March 31, 1997. Interest earned on federal funds sold and interest-
bearing deposits in other financial institutions increased $18,000, or 69.9%,
for the first three months of 1998 compared to the same period in 1997. This
increase is attributable to higher average balances outstanding in the first
three months of 1998 compared to the same period in the previous year.
Total interest expense increased $7,000, or 1.4%, for the three months ended
March 31, 1998 compared to the same period in 1997. An increase in interest
expense of $3,000 on savings deposits and interest-bearing checking accounts
from the first three months of 1997 to the same period in 1998 was a result of
an increase of $373,000, or 2.9%, in the average balance of these accounts
between the two periods. The average balance of time deposits and long-term
borrowings also increased slightly from the first three months of 1997
compared to the same period in 1998 contributing to the remaining increase in
interest expense.
As a result of the changes described above, the net interest margin
decreased $7,000, or 1.7%, for the three months ended March 31, 1998 compared
to the three months ended March 31, 1997.
Provision for Loan Losses
The provision for loan losses was $16,000 for the first three months of 1998
compared to $249,000 for the same period in 1997. Tri-County experienced
significant commercial and non-residential real estate loan charge-offs in the
first three months of 1997, and as a result, additional provisions for loan
losses were recorded during the period. Tri-County has not experienced the
same level of charge-offs in the first three months of 1998 and
correspondingly has recorded lower provisions during that period.
Other Income
Other income decreased by $16,000, or 17.5%, for the three months ended
March 31, 1998 compared to the same period in 1997. The decrease in other
income was primarily a result of a decrease in service charges earned on
deposit accounts.
Other Expense
Other expense decreased by $20,000, or 6.0%, for the first three months of
1998 compared to the same period in 1997. The decrease in other expense was
primarily due to a decrease in salaries and benefits of $26,000.
27
<PAGE>
Income Tax Expense
Tri-County recognized income tax expense of $57,000 in the first three
months of 1998 compared to an income tax benefit of $41,000 for the same
period in 1997. The effective tax rates were 43.5% and 41.0% for the three
month periods ended March 31, 1998 and 1997, respectively.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
General
Tri-County's consolidated net loss for the year ended December 31, 1997
totaled $22,000 compared to net earnings for the year ended December 31, 1996
of $256,000 representing a decrease of $278,000. The decrease in net earnings
is attributable to an increase of $476,000 in the provision for loan losses
partially offset by a $50,000 decrease in other expenses and a $177,000
decrease in income tax expense.
Net Interest Margin
Total interest income increased by $87,000, or 2.6%, in 1997 compared to
1996. Interest income on loans increased $74,000, or 2.9%, due primarily to an
increase of $2.3 million in the average balance of loans outstanding in 1998
compared to 1997. This increase was partially offset by an overall decrease in
the yield earned on loans.
Total interest expense increased by $118,000, or 6.9%, in 1997 compared to
1996. An increase of $110,000, or 8.1%, in interest expense on time deposits
contributed significantly to the overall increase. The increase in the average
balance of time deposits in 1997 was $1.7 million, or 7.3%, compared to 1996.
The net interest margin decreased $31,000, or 1.8%, compared to 1996 as a
result of the changes described above.
28
<PAGE>
The following table presents Tri-County's average balances, interest earned
or accrued, and the related yields and rates on major categories of Tri-
County's interest-earning assets and interest-bearing liabilities for the
periods indicated:
COMPARATIVE AVERAGE BALANCES, YIELDS AND RATES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1997 1996
----------------------- -----------------------
AVERAGE AVERAGE
RATE RATE
AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/
BALANCE EXPENSE PAID BALANCE EXPENSE PAID
------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans, net (1)................ $27,243 $2,611 9.58% $24,902 $2,537 10.19%
Investment securities--
taxable...................... 10,963 683 6.24% 10,849 677 6.24%
Investment securities--
nontaxable (2)............... 273 13 5.05% 623 28 4.84%
Federal funds sold............ 571 31 5.34% 469 24 5.18%
Interest-bearing deposits in
other financial
institutions................. 1,443 96 6.67% 1,302 81 6.17%
------- ------ ---- ------- ------ -----
Total interest-earning
assets..................... 40,493 3,434 8.48% 38,145 3,347 8.77%
------ ---- ------ -----
Noninterest-earning assets..... 3,017 3,137
------- -------
Total assets................ $43,510 $41,282
======= =======
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing liabilities
Savings deposits and
interest-bearing checking.... $12,380 $ 350 2.82% $11,870 $ 337 2.84%
Time deposits................. 25,577 1,466 5.73% 23,848 1,356 5.69%
Federal funds purchased....... 46 2 5.31% 81 5 5.78%
Borrowed funds................ 131 12 8.86% 162 14 8.83%
------- ------ ---- ------- ------ -----
Total interest-bearing
liabilities................ 38,134 1,830 4.80% 35,961 1,712 4.76%
------ ---- ------ -----
Noninterest-bearing
liabilities................... 2,254 2,321
Stockholders' equity........... 3,122 3,000
------- -------
Total liabilities and
stockholders' equity....... $43,510 $41,282
======= =======
Net interest income (3)........ $1,604 $1,635
====== ======
Interest rate spread........... 3.68% 4.01%
==== =====
Net yield on interest-earning
assets (4).................... 3.96% 4.29%
==== =====
</TABLE>
- --------
(1) Non-accruing loans are included in the computation of average balances.
(2) Yield is adjusted for the tax effect of tax exempt securities. The tax
effects in 1997 and 1996 were $927 and $2,058, respectively. The marginal
tax rate used was 34%.
(3) Tri-County shares includes loan fees in interest income. Such fees totaled
$19,772 and $14,727 in 1997 and 1996, respectively.
(4) The net yield on average earning assets is the net interest income divided
by average interest-earning assets.
29
<PAGE>
The following table presents the components of changes in Tri-County's net
interest income as attributed to volume and rate on a tax-equivalent basis.
The net change attributable to the combined impact of volume and rate has been
solely allocated to the change in rate.
RATE/VOLUME INTEREST ANALYSES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31, 1997 COMPARED
TO 1996
--------------------
TOTAL
VOLUME RATE CHANGES
------ ---- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C>
Interest income:
Loans (1)............................................... 239 (165) 74
Investment securities--taxable.......................... 7 (1) 6
Investment securities--nontaxable....................... (17) 2 (15)
Federal funds sold...................................... 5 2 7
Interest bearing deposits in other financial
institutions........................................... 9 6 15
--- ---- ---
Total interest income................................. 243 (156) 87
=== ==== ===
Interest expense:
Savings deposits and interest-bearing checking.......... 15 (2) 13
Time deposits........................................... 98 12 110
Federal funds purchased................................. (2) (1) (3)
Borrowed funds.......................................... (3) 1 (2)
--- ---- ---
Total interest expense................................ 108 10 118
--- ---- ---
Increase (decrease) in net interest income................ 135 (166) (31)
=== ==== ===
</TABLE>
- --------
(1) Tri-County Bancshares includes loan fees in interest income. Such fees
totaled $19,772 and $14,727 in 1997 and 1996, respectively.
The following table sets forth the average balances and weighted average
rates for Tri-County's categories of deposits for the periods indicated
(dollars in thousands):
<TABLE>
<CAPTION>
AVERAGE DEPOSIT BALANCES AND RATES
---------------------------------------------------
YEAR ENDED 12/31/97 YEAR ENDED 12/31/96
------------------------- -------------------------
% OF % OF
AVERAGE AVERAGE TOTAL AVERAGE AVERAGE TOTAL
BALANCES RATE DEPOSITS BALANCES RATE DEPOSITS
-------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing
demand................. $ 2,091 0.00% 5.22% $ 2,075 0.00% 5.50%
Interest-bearing
NOW................... 6,995 2.56% 17.47% 6,589 2.61% 17.43%
Money Market.......... 2,388 3.14% 5.96% 2,220 3.06% 5.87%
Savings................. 2,997 3.20% 7.48% 3,061 3.20% 8.10%
Time deposits........... 25,577 5.73% 63.87% 23,848 5.69% 63.10%
------- ------- ------- -------
Total............... $40,048 100.00% $37,793 100.00%
======= ======= ======= =======
</TABLE>
Provision for Loan Losses
During 1997, Tri-County recorded provisions for loan losses of $759,000
compared to $283,000 in 1996. The increase in provision for loan losses was
directly attributable to higher charge-offs of commercial and real estate
mortgage loans. Net charge-offs were $617,000 in 1997 compared to $111,000 in
1996. The increase in charged-off loans in 1997 compared to 1996 is related to
an identified group of loans, which were originated by
30
<PAGE>
a previously employed member of management. Such loans did not meet Tri-
County's established underwriting guidelines. Management has identified these
loans and either appropriately charged-off or reserved for any potential
losses related to these loans. The allowance for loan losses totaled $642,000,
or 2.3%, of gross loans at December 31, 1997.
Other Income
Other income remained stable, increasing slightly from $337,000 in 1996 to
$339,000 in 1997. Tri-County's service charges on deposit accounts increased
$14,000, or 5.6%, in 1997 compared to 1996. This increase was offset by a
decrease in other miscellaneous income in 1997 compared to 1996.
Other Expense
Other expense decreased $50,000, or 3.8%, in 1997 compared to 1996. The
decrease in other expense is primarily attributable to a decrease of $19,000,
or 10.8%, in furniture and equipment expense related to lower software
maintenance and depreciation expense in 1997 compared to 1996. Also
contributing to the decrease in other expense was an $18,000 decrease in other
operating expenses related primarily to lower printing and stationery supplies
in 1997 compared to 1996.
Income Tax Expense
Tri-County recognized an income tax benefit of $47,000 in 1997 versus income
tax expense of $130,000 in 1996. The income tax benefit recognized in 1997 was
due to significant recording of provision for loan losses which created a net
loss before taxes.
FINANCIAL CONDITION
Following are key financial and operating ratios for Tri-County for all
periods reported:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
--------------- -----------------
3/31/98 3/31/97 12/31/97 12/31/96
------- ------- -------- --------
<S> <C> <C> <C> <C>
Return on average assets................ 0.66% -0.53% -0.05% 0.62%
Return on average equity................ 9.42% -7.41% -0.70% 8.53%
Average equity to average assets........ 7.04% 7.12% 7.18% 7.27%
Dividend payout ratio................... 0.00% 0.00% 0.00% 0.00%
</TABLE>
Net loans decreased from $28.6 million a December 31, 1996 to $27.4 million
at December 31, 1997. This decrease in loan balances is a result of Tri-County
implementing more stringent underwriting guidelines in 1997. Total deposits
remained relatively stable increasing from $39.8 million at December 31, 1996
to $40.0 million at December 31, 1997. The resulting loan to deposit ratios of
71.9% and 68.5% as of December 31, 1996 and December 31, 1997 decreased as a
result of the implementation of the more stringent underwriting guidelines.
Liquidity and Capital Resources
Liquidity risk is managed by Tri-County through the composition of its
assets and liabilities in an effort to efficiently meet the borrowing needs
and withdrawal requirements of its customers.
Cash and cash equivalents include cash due from banks and Federal funds
sold. The primary sources of Tri-County's liquidity are cash and cash
equivalents and investment securities with short-term maturities. Tri-County
believes its process of asset/liability management allows adequate reaction
time for trends in the marketplace as they occur, minimizing the negative
impact of such trends on the net interest margin.
As of December 31, 1997, Tri-County had cash and cash equivalents of
approximately $1.6 million, interest bearing deposits of $2.1 million and
investment securities maturing in less than one year of $4.3 million. These
amounts represent approximately 25.7% of Tri-County's total assets at December
31, 1997 and provide Tri-County with sufficient resources to handle unforeseen
deposit outflows and loan requirements.
31
<PAGE>
Tri-County's cash and cash equivalents increased approximately $84,000 for
the year ended December 31, 1997. Net cash provided by operating activities
aggregated $491,000. Net cash used in investing activities for the year was
$754,000, primarily as the result of $2.2 million of interest bearing deposits
in other financial institutions, net of maturities of approximately $1.1
million partially offset by an increase in net loans of $427,000. Net cash
provided by financing activities approximated $347,000 for the year as a
result of a net increase in federal funds purchased of $200,000 and an
increase in net deposit balances of $168,000, partially offset by $95,000 in
purchases of treasury stock.
Stockholders' equity represented 6.7% of total assets at December 31, 1997.
Risk-based capital and leverage ratios of the subsidiary bank at December 31,
1997 exceeded levels considered necessary to be classified as an "adequately
capitalized" institution by regulatory banking authorities.
Effects of Economic Conditions
Tri-County's consolidated financial statements 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 consideration for changes in the relative purchasing power of
money over time due to inflation.
The primary impact of inflation on the operations of Tri-County is reflected
in increased operating costs. Unlike most industrial companies, virtually all
of the assets and liabilities of a financial institution are monetary in
nature. As a result, changes in interest rates have a more significant impact
on the performance of a financial institution than do changes in prices.
Interest rate changes do not necessarily move in the same direction or have
the same magnitude as changes in the prices of goods and services.
The local economies of Washington and Cloud counties are heavily dependent
on agriculture and related business.
LOAN PORTFOLIO--TYPES OF LOANS
The following table presents the amount of loans outstanding at the dates
indicated, according to loan category (dollars in thousands).
<TABLE>
<CAPTION>
% OF % OF
TOTAL TOTAL
12/31/97 LOANS 12/31/96 LOANS
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Agricultural................................ 9,802 35% 9,416 32%
Real estate--mortgage....................... 8,940 32% 9,853 34%
Commercial.................................. 6,345 23% 6,635 23%
Consumer.................................... 2,863 10% 3,018 10%
Other....................................... 96 0% 168 1%
------ ---- ------ ----
28,046 100% 29,090 100%
====== ==== ====== ====
</TABLE>
Agricultural and Commercial
Agricultural and commercial loans are comprised mainly of loans to customers
in the Washington and Cloud County trade areas and are dependent, to a large
extent, on the agricultural sector. Consistent with management's emphasis on
relationship banking, most borrowing customers also maintain deposit accounts
and utilize other banking services.
Real Estate--Mortgage
This category of the loan portfolio consists of residential and farmland
loans for properties located in Washington County, Kansas and Cloud County,
Kansas. These loans aggregated approximately $8.9 million and $9.9 million at
December 31, 1997 and 1996, respectively.
32
<PAGE>
Consumer
The consumer loan portfolio consists of both secured and unsecured loans to
individuals for various personal reasons such as automobile financing, home
improvements, educational and recreational purposes.
ALLOWANCE FOR LOAN LOSSES
Provisions for losses on loans receivable are based upon management's
estimate of the amount required to maintain an adequate allowance for losses,
relative to the risk in the loan portfolio. This estimate is based on reviews
of the loan portfolio, including assessment of the estimated net realizable
value of the related underlying collateral, and upon consideration of past
loss experience, current economic conditions and such other factors that, in
the opinion of management, deserve current recognition. Amounts are charged
off as soon as probability of loss is established, taking into consideration
such factors as the borrower's financial condition, underlying collateral and
guarantees. Loans are also subject to periodic examination by regulatory
agencies. Such agencies may require charge-offs or additions to the allowance
based upon their judgments about information available at the time of their
examination. The following table presents the allowance for loan losses at the
dates indicated (dollars in thousands):
<TABLE>
<CAPTION>
3/31/98 12/31/97 12/31/96
------- -------- --------
<S> <C> <C> <C>
Balance at beginning of period................ 642 500 328
Loans charged-off:
Agricultural.............................. -- -- (14)
Commercial................................ (76) (439) (81)
Real estate--mortgage..................... -- (123) (7)
Consumer.................................. (12) (80) (19)
Total charge-offs..................... (88) (642) (121)
Recoveries
Agricultural.............................. -- 14 --
Commercial................................ -- -- 4
Consumer.................................. 1 10 6
Other..................................... -- 1 --
----- ------ -----
Total recoveries...................... 1 25 10
Net charge-offs............................... (87) (617) (111)
Provision for loan losses..................... 16 759 283
----- ------ -----
Balance at end of period.............. 571 642 500
===== ====== =====
Ratio of net charge-offs during the period to
average loans outstanding during the period.. (0.33)% (2.26)% (0.45)%
===== ====== =====
</TABLE>
As of December 31, 1997 and 1996, the allowance for loan losses was
allocated to Tri-County's loan categories as follows (dollars in thousands):
<TABLE>
<CAPTION>
12/31/97 12/31/96
----------------------- -----------------------
PERCENT OF TOTAL PERCENT OF TOTAL
LOANS IN EACH LOANS IN EACH
AMOUNT CATEGORY TO AMOUNT CATEGORY TO
------ ---------------- ------ ----------------
<S> <C> <C> <C> <C>
Agricultural.............. 101 35% 125 32%
Commercial................ 339 23% 217 23%
Real estate--mortgage..... 150 32% 115 34%
Consumer.................. 52 10% 42 10%
Other..................... -- 0% 1 1%
--- ---- --- ----
642 100% 500 100%
=== ==== === ====
</TABLE>
33
<PAGE>
NON-PERFORMING LOANS
The following table presents the amount of non-performing loans outstanding
at the dates indicated, by category (dollars in thousands):
<TABLE>
<CAPTION>
3/31/98 12/31/97 12/31/96
------- -------- --------
<S> <C> <C> <C>
Non-accrual loans............................... 935 843 208
Loans 90 days past due and still accruing....... 4 110 63
Restructured loans.............................. -- -- --
--- --- ---
Total non-performing loans.................. 939 953 271
=== === ===
</TABLE>
If non-accrual loans had been current in accordance with their original
terms and had been outstanding throughout 1997, Tri-County would have
recognized an additional $113,000 of interest income on these loans. No
interest income was included in net income from these loans in 1997.
Management reviews Tri-County's loan portfolio on a continuous basis for
problem loans. During the ordinary course of business, management becomes
aware of borrowers that may not be able to meet contractual requirements of
loan agreements. Such loans are placed under close supervision, with
consideration given to placing the loan on a non-accrual status. Management
then determines the need for additions to the allowance for loan loss, or, if
appropriate, partial or full charge-off of the loan. Depending upon the
circumstances, certain of these loans are from time to time renegotiated.
Those loans on which management does not expect to collect interest in the
normal course of business, or which are 90 days or more past due as to
principal or interest, are placed on nonaccrual status. After a loan is placed
on nonaccrual status, any interest previously accrued but not yet collected is
reversed against current income. Interest is included in income subsequent to
the date the loan is placed on nonaccrual status on a cash basis so long as
management is satisfied there is no impairment of the book value of the loan.
The loan is returned to accrual status only when the borrower has brought all
past due principal and interest payments current, and in the opinion of
management, the borrower has demonstrated the ability to make future payments
of principal and interest as scheduled.
MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES AS OF
DECEMBER 31, 1997
The following table sets forth the scheduled maturities of the loan
portfolio as of December 31, 1997 (in thousands):
<TABLE>
<CAPTION>
ONE YEAR OR LESS ONE TO FIVE YEARS OVER FIVE YEARS TOTAL
---------------- ----------------- --------------- ------
<S> <C> <C> <C> <C>
Agricultural............ 6,136 2,564 1,102 9,802
Commercial.............. 1,715 1,660 2,970 6,345
Real estate--mortgage... 92 848 8,000 8,940
Consumer................ 709 2,048 106 2,863
Other................... 96 -- -- 96
----- ----- ------ ------
Total loans......... 8,748 7,120 12,178 28,046
===== ===== ====== ======
</TABLE>
As of December 31, 1997, loans repricing after one year include
approximately $4.1 million in fixed rate loans and $15.2 million in floating
or adjustable rate loans.
Interest Rate Risk
Asset and liability management encompasses both interest rate risk and
liquidity management. Tri-County's net interest margin can be vulnerable to
wide fluctuations arising from a change in the general level of interest rates
which may affect the yield on interest earning assets differently than the
cost of the interest bearing liabilities. Tri-County monitors its assets and
liability mix in an effort to maintain a consistent earnings performance
through control of interest rate risk.
34
<PAGE>
Below is a "static gap" schedule for Tri-County as of December 31, 1997 (in
thousands). This is just one of several tools which may be used to measure and
manage interest rate sensitivity. Earning assets and interest bearing
liabilities are presented below within selected time intervals based on their
repricing and maturity characteristics. In this view, the sensitivity position
is perfectly matched when an equal amount of assets and liabilities reprice
during any given period. Excess assets or liabilities repricing in a given
time period result in the "Interest Sensitivity Gap" shown at the bottom of
the schedule. A positive gap indicates more assets than liabilities will
reprice in that time period, while a negative gap indicates more liabilities
than assets will reprice.
REPRICING AND INTEREST RATE SENSITIVITY AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
0-3 4-12 1-5 OVER 5
MONTHS MONTHS YEARS YEARS TOTAL
-------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Interest Earning Assets:
Loans.................................. $ 7,799 9,712 9,073 1,462 28,046
Investment securities--taxable......... 1,089 3,248 5,598 894 10,829
Investment securities--nontaxable...... -- 25 235 -- 260
Interest-bearing deposits in other
other financial institutions.......... 589 1,560 -- -- 2,149
-------- ------ ------ ----- ------
Total interest earning assets........ 9,477 14,545 14,906 2,356 41,284
-------- ------ ------ ----- ------
Interest Bearing Liabilities:
Interest bearing demand and savings.... 11,976 -- -- -- 11,976
Time & CD's < $100,000................. 5,622 9,516 5,227 -- 20,365
Time & CD's > $100,000................. 1,481 2,851 833 -- 5,165
Federal funds purchased................ 525 -- -- -- 525
Borrowed funds......................... -- 114 80 -- 194
-------- ------ ------ ----- ------
Total interest bearing liabilities... 19,604 12,481 6,140 -- 38,225
-------- ------ ------ ----- ------
Interest sensitivity GAP................. $(10,127) 2,064 8,766 2,356 3,059
======== ====== ====== ===== ======
</TABLE>
The schedule indicates Tri-County is liability sensitive in the 0-3 month
period and is asset sensitive for all other periods. This means, that during
the 0-3 month period, interest bearing liabilities would be repricing faster
than earning assets, thereby improving net interest income when rates are
declining and reducing net interest income when rates are rising. While the
"static gap" is a widely used measure of interest sensitivity, it is not, in
management's opinion, the only indicator of Tri-County's sensitivity position.
The following table summarizes at December 31, 1997, Tri-County's
certificates of deposits of $100,000 or more by time remaining until maturity.
<TABLE>
<CAPTION>
CERTIFICATES OF DEPOSIT
$100,000 OR GREATER
-----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Maturity Period:
Less than three months.......................... $1,481
Over three months through six months............ 2,169
Over six months through twelve months........... 682
Over twelve months.............................. 833
------
Total CD's > $100,000......................... $5,165
======
</TABLE>
Tri-County had no other time deposits in excess of $100,000.
35
<PAGE>
ACCOUNTING AND FINANCIAL REPORTING
The Financial and Accounting Standards Board (FASB) issued SFAS No. 130,
Reporting Comprehensive Income in June 1997. SFAS No. 130 requires classifying
items of other comprehensive income by their nature in the financial
statements and displaying the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in capital in the
equity section of the statement of stockholders' equity. SFAS No. 130 is
effective for fiscal years beginning after December 31, 1997. The adoption of
the standard is not expected to have a significant impact on the financial
statements of Tri-County.
LEGAL OPINION
The legality of the Company Common Stock offered hereby will be passed upon
by Blackwell Sanders Peper Martin LLP.
EXPERTS
INDEPENDENT PUBLIC ACCOUNTANTS FOR GOLD BANC CORPORATION, INC.
The consolidated financial statements of the Company as of December 31, 1997
and 1996 and for each of the years in the 3-year period ended December 31,
1997 incorporated by reference in the Annual Report on Form 10-K, which are
incorporated by reference in this Registration Statement, have been
incorporated herein in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, and upon the authority of said firm
as experts in auditing and accounting.
INDEPENDENT PUBLIC ACCOUNTANTS FOR TRI-COUNTY BANCSHARES, INC.
The consolidated financial statements of Tri-County as of and for the year
ended December 31, 1997, have been included herein in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, and upon
the authority of said firm as experts in auditing and accounting.
STOCKHOLDER PROPOSALS
If the Merger is consummated, stockholders of Tri-County will become
stockholders of the Company at the Effective Time. The Company stockholders
may submit to the Company proposals for formal consideration at the 1999
annual meeting of the Company's stockholders and inclusion in the Company's
proxy statement for such meetings. All such proposals to be considered for
inclusion in the Company's proxy statement for the 1999 annual meeting must be
received in writing by the Corporate Secretary at Gold Banc Corporation, Inc.
by November 25, 1998.
36
<PAGE>
INDEX TO FINANCIAL STATEMENTS OF
TRI-COUNTY BANCSHARES, INC. & SUBSIDIARY
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Audited Consolidated Financial Statements, December 31, 1997 and 1996...... F-2
Unaudited Consolidated Financial Statements, March 31, 1998 and 1997....... F-15
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Tri-County Bancshares and Subsidiary:
We have audited the accompanying consolidated balance sheet of Tri-County
Bancshares and subsidiary as of December 31, 1997 and the related consolidated
statement of earnings, stockholders' equity and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audit provides 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 Tri-County
Bancshares and subsidiary as of December 31, 1997 and the results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
June 5, 1998
F-2
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS 1997 1996
------ ------- -----------
(UNAUDITED)
<S> <C> <C>
Cash and due from banks................................... $ 1,612 1,528
Interest-bearing deposits at other institutions........... 2,149 1,073
Investment securities (note 2)
Held-to-maturity........................................ 9,363 9,972
Available-for-sale...................................... 1,726 950
------- ------
Total investment securities........................... 11,089 10,922
------- ------
Loans, net (note 3)....................................... 27,404 28,590
Land, buildings and equipment, net (note 4)............... 635 724
Accrued interest, deferred taxes and other assets (note
7)....................................................... 838 696
------- ------
Total assets.......................................... $43,727 43,533
======= ======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Deposits (note 5)......................................... $39,986 39,818
Federal funds purchased................................... 525 325
Borrowed funds (note 6)................................... 194 120
Accrued interest and other liabilities.................... 110 242
------- ------
Total liabilities..................................... 40,815 40,505
------- ------
Stockholders' equity (note 9):
Common stock, $100 par value; 50,000 shares authorized;
12,772 shares issued; 12,377 and 12,722 shares
outstanding, respectively.............................. 1,277 1,277
Capital surplus......................................... 338 338
Retained earnings....................................... 1,392 1,414
Unrealized gain (loss) on available-for-sale securities,
net of tax............................................. -- (1)
Treasury stock, 395 shares at December 31, 1997, at
cost................................................... (95) --
------- ------
Total stockholders' equity............................ 2,912 3,028
Commitments and contingent liabilities (note 10)
------- ------
Total liabilities and stockholders' equity............ $43,727 43,533
======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1997 AND 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1997 1996
------ -----------
(UNAUDITED)
<S> <C> <C>
Interest and fee income:
Loans..................................................... $2,611 2,537
Investment securities..................................... 696 705
Other..................................................... 127 105
------ -----
Total interest and fee income........................... 3,434 3,347
------ -----
Interest expense:
Deposits.................................................. 1,816 1,693
Other..................................................... 14 19
------ -----
Total interest expense.................................. 1,830 1,712
------ -----
Net interest margin......................................... 1,604 1,635
Provision for loan losses (note 3).......................... 759 283
------ -----
Net interest income after provision for loan losses..... 845 1,352
------ -----
Other income:
Service charges on deposit accounts....................... 266 252
Other..................................................... 73 85
------ -----
339 337
------ -----
Other expenses:
Salaries and employee benefits............................ 714 720
Furniture and equipment................................... 151 170
Occupancy expense......................................... 42 49
Professional services..................................... 49 47
Advertising............................................... 41 53
Other..................................................... 256 264
------ -----
1,253 1,303
------ -----
Earnings (loss) before income taxes......................... (69) 386
Income tax (benefit) expense (note 7)....................... (47) 130
------ -----
Net earnings (loss)......................................... $ (22) 256
====== =====
Basic and diluted net earnings (loss) per share............. $(1.71) 20.07
====== =====
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
GAIN ON
AVAILABLE-
FOR-SALE
COMMON CAPITAL RETAINED SECURITIES, TREASURY
STOCK SURPLUS EARNINGS NET OF TAX STOCK TOTAL
------ ------- -------- ----------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995
(unaudited)............... $1,277 338 1,158 -- -- 2,773
Unrealized loss on
available-for-sale
securities, net of tax
(unaudited)............... -- -- -- (1) -- (1)
Net earnings (unaudited)... -- -- 256 -- -- 256
------ --- ----- --- --- -----
Balance at December 31,
1996
(unaudited)............... 1,277 338 1,414 (1) -- 3,028
Unrealized gain on
available-for-sale
securities, net of tax.... -- -- -- 1 -- 1
Purchase of 395 shares of
common
stock at cost............. -- -- -- -- (95) (95)
Net loss................... -- -- (22) -- -- (22)
------ --- ----- --- --- -----
Balance at December 31,
1997...................... $1,277 338 1,392 -- (95) 2,912
====== === ===== === === =====
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
------ -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss)...................................... $ (22) 256
Adjustments to reconcile net earnings (loss) to net cash
from operating activities:
Provision for loan losses.............................. 759 283
Depreciation and amortization.......................... 81 91
Accretion of discounts on investment securities,
net of amortization of premiums....................... (72) (61)
Increase in other assets............................... (124) 2
Decrease (increase) in other liabilities............... (131) 74
------ ------
Net cash provided by operating activities............ 491 645
------ ------
Cash flows from investing activities:
Net increase (decrease) in loans......................... 427 (6,305)
Purchases of available-for-sale securities............... (1,936) (1,274)
Purchases of held-to-maturity securities................. (1,909) (3,296)
Proceeds from maturities of available-for-sale
securities.............................................. 1,200 2,735
Proceeds from maturities of held-to-maturity securities.. 2,550 1,986
Purchases of interest-bearing deposits................... (2,163) (1,194)
Proceeds from maturities of certificates of deposit...... 1,087 1,364
Purchases of land, buildings and equipment, net.......... (10) (188)
------ ------
Net cash used in investing activities................ (754) (6,172)
------ ------
Cash flows from financing activities:
Net increase in deposits................................. 168 4,464
Net increase in federal funds purchased.................. 200 325
Proceeds from borrowed funds............................. 94 --
Repayment of borrowed funds.............................. (20) (60)
Purchase of treasury stock............................... (95) --
------ ------
Net cash provided by financing activities............ 347 4,729
------ ------
Net increase (decrease) in cash and cash equivalents....... 84 (798)
Cash and cash equivalents at beginning of year............. 1,528 2,326
------ ------
Cash and cash equivalents at end of year................... $1,612 1,528
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
(INFORMATION AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The consolidated financial statements include the accounts of Tri-County
Bancshares, Inc. and its subsidiary, Tri-County Bank (the Bank), collectively
referred to as the Company. All significant intercompany transactions have
been eliminated.
(b) Investment Securities
The Company classifies investment securities as either available-for-sale or
held-to-maturity. Held-to-maturity securities are those which the Company has
the positive intent and ability to hold to maturity. All other securities are
classified as available-for-sale.
Held-to-maturity securities are recorded at amortized cost. Available-for-
sale securities are recorded at fair value. Unrealized holding gains and
losses, net of related tax effect, on available-for-sale securities are
excluded from earnings and reported as a separate component of stockholders'
equity until realized.
A decline in the fair value of any security below cost that is deemed other
than temporary is charged to income resulting in the establishment of a new
cost basis for the security.
Premiums and discounts are amortized or accreted over the life of the
related security as an adjustment to interest income. Interest income is
recognized when earned. Realized gains and losses are included in income using
the specific identification method for determining the basis of the securities
sold.
(c) Land, Buildings and Equipment
Land, buildings and equipment are stated at cost less accumulated
depreciation. Depreciation is computed over the estimated useful life of the
respective assets, ranging from three to thirty-nine years, utilizing
primarily the straight-line method.
Costs of maintenance and repairs are charged to expense as incurred. Major
betterments are considered individually and are expensed or capitalized as the
facts dictate.
(d) Recognition of Income on Loans
Interest income on loans is accrued based on the principal amount
outstanding. The accrual of interest on impaired loans is discontinued when,
in management's opinion, the interest will not be collectible in the ordinary
course of business. When interest accrual is discontinued, all unpaid accrued
interest is reversed.
(e) Provision for Loan Losses
Provisions for losses on loans receivable are based upon management's
estimate of the amount required to maintain an adequate allowance for losses,
relative to the risk in the loan portfolio. This estimate is based on reviews
of the loan portfolio, including assessment of the estimated net realizable
value of the related underlying collateral, and upon consideration of past
loss experience, current economic conditions and such other factors which, in
the opinion of management, deserve current recognition. Amounts are charged
off as soon as probability of loss is established, taking into consideration
such factors as the borrower's financial condition, underlying collateral and
guarantees. Loans are also subject to periodic examination by regulatory
agencies. Such agencies may require charge-offs or additions to the allowance
based upon their judgments about information available at the time of their
examination.
F-7
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996 IS UNAUDITED)
(f) Income Taxes
The Company and its subsidiary file a consolidated federal income tax
return. The Company records deferred tax assets and liabilities for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
income tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates applied to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
(g) Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
(h) Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash flows, cash and cash
equivalents include cash-on-hand and due from banks.
Supplemental information for the consolidated statements of cash flows for
1997 and 1996 was as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
------ -----
<S> <C> <C>
Interest and fees received................................... $3,416 4,884
====== =====
Interest paid................................................ $1,830 2,121
====== =====
Income taxes paid, net of refunds received................... $ 186 76
====== =====
</TABLE>
(i) Earnings Per Common Share
Earnings per share is computed in accordance with SFAS No. 128, Earnings Per
Share. Basic earnings per share is based upon the weighted average number of
common shares outstanding during the periods presented. Weighted average
common shares outstanding were 12,751 and 12,772 for 1997 and 1996,
respectively. During 1997 and 1996, there were no dilutive securities
outstanding.
(j) Future Accounting Pronouncements
The Financial Accounting Standards Board (FASB) issued SFAS No. 130,
Reporting Comprehensive Income, and SFAS No. 131, Disclosures About Segments
of an Enterprise and Related Information, in June 1997. SFAS No. 130 will
require the Company to classify items of other comprehensive income by their
nature in the financial statements and display the accumulated balance of
other comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of the statement of stockholders'
equity. SFAS No. 131 requires that public enterprises report financial and
descriptive information about their reportable operating segments. Operating
segments are components of an enterprise about which separate financial
information is available that is evaluated regularly by management. Both SFAS
No. 130 and SFAS No. 131 are effective for fiscal years beginning after
December 15, 1997. The adoption of the standards is not expected to have a
significant impact on the financial statements of the Company.
F-8
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996 IS UNAUDITED)
(2) INVESTMENT SECURITIES
The amortized cost, gross unrealized gains (losses) and fair values of
available-for-sale and held-to-maturity securities by type at December 31,
1997 and 1996 follow (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -----
<S> <C> <C> <C> <C>
1997
Available-for-sale:
United States government and
federal agency obligations.... $1,664 1 (1) 1,664
Other.......................... 62 -- -- 62
------ --- --- -----
$1,726 1 (1) 1,726
====== === === =====
Held-to-maturity:
United States government and
federal agency obligations.... $8,149 32 (12) 8,169
State and local obligations.... 260 -- (2) 258
Mortgage-backed securities..... 954 2 (31) 925
------ --- --- -----
$9,363 34 (45) 9,352
====== === === =====
1996
Available-for-sale:
United States government and
federal agency obligations.... $ 889 1 (2) 888
Other.......................... 62 -- -- 62
------ --- --- -----
$ 951 1 (2) 950
====== === === =====
Held-to-maturity:
United States government and
federal agency obligations.... $8,509 44 (31) 8,522
State and local obligations.... 281 -- (6) 275
Mortgage-backed securities..... 1,182 26 (16) 1,192
------ --- --- -----
$9,972 70 (53) 9,989
====== === === =====
</TABLE>
The amortized cost and fair value of United States government and federal
agency obligations at December 31, 1997 and 1996 by contractual maturity are
shown below (in thousands):
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Available-for-sale:
Within one year......................... $ 986 986 589 588
After one but within five years......... 678 678 300 300
Other................................... 62 62 62 62
------- ----- ----- -----
$ 1,726 1,726 951 950
======= ===== ===== =====
Held-to-maturity:
Within one year......................... 3,254 3,489 2,316 2,322
After one but within five years......... 5,155 4,938 6,474 6,475
Mortgage-backed securities.............. 954 925 1,182 1,192
------- ----- ----- -----
$ 9,363 9,352 9,972 9,989
======= ===== ===== =====
</TABLE>
F-9
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996 IS UNAUDITED)
The Company's portfolio of mortgage-backed securities consists primarily of
fixed rate mortgage pools.
There were no sales of securities in 1997 or 1996.
Investment securities and money market obligations with a fair value of
approximately $5,798,000 and $4,388,000 were pledged to secure public
deposits, federal funds purchased and borrowed funds at December 31, 1997 and
1996, respectively.
(3) LOANS AND ALLOWANCES FOR LOAN LOSSES
The Company is a community banking institution operating in Concordia, Linn
and Washington, Kansas. The Bank's primary market area is Washington and Cloud
counties. Accordingly, substantially all of the loans made by the Company are
within its primary market area.
The Company evaluates each customer's creditworthiness on an individual
basis. The amount of collateral obtained, if deemed necessary, by the Company
upon extension of credit is based on management's credit evaluation of the
counterparty. Collateral held varies but may include accounts receivable,
inventory, property, plant, equipment and income-producing commercial
properties.
Loans consisted of the following at December 31, 1997 and 1996 (in
thousands):
<TABLE>
<CAPTION>
1997 1996
------- ------
<S> <C> <C>
Agricultural............................................... $ 9,802 9,416
Real estate--mortgage...................................... 8,940 9,853
Commercial................................................. 6,345 6,635
Consumer................................................... 2,863 3,018
Other...................................................... 96 168
------- ------
28,046 29,090
Less allowances for loan losses............................ 642 500
------- ------
Total loans............................................ $27,404 28,590
======= ======
</TABLE>
Loans made to executive officers and directors of the Company approximated
$619,000 and $588,000 at December 31, 1997 and 1996, respectively. Such loans
were made in the ordinary course of business at market rates.
The activity in the allowance for loan losses is summarized as follows for
the years ended December 31, 1997 and 1996 (in thousands):
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Balance at beginning of year................................ $ 500 328
Provision for loan losses................................... 759 283
Charge-offs................................................. (642) (121)
Recoveries.................................................. 25 10
----- -----
Balance at end of year...................................... $ 642 500
===== =====
</TABLE>
Nonaccruing loans at December 31, 1997 and 1996 aggregated approximately
$843,000 and $208,000, respectively. The interest income not recognized on
these loans was approximately $113,000 and $23,000 in 1997 and 1996,
respectively. Other impaired loans are considered insignificant at December
31, 1997 and 1996.
F-10
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996 IS UNAUDITED)
(4) LAND, BUILDINGS AND EQUIPMENT
A summary of the Company's land, building and equipment at December 31, 1997
and 1996 is as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Land........................................................ $ 40 40
Buildings and improvements.................................. 642 642
Furniture, fixtures and equipment........................... 657 655
Automobiles................................................. 36 36
------ ------
1,375 1,373
Less accumulated depreciation............................... 740 649
------ ------
Total................................................... $ 635 724
====== ======
</TABLE>
Depreciation of buildings and equipment charged to expense was approximately
$99,000 and $108,000 for 1997 and 1996, respectively, and is included in
occupancy and furniture and equipment expense in the consolidated statements
of earnings.
(5) DEPOSITS
Deposits consist of the following at December 31, 1997 and 1996 (in
thousands):
<TABLE>
<CAPTION>
1997 1996
------- ------
<S> <C> <C>
Noninterest bearing demand................................. $ 2,480 2,153
Savings and interest-bearing demand........................ 11,976 12,243
Time, $100,000 and greater................................. 5,165 3,992
Time, other................................................ 20,365 21,430
------- ------
$39,986 39,818
======= ======
</TABLE>
Maturities of time deposits are as follows at December 31, 1997 (in
thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- -------
<S> <C>
1998............................. $19,469
1999............................. 3,024
2000............................. 2,765
2001............................. 138
2002............................. 134
-------
$25,530
=======
</TABLE>
(6) BORROWED FUNDS
Borrowed funds at December 31, 1997 and 1996 consisted of notes payable to a
bank aggregating $194,000 and $120,000, respectively. Such notes bear interest
at 1/2% above prime (9% at December 31, 1997) with principal balances of
$114,000 and $80,000 maturing in 1998 and 1999, respectively.
F-11
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996 IS UNAUDITED)
(7) INCOME TAXES
Income tax expense (benefit) from operations for the years ended December
31, 1997 and 1996 is as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Current........................................................ $ 47 98
Deferred....................................................... (94) 32
---- ---
Total...................................................... $(47) 130
==== ===
</TABLE>
Based on the statutory federal income tax rate of 34%, for the years ended
December 31, 1997 and 1996, actual income taxes differ from expected income
taxes as a result of the following (in thousands):
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Expected federal income tax expense (benefit)................. $(23) 131
Nontaxable interest income, net............................... (5) (11)
Other, net.................................................... (19) 10
---- ---
Total income tax expense (benefit)........................ $(47) 130
==== ===
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at December 31,
1997 and 1996 are presented below (in thousands):
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Allowance for loan losses....................................... $235 144
State tax benefit............................................... 21 11
---- ---
Total deferred tax assets................................... 256 155
---- ---
Depreciation.................................................... 30 30
Market discount on investment securities........................ 36 29
---- ---
Total deferred tax liabilities.............................. 66 59
---- ---
Net deferred tax assets included in other assets................ $190 96
==== ===
</TABLE>
No valuation allowance for deferred tax assets was necessary at December 31,
1997 and 1996.
(8) EMPLOYEE BENEFIT PLANS
The Company has a 401(k) savings plan covering substantially all of their
employees. The Company matches 50% of the employee's contributions not to
exceed 5% of their total compensation. Contributions to the 401(k) plan
charged to salaries and employee benefits amounted to $11,000 in both 1997 and
1996.
(9) REGULATORY CAPITAL REQUIREMENTS
Current regulatory capital regulations require financial institutions to
meet three different regulatory capital requirements. Institutions are
required to have minimum leverage capital equal to 4% of total average assets,
minimum Tier 1 risk-based capital equal to 4% of total risk-weighted assets
and total qualifying capital equal to
F-12
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996 IS UNAUDITED)
8% of total risk-weighted assets in order to be considered "adequately
capitalized." The following is a comparison of the Bank's regulatory capital
to minimum capital requirements at December 31, 1997 (in thousands):
<TABLE>
<CAPTION>
REGULATORY CAPITAL
------------------------------
TIER 1 TOTAL
LEVERAGE RISK-BASED RISK-BASED
CAPITAL CAPITAL CAPITAL
-------- ---------- ----------
<S> <C> <C> <C>
Bank capital.............................. $3,112 3,112 3,488
Minimum capital requirements.............. 1,744 1,194 2,388
------ ----- -----
Bank capital in excess of minimum capital
requirements............................. $1,368 1,918 1,100
------ ----- -----
Minimum capital requirement--percent...... 4.00% 4.00 8.00
------ ----- -----
Bank capital.............................. 7.14% 10.42 11.68
====== ===== =====
</TABLE>
(10) COMMITMENTS
The Company has outstanding commitments to provide loans to customers and
has also issued letters of credit. Loan commitments generally have fixed
expiration dates or other termination clauses and may require payment of a
fee. Since many of the commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements. Letters of credit are conditional commitments issued by the
Company to guarantee the performance of a customer to a third party. The
credit risk involved in issuing letters of credit is essentially the same as
is involved in extending loan facilities to customers. The Company has
unfunded loan commitments and outstanding letters of credit amounting to
$3,589,000 and $4,752,000 at December 31, 1997 and 1996, respectively.
(11) PARENT COMPANY CONDENSED FINANCIAL STATEMENTS
Following is condensed financial information of the Company as of and for
the years ended December 31, 1997 and 1996 (amounts in thousands):
CONDENSED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
------ ------ -----------
(UNAUDITED)
<S> <C> <C>
Cash......................................................... $ 3 10
Investment in subsidiary..................................... 3,112 3,171
Other........................................................ 4 --
------ -----
Total assets............................................. $3,119 3,181
====== =====
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Borrowed funds............................................... $ 194 120
Other........................................................ 13 33
Stockholders' equity......................................... 2,912 3,028
------ -----
Total liabilities and stockholders' equity............... $3,119 3,181
====== =====
</TABLE>
F-13
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996 IS UNAUDITED)
CONDENSED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- -----------
(UNAUDITED)
<S> <C> <C>
Dividends from
subsidiary............. $ 32 69
Other expense, net...... (3) (1)
---- ---
Income before equity in
undistributed earnings
of subsidiary.......... 29 68
Increase (decrease) in
undistributed equity of
subsidiary............. (59) 181
---- ---
Earnings (loss) before
income taxes........... (30) 249
Income tax benefit...... 8 7
---- ---
Net earnings (loss)..... $(22) 256
==== ===
</TABLE>
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss)......................................... $(22) 256
(Increase) decrease in undistributed equity of subsidiary... 59 (180)
Other....................................................... (23) (15)
---- ----
Net cash provided by operating activities................. 14 61
---- ----
Cash flows from financing activities:
Purchase of treasury stock.................................. (95) --
Proceeds from note payable.................................. 94 --
Payment on note payable..................................... (20) (60)
---- ----
Net cash used in financing activities..................... (21) (60)
---- ----
Net increase (decrease) in cash............................... (7) 1
Cash at beginning of year..................................... 10 9
---- ----
Cash at end of year........................................... $ 3 10
==== ====
</TABLE>
(12) SUBSEQUENT EVENTS
On April 29, 1998, the Company announced a definitive merger agreement with
Gold Banc Corporation, Inc. for a combination cash and stock-for-stock/tax
free transaction valued at $4.4 million. Gold Banc Corporation had total
assets of $567 million, deposits of $455 million and loans of $368 million at
March 31, 1998. Closing of the merger is contingent upon receiving regulatory
and shareholder approval.
F-14
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND MARCH 31, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1998 1997
------ ----------- ------------
(UNAUDITED)
<S> <C> <C>
Cash and due from banks............................... $ 1,419 1,612
Federal funds sold.................................... 895 --
Interest-bearing deposits at other institutions....... 2,042 2,149
------- ------
Investment securities:
Held-to-maturity securities......................... 10,419 9,363
Available-for-sale securities....................... 1,534 1,726
------- ------
Total investment securities....................... 11,953 11,089
------- ------
Loans, net............................................ 26,030 27,404
Land, buildings and equipment, net.................... 614 635
Accrued interest, deferred taxes and other assets..... 722 838
------- ------
Total assets...................................... $43,675 43,727
======= ======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Liabilities:
Deposits............................................ $40,392 39,986
Federal funds purchased............................. -- 525
Borrowed funds...................................... 194 194
Accrued interest and other liabilities.............. 104 110
------- ------
Total liabilities................................. 40,690 40,815
------- ------
Stockholders' equity:
Common stock, $100 par value, 50,000 shares
authorized, 12,772 shares issued; 12,337 shares
outstanding........................................ 1,277 1,277
Additional paid-in capital.......................... 338 338
Retained earnings................................... 1,465 1,392
Treasury stock, 395 shares, at cost................. (95) (95)
------- ------
Total stockholders' equity........................ 2,985 2,912
------- ------
Total liabilities and stockholders' equity........ $43,675 43,727
======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-15
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1998 1997
--------- ---------
(UNAUDITED)
<S> <C> <C>
Interest and fee income:
Loans..................................................... $ 627 647
Investment securities..................................... 174 172
Other..................................................... 43 25
----- -----
Total interest and fee income........................... 844 844
----- -----
Interest expense:
Deposits.................................................. 451 446
Other..................................................... 5 3
----- -----
456 449
----- -----
Net interest income......................................... 388 395
Provision for loan losses................................... 16 249
----- -----
Net interest income after provision for loan losses..... 372 146
----- -----
Other income:
Service fees.............................................. 58 72
Other..................................................... 16 18
----- -----
74 90
----- -----
Other expense:
Salaries and employee benefits............................ 166 192
Furniture and equipment................................... 39 38
Net occupancy expense..................................... 10 11
Professional services..................................... 16 13
Advertising............................................... 9 10
Other..................................................... 75 71
----- -----
315 335
----- -----
Earnings (loss) before income taxes......................... 131 (99)
Income tax expense (benefit)................................ 57 (41)
----- -----
Net earnings (loss)......................................... $ 74 (58)
===== =====
Basic and dilluted net earnings (loss) per share............ $5.99 (4.58)
===== =====
</TABLE>
See accompanying notes to consolidated financial statements.
F-16
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1998 1997
--------- ---------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss)...................................... $ 74 (58)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Provisions for loan losses............................. 16 249
Accretion of discounts on investment securities' net of
amortization of premiums.............................. (17) (18)
Depreciation and amortization.......................... 18 20
Other changes:
Accrued interested, deferred taxes and other assets.. 121 32
Accrued interest and other liabilities............... (7) (93)
------- -----
Net cash provided by operating activities.......... 205 132
------- -----
Cash flows from investing activities:
Net decrease in loans.................................... 1,357 1,268
Purchases of available-for-sale securities............... (200) (434)
Purchases of held-to-maturity securities................. (1,930) (859)
Proceeds from maturities of available-for-sale
securities.............................................. 400 100
Proceeds from maturities of held-to-maturity security.... 882 636
Purchases of interest-bearing deposits................... (482) (497)
Proceeds from maturities of interest-bearing deposits.... 589 400
------- -----
Net cash provided by investing activities.......... 616 614
------- -----
Cash flows from financing activities:
Increase (decrease) in deposits.......................... 406 (75)
Decrease in federal funds purchased...................... (525) (325)
------- -----
Net cash used in financing activities.............. (119) (400)
------- -----
Increase in cash and cash equivalents...................... 702 346
Cash and cash equivalents, beginning of period............. 1,612 1,528
------- -----
Cash and cash equivalents, end of period................... $ 2,314 1,874
======= =====
</TABLE>
See accompanying notes to consolidated financial statements.
F-17
<PAGE>
TRI-COUNTY BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998 AND 1997
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Trio-County
Bancshares, Inc. and its subsidiary, Tri-County Bank, collectively referred to
as the Company. All significant intercompany transactions have been
eliminated.
The December 31, 1997 balance sheet has been derived from the audited
financial statements. The consolidated financial statements as of March 31,
1998 and for the three months ended March 31, 1998 and 1997 are unaudited but
include all adjustments (consisting only of normal recurring adjustments)
which the Company considers necessary for a fair presentation of financial
position and results of operations for those periods. The consolidated
statements of earnings for the three months ended March.
F-18
<PAGE>
ANNEX A
RESTATED AGREEMENT AND PLAN OF REORGANIZATION
This Restated Agreement and Plan of Reorganization (the "Agreement") dated
as of the 29th day of April, 1998, is made by and among GOLD BANC CORPORATION,
INC., a Kansas corporation ("Gold"), GOLD BANC ACQUISITION CORPORATION II,
INC., a Kansas corporation ("Sub") and TRI-COUNTY BANCSHARES, INC., a Kansas
corporation ("Company").
WITNESSETH:
WHEREAS, Gold, Company and Gold Banc Acquisition Corporation V, Inc.
previously entered into an Agreement and Plan of Reorganization and this
Restated Agreement supersedes such prior agreement; and
WHEREAS, the Boards of Directors of Gold, Sub and Company have approved and
deem it advisable and in the best interests of their respective companies and
shareholders that Gold and Company become affiliated through the merger of
Company with and into Sub in the manner hereinafter set forth (the "Merger");
and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereby agree as follows:
ARTICLE I
THE COMPANY MERGER
1.1 The Company Merger. Upon the terms and subject to the conditions of this
Agreement at the Effective Time (as hereinafter defined), Company shall be
merged with and into Sub and the separate existence and corporate organization
of Company shall thereupon cease and Sub and Company shall thereupon be a
single corporation. Sub shall be the surviving corporation in the Merger and
the separate corporate existence of Sub shall continue unaffected and
unimpaired by the Merger.
1.2 Effective Time of the Company Merger. On the Closing Date (as
hereinafter defined), the proper officers of Company and Sub shall execute and
acknowledge appropriate certificates of merger that shall be filed with the
Kansas Secretary of State on the first business day following the Closing
Date, all in accordance with the Kansas General Corporation Code (the "KGCC").
The Merger shall become effective on the Closing Date (the "Effective Time").
The closing shall be on a day (the "Closing Date") within forty-five (45) days
following the satisfaction or waiver, to the extent permitted hereunder, of
the conditions to the consummation of the Merger specified in Articles VII and
VIII of this Agreement at the offices of Gold, 11301 Nall Avenue, Leawood,
Kansas, which day shall be specified by notice from Gold to Company (such
notice to be at least five (5) days in advance of such Closing Date).
1.3 The Articles of Incorporation. The Articles of Incorporation and By-Laws
of Sub as in effect immediately prior to the Effective Time shall be and
remain the Articles of Incorporation and By-Laws of the surviving corporation
from and after the Effective Time until amended as provided by law and the
officers and directors of Sub shall continue as the officers and directors of
the surviving corporation from and after the Effective Time.
1.4 Effect of Company Merger. Subject to Kansas law, at the Effective Time
(a) Sub shall possess all assets and property of every description, and every
interest therein, wherever located, and the rights, privileges,
A-1
<PAGE>
immunities, powers, franchises, and authority, of a public as well as of a
private nature, of Company and all obligations belonging to or due each of
Company and Sub shall be vested in Sub without further act or deed; (b) title
to any real estate or any interest therein vested in Company shall not revert
or in any way be impaired by reason of the Merger; (c) all rights of creditors
and all liens on any property of the Company shall be preserved unimpaired;
and (d) Sub shall be liable for all the obligations of Company, and any claim
existing, or action or proceeding pending, by or against either of Company or
Sub, may be prosecuted to judgment with the right of appeal, as if the Merger
had not taken place.
1.5 Further Assurances. If at any time after the Effective Time, Sub shall
consider it advisable that any further conveyances, agreements, documents,
instruments or assurances of law or any other actions or things are necessary
or desirable to vest, perfect, confirm, or record in Sub the title to any
property, rights, privileges, powers, or franchises of the Company, the Board
of Directors and officers of Sub shall, and will be authorized to, execute and
deliver in the name and on behalf of Sub or otherwise, any and all proper
conveyances, agreements, documents, instruments, and assurances of law and do
all things necessary or proper to vest, perfect, or confirm title to such
property, rights, privileges, powers and franchises in Sub, and otherwise to
carry out the provisions of this Agreement.
ARTICLE II
PROVISIONS OF MERGER TRANSACTION
2.1 Effect of Merger on Sub Stock. Each share of common stock, $1.00 par
value per share, of Sub ("Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding at
the Effective Time, and shall be unaffected by the Company Merger.
2.2 Conversion of the Company Shares in the Company Merger. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
thereof:
(a) Except as set forth in Section 2.2(c) hereinafter, each outstanding
share of common stock, $100.00 par value per share of the Company,
including any and all shares which are held in the treasury of the Company
or held by the Company or any subsidiary of the Company other than as
trustee, fiduciary, nominee or some similar capacity ("Company Common
Stock") shall be canceled and retired and shall cease to exist from and
after the Effective Time, and in addition to Gold Common Stock as provided
hereinafter, immediately available funds shall be delivered in exchange
therefor as set forth in Section 2.2(b) and Section 2.2(c) hereinafter;
(b) Except as set forth in Section 2.2(c) hereinafter, each share of the
issued and outstanding Company Common Stock (the total of which shall be
12,377 shares at the Effective Time as provided hereinafter), shall be
converted into 17 shares of Gold Common Stock, as defined in Section 3.6
below, and the Gold Common Stock shall be delivered to a brokerage account
set up at Advest, Inc. to be set up for each shareholder of the Company;
the formula set forth in this Section 2.2(b) is effective after the
effective date of the 100% stock dividend referenced in Section 3.6
hereinafter;
(c) At the Effective Time, in addition to the conversion of Company
Common Stock into Gold Common Stock as provided in Section 2.2(b) above,
Sub shall pay to the shareholders of the Company a total of $1,732,780.00.
As a result, all of the shareholders of the Company will be entitled to
receive, as part of this transaction, 8.5 shares of Gold Common Stock and
One Hundred Forty Dollars ($140.00) (subject to possible adjustment as set
forth hereinafter) for each and every share of Company Common Stock owned
by the shareholder. The cash being paid by Sub hereunder and the Gold
Common Stock referenced hereinabove shall be the total consideration
delivered by Sub hereunder.
2.3 Exchange of Certificates. (a) Gold, on behalf of Sub, shall make
available to Exchange National Bank, which is hereby designated as exchange
agent (the "Exchange Agent"), at and after the Effective Time, such
A-2
<PAGE>
cash and number of shares of Gold Common Stock as shall be issuable to the
holders of Company Common Stock in accordance with Section 2.2 hereof. As soon
as practicable after the Closing Date, Gold on behalf of the Exchange Agent
shall mail to each holder of record of a certificate that immediately prior to
the Closing Date represented outstanding shares of Company Common Stock (i) a
form letter of transmittal and (ii) instructions for effecting the surrender
of certificates of Company Common Stock for exchange into cash and
certificates of Gold Common Stock.
(b) Notwithstanding any other provision herein, no fractional shares of Gold
Common Stock and no certificates or script therefor or other evidence of
ownership thereof will be issued. All fractional shares of Gold Common Stock
to which a holder of Company Common Stock would otherwise be entitled to under
Section 2.2 hereof shall be aggregated. If a fractional share results from
such aggregation, such shareholder shall be entitled, after the Effective Time
and upon the surrender of such shareholder's certificate or certificates
representing shares of Company Common Stock, to receive from the Exchange
Agent an amount in cash in lieu of such fractional share equal to the product
of such fraction and the Average Gold Price. Gold, on behalf of Sub, shall
make available to the Exchange Agent, as required from time to time, any cash
necessary for this purpose.
2.4 Closing of the Company Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of Company
Common Stock shall thereafter be made.
2.5 Dividends. No dividends or other distributions that are declared after
the Effective Time with respect to Gold Common Stock payable to holders of
record thereof after the Effective Time shall be paid to the Company
shareholders entitled to receive certificates representing Gold Common Stock
until such shareholders surrender their certificates. Upon such surrender,
there shall be paid to the shareholder in whose name the certificates
representing such Gold Common Stock shall be issued any dividends which shall
have become payable with respect to such Gold Common Stock between the
Effective Time and the time of such surrender, without interest. After such
surrender there shall also be paid to the shareholder in whose name the
certificates representing such Gold Common Stock shall be issued any dividend
on such Gold Common Stock that shall have (a) a record date subsequent to the
Effective Time and prior to such surrender and (b) a payment date after such
surrender, and such payment shall be made on such payment date. In no event
shall the shareholders entitled to receive such dividends be entitled to
receive interest on such dividends.
2.6 Shareholders' Approval. Company agrees to submit this Agreement and the
transactions contemplated hereby to its shareholders for approval to the
extent required and as provided by law and the Articles of Incorporation and
By-Laws of Company. A shareholders' meeting of Company shall be held and
Company shall use its reasonable best efforts to take all steps as shall be
required for said meeting to be held as soon as reasonably practicable after
the execution hereof. Company and its Board of Directors shall recommend that
the shareholders of Company approve this Agreement and the transactions
contemplated hereby and shall use their reasonable best efforts to secure such
approval.
2.7 Dissenting Shares. Notwithstanding anything to the contrary contained in
this Agreement, to the extent appraisal rights are available to the Company's
shareholders pursuant to the KGCC, any shares held by a person who objects to
the Merger, whose shares were not entitled to vote or were not voted in favor
of the Merger and who complies with all of the provisions of the KGCC
concerning the rights of such person to dissent from the Merger and to require
appraisal of such person's shares and who has not withdrawn such objection or
waived such rights prior to the Closing Date ("Company Dissenting Shares")
shall not be converted pursuant to Section 2.2 but shall become the right to
receive such consideration as may be determined to be due to the holder of
such Company Dissenting Shares pursuant to the KGCC, including, if applicable,
any costs determined to be payable by Bank to the holders of the Company
Dissenting Shares pursuant to an order of the district court in accordance
with the KGCC. Notwithstanding the foregoing, as set forth hereinafter, the
obligation of Gold to close on this transaction is contingent upon the total
required cash payments due Company's shareholders exercising dissenter's
rights totaling less than 2% of the total consideration being provided by Gold
to Company as consideration for this merger.
A-3
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GOLD AND SUB
Except as set forth on the Gold Disclosure Schedule attached hereto, Gold
and Sub, jointly and severally, hereby represent and warrant as follows:
3.1 Organization and Authority. (a) Gold is a corporation duly organized,
validly existing and in good standing under the laws of the State of Kansas
with the corporate power and authority to own its properties and conduct its
business as it is now being conducted and is duly registered as a bank holding
company under the provisions of the Bank Holding Company Act of 1956, as
amended.
(b) Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Kansas. Sub has the corporate power to
enter into and perform this Agreement and the execution, delivery and
performance of this Agreement by Sub and the consummation by Sub of the
transactions contemplated hereby have been duly authorized by its Board of
Directors and by Gold as the sole shareholder of Sub.
3.2 Authority. Gold has all requisite corporate power and authority to enter
into this Agreement, and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Gold. This Agreement has been duly executed
and delivered by Gold, and assuming due execution and delivery by Company,
constitutes a valid and binding obligation of Gold, enforceable in accordance
with its terms subject to applicable conservatorship, receivership,
bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles
of equity (including without limitation specific performance), whether applied
in a court of law or a court of equity.
3.3 Shareholder Approval. The shareholders of Gold are not required to
approve this Agreement.
3.4 No Violations. Subject to approval by the appropriate regulatory
agencies, the execution, delivery and performance of this Agreement by Gold
and Sub do not, and the consummation of the transactions contemplated hereby
will not, constitute (i) a breach or violation of, or a default under, any
law, rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of Gold or any subsidiary or to
which Gold or any subsidiary (or any of their respective properties) is
subject, (ii) a breach or violation of, or a default under, the articles of
incorporation, charter or bylaws of Gold or any subsidiary of Gold or (iii) a
breach or violation of, or a default under (or an event which with due notice
or lapse of time or both would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of Gold under any of the terms,
conditions or provisions of any note, bond, indenture, deed of trust, loan
agreement or other agreement, instrument or obligation to which Gold is a
party, or to which any of its respective properties or assets may be bound or
affected.
3.5 Consents. In order to consummate the Merger, Gold is not required to
make any filing or registration with or obtain the authorization, consent or
approval of, any public body or authority except required regulatory filing
and approval with the Federal Reserve System, the Kansas Banking Department
and the Comptroller of Currency and requisite filings with the Securities and
Exchange Commission and the Kansas Secretary of State.
3.6 Capital Stock of Gold. As of the date of this Agreement, Gold has
authorized capital stock consisting of (a) 25,000,000 shares of common stock,
$1.00 par value ("Gold Common Stock"), of which 5,352,196 shares were issued
and outstanding on March 31, 1998, and (b) $28.75 Million of 8.75% Junior
Subordinated Deferrable Interest Debentures. All of the issued and outstanding
shares of Gold Common Stock are validly issued, fully paid and non-assessable.
Holders of Gold Common Stock do not have any preemptive rights with respect to
the issuance of additional authorized shares of Gold Common Stock.
A-4
<PAGE>
3.7 Government Regulation. Gold and its subsidiaries hold all material
licenses, certificates, permits, franchises and rights from all appropriate
federal, state or other public authorities necessary for the lawful conduct of
their respective businesses and ownership of their respective properties. Gold
and its subsidiaries have substantially complied with all federal, state and
local statutes, regulations, ordinances or rules applicable to the ownership
of their respective properties or the conduct of their respective businesses,
except where such failure to comply would not have a material adverse effect
on Gold and its subsidiaries.
3.8 Financial Statements. The consolidated balance sheets of Gold as of
December 31, 1997, the consolidated statement of earnings for the year ended
December 31, 1997, and all related schedules and notes to the foregoing, all
of which have been delivered to Company, have been certified by KPMG Peat
Marwick LLP, independent certified public accountants. All of the foregoing
financial statements, together with the financial statements of Gold dated as
of March 31, 1998 and for the period then ending, have been prepared in
accordance with generally accepted accounting principles and practices which
were applied on a consistent basis, are correct and complete and fairly and
accurately present the financial position, results of operation and changes of
financial position of Gold as of their respective dates and for the periods
indicated. From March 31, 1998 until the date hereof, there has been no
material adverse change in the financial condition, properties or assets of
Gold.
3.9 SEC Reports. Gold's Report on Form 10-K for year ended December 31,
1997, filed with the Securities and Exchange Commission and all subsequent
reports and proxy statements filed by Gold thereafter pursuant to Section
13(a) or 14(a) of the Securities Exchange Act of 1934 do not and will not
contain a misstatement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading as of the time the document was filed. Since the filing of such
Report on Form 10-K, no other report, proxy statement, or other document has
been required to be filed by Gold pursuant to Section 13(a) or 14(a) of the
Securities Exchange Act of 1934 which has not been filed. Gold has delivered
to Company the Form 10-K for the fiscal year ended December 31, 1997 and the
unaudited financial statements for the quarter ended March 31, 1998, it being
understood that Gold is relying upon the representation of Company that it has
delivered copies of each of these documents to each shareholder of the
Company.
3.10 Status of Gold Common Stock to be Issued. The shares of Gold Common
Stock into which the Company Common Stock are to be exchanged or converted
pursuant to this Agreement will be, when delivered as specified in this
Agreement, validly authorized and issued, fully paid and non-assessable, and
registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or any successor federal statute and the
rules and regulations promulgated thereunder, all as the same shall be in
effect at the time (the "Securities Act").
3.11 Legal Proceedings. There are as of the date hereof no actions, suits,
claims, demands or other proceedings or investigations, either judicial or
administrative, pending or, to the knowledge of Gold, threatened against or
affecting the properties, assets, rights or business of Gold or the right to
carry on or conduct its business, nor are there to the knowledge of Gold any
grounds therefor, which, if adversely determined, would have a material
adverse effect on the business, operations, properties or financial condition
of Gold. There are as of the date hereof no actions, suits, claims, demands or
other proceedings or investigations, either judicial or administrative,
pending or, to the knowledge of Gold, threatened which will or could prevent
or interfere with the consummation of the transactions contemplated by this
Agreement.
3.12 Taxes. Gold and Sub have timely filed all tax returns required to be
filed by them, and have timely paid and discharged any taxes due in connection
with all such tax returns. To the best knowledge of Gold, the liability for
taxes set forth on each such tax return adequately reflects the taxes due with
respect to such returns. Neither the Internal Revenue Service nor any other
taxing authority is now asserting, either through audits, administrative
proceedings, court proceedings or otherwise any deficiency or claim for
additional taxes against Gold or Sub. Neither Gold nor Sub has granted any
waiver of any statute of limitations with respect to, or any extension of a
period for the assessments of, any tax. There are no tax liens on any of the
assets of Gold or Sub.
3.13 Defaults. Neither Gold nor any of its subsidiaries is in material
breach or material default under any agreement or commitment to which Gold or
any of its subsidiaries is a party, or under any loan agreement, note,
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security agreement, guarantee or other document pursuant to or in connection
with Gold's or any of its subsidiaries' extension of credit; and, to their
knowledge, there has not occurred any event which, after the giving of notice,
the lapse of time or otherwise, would constitute any such default under, or
result in any such breach of, any such agreement, commitment or extension of
credit.
3.14 Information Supplied. None of the information supplied or to be
supplied by Gold and Sub for inclusion or incorporation by reference in (a)
the Registration Statement (as defined in Section 11.1) will, at the time the
Registration Statement is filed with the Securities and Exchange Commission
(the "SEC") and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
3.15 Absence of Adverse Agreements. Neither Gold nor Sub is a party to any
agreement or instrument or any judgment, order or decree or any rule or
regulation of any court or other governmental agency or authority which has a
current material adverse effect on the financial condition, result or
operations, assets, business or prospects of Gold or Sub, taken as a whole.
3.16 Broker's Fees. Neither Gold nor Sub nor any of their respective
officers or directors has employed any broker or finder or incurred any
liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as set forth on the Company Disclosure Schedule attached hereto,
Company hereby represents and warrants to each of Gold and Sub as follows:
4.1 Organization and Good Standing. (a) Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Kansas with the corporate power and authority to own its properties and
conduct its business as it is now being conducted and is duly registered as a
bank holding company under the Bank Holding Company Act of 1956, as amended.
The conduct of Company's business and the ownership of its properties do not
require Company to qualify as a foreign corporation in any jurisdiction except
where the failure to be so qualified individually or in the aggregate would
not materially and adversely affect the business, operations, properties or
financial condition of Company and its subsidiary.
(b) Company has one subsidiary: Tri-County National Bank, Washington, Kansas
("Bank"), which is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America
with the corporate power and authority to carry on its business as it is now
being conducted. Bank is duly qualified to do business in each jurisdiction in
which it owns or leases real property or in which the conduct of its business
requires such qualification except where the failure to be so qualified
individually or in the aggregate would not materially and adversely affect the
business, operations, properties or financial condition of Company and/or
Bank.
4.2 Authority. Company has all requisite corporate power and authority to
enter into this Agreement, and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement, and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Company. This Agreement has been
duly executed and delivered by Company, and assuming due execution and
delivery by Gold, constitutes a valid and binding obligation of Company,
enforceable in accordance with its terms subject to applicable
conservatorship, receivership, bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity (including without limitation
specific performance), whether applied in a court of law or a court of equity.
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4.3 Shareholder Approval. The Board of Directors of Company has directed or
will direct, that this Agreement and the transactions contemplated hereby be
submitted to the Company's shareholders for approval at a meeting of such
shareholders and, except for adoption of this Agreement by the requisite vote
of the Company's shareholders, no other shareholder action is necessary to
approve this Agreement and to consummate the transactions contemplated hereby.
The Board of Directors will recommend that the shareholders approve the
transactions contemplated hereby subject to its fiduciary duties. No approval
of a number of outstanding shares of Company or Bank greater than that
required by the relevant statutory provisions is required for approval of this
Agreement and the consummation of the transactions contemplated hereby.
Approval of this Agreement by the shareholders shall also constitute the
acceptance by the shareholders of the indemnification obligation imposed upon
them under Section 9.5 hereinafter. Delivery of such shareholder approval
shall be a condition precedent to the obligation of Gold and Sub to close this
transaction.
4.4 No Violations. Subject to approval by the appropriate regulatory
agencies, the execution, delivery and performance of this Agreement by Company
do not, and the consummation of the transactions contemplated hereby will not,
constitute (i) a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of Company or Bank or to which Company or
Bank (or any of their respective properties) is subject, (ii) a breach or
violation of, or a default under, the articles of incorporation, charter or
bylaws of Company or Bank or (iii) a breach or violation of, or a default
under (or an event which with due notice or lapse of time or both would
constitute a default under), or result in the termination of, accelerate the
performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the properties or
assets of Company or Bank under any of the terms, conditions or provisions of
any note, bond, indenture, deed of trust, loan agreement or other agreement,
instrument or obligation to which the Company or Bank is a party, or to which
any of their respective properties or assets may be bound or affected.
4.5 Consents. Except as disclosed herein, no filing or registration with, or
authorization, consent or approval of, any public body or authority is
necessary for the consummation by Company of the Merger or the other
transactions contemplated by this Agreement.
4.6 Capitalization. Company has authorized capital stock consisting of
50,000 shares of common stock, par value $100.00 per share, of which 12,377
shares are issued. All of the issued and outstanding shares of Company Common
Stock are validly issued, fully paid and non-assessable. There are no
outstanding warrants, options, subscriptions, contracts, rights or other
agreements or commitments obligating Company to issue or sell any additional
shares of Company Common Stock nor are there outstanding any securities,
debts, obligations or rights which are convertible into or exchangeable for
shares of Company Common Stock. The authorized capital stock of Bank consists
of 100,000 shares of common stock, $100.00 par value per share ("Bank Stock"),
of which 7,750 shares have been duly and validly issued, are fully paid, and,
except for director's qualifying shares, all of which are owned directly by
Company free and clear of all liens, encumbrances, equities or claims. There
are no outstanding warrants, options, subscriptions, contracts, rights or
other arrangements or commitments obligating Company or Bank to issue or sell
any additional shares of Bank's capital stock nor are there outstanding any
securities, debts, obligations or rights which are convertible into or
exchangeable for shares of capital stock or any other equity security of Bank.
All director's qualifying shares are held pursuant to Repurchase Agreements.
4.7 Government Regulation. Company and Bank hold all material licenses,
certificates, permits, franchises and rights from all appropriate federal,
state or other public authorities necessary for the lawful conduct of their
respective businesses and ownership of their respective properties. Company
and Bank have substantially complied with all material federal, state and
local statutes, regulations, ordinances or rules applicable to the ownership
of their respective properties or the conduct of their respective businesses.
4.8 Financial Statements. The Company has previously delivered to Gold and
Sub balance sheets for the Company as of March 31, 1998, December 31, 1997 and
December 31, 1996, the statements of earnings for the period ended March 31,
1998 and for the years ended December 31, 1997 and December 31, 1996, the
daily
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statement, balance sheet and statement of earnings for the Bank as of March
31, 1998 and for the period then ending, and all related schedules and notes
to the foregoing (collectively the "Company Financial Statements"). Although
such statements have not been certified as of the date hereof by independent
certified public accountants, the Company Financial Statements have been
prepared in accordance with generally accepted accounting principles and
practices which were applied on a consistent basis, are correct and complete
and fairly and accurately present the financial position, results of operation
and changes of financial position of Company as of their respective dates and
for the periods indicated. Company has no material liabilities or obligations
of a type which would be included in a balance sheet prepared in accordance
with generally accepted accounting principles whether related to tax or non-
tax matters, accrued or contingent, due or not yet due, liquidated or
unliquidated, or otherwise, except as and to the extent disclosed or reflected
in the balance sheet of Company as of March 31, 1998, or incurred since March
31, 1998, in the ordinary course of business. From March 31, 1998 until the
date hereof, there has been no material adverse change in the financial
condition, properties, assets, liabilities, rights or business of Company or
Bank, or in the relationship of Company and Bank with respect to its
employees, creditors, suppliers, distributors, customers or others with whom
it has business relationships. The Company acknowledges, however, that an
examination of the Bank is currently pending and the Company agrees to advise
Gold and Sub of any modifications to the Company Financial Statements
resulting from such examination.
4.9 Legal Proceedings. There are as of the date hereof no actions, suits,
claims, demands or other proceedings or investigations, either judicial or
administrative, pending or, to the knowledge of Company, threatened against or
affecting the properties, assets, rights or business of Company or Bank or the
right to carry on or conduct their respective businesses, nor are there to the
knowledge of Company any grounds therefor. There are as of the date hereof no
actions, suits, claims, demands or other proceedings or investigations, either
judicial or administrative, pending or, to the knowledge of Company,
threatened which will or could prevent or interfere with the consummation of
the transactions contemplated by this Agreement. The Company agrees to advise
Gold and Sub if at any time between the date hereof and the Effective Time,
any legal proceeding as described in this paragraph is initiated or threatened
and the Company specifically acknowledges and agrees that the indemnification
provisions set forth in Article IX apply, not by way of limitation, to any
such proceedings.
4.10 Title to Assets. Except for securities pledged to secure public funds
deposits or subject to customer repurchase agreements entered into in the
ordinary course of business, and leased property discussed below, Company and
Bank have good and marketable title to and possession of all of their
respective real and personal properties and assets, in each case free and
clear of any liens, restrictions, encumbrances, rights, title and interests of
others, except for other real estate owned and except as reflected on their
respective financial statements and except for the lien of current taxes,
covenants and restrictions of record, and other minor imperfections of title
not affecting marketability, which liens, covenants, restrictions and
imperfections do not materially affect the value of such property and do not
interfere with the use made of such property by Company and Bank. The real and
personal properties and assets held under lease by Company and Bank are held
by them under valid, subsisting and enforceable leases with such exceptions as
do not interfere with the use made of such properties and assets by Company
and Bank. No consent is necessary under the terms of any such lease in
connection with the consummation of the transactions contemplated hereby.
4.11 Undisclosed Liabilities. As of the date hereof, neither Company nor
Bank have any debt, liability or obligation (whether accrued, contingent,
absolute or otherwise) known to any of such corporations of the nature which
would customarily be included in a corporate balance sheet or the notes
thereto prepared in accordance with generally accepted accounting principles
that is not reflected or reserved against in the Company Financial Statements
or was not incurred in the ordinary course of their business.
4.12 Taxes. The Company and Bank have timely filed all tax returns required
to be filed by them, and the Company and Bank have timely paid and discharged
all taxes due in connection with or with respect to the filing of such tax
returns and have timely paid all other taxes as are due, except such as are
being contested in good faith by appropriate proceedings and with respect to
which the Company is maintaining reserves adequate for their payment. To the
best knowledge of the Company, the liability for taxes set forth on each such
tax return
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adequately reflects the taxes required to be reflected on such tax return.
Neither the IRS nor any other governmental entity or taxing authority or
agency is now asserting, either through audits, administrative proceedings,
court proceedings or otherwise, or, to the best of Company's knowledge,
threatening to assert against Company or Bank any deficiency or claim for
additional taxes. Neither the Company nor Bank has granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any tax. There are no tax liens on any assets of the Company or
Bank. Neither the Company nor Bank has received a ruling or entered into an
agreement with the Internal Revenue Service or any other governmental entity
or taxing authority or agency that would have a Material Adverse Effect (as
defined below) on the Company or Bank, taken as a whole, after the Effective
Time. The Company agrees to provide assistance in the preparation of income
tax returns for the Company and Bank from the commencement of the current
fiscal year through the Effective Time with such returns to be completed
within ninety (90) days of the Effective Time.
4.13 Contracts. Neither Company nor Bank is party to or bound by any:
(a) employment contract or letter or other writing relating to
employment;
(b) bonus, deferred compensation, savings, profit sharing, severance pay,
pension or retirement plan or arrangement;
(c) material lease or license with respect to any property, real or
personal, whether Company or Bank is landlord or tenant, licenser or
licensee, involving a liability or obligation of Company or Bank as obligor
in excess of $5,000 on an annual basis or over the life of the lease or
license.
(d) agreement, contract or indenture relating to the borrowing of money
by Company or any subsidiary, excluding deposit obligations, obligations
under certificates of deposit, letters of credit, items in the process of
collection, commitments to loan or discount, endorsements made for
collection and guarantees made in the ordinary course of business;
(e) agreement with any present or former officer, director or shareholder
of Company or Bank; or
(f) except as listed in the disclosure statement, other contract,
agreement or other commitment which is material to the business,
operations, property, prospects or assets or to the condition, financial or
otherwise, of Company or Bank or which involve a payment by Company or Bank
of more than $1,000 in one year over the life of such contract, agreement
or commitment.
4.14 Regulatory Reports; Examinations. Company and Bank have timely filed
all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, with all governmental or
regulatory authorities, agencies, courts, commissions or other entity
("Governmental Entity") and have paid all fees and assessments due and payable
in connection therewith. Except for normal examinations conducted by a
Governmental Entity in the regular course of the business of Company and Bank,
no Governmental Entity has initiated any proceeding or, to the best knowledge
of Company, investigation into the business or operations of Company or Bank.
There is no unresolved material violation, criticism, or exception by any
Governmental Entity with respect to any report or statement relating to any
examinations of Company or Bank. Company has provided or made available to
Gold all reports of examinations conducted by any Governmental Entity with
respect to Company and/or Bank, and all correspondence between Company and/or
Bank and any Governmental Entity during the preceding three (3) years. Company
will also provide to Gold and Sub any subsequent correspondence or reports of
examination received from any Government Entity between the date hereof and
the Effective Time.
4.15 Conduct. From March 31, 1998 until the date hereof:
(a) There has been no material adverse change in the financial condition
of, or in the properties, assets, liabilities, rights or business, taken as
a whole, of Company or Bank or in the relationship of Company or Bank with
respect to their employees, creditors, suppliers, distributors, customers
or others with whom they have business relationships.
(b) The business affairs of Company and Bank have been conducted and
carried on only in their ordinary and regular course of business, and
Company and Bank have not incurred or become subject to
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any liabilities or obligations other than those incurred in their ordinary
course of business, those incurred pursuant to existing contracts disclosed
pursuant to Section 4.13 and those incurred pursuant to commitments
permitted hereby.
(c) Neither Company nor Bank have entered into any employment contract
with any director, officer or salaried employee, paid any or made any
accrual or arrangement for payment of bonuses or special compensation of
any kind or any severance or termination pay to any of their officers,
employees or directors, increased the rate of compensation, if any, or
instituted or made any material increase in any officer's, employee's or
director's welfare, retirement or similar plan or arrangement, other than
merit increases made in accordance with past practices and procedures which
have not exceeded the greater of $3,000 or 5% on an annual basis for any
one individual.
4.16 Compliance with ERISA. Neither Company nor Bank has established,
maintained or contributed at any time during the five-year period ending as of
the Effective Time to any employee benefit plan (as defined in Sections 3(3)
or 3(37) of the Employment Retirement Income Security Act of 1974 ("ERISA"))
or any other plan with respect to which any governmental filings are required,
except for the plans listed on Schedule 4.16 (collectively, the "Plans"). A
true and accurate copy of each of the Plans, any related trust agreements and
each of the amendments thereto has been provided to Gold together with (i) all
determination letters received in respect of any qualified plans, and (ii) all
required reports and supporting schedules filed with any government agency in
respect of the Plans for the three most recent years ending on or before the
Effective Time. To Company's knowledge as sponsor of the Plans, the Plans and
each fiduciary (as defined in Section 3(21) of ERISA) of the Plans are in
compliance in all material respects with all applicable requirements
(including nondiscrimination requirements in effect as of the Effective Time)
of the Internal Revenue Code of 1986 ("Code"), including, but not limited to,
Sections 79, 105, 106, 125, 401, 501, and 4975 of the Code. For purposes of
this Section 4.16, noncompliance with the Code or ERISA is material if such
noncompliance could have a Material Adverse Effect on the condition of one or
more of the Plans or of Company or Bank, either as of the Effective Time or
upon discovery of the noncompliance. To Company's knowledge as sponsor of the
Plans, all required contributions to the Plans through the Effective Time have
been made. To Company's knowledge as sponsor of the Plans, Company and Bank
(each with respect to the Plans), as well as the Plans, have no material
current or threatened liability of any kind to any person, including but not
limited to any government agency, now or as of the Effective Time, other than
for the payment of benefits in the ordinary course.
4.17 Defaults. Neither Company nor Bank is in material breach or material
default known to either under any agreement or commitment to which the Company
or Bank is a party, or under any loan agreement, note, security agreement,
guarantee or other document pursuant to or in connection with the Company's or
Bank's extension of credit; and to their knowledge there has not occurred any
event which, after the giving of notice, the lapse time or otherwise, would
constitute any such default under, or result in any such breach of, any such
agreement, commitment or extension of credit.
4.18 Insurance. Complete and correct copies of all material policies of
fire, product or other liability, workers' compensation and other similar
forms of insurance owned or held by Company and Bank have been delivered or
made available to Gold. Subject to expirations and renewals of insurance
policies in the ordinary course of business, all such policies are in full
force and effect, all premiums with respect thereto covering all periods up to
and including the date as of which this representation is being made have been
paid (other than retrospective premiums which may be payable with respect to
worker's compensation insurance policies), and no notice of cancellation or
termination has been received with respect to any such policy. Such policies
are and shall remain valid, outstanding and enforceable policies, and will not
be terminated prior to the Effective Time. To the best knowledge of Company,
the insurance policies to which Company or Bank are parties are sufficient for
compliance with all material requirements of law and all material agreements
to which Company or Bank are parties and will be maintained by Company and
Bank until the Effective Time. Neither Company nor Bank has been refused any
insurance with respect to any material assets or operations, nor has coverage
been limited in any respect material to their operations by any insurance
carrier to which they have applied for any such insurance or with which they
have carried insurance during the last five (5) years.
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4.19 Absence of Adverse Agreements. Neither the Company nor Bank is a party
to any agreement or instrument or any judgment, order or decree or any rule or
regulation of any court or other governmental agency or authority which
materially and adversely affects or in the future may have a Material Adverse
Effect on the financial condition, results or operations, assets, business or
prospects of the Company or Bank, taken as a whole.
4.20 Internal Controls and Records. The Company and Bank maintain books of
account which accurately and validly reflect, in all material respects, all
loans, mortgages, collateral and other business transactions and maintain
accounting controls sufficient to ensure that all such transactions are (a) in
all material respects, executed in accordance with its management's general or
specific authorization, and pursuant to Company's and Bank's documented
policies and procedures, and (b) recorded in conformity with generally
accepted accounting principles. Company has furnished to Gold all of Company's
and Bank's written internal policies and procedures which are identified on
the Company's Disclosure Schedule.
4.21 Loans. (a) Bank is not a party to any written or oral loan agreement,
note or borrowing arrangement which has been classified as "substandard",
"doubtful," "loss," "other loans especially mentioned" or any comparable
classifications by Company or Bank or banking regulators, except as reflected
on a list previously provided to Gold and Sub during the due diligence period,
which list Company and Bank agree to update between the date hereof and the
Closing Date; (b) neither Company nor Bank is a party to any written or oral
loan agreement, note, or borrowing arrangement, including any loan guaranty,
with any director or executive officer of Company or Bank, or any person,
corporation or enterprise controlling, controlled by or under common control
with any of the foregoing; (c) to the best knowledge of Company neither
Company nor Bank is a party to any written or oral loan agreement, note or
borrowing arrangement in violation of any law, regulation or rule of any
governmental authority.
4.22 Environmental Laws. The operations of Company and Bank comply with all
applicable past and present federal, state and local environmental statutes
and regulations and neither the condition of any property owned by Company or
Bank nor the operation of the business of any of such entities violates any
applicable federal, state or local environmental statute or regulation. None
of the operations of Company or Bank is subject to any judicial or
administrative proceeding alleging the violation of any federal, state or
local environmental health or safety statute or regulation nor is it the
subject of any claim alleging damages to health or property pursuant to which
the Company or Bank may be liable. None of the operations of nor any of the
properties owned by Company or Bank is the subject of any federal, state or
local investigation in evaluating whether any remedial action is needed to
respond to a release or threatened release of any hazardous waste or substance
from whatever source. No condition or event has occurred which, with notice or
the passage of time or both, would constitute a violation of any federal,
state or local environmental law and at no time has the Company or Bank stored
or used any pollutants, contaminants or hazardous or toxic waste, substances
or materials on or at any location owned by Company or Bank. There are no
underground storage tanks now or heretofore located on any real property owned
by Company or Bank. Neither Company nor Bank has ever been notified by either
a federal, state or local governmental authority, or any private party, that
Company or Bank is a potentially responsible party for remedial costs spent
addressing the release, or threat of a release, of a hazardous substance and
to the environment pursuant to the Comprehensive Environmental Response,
Compensation or Liability Act, 42 U.S.C. (S)(S) 9601, et seq. or any
corresponding state law.
Gold may obtain at its option and expense on or prior to 120 days following
the date hereof an environmental audit of all properties and assets of Company
and Bank whether directly owned or classified as other real estate owned. Such
environmental audit shall constitute a part of the due diligence process,
should Gold choose to pursue it, and if Gold determines in its sole discretion
that such environmental audit has not been completed to its reasonable
satisfaction or reflects the potential of an environmental problem with
respect to any of the properties or assets of Company or Bank, then Gold may
deem the due diligence unsatisfactory and terminate this Agreement under the
terms of Section 9.1 hereinafter.
4.23 Broker's Fees. Neither Company nor Bank nor any of their respective
officers or directors has employed any broker or finder or incurred any
liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement.
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4.24 Labor Matters. (a) To the best knowledge of Company, Company and Bank
are in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and are not engaged in any unfair labor practice; (b) there is no unfair
practice complaint against Company or Bank pending before the National Labor
Relations Board; (c) there is no labor strike, dispute, slowdown,
representation campaign or work stoppage actually pending or threatened
against or affecting Company or Bank; (d) no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is pending
and no claim therefor has been asserted against Company or Bank; and (e)
neither Company nor Bank is experiencing any material work stoppage.
4.25 Full Disclosure. No statement contained in any document, certificate,
or other writing furnished or to be furnished by or at the direction of
Company to Gold in, or pursuant to the provisions of, this Agreement contains
or shall contain any untrue statement of a material fact or omits or shall
omit to state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading.
ARTICLE V
COVENANTS OF COMPANY
5.1 Affirmative Covenants of the Company. Unless the prior written consent
of Gold shall have been obtained, and which consent will be given or denied
within 3 business days of receipt of written request for such consent, and
except as otherwise expressly contemplated herein, the Company shall and shall
cause Bank to (i) operate its business only in the usual, regular, and
ordinary course, (ii) preserve intact its business organization and assets and
maintain its rights and franchises; and (iii) take no action which would (a)
materially adversely affect the ability of any party to obtain any consents
required for the transactions contemplated hereby without imposition of a
condition or restriction which would prevent the transactions contemplated
hereby, including the Merger, from qualifying as a reorganization within the
meaning of Section 368(a) of the Code, or (b) materially adversely affect the
ability of any party to perform its covenants and agreements under this
Agreement.
5.2 Negative Covenants of the Company. Except as specifically permitted by
this Agreement, from the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement, the Company covenants and
agrees that it will not do or agree to commit to do, or permit Bank to do or
agree to commit to do, any of the following without the prior written consent
of Gold, which consent shall not be unreasonably withheld and which consent
will be given or denied within 3 business days of receipt of written request
for such consent:
(a) make any single loan (or series of loans to the same or related
entities or persons) or any commitment (verbal or written) for a loan (or
series of commitments to the same or related entities or persons) in an
amount greater than $50,000.00 other than renewals of existing loans or
commitments to loan;
(b) purchase or invest in any securities, other than U.S. government
obligations or other securities backed by the full faith and credit of the
United States having a maturity of not more than two years from the date of
purchase;
(c) amend or adopt any employee benefit plan, and will not grant any
increase in the rates of pay of their employees or any increase in the
compensation payable or to become payable, if any, to any director,
officer, employee or agent thereof, or contribute to any pension plan or
otherwise increase in any amount the benefits or compensation of any such
directors, officers or employees of Company or Bank under any pension plan
or other contract or commitment except for merit increases in accordance
with past practices;
(d) make any capital expenditure or enter into any material contract or
commitment (except loan commitments as permitted in Subparagraph (a) of
this Section 5.2); involving an obligation or commitment in excess of
$5,000 or engage in any transaction not in their usual and ordinary course
of business and consistent with past practices;
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(e) declare or pay any dividend or make any other distribution in respect
of any capital stock of Company or Bank, split, combine or reclassify any
shares of its capital stock or, directly or indirectly, redeem (except as
set forth in Section 5.1 above), purchase or otherwise acquire any share of
the capital stock of the Company or Bank;
(f) amend the Articles of Incorporation or By-Laws of each of the Company
or Bank or make any change in the authorized, issued or outstanding capital
stock (or any change in the par value thereof) of Company or Bank;
(g) acquire or purchase any assets of or make any investment in any
financial institution other than the purchase of loans or participations
therein in the ordinary course of business, but subject to Section 5.2(a);
(h) enter into any new line of business;
(i) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
or otherwise acquire any assets, which would be material, individually or
in the aggregate, to Company, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructuring
in the ordinary course of business consistent with prudent banking
practices;
(j) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Article VII not being satisfied,
or in a violation of any provisions of this Agreement except, in every
case, as may be required by applicable law;
(k) change its methods of accounting except as required by changes in
generally accepted accounting principles ("GAAP") or regulatory accounting
principles as concurred to by the Company's independent auditors;
(l) other than activities in the ordinary course of business consistent
with prior practice, sell, lease, encumber, assign or otherwise dispose of,
any of its material assets in excess of $5,000.00, properties or other
rights of agreements;
(m) file any application to relocate or terminate the operations of any
banking office;
(n) make any equity investment or commitment to make such an investment
in real estate or in any real estate development project, other than in
connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructuring in the ordinary course of business
consistent with prudent banking practices;
(o) create, renew, amend or terminate or give notice of a proposed
renewal, amendment or termination of, any material contract, agreement or
lease for goods, services or office space to which the Company or Bank is a
party or by which the Company or Bank or their respective properties is
bound; or
(p) make any new loan or new extension of credit, or commit to make any
such loan or extension of credit, to any director or officer of the Company
or Bank without giving Gold three days' notice in advance of the Company's
or Bank's approval of such loan or extension of credit or commitment
relating thereto.
5.3 Inspection. Between the date hereof and the Closing Date and upon
reasonable notice, and with the prior consent of James R. Pachta or Don R.
Moser, Gold and its authorized representatives shall be permitted full access
during all business hours to all properties, books, records, contracts and
documents of Company and Bank. The Company shall furnish to Gold and its
authorized representative all information with respect to the affairs of
Company and Bank as Gold may reasonably request.
5.4 Financial Statements and Call Reports. From and after the date hereof
through the Closing Date, Company shall deliver to Gold monthly reports of
condition and income statements of Company and Bank and shall deliver to Gold
copies of the call reports for Bank as filed with any regulatory agency
promptly after such filing.
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5.5 Right to Attend Meetings. Company and Bank shall allow a representative
of Gold to attend as an observer all meetings of the Board of Directors of
Company and Bank and all meetings of the committees of each such board,
including, without limitation, the audit and executive committees thereof and
any other meetings of Company or Bank officials at which policy is being made.
Company and Bank shall give reasonable notice to Gold of any such meeting and,
if known, the agenda for or business to be discussed at such meeting. Company
and Bank shall provide to Gold all information provided to the directors on
all such boards and committees in connection with all such meetings or
otherwise provided to the directors and shall provide any other financial
reports or other analyses prepared for senior management of Company or Bank.
5.6. Data Processing. Company shall cooperate with Gold in taking those
planning actions necessary to be in a position to convert its data processing
procedures and formats to procedures and formats used by Gold, if any, as of
the Effective Time. Gold shall provide such assistance and consultation as
Company may reasonably require in such planning process.
5.7 No Solicitation. Neither Company nor Bank nor any affiliates or
associates of Company nor Bank acting for or on behalf of Company or Bank
shall, directly or indirectly, make, encourage, facilitate, solicit, assist or
initiate any inquiry or proposal, or participate in any negotiations with, or,
subject to the provisos to this sentence, provide any information to, any
corporation, partnership, agent, attorney, financial adviser, person, or other
entity or group (other than (a) Gold, Sub, an affiliate or associate of Gold
or Sub or an officer, employee or other authorized representative of Gold, Sub
or such affiliate or associate or (b) the Company's counsel, accountants and
financial adviser solely for use in connection with the transactions
contemplated hereby) relating to any (i) liquidation, dissolution,
recapitalization, merger or consolidation of the Company or Bank, (ii) outside
the ordinary course of business, sale of a significant amount of assets of the
Company or Bank, (iii) purchase or sale of shares of capital stock of the
Company or Bank, or (iv) any similar transactions involving Company or Bank,
other than the transactions contemplated by this Agreement; provided, however,
that the Company may provide information at the request of a third party if
the Board of Directors of the Company determines, in good faith, that the
exercise of its fiduciary duties to the Company's shareholders under
applicable law, as advised in writing by outside counsel reasonably acceptable
to Gold and Sub, requires it to take such action, and, provided further, that
Company may not, in any event, provide to such third party any information
which it has not provided to Gold and Sub. Company shall immediately cease and
cause to be terminated any and all such contacts and negotiations with respect
to any such transaction. Company shall immediately inform Gold and Sub of any
inquiry, proposal or request for information (including the terms thereof and
the person making such inquiry) which it may receive in respect of such a
transaction.
5.8 Regulatory Approvals. Subject to the terms and conditions of this
Agreement, Company agrees to use its reasonable best efforts to cooperate with
Gold in Gold's efforts to secure as expeditiously as practicable all the
necessary approvals, regulatory or otherwise, needed to consummate the
transactions contemplated herein.
5.9 Information. Company shall provide such information and answer such
inquiries as Gold may reasonably request or make concerning the subject matter
of the representations and warranties of Company herein.
5.10 TaxFree Reorganization Treatment. Company shall not intentionally take
or cause to be taken any action, whether before or after the Effective Time,
which would disqualify the Merger as a taxfree "reorganization" within the
meaning of Section 368(a) of the Code (subject to required recognition of gain
or loss with respect to cash paid pursuant hereto or to any holder of Company
Common Stock who dissents from the merger).
ARTICLE VI
COVENANTS OF GOLD AND SUB
6.1 Regulatory Approvals. Subject to the terms and conditions of this
Agreement, Gold and Sub agree to use their reasonable best efforts to secure
as expeditiously as practicable all the necessary approvals, regulatory
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or otherwise, needed to consummate the transactions contemplated herein and
agree to exercise best efforts to file applications relating to such approvals
within sixty (60) days from the date hereof or as soon thereafter as is
reasonably possible. Gold and Sub shall provide to Company's counsel a copy of
all applications for such approvals and shall keep such counsel or the Company
advised of the status of the regulatory review process.
6.2 Information. Gold and Sub shall provide such information and answer such
inquiries, as the Company may reasonably request or make concerning the
subject matter of the representations and warranties of Gold and Sub herein.
6.3 TaxFree Reorganization Treatment. Neither Gold nor Sub shall
intentionally take or cause to be taken any action, whether before or after
the Effective Time, which would disqualify the Merger as a taxfree
"reorganization" within the meaning of Section 368(a) of the Code.
6.4 Employee Benefits. Employees of Company or Bank shall be eligible to
participate in all Gold employee welfare benefit plans in accordance with
their terms, and for such purpose all service of such employees with the
Company and Bank shall be counted as service with Gold.
ARTICLE VII
CONDITIONS PRECEDENT TO GOLD'S OBLIGATIONS
The obligations of Gold and Sub to consummate the transactions hereunder
shall be subject to the satisfaction on or before the Closing Date of all of
the following conditions, except such conditions as Gold or Sub may waive in
writing:
7.1 Representations, Warranties and Covenants. All representations and
warranties of Company contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date, except for changes
permitted by or contemplated by this Agreement and except to the extent that
any such representation or warranty is made solely as of a specified date.
Company shall have performed all agreements and covenants in all material
respects required by this Agreement to be performed on or prior to the Closing
Date and Gold shall have received a certificate signed by the Chief Executive
Officer of Company, dated the Closing Date, to the foregoing effect.
7.2 Material Actions; Debts or Defaults. On the Closing Date, there shall
not be: (i) except as set forth on the Company Disclosure Schedule, any
actions, suits, claims, demands or other proceedings or investigations, either
judicial or administration, pending or, to the knowledge of Company or Bank,
threatened against or affecting the properties, assets, rights or business of
Company or Bank or the right to carry on or conduct their respective
businesses; (ii) any debt, liability or obligation of Company or Bank (whether
accrued, contingent, absolute or otherwise) required to be reflected in a
corporate balance sheet or the notes thereto that is not reflected or reserved
against in their respective financial statements or was not incurred in
ordinary course of their respective businesses; or (iii) any material breach
or material default of Company or Bank under any agreement or commitment to
which either is a party, or under any loan agreement, note, security
agreement, guarantee or other document pursuant to or in connection with the
Company's or Bank's extension of credit.
7.3 Adverse Changes. There will have been no material adverse change in the
financial condition of, or in the properties, assets, liabilities, rights or
business, taken as a whole, of Company or Bank, and taking into account for
this purpose the proceeds of any applicable insurance.
7.4 Regulatory Authority Approval. Orders, consents and approvals in form
and substance reasonably satisfactory to Gold shall have been entered by or
obtained from the appropriate regulatory authorities authorizing consummation
of the transactions contemplated hereby pursuant to the provisions of the Bank
Holding Company Act and any other applicable federal or state banking
regulatory statute or rule and no such order, consent or approval shall be
conditioned or restricted in any manner which in the reasonable judgment of
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Gold would materially adversely affect the operations of or be unduly
burdensome to Gold. In addition, all required regulatory approvals to permit
the acquisition of the Bank Business, as well as any planned branching or
merger transactions with respect thereto shall have been received and any
applicable waiting periods shall have been expired. Company specifically
acknowledges and agrees that Sub may assign to any third party any of its
rights hereunder subject to the obligation of Sub to cause all consideration
required under Section 2.2 above to be delivered at the Effective Time subject
to all terms and conditions hereof.
7.5 Litigation. At the Closing Date, there shall not be pending or
threatened litigation in any court or any proceeding by any governmental
commission, board or agency which Gold reasonably believes could reasonably
result in restraining, enjoining or prohibiting the consummation of this
Agreement.
7.6 Financial Measures. On the Closing Date, the tier 1 capital of Bank
shall be not less than $3,187,331.73 and the reserve for loan and lease loss
of Bank shall be not less than $571,150.80, all as determined on the basis of
the March 31, 1998 financial statements of the Bank delivered to Gold and
prepared in accordance with applicable bank regulatory instructions. It is
fully understood all future earnings from the date hereof forward shall accrue
to the retained earnings or reserves of the Bank, respectively, and shall not
result in an increase of any consideration payable by Gold or Sub hereunder.
Further, the parties may mutually agree to certain accounting adjustments to
be made prior to the Effective Time.
7.7 Approval by Shareholders. The shareholders of Company and Bank shall
have duly approved and adopted this Agreement and the other transactions
contemplated hereby to the extent required by applicable requirements of law
and the Articles of Incorporation and By-Laws of Company and Bank. The
approval of the shareholders of Company and confirmation that such approval
constitutes their acceptance of the indemnification obligation imposed under
Section 9.5 hereinafter shall be delivered to Gold and Sub at or prior to
closing.
7.8 Tax Representations. Each shareholder of Company and Bank owning more
than 10% of the outstanding Company Common Stock or Bank Stock shall have made
those representations reasonably requested by counsel and necessary to enable
them to render the opinion described in Section 7.10 hereof.
7.9 Affiliate Agreements. Each person who is an "affiliate" (for purposes of
Rule 145 under the Securities Act and for pooling-of-interests accounting
treatment) of the Company and Bank at the time this Agreement is submitted to
approval of the stockholders of the Company and Bank shall deliver to Gold a
letter in substantially the form set forth in Exhibit 7.9.
7.10. Satisfactory Due Diligence. Representatives of Company and Bank have
cooperated with Gold, Sub and representatives of Gold and Sub in conducting
its due diligence in accordance with the terms of Section 5.3 above.
7.11 Federal Tax Opinion. Gold shall have received an opinion of Payne &
Jones, Chartered, counsel to Gold ("Gold's Counsel"), in form and substance
reasonably satisfactory to Gold, dated the Closing Date, the Merger will be
treated as a tax-free reorganization within the meaning of Section
368(a)(1)(A) of the Code, subject to required recognition of gain or loss with
respect to cash paid in accordance with the terms hereof or cash paid to
holders of Company Common Stock who dissent from the Merger.
7.12 Opinion of Counsel. Gold shall have received an opinion of Paul L.
Monty, Monty and Eyer ("Company's Counsel"), dated the Closing Date in form
and substance reasonably satisfactory to Gold covering the matters set out in
Exhibit 7.12 hereto.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATION OF COMPANY AND BANK
The obligations of Company and Bank to consummate the transactions
contemplated hereunder shall be subject to satisfaction on or before the
Closing Date of all of the following conditions, except such conditions as
Company and Bank may waive in writing:
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8.1 Representations, Warranties and Covenants. All representations and
warranties of Gold contained in this Agreement shall be true in all material
respects on and as of the Closing Date, except to the extent that any such
representation or warranty is made solely as of a specified date, and Gold
shall have performed all agreements and covenants in all material respects
required by this Agreement to be performed on or prior to the Closing Date.
8.2 Regulatory Authority Approval. Orders, consents and approvals in form
and substance reasonably satisfactory to Company shall have been entered by or
obtained from the appropriate regulatory authorities authorizing consummation
of the transactions contemplated by this Agreement pursuant to the provisions
of the Bank Holding Company Act and any other applicable federal or state
banking regulatory statute or rule.
8.3 Litigation. There shall not be pending or threatened litigation in any
court or any proceeding by any governmental commission, board or agency which
Company believes could reasonably result in restraining, enjoining or
prohibiting the consummation of the transactions contemplated by this
Agreement.
8.4 Approval by Shareholders. The shareholders of Company and Bank shall
have duly approved and adopted this Agreement and the transactions
contemplated hereby to the extent required by applicable requirements of law
and the Articles of Incorporation and By-Laws of the Company and Bank.
8.5 Adverse Changes. From the date of this Agreement to the Closing Date,
there will have been no material adverse change in the financial condition,
properties, assets, liabilities, rights, business or prospects of Gold.
ARTICLE IX
TERMINATION OF AGREEMENT; INDEMNIFICATION
9.1 Basis for Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing Date: (a) by mutual
consent in writing of the parties hereto; (b) by Gold upon written notice to
Company if any regulatory approval of the transactions contemplated under the
terms of this Agreement shall be denied or if any such regulatory approval
shall be conditioned or restricted in any manner which in the reasonable
judgment of Gold would materially adversely affect the operations of or would
be unduly burdensome to Gold; (c) by Gold or Company if the other party has
materially breached this Agreement and has not cured such breach within the
earlier of (i) 30 days after the nonbreaching party shall have given notice to
the breaching party of the existence of such breach or (ii) the Closing Date;
(d) by Gold or Company upon written notice to the other of any other condition
imposed for the benefit of such party that shall not have been satisfied or
waived prior to the Closing Date; or (e) by either Gold or Company if the
Closing Date shall not have occurred by December 31, 1998; provided that the
terminating party is not then in material breach of this Agreement and
provided further that such delay has not been caused by regulatory action or
inaction, whether by banking authorities, the Securities and Exchange
Commission, or otherwise, beyond the control of either party. As used in this
Section 9.1, actions contemplated as being taken by Gold or the Company must
be taken by their respective Board of Directors or the Executive Committee of
such Board.
9.2 Effect of Termination. In the event of termination of this Agreement for
any reason set forth in Section 9.1, other than a breach thereof, no party
hereto shall have any liability to the other of any nature whatsoever,
including any liability for loss, damages or expenses suffered or claimed to
be suffered by reason thereof.
In the event Gold and Sub have performed all of their obligations hereunder
and all conditions precedent to the obligation of Gold and Sub to close have
been met or waived in writing by Gold and Sub, but Company fails or otherwise
refuses to close, then Gold shall be entitled to enforce the terms hereof by
an action seeking specific performance. Such right is not exclusive and shall
not preclude Gold from also pursuing an action to recover any and all damages
resulting from the Company's default hereunder. All remedies available to Gold
hereunder or by law are cumulative.
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In the event Company has performed all of its obligations hereunder and all
conditions precedent to the obligations of Gold and Sub to close have been met
or waived in writing by Gold and Sub, but Gold and Sub fail or otherwise
refuse to close, then Company shall be entitled to enforce the terms hereof by
an action seeking specific performance. Such right is not exclusive and shall
not preclude Company from also pursuing an action to recover any and all
damages resulting from the default by Gold and Sub hereunder. All remedies
available to Company hereunder or by law are cumulative.
9.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
merger by the stockholders of Company or Sub, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party.
9.5 Indemnification by Company and its Shareholders. Subsequent to the
closing hereof, the Company and each of its shareholders (as evidenced by
delivery at or prior to closing of the shareholder consent as referenced
hereinabove) jointly and severally agree to indemnify and hold harmless Gold,
Sub and the officers, shareholders and directors of each such entity from and
against and in respect of any and all damages, losses, diminution of value, or
expenses suffered or incurred by any such party (whether as a result of third
party claims [whether valid or not], demands, suits, causes of action,
proceedings, investigations, judgments or liabilities or otherwise), including
costs of investigation in defense and reasonable attorneys' fees assessed,
incurred or sustained by or against any of them, with respect to or arising
out of any breach of the representations, warranties and/or covenants of the
Company set forth herein and in any other agreement or instrument executed by
the Company in connection herewith. If this merger is approved by a requisite
number of shareholders of Company, then each and every shareholder of Company
shall be deemed to have agreed to this indemnification whether or not such
shareholder dissents to the terms of the merger, subject to the limitation set
forth in Section 9.7 hereinafter.
9.6 Indemnification by Gold. Gold agrees to indemnify, defend and hold
harmless Company and its shareholders from and against and in respect of any
and all damages, losses, diminution of value, or expenses suffered or incurred
by Company (whether as a result of third party claims [whether valid or not],
demands, suits, causes of action, proceedings, investigations, judgments,
liabilities or otherwise), including costs of investigation and defense and
reasonable attorneys' fees assessed or incurred or sustained by or against
Company or its shareholders, with respect to or arising out of any breach of
the representations, warranties and covenants of Gold and Sub set forth herein
and in any other agreement or instrument executed by Gold and/or Sub in
connection herewith.
9.7 Limitations on Indemnification. Notwithstanding anything herein
contained to the contrary, no person shall be entitled to indemnification
under the provisions of this Agreement: (i) unless such party shall have given
written notice to the indemnifying party setting forth its claim for
indemnification in reasonable detail, and (ii) to the extent that the
aggregate amount of all indemnification liability under Section 9.5 or Section
9.6, as applicable, exceeds the sum of the total figure reflected in Clause
(i) of Section 2.2(c).
9.8 Procedure for Indemnification. If a party hereto becomes aware of an
event which gives rise to a claim for indemnification hereunder, such party
shall give the other party prompt notice of any such action, claim, liability,
assessment or notice of deficiency received by such party which might result
in any liability under this provision. To the extent Gold is giving such
notice, notice to Company shall be deemed sufficient to constitute
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notice to all shareholders. By execution hereof, Company specifically agrees
that it shall assume all responsibility for communicating receipt of any such
notice to the shareholders of Company. Further, any party who may claim a
right of indemnification hereunder agrees to refrain from paying, settling or
compromising any such claim for which indemnification may be sought without
giving notice of same to the other party. If the other party wishes to contest
or defend such third party claim, then the party against whom the claim was
made shall be obligated to cooperate fully with such party in contesting and
preserving all rights with respect to such contest; provided, however, that if
the other party does not wish to challenge or contest such third party claim,
then the party against whom the claim was being made by settle same on terms
and conditions it deems to be the most favorable it can be obtained and then
inserting the indemnification claim against the other party hereto. When
giving a notice under this provision, a party may specify a time for a
response from the other party as to whether such other party wishes to contest
or defend such third party claim. Such deadline for response may be
established consistent with the facts and circumstances surrounding the
situation. Failure of the other party to respond within such time period shall
constitute such other party's decision not to contest or defend such claim. If
a party hereunder claims indemnification for a claim other than a third party
claim, the party seeking indemnification shall notify the indemnifying party
in writing of the basis for such claim setting forth the nature and amount of
the damages resulting from such claim. To the extent a party is deemed to have
ultimately been responsible for indemnification, then interest shall be deemed
to accrue on the unpaid amount of indemnification obligation at the prime rate
of interest announced from time to time by Exchange National Bank, such
interest to be calculated based on the actual number of days elapsed from the
date each indemnification obligation becomes due and owing until paid in full
and based on 365 day year.
ARTICLE X
SECURITIES LAWS MATTER
10.1 Registration Statement and Proxy Statement. Gold shall as soon as
practicable prepare and file a registration statement on Form S-4 to be filed
with the SEC pursuant to the Securities Act for the purpose of registering the
shares of Gold Common Stock to be issued in the Merger (the "Registration
Statement"). Company, Bank, Gold and Sub shall each provide promptly to the
other such information concerning their respective businesses, financial
conditions, and affairs as may be required or appropriate for inclusion in the
Registration Statement or the proxy statement to be used in connection with
the special stockholders' meetings of Company and to be called for the purpose
of considering and voting on the Merger (the "Proxy Statement"). Company,
Bank, Gold and Sub shall each cause their counsel and auditors to cooperate
with the other's counsel and auditors in the preparation and filing of the
Registration Statement and the Proxy Statement. Gold shall not include in the
Registration Statement any information concerning Company or Bank to which
Company or Bank shall reasonably and timely object in writing. Gold, Sub,
Company and Bank shall use their reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as soon as
may be practicable and thereafter Company and Bank shall distribute the Proxy
Statement to their respective stockholders in accordance with applicable laws
not fewer than 20 business days prior to the date on which this Agreement is
to be submitted to their respective stockholders for voting thereon. If
necessary, in light of developments occurring subsequent to the distribution
of the Proxy Statement, Company and Bank shall mail or otherwise furnish to
their respective shareholders such amendments to the Proxy Statement or
supplements to the Proxy Statement as may, in the reasonable opinion of Gold,
Sub, Company or Bank, be necessary so that the Proxy Statement, as so amended
or supplemented, will contain no untrue statement of any material fact and
will not omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or as may be necessary to comply with
applicable law. Gold and Sub shall not be required to maintain the
effectiveness of the Registration Statement after delivery of the Gold Common
Stock issued pursuant hereto for the purpose of resale of Gold Common Stock by
any person. For a period of at least three years from the Effective Time, Gold
shall make available "adequate current public information" within the meaning
of and as required by paragraph (c) of Rule 144 adopted pursuant to the
Securities Act.
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10.2 State Securities Laws. The parties hereto shall cooperate in making any
filings required under the securities laws of any state in order either to
qualify or register the Gold Common Stock so it may be offered and sold
lawfully in such state in connection with the Merger or to obtain an exemption
from such qualification or registration.
10.3 Publication of Combined Financial Results. Gold will file with the
Securities and Exchange Commission a Periodic Report on Form 8K containing
financial statements which include no less than 30 days of combined operations
of Gold and Company, ended on a normal closing date, as soon as practicable
after the Effective Time unless the first 30 day period of combined operations
is reflected in and ends on the normal closing date of an annual report on
Form 10K or quarterly report on Form 10Q.
ARTICLE XI
MISCELLANEOUS
11.1 Expenses. Except as set forth herein, each party shall be responsible
for its own expenses in connection with this transaction. Specifically, each
party shall be responsible for its own legal and accounting fees and any
related costs or charges associates with the negotiation, execution and
consummation of this Agreement. However, notwithstanding anything herein
contained to the contrary, it is understood and agreed that if the transaction
described in this Agreement does not close for any reason, the Company shall
pay $30,000.00 of the total cost of (i) the certified audit of the
consolidated balance sheet of the Company as of December 31, 1997 (if
required) and the statement of income for the year then ended and (ii) the
preparation and filing of the Registration Statement and Proxy Statement
referenced in Section 10.1 above. If the transaction described in this
Agreement closes, then such $30,000.00 payment shall be made by the
shareholders of the Company (on a prorata basis). If this transaction closes,
and any portion of this $30,000.00 obligation of the shareholders of Company
is paid by Company, Bank (or by Gold or Sub), then such payment shall reduce
the total amount payable in Section 2.2(c) hereinabove. Likewise, if either
Gold, Sub, Company or Bank pays any other expense payable by the shareholders
of Company hereunder, then such additional expense paid shall likewise reduce
the figure to be paid pursuant to Section 2.2(c). To the extent the cash
payment pursuant to Section 2.2(c) is reduced, the cash payable for each share
of Company Common Stock shall be reduced accordingly.
11.2 Parties in Interest. This Agreement and the rights hereunder are not
assignable unless such assignment is consented to in writing by all parties
hereto. Except as otherwise expressly provided herein, all of the terms and
provisions of this Agreement shall be binding upon, shall inure to the benefit
of and shall be enforceable by the respective heirs, beneficiaries, personal
and legal representatives, successors and permitted assigns of the parties
hereto.
11.3 Entire Agreement, Amendments, Waiver. This Agreement contains the
entire understanding of Gold, Sub and Company with respect to the Merger and
supersedes all prior agreements and understandings, whether written or oral,
between them with respect to the Merger contemplated herein. This Agreement
may be amended only by a written instrument duly executed by the parties or
their respective successors or permitted assigns. Any condition to a party's
obligation hereunder may be waived by such party in writing.
11.4 Notices. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered or transmitted by telefacsimile with a copy thereof
transmitted by a nationally recognized overnight delivery service or deposited
in the United States mail, certified or registered, return receipt requested,
postage prepaid, addressed to the parties at the following addresses or at
such other address as shall be given in like manner by any party to the other:
If to Company: Mr. James R. Pachta
Tri-County Bancshares, Inc.
408 4th Street
Linn, KS 66953
Telephone: (785) 348-5521
FAX: (785) 348-5524
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with a copy to:
Mr. Paul L. Monty
Monty and Eyer
1112 C Street
Washington, KS 66968-0008
Telephone: (913) 325-2223
FAX: (913) 325-2224
If to Gold:
Mr. Michael W. Gullion
Gold Banc Corporation, Inc.
11301 Nall Avenue
Leawood, KS 66211
Telephone: (913) 451-8050
FAX: (913) 451-8004
with a copy to:
Thomas K. Jones
Payne & Jones, Chartered
P.O. Box 25625
Overland Park, KS 66225
Telephone: (913) 469-4100
FAX: (913) 469-8182
11.5 Law Governing. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Kansas.
11.6 Further Acts. Gold, Company and Sub agree to execute and deliver on or
before the Closing Date such other documents, certificates, agreements or
other writings and take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions contemplated
by this Agreement.
A-21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
Gold Banc Corporation, Inc.
/s/ Michael W. Gullion
By: _________________________________
Michael W. Gullion
President and Chief Executive
Officer
Attest:
/s/ Keith E. Bouchey
- -------------------------------------
Keith E. Bouchey
Secretary
Gold Banc Acquisition Corporation
II, Inc.
/s/ Michael W. Gullion
By: _________________________________
Michael W. Gullion
President and Chief Executive
Officer
Attest:
/s/ Keith E. Bouchey
- -------------------------------------
Keith E. Bouchey
Secretary
Tri-County Bancshares, Inc.
/s/ Don R. Moser
By: _________________________________
Don R. Moser
President
Attest:
/s/ James R. Pachta
- -------------------------------------
James R. Pachta
Name: _______________________________
Secretary
A-22
<PAGE>
ACKNOWLEDGMENT
o
State of Kansas ss:
County of Johnson
ON THIS 28th day of May, 1998, before me the undersigned, a Notary Public in
and for the County and State aforesaid, came Michael W. Gullion, President and
Chief Executive Officer of Gold Banc Corporation, Inc., a Kansas corporation,
and Keith E. Bouchey, Secretary, who are personally known to me to be such
persons, and who is personally known to me to be the same persons who executed
the within instrument on behalf of said corporation, and such persons duly
acknowledged the execution of the same to be the act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, the day and year last above written.
/s/ Theresa A. Armstrong
-------------------------------------
My Appointment Expires:
10-21-2000
- -------------------------
ACKNOWLEDGMENT
State of Kansas o
County of Johnson ss:
ON THIS 28th day of May, 1998, before me the undersigned, a Notary Public in
and for the County and State aforesaid, came Michael W. Gullion, President and
Chief Executive Officer of Gold Banc Acquisition Corporation II, Inc., a
Kansas corporation, and Keith E. Bouchey, Secretary, who are personally known
to me to be such persons, and who is personally known to me to be the same
persons who executed the within instrument on behalf of said corporation, and
such persons duly acknowledged the execution of the same to be the act and
deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, the day and year last above written.
/s/ Theresa A. Armstrong
-------------------------------------
NOTARY PUBLIC
My Appointment Expires:
10-21-2000
- -------------------------
A-23
<PAGE>
ACKNOWLEDGMENT
o
State of Kansas ss:
County of Washington
ON THIS 28th day of May, 1998, before me the undersigned, a Notary Public in
and for the County and State aforesaid, came Don R. Moser, President of Tri-
County Bancshares, Inc., a Kansas corporation, and James R. Pachta, Secretary,
who are personally known to me to be such persons, and who is personally known
to me to be the same persons who executed the within instrument on behalf of
said corporation, and such persons duly acknowledged the execution of the same
to be the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, the day and year last above written.
/s/ Carmen Johnson
-------------------------------------
NOTARY PUBLIC
My Appointment Expires:
6-18-99
- -------------------------
A-24
<PAGE>
The undersigned represent all of the Board of Directors of Tri-County
Bancshares, Inc. and hereby evidence their approval of this Agreement and Plan
of Reorganization.
/s/ F.M. Beam
-------------------------------------
F. M. Beam
Director
/s/ Frank H. Blaha
-------------------------------------
Frank H. Blaha
Director
/s/ John F. Davis
-------------------------------------
John F. Davis
Director
/s/ Melvin J. Hatesohl
-------------------------------------
Melvin J. Hatesohl
Director
/s/ Carmen Johnson
-------------------------------------
Carmen Johnson
Director
/s/ Dale R. Keesecker
-------------------------------------
Dale R. Keesecker
Director
/s/ Brice Leonard
-------------------------------------
Brice Leonard
Director
/s/ Don R. Moser
-------------------------------------
Don R. Moser
Director
/s/ James R. Pachta
-------------------------------------
James R. Pachta
Director
/s/ Calvin H. Wilgers
-------------------------------------
Calvin H. Wilgers
Director
A-25
<PAGE>
ANNEX B
K.S.A. (S) 17-6712. PAYMENT FOR STOCK OF STOCKHOLDER OBJECTING TO MERGER OR
CONSOLIDATION; DEFINITIONS; NOTICE TO OBJECTING STOCKHOLDERS; DEMAND FOR
PAYMENT; APPRAISAL AND DETERMINATION OF VALUE BY DISTRICT COURT, WHEN;
TAXATION OF COSTS; RIGHTS OF OBJECTING STOCKHOLDERS; STATUS OF STOCK; SECTION
INAPPLICABLE TO CERTAIN SHARES OF STOCK. (a) When used in this section, the
word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation.
(b) The corporation surviving or resulting from any merger or consolidation,
within 10 days after the effective date of the merger or consolidation, shall
notify each stockholder of any corporation of this state so merging or
consolidating who objected thereto in writing and whose shares either were not
entitled to vote or were not voted in favor of the merger or consolidation,
and who filed such written objection with the corporation before the taking of
the vote on the merger or consolidation, that the merger or consolidation has
become effective. If any such stockholder, within 20 days after the date of
mailing of the notice, shall demand in writing, from the corporation surviving
or resulting from the merger or consolidation, payment of the value of the
stockholder's stock, the surviving or resulting corporation shall pay to the
stockholder, within 30 days after the expiration of the period of 20 days, the
value of the stockholder's stock on the effective date of the merger or
consolidation, exclusive of any element of value arising from the expectation
or accomplishment of the merger or consolidation.
(c) If during a period of 30 days following the period of 20 days provided
for in subsection (b), the corporation and any such stockholder fail to agree
upon the value of such stock, any such stockholder, or the corporation
surviving or resulting from the merger or consolidation, may demand a
determination of the value of the stock of all such stockholders by an
appraiser or appraisers to be appointed by the district court, by filing a
petition with the court within four months after the expiration of the thirty-
day period.
(d) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the corporation, which shall file with the clerk of
such court, within 10 days after such service, a duly verified list containing
the names and addresses of all stockholders who have demanded payment for
their shares and with whom agreements as to the value of their shares have not
been reached by the corporation. If the petition shall be filed by the
corporation, the petition shall be accompanied by such duly verified list. The
clerk of the court shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the corporation
and to the stockholders shown upon the list at the addresses therein stated
and notice shall also be given by publishing a notice at least once, at least
one week before the day of the hearing, in a newspaper of general circulation
in the county in which the court is located. The court may direct such
additional publication of notice as it deems advisable. The forms of the
notices by mail and by publication shall be approved by the court.
(e) After the hearing on such petition the court shall determine the
stockholders who have complied with the provisions of this section and become
entitled to the valuation of and payment for their shares, and shall appoint
an appraiser or appraisers to determine such value. Any such appraiser may
examine any of the books and records of the corporation or corporations the
stock of which such appraiser is charged with the duty of valuing, and such
appraiser shall make a determination of the value of the shares upon such
investigation as seems proper to the appraiser. The appraiser or appraisers
shall also afford a reasonable opportunity to the parties interested to submit
to the appraiser or appraisers pertinent evidence on the value of the shares.
The appraiser or appraisers, also, shall have the powers and authority
conferred upon masters by K.S. 60-253 and amendments thereto.
(f) The appraiser or appraisers shall determine the value of the stock of
the stockholders adjudged by the court to be entitled to payment therefor and
shall file a report respecting such value in the office of the clerk of
B-1
<PAGE>
the court, and notice of the filing of such report shall be given by the clerk
of the court to the parties in interest. Such report shall be subject to
exceptions to be heard before the court both upon the law and facts. The court
by its decree shall determine the value of the stock of the stockholders
entitled to payment therefor and shall direct the payment of such value,
together with interest, if any, as hereinafter provided, to the stockholders
entitled thereto by the surviving or resulting corporation. Upon payment of
the judgment by the surviving or resulting corporation, the clerk of the
district court shall surrender to the corporation the certificates of shares
of stock held by the clerk pursuant to subsection (g). The decree may be
enforced as other judgments of the district court may be enforced, whether
such surviving or resulting corporation be a corporation of this state or of
any other state.
(g) At the time of appointing the appraiser or appraisers, the court shall
require the stockholders who hold certificated shares and who demanded payment
for their shares to submit their certificates of stock to the clerk of the
court, to be held by the clerk pending the appraisal proceedings. If any
stockholder fails to comply with such direction, the court shall dismiss the
proceedings as to such stockholder.
(h) The cost of any such appraisal, including a reasonable fee to and the
reasonable expenses of the appraiser, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to such appraisal or any of them as appears to be equitable,
except that the cost of giving the notice by publication and by registered or
certified mail hereinabove provided for shall be paid by the corporation. The
court, on application of any party in interest, shall determine the amount of
interest, if any, to be paid upon the value of the stock of the stockholders
entitled thereto.
(i) Any stockholder who has demanded payment of the stockholder's stock as
herein provided shall not thereafter be entitled to vote such stock for any
purpose or be entitled to the payment of dividends or other distribution on
the stock, except dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the merger or
consolidation, unless the appointment of an appraiser or appraisers shall not
be applied for within the time herein provided, or the proceeding be dismissed
as to such stockholder, or unless such stockholder with the written approval
of the corporation shall deliver to the corporation a written withdrawal of
the stockholder's objections to and an acceptance of the merger or
consolidation, in any of which cases the right of such stockholder to payment
for the stockholder's stock shall cease.
(j) The shares of the surviving or resulting corporation into which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized
and unissued shares of the surviving or resulting corporation.
(k) This section shall not apply to the shares of any class or series of a
class of stock, which, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of stockholders at
which the agreement of merger or consolidation is to be acted on, were either
(1) registered on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the national
association of securities dealers, inc., or (2) held of record by not less
than 2,000 stockholders, unless the articles of incorporation of the
corporation issuing such stock shall otherwise provide; nor shall this section
apply to any of the shares of stock of the constituent corporation surviving a
merger, if the merger did not require for its approval the vote of the
stockholders of the surviving corporation, as provided in subsection (f) of
K.S. 17-6701 and amendments thereto. This subsection shall not be applicable
to the holders of a class or series of a class of stock of a constituent
corporation if under the terms of a merger of consolidation pursuant to K.S.
17-6701 or 17-6702, and amendments thereto, such holders are required to
accept for such stock anything except (i) stock or stock and cash in lieu of
fractional shares of the corporation surviving or resulting from such merger
or consolidation, or (ii) stock or stock and cash in lieu of fractional shares
of any other corporation, which at the record date fixed to determine the
stockholders entitled to receive notice of and to vote at the meeting of
stockholders at which the agreement of merger or consolidation is to be acted
on, were either registered on a national securities exchange or held of record
by not less than 2,000 stockholders, or (iii) a combination of stock or stock
and cash in lieu of fractional shares as set forth in (i) and (ii) of this
subsection.
B-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company Articles and the Company Bylaws require it to indemnify its
directors and officers and advisory directors against liabilities, fines,
penalties, settlements, claims and reasonable expenses incurred by them in
connection with any proceeding to which they may be made a party by reason of
their service in those capacities to the fullest extent permitted by the KGCC.
The KGCC permits a corporation to indemnify its present and former directors
and officers if ordered to do so by a court or after a determination by its
independent counsel, stockholders or a majority of its disinterested directors
that the person to be indemnified acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of
the corporation.
ITEM 21. EXHIBITS
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
2 Restated Agreement and Plan of Reorganization dated the 29th day
of April, 1998, among the Registrant, Sub and Tri-County (in-
cluded as Annex A to the Prospectus).
3(a) Amended and Restated Articles of Incorporation of the Company*
3(a)(i) Certificate of Amendment to Restated Articles of Incorporation**
3(b) Restated Bylaws of the Company*
4 Form of Common Stock Certificate*
5 Opinion of Blackwell Sanders Peper Martin LLP
8 Opinion of Payne & Jones, Chartered
9(a) Proxy Agreement/Stockholder Agreement between Michael W. Gullion
and William Wallman, dated as of September 15, 1996*
9(b) Proxy Agreement/Stockholder Agreement between Michael W. Gullion
and William F. Wallman, dated as of September 15, 1996*
10(a) Employment Agreement between the Company and Michael W. Gullion*
10(b) Employment Agreement between the Company and Keith E. Bouchey*
10(c) Gold Banc Corporation, Inc. 1996 Equity Compensation Plan*
10(d) Form of Tax Sharing Agreements between the Company and the Banks*
10(e) Form of Federal Home Loan Bank Credit Agreement to which each of
the Banks is a party*
10(f) Form of Junior Subordinated Indenture dated as of December 15,
1997 between the Company and Banker's Trust Company as Trust-
ee.***
10(g) Form of Trust Agreement dated as of December 15, 1997 between the
Company and Banker's Trust (Delaware) as Trustee.***
10(h) Form of Amended and Restated Trust Agreement among the Company,
Banker's Trust Company, as Property Trustee, Banker's Trust (Del-
aware), as Delaware Trustee and various holders of Trust Securi-
ties.***
10(i) Form of Guaranty Agreement between the Company, as Guarantor, and
Banker's Trust Company, as Trustee, dated as of December 15,
1997.***
21 List of Subsidiaries of the Company****
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
23(a) Consent of KPMG Peat Marwick LLP.
23(b) Consent of KPMG Peat Marwick LLP.
23(c) Consent of Blackwell Sanders Peper Martin LLP (included in Exhibit
5).
24 Powers of Attorney (included in signature page to Registration
Statement).
99(a) Form of Proxy of Tri-County Bancshares, Inc.
</TABLE>
- --------
* Previously filed as an Exhibit to the Company's Registration Statement on
Form SB-2 No. 333-12377 and the same is incorporated herein by reference.
**Previously filed as an Exhibit to the Company's Registration Statement on
Form S-4 No. 333-28563 and the same is incorporated herein by reference.
***Previously filed as an Exhibit to the Company's Registration Statement on
Form SB-2 No. 333-39849 and the same is incorporated herein by reference.
****Previously filed as an Exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997 and the same is incorporated herein by
reference.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) That, for the purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of employee benefit plans annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
(2) That, prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form.
(3) That, every prospectus (i) that is filed pursuant to paragraph (2)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415 (section 230.415 of this chapter), will be
filed as part of an amendment of the registration statement and will not be
used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such post-
effective amendment 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.
(4) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Items 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(5) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of registrant in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
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 LEAWOOD, KANSAS ON JUNE
24, 1998.
GOLD BANC CORPORATION, INC.
(Registrant)
/s/ Michael W. Gullion
-------------------------------------
Michael W. Gullion
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, THAT WE, THE UNDERSIGNED DIRECTORS OF GOLD
BANC CORPORATION, INC., HEREBY SEVERALLY CONSTITUTE MICHAEL W. GULLION AND
KEITH E. BOUCHEY, AND EACH OF THEM SINGLY, OUR TRUE AND LAWFUL ATTORNEYS WITH
FULL POWER TO THEM, AND EACH OF THEM SINGLY, TO SIGN FOR US AND IN OUR NAMES
IN THE CAPACITIES INDICATED BELOW, THE REGISTRATION STATEMENT FILED HEREWITH
AND ANY AND ALL AMENDMENTS TO SAID REGISTRATION STATEMENT, AND GENERALLY TO DO
ALL SUCH THINGS IN OUR NAMES AND IN OUR CAPACITIES AS DIRECTORS TO ENABLE GOLD
BANC CORPORATION, INC. TO COMPLY WITH THE PROVISIONS OF THE SECURITIES ACT OF
1933, AND ALL REQUIREMENTS OF THE SECURITIES AND EXCHANGE COMMISSION, HEREBY
RATIFYING AND CONFIRMING OUR SIGNATURE AS THEY MAY BE SIGNED BY OUR SAID
ATTORNEYS, OR ANY OF THEM, TO SAID REGISTRATION STATEMENT AND ANY AND ALL
AMENDMENTS THERETO.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Michael W. Gullion Chairman of the Board, June 24, 1998
____________________________________ President and Chief
Michael W. Gullion Executive Officer
(Principal Executive
Officer)
/s/ Keith E. Bouchey Director, Executive Vice June 24, 1998
____________________________________ President, Chief Financial
Keith E. Bouchey Officer and Corporate
Secretary
(Principal Financial
Officer)
/s/ Brian J. Ruisinger Treasurer and Controller June 24, 1998
____________________________________ (Principal Accounting
Brian J. Ruisinger Officer)
/s/ William Wallman Director June 24, 1998
____________________________________
William Wallman
Director , 1998
____________________________________
D. Michael Browne
/s/ William F. Wright Director June 24, 1998
____________________________________
William F. Wright
/s/ Allen D. Petersen Director June 24, 1998
____________________________________
Allen D. Petersen
</TABLE>
II-4
<PAGE>
EXHIBIT 5
__________, 1998
Gold Banc Corporation, Inc.
11301 Nall Avenue
Leawood, Kansas 66211
Ladies and Gentlemen:
We have acted as counsel to Gold Banc Corporation, Inc., a Kansas
corporation ("the Company"), in connection with the transactions contemplated
by the Restated Agreement and Plan of Reorganization, dated as of April 29,
1998 (the "Agreement"), by and among the Company, Gold Banc Acquisition
Corporation II, Inc. ("Sub") and Tri-County Bancshares, Inc. ("Tri-County").
This opinion is being furnished in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the
"Securities Act").
Pursuant to the Agreement, Tri-County will be merged with and into Sub, with
Sub being the surviving corporation (the "Merger"). In the Merger, the
outstanding shares of common stock, $100.00 par value of Tri-County, other
than any shares owned by the Company, Sub or Tri-County (which shares will be
canceled), will be exchanged for fully paid and nonassessable shares of common
stock, $1.00 par value, of the Company (the "Company Common Stock").
In connection with the transactions contemplated by the Agreement, the
Company will file with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (the "Registration
Statement") relating to the registration under the Securities Act of the
shares of the Company Common Stock to be issued in the Merger.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Registration Statement, (ii) the Articles of Incorporation and By-laws
of the Company, as in effect on the date hereof, (iii) the Agreement and (iv)
certain resolutions of the Board of Directors of the Company relating to the
Merger. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents as we have deemed necessary
or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the completeness and authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic copies
and the completeness and authenticity of the originals of such latter
documents. In making our examination of documents executed by parties other
than the Company, we have assumed that such parties had the power, corporate
or other, to enter into and perform all obligations thereunder and have also
assumed the due authorization by all requisite action, corporate or other, and
execution and delivery by such parties of such documents on such parties. As
to any facts material to the opinion expressed herein which were not
independently established or verified, we have relied upon oral or written
statements and representations of officers and other representations of the
Company and others.
Members of our firm are admitted to the Bar in the State of Kansas, and we
do not express any opinion as to the laws of any other jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that the
shares of the Company Common Stock, when issued upon the consummation of the
Merger in accordance with the terms of the Agreement and as set forth in the
Registration Statement, will be validly issued, fully paid and nonassessable.
<PAGE>
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and to the reference to our firm under
the heading "Legal Opinion" in the related Prospectus/Proxy Statement which
forms a part of the Registration Statement. In giving such consent we do not
thereby admit or imply that we are in the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Commission thereunder.
Very truly yours,
/s/ Blackwell Sanders Peper Martin
LLP
2
<PAGE>
EXHIBIT 8
, 1998
Gold Banc Acquisition Corporation, Inc.
11301 Nall
Leawood, KS 66211
Attn.: Mr. Michael W. Gullion, President
RE: Agreement with Tri-County Bancshares, Inc.
Ladies and Gentlemen:
We have acted as counsel to Gold Banc Acquisition Corporation II, Inc.
("Gold Banc Acquisition II") and to Gold Banc Corporation, Inc. ("Gold") in
connection with the acquisition by Gold Banc Acquisition II of all of the
issued and outstanding shares of stock of Tri-County Bancshares, Inc. ("Tri-
County") under and pursuant to that certain Restated Agreement and Plan of
Reorganization dated April 28, 1998 (the "Agreement"). Pursuant to Section
7.11 of the Agreement, a condition precedent to the obligation of Gold and
Gold Banc Acquisition to close the transaction described in the Agreement is
that Gold shall have received an opinion of counsel that the transaction
described in the Agreement will be treated as a tax-free reorganization under
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
"Code").
In connection with this transaction, we have reviewed the following
documents:
i. The Agreement.
ii. The Certificate of Merger dated , 1998 (the "Certificate
of Merger") executed by authorized representatives of Gold Banc Acquisition
II and Tri-County.
iii. Minutes of certain meetings of the Board of Directors of Gold, Gold
Banc Acquisition II and Tri-County.
iv. Minutes of certain meetings of shareholders of Gold Banc Acquisition
II and Tri-County.
v. Articles of Incorporation and Bylaws of Gold.
vi. Articles of Incorporation and Bylaws of Gold Banc Acquisition II.
vii. Articles of Incorporation and Bylaws of Tri-County.
We have also reviewed such other records and documents as we deem pertinent
in rendering the opinion described herein.
In rendering this opinion, we have made, with your consent and without
independent investigation on our part, the following assumptions:
1. All documents executed by all parties to the Agreement have been duly
and properly authorized, executed, attested, delivered and accepted.
2. All documents submitted to us as copies conform to the original
documents, and all such originals are authentic.
3. There are no oral agreements or other written documents or course of
conduct which may modify the terms of the Agreement or the Certificate of
Merger.
4. Gold Banc Acquisition II, as a result of the consummation of the
transaction described in the Agreement, will ultimately acquire
substantially all of the properties of Tri-County.
5. There is no consideration being provided by Gold Banc Acquisition II
pursuant to the Agreement other than stock of Gold (except for certain cash
payments required by the Agreement and subject to rights of dissenting
shareholders of Tri-County pursuant to K.S.A. 17-6712). No stock of Gold
Banc Acquisition
<PAGE>
II is being used as consideration for this transaction. Gold Banc
Acquisition II is assuming no liabilities of Tri-County except as set forth
in the Agreement.
6. All representations and warranties of all parties to the Agreement as
set forth therein are true, accurate and complete.
7. The Certificate of Merger will be filed on a timely basis with the
Kansas Secretary of State and recorded in the office of the Register of
Deeds of each county in which the registered office of Gold, Gold Banc
Acquisition II and Tri-County respectively is located.
8. The shareholders of Tri-County have no preconceived plan or
arrangement to dispose of a significant percentage of the stock in Gold
being acquired pursuant to the transaction described in the Agreement.
9. Gold and Gold Banc Acquisition II will continue Tri-County's historic
business or will use a significant portion of Tri-County's historic
business assets in continuing such business.
10. The primary motivation to Gold and Gold Banc Acquisition II in
consummating this transaction is to acquire the business operations of Tri-
County and not to avoid income tax.
11. There is no plan to immediately liquidate Gold Banc Acquisition II
after the closing of the transaction described in the Agreement.
Based upon the foregoing and subject to the assumptions, qualifications and
limitations set forth herein, it is our opinion that the transaction described
in the Agreement will be treated as a tax-free reorganization as that term is
used in Section 368(a)(1)(A) of the Code. This opinion does not address any
issue applicable to carryover of tax attributes as governed by Section 381 of
the Code. Further, this opinion does not address additional requirements
imposed upon the parties to the Agreement to file documentation with federal
income tax returns in the year in which such transaction closes, nor does this
opinion address the issue of basis of any asset acquired by any party to the
transaction.
The opinion expressed herein is restricted to matters governed by the laws
of the United States of America and the laws of the State of Kansas as they
exist as of the date of this letter. To the extent there is any change in the
federal income tax laws after this date, no opinion is expressed as to the
impact of such change on the tax treatment of the transaction described in the
Agreement. Further, to the extent the laws of the State of Kansas change after
this date with respect to the steps required to consummate a merger, this
opinion does not address the impact of such changes upon the income tax
treatment of the transaction described in the Agreement. We undertake no
obligation or responsibility to update or supplement this opinion in response
to subsequent changes in the law or any subsequent changes in the relevant
factual circumstances pertaining to the transaction described in the
Agreement.
The opinion expressed herein is being delivered to you for your sole use and
benefit in connection with the transaction described in the Agreement. This
opinion may not be relied upon by any other person and may not be used in
whole or in part for any other purpose or delivered to any other person except
with the prior written consent of the undersigned.
Yours very truly,
/s/ Thomas K. Jones
for Payne & Jones, Chartered
2
<PAGE>
EXHIBIT 23(A)
INDEPENDENT ACCOUNTANTS' CONSENT
Board of Directors
Gold Banc Corporation, Inc.:
We consent to the incorporation by reference in the Registration Statement
on Form S-4 of Gold Banc Corporation, Inc. of our report dated January 19,
1998, relating to the consolidated balance sheets of Gold Banc Corporation,
Inc. and subsidiaries as of December 31, 1997 and 1996 and the related
statements of income, cash flows and stockholders' equity for each of the
years in the 3-year period ended December 31, 1997, which report appears in
the December 31, 1997 annual report on Form 10-K of Gold Banc's Corporation,
Inc., and inclusion in the Registration Statement on Form S-4 of Gold Banc
Corporation, Inc. to the reference to our firm under the heading of "Experts"
in the related Prospectus.
/s/ KPMG Peat Marwick LLP
Kansas City, Missouri
June 24, 1998
<PAGE>
EXHIBIT 23(B)
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Tri-County Bank Shares
We hereby consent to the inclusion in the Registration Statement on Form S-4
of Gold Banc Corporation, Inc. our report dated June 5, 1998 with respect to
Tri-County Bank Shares, Inc's financial statements for the year ended December
31, 1997. We also consent to the reference to our firm under the heading
"Experts" in the related Prospectus.
/s/ KPMG Peat Marwick LLP
Kansas City, Missouri
June 24, 1998
<PAGE>
Exhibit 99(a)
PROXY/VOTING INSTRUCTION CARD [FRONT OF CARD]
TRI-COUNTY BANCSHARES, INC.
Common Stock
Proxy for Special Meeting of Stockholders to be held on ____________, 1998
The undersigned hereby appoint James R. Pachta and Don R. Moser and any one
or more of them, with full power of substitution, as a proxy or proxies to vote
all shares of stock of the undersigned as specified below at the special meeting
of stockholders of Tri-County Bancshares, Inc. to be held on ____________, 1998,
and any adjournment or postponements thereof.
The Board of Directors Recommends a Vote FOR the Following Proposal:
Approval of the Restated Agreement and Plan or Reorganization, among Gold
Banc Corporation, Inc., Gold Banc Acquisition Corporation II, Inc. and Tri-
County Bancshares, Inc.
FOR AGAINST
[_] [_]
Specify your choice by marking the appropriate box. If not otherwise specified,
this proxy will be voted for the approval of the acquisition agreement.
The named proxies may vote in their discretion upon such other business as
may properly come before the meeting, or any adjournments or postponements
thereof, including without limitation upon any proposal to postpone or adjourn
the Special Meeting.
, 1998
-----------------------------------------
SIGNATURE Date
, 1998
-----------------------------------------
TITLE (if applicable)
, 1998
-----------------------------------------
SIGNATURE(S) IF HELD JOINTLY Date
, 1998
-----------------------------------------
SIGNATURE(S) IF HELD JOINTLY Date
Should any joint tenants be deceased please attach certified copy of the death
certificate or affidavit of death.
<PAGE>
[BACK OF CARD]
Please follow these steps to ensure that your proxy is properly executed and
returned in time to be counted:
1. Mark your vote for the proposal in one of the two boxes on the other side
of this card.
2. Please sign exactly as your name or names appear on your stock
certificate(s). Also enter the date. Joint owners should each sign
personally. When signing as attorney, executor, administrator, trustee or
guardian, the full title as such should be given.
3. Mail the completed card with signature in the enclosed reply envelope to:
Tri-County Bancshares, Inc.
Attention: Corporate Secretary
408 4th Street
Linn, Kansas 66953
If you have any questions regarding completion of this proxy card, contact
James R. Pachta at (785) 348-5521.
