<PAGE> 1
As filed with the Securities and Exchange Commission on April 13, 1999
Registration No. __________
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------------
TEAM FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
KANSAS 6719 48-1017164
- ------------------------------- ---------------------------- ----------------------
(State or other jurisdiction of (Primary S.I.C. Code Number) (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
8 WEST PEORIA, SUITE 200
PAOLA, KANSAS 66071
(913) 294-9667
---------------------------------------------------
(Address, including zip code, and telephone number,
including area code, of principal executive offices
and principal place of business)
ROBERT J. WEATHERBIE
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
8 WEST PEORIA, SUITE 200
PAOLA, KANSAS 66071
(913) 294-9667
---------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
REID A. GODBOLT, ESQ. MATTHEW C. BOBA, ESQ.
JONES & KELLER, P.C. CHAPMAN AND CUTLER
1625 BROADWAY, SUITE 1600 111 WEST MONROE STREET
DENVER, COLORADO 80202 CHICAGO, ILLINOIS 60603
TELEPHONE: (303) 573-1600 TELEPHONE: (312) 845-3000
-------------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE
PUBLIC: As soon as practicable after the effective date of this
Registration Statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [X]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities Amount to be Offering Price Aggregate Offering Registration
to be Registered Registered(2) Per Security(1) Price Fee
- --------------------------------- ------------- ---------------- ------------------ ------------
<S> <C> <C> <C> <C>
Common Stock 1,150,000 $ 13.00 $ 14,950,000 $ 4,157
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------
(1) Estimated solely for purposes of calculating the registration fee.
(2) Includes 150,000 shares of common stock subject to the underwriters'
over-allotment option.
---------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON THE DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT WILL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT WILL BECOME
EFFECTIVE ON THE DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
===============================================================================
<PAGE> 3
SUBJECT TO COMPLETION, DATED _____________, 1999
1,000,000 SHARES
TEAM FINANCIAL, INC.
[LOGO]
COMMON STOCK
- -------------------------------------------------------------------------------
This is our initial public offering of shares of common stock. Of the
1,000,000 shares offered, Team is offering 700,000 shares and 300,000 shares
are being offered by a selling shareholder, Team's employee stock ownership
plan. Team will not receive any proceeds from shares sold by the selling
shareholder.
No public market currently exists for the shares.
We have filed an application to list the shares on the Nasdaq National
Market(R) under the symbol TFIN. The anticipated price range is $11.00 to
$13.00 per share.
INVESTING IN THE SHARES INVOLVES RISKS. PLEASE REFER TO "RISK FACTORS"
BEGINNING ON PAGE 3.
<TABLE>
<CAPTION>
Underwriting Proceeds
Price to Discounts and Proceeds to Selling
Public Commissions to Team Shareholder
<S> <C> <C> <C> <C>
Per Share $ $ $ $
Total $ $ $ $
</TABLE>
Team has granted the underwriters a 30-day option to purchase up to 150,000
additional shares on the same terms as above to cover over-allotments, if any.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE. THESE SECURITIES ARE NOT DEPOSITS OR ACCOUNTS AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.
Howe Barnes Investments, Inc., on behalf of the underwriters, expects to
deliver the shares on or about _________, 1999.
- -------------------------------------------------------------------------------
HOWE BARNES INVESTMENTS, INC.
, 1999
- -------------------------------------------------------------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
- -------------------------------------------------------------------------------
<PAGE> 4
[TEAM LOGO]
[MAP]
<PAGE> 5
PROSPECTUS SUMMARY
This summary provides an overview of selected information contained
elsewhere in this prospectus and does not contain all the information you
should consider. Therefore, you should also read the more detailed information
set forth in this prospectus and in our financial statements appearing
elsewhere in this prospectus. Unless otherwise indicated, all information in
this prospectus gives effect to the five-for-one stock split of our common
stock made in December 1998 and assumes that the underwriters' over-allotment
option is not exercised.
TEAM
Team Financial, Inc., a multi-bank holding company, offers full service
community banking through 15 banking locations, seven in the Kansas City area,
three in southeastern Kansas, two in western Missouri and three in the Omaha,
Nebraska area. Team's growth strategy is focused on a combination of
acquisitions, establishing new branches and internal growth.
Team is majority owned by its employee stock ownership plan or ESOP. Team
was formed in 1986 by the purchase of a one-bank holding company by certain of
its executive officers and the ESOP. A majority of the funding of the purchase
was obtained through ESOP borrowings which were guaranteed by Team. After
giving effect to this offering, including the sale of ESOP-owned shares, the
ESOP will continue to hold 34.7% of Team's common stock.
Team has grown dramatically over recent years, from assets of $237.8
million as of December 31, 1994, to $442.4 million as of December 31, 1998.
Growth was achieved primarily through purchases of branches of large banks and
through an acquisition of a community bank. Additional asset growth occurred
through internal growth at existing banks as well as starting three new
branches. During this period of asset growth and corresponding revenue
increases, net income has remained level, as Team has absorbed the costs of its
acquisitions and expansion. Team's strategy takes into account, and its
experience is, that it takes up to 18 months to realize meaningful net income
improvements from acquisitions and expansion.
Team's principal executive office is located at 8 West Peoria, Suite 200,
Paola, Kansas, and its telephone number is (913) 294-9667.
THE OFFERING
<TABLE>
<S> <C>
Common stock offered................ 700,000 shares by Team
300,000 shares by Team's ESOP as
--------- selling shareholder
1,000,000 total shares
=========
Common stock to be outstanding
after the offering................. 3,701,803 based on the number of
shares outstanding as of
the date of this prospectus
Proposed Nasdaq National Market(R)
symbol............................. TFIN
Use of Proceeds..................... Net proceeds to Team will be used
to repay $6.0 million of debt
and to contribute $1.5 million as
capital to a subsidiary bank. The
selling shareholder currently
intends to use $1.0 million of its
proceeds to pay debt guaranteed by
Team. This will reduce Team's
liabilities and increase
stockholders' equity by $1.0 million.
See "Capitalization."
</TABLE>
1
<PAGE> 6
RISK FACTORS
You should carefully read the following risk factors and other sections of
this prospectus before purchasing any shares.
TEAM'S GROWTH STRATEGY INVOLVES RISKS THAT MAY NEGATIVELY IMPACT ITS PROFITS.
Team believes its growth will primarily depend on its ability to expand its
business through the acquisition of other financial institutions or bank
branches, internal growth and the opening of new branch offices. Team's ability
to grow profitably through the opening of new branches depends primarily on Team
identifying profitable or growing markets and acquiring or establishing branch
locations in those markets at reasonable costs. In addition, Team must attract
the necessary deposits and locate sound loans in those markets.
Acquiring other financial institutions or bank branches involves these
same risks, as well as additional risks, including:
o adverse change in the results of operations of the acquired entities;
o unforeseen liabilities or asset quality problems of the acquired
entities;
o greater than anticipated costs of integrating acquisitions;
o adverse personnel relations;
o loss of customers; and
o deterioration of local economic conditions.
The risks discussed above may inhibit or restrict Team's strategy to grow
through acquisition and branch expansion, negatively impact Team's revenue
growth and ultimately reduce its profits.
IF TEAM IS UNABLE TO SUCCESSFULLY INTEGRATE ACQUISITIONS, ITS EARNINGS COULD BE
NEGATIVELY AFFECTED.
Team has a history of growth through acquisitions and plans to continue
this strategy. See "Business -Overview." In connection with its acquisitions of
banks or bank branches, Team faces challenges in integrating and managing the
businesses which may be acquired. To integrate an acquisition operationally,
Team must:
o centralize and standardize policies, procedures, practices and
processes;
o combine employee benefit plans;
o implement a unified investment policy and adjust the combined
investment portfolio to comply with the policy;
2
<PAGE> 7
o implement a unified loan policy and confirm lending authority;
o implement a standard loan management system; and
o implement a loan loss reserve policy.
Integrating acquisitions may detract attention from day-to-day business of Team
and may result in unexpected costs to Team.
Once an acquired business is integrated, the future prospects of Team will
depend on a number of factors, including, among others:
o its ability to compete effectively in new market areas;
o its successful retention of earning assets, including loans acquired
in acquisitions;
o its ability to generate new earning assets;
o its ability to attract deposits;
o its ability to achieve cost savings. Historically, Team has not
implemented wholesale cost cutting after acquisitions, preferring to
adjust operational costs on an ongoing basis in order to preserve
market share and each acquired entity's standing in its community;
and
o its ability to attract and retain qualified management and other
appropriate personnel.
If these factors fail to materialize they might have a material adverse effect
on the financial condition and results of operations of Team.
WE MAY NOT BE SUCCESSFUL IN IMPLEMENTING OUR INTERNAL GROWTH STRATEGY DUE
TO THE SIGNIFICANT COMPETITION WE FACE.
Team intends to continue to pursue an internal growth strategy, the
success of which will depend primarily on generating an increasing level of
loans and deposits at acceptable risk levels without corresponding increases in
non-interest expenses. There can be no assurance that Team will be successful
in continuing its internal growth strategies due to delays and other
impediments resulting from regulatory oversight, lack of qualified personnel,
scarcity of bank acquisitions or branch sites or deficient site selection
of bank branches. In addition, the success of Team's internal growth strategy
will depend on maintaining sufficient regulatory capital levels and on
continued favorable economic conditions in Team's primary market areas.
A primary factor influencing Team's ability to achieve internal growth is
competition. The banking business in Team's operating areas is highly
competitive. Team competes for loans and deposits with other local, regional
and national commercial banks, savings banks, savings and loan associations,
finance companies, money market funds, brokerage houses, credit unions and
nonfinancial institutions, many of which have substantially greater financial
resources than Team. In addition, interstate banking is permitted in Kansas,
Missouri and to a lesser extent in Nebraska. As a result, management believes
that Team may experience significant competition in its market areas that may
negatively impact its ability to achieve growth.
3
<PAGE> 8
ABSENCE OF AN ESTABLISHED PUBLIC MARKET MAY ADVERSELY AFFECT TEAM'S STOCK PRICE
AND ANY DEVELOPING MARKET MAY NOT ELIMINATE VOLATILITY OF TEAM'S STOCK PRICE.
Team has filed an application with the Nasdaq National Market to list the
shares of common stock offered by this prospectus. Team anticipates that the
common stock will be listed on the Nasdaq National Market under the trading
symbol "TFIN."
To date, there has been no established public market for Team's common
stock. There can be no assurance that:
o an active market for the common stock will develop;
o any market for the common stock that develops will be liquid; or
o you will be able to sell your common stock at any particular price.
If a public market for the common stock develops, the market price of
common stock could fluctuate significantly due to variations in quarterly and
yearly results of operations, general trends in the banking industry and other
factors. Additionally, there have historically been price and volume
fluctuations in the stock market that often have been unrelated or
disproportionate to the operating performance of affected companies. These
broad fluctuations might adversely affect the market price of the common stock.
ABSENCE OF AN ESTABLISHED PUBLIC MARKET FOR OUR COMMON STOCK MAY EXPOSE US TO A
SIGNIFICANT ESOP STOCK REPURCHASE LIABILITY.
In the event a public market for Team's common stock does not develop the
stock may be deemed not readily tradable under the Internal Revenue Code. Team
will then be obligated to repurchase common stock of its ESOP participants who
terminate employment and elect to take their ESOP distribution in cash or to
sell back their shares, or elect to diversify their ESOP accounts pursuant to
diversification rights in the Internal Revenue Code. These repurchase
obligations, if they arise, would be significant, and could be expected to have
a material adverse effect on the results of operations and financial condition
of Team. For further discussion regarding Team's potential repurchase
obligations in the event of an absence of an active public market for Team's
common stock, as well as an overview of Team's ESOP, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity" and "Management--Employee Stock Ownership Plan."
SINCE CONTROL OF TEAM IS HELD BY ITS ESOP, DIRECTORS AND OFFICERS, THEY HAVE
SUBSTANTIAL INFLUENCE OVER TEAM.
As of March 31, 1999, Team's ESOP, directors and executive officers
beneficially owned 60.6% of the common stock. The trustee of the ESOP is Team,
acting through its board of directors, which means
4
<PAGE> 9
that the board exerts substantial influence over the ESOP. Upon completion of
the offering, Team's ESOP, directors and executive officers will beneficially
own 41.0% of the common stock. These persons will be in a position to exercise
substantial influence over the affairs of Team and may impede the acquisition of
control of Team by a third party. See "Management" and "Principal Shareholders
and Selling Shareholder."
IF THE COMPUTER SYSTEMS OF TEAM OR ITS SUPPLIERS AND CUSTOMERS ARE NOT YEAR
2000 COMPLIANT, TEAM'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS MAY BE
ADVERSELY AFFECTED.
Team faces a significant business issue regarding how existing application
software programs and operating systems will accommodate the date value for the
year 2000. Many existing software application products, including software
application products used by Team and its suppliers and customers, were
designed to accommodate only a two-digit date value, which represents the year.
The interruption to Team's business could be substantial if its current
computer service provider fails in efforts to assist Team in becoming year 2000
compliant.
In addition, failure by suppliers and customers of Team to modify and
convert their own computer systems could have a significant adverse effect on
the suppliers' or customers' operations and profitability, thus inhibiting
their ability to provide services or repay loans to Team. It is unlikely that
Team will accumulate sufficient information on its suppliers' and customers'
year 2000 programs to assess adequately the impact on Team. This uncertainty
may negatively impact Team's financial condition and results of operations
since potential problems may not be identified prior to January 1, 2000. For
further information, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Year 2000 Considerations."
IF OUR ALLOWANCE FOR LOAN LOSSES IS NOT ADEQUATE TO COVER ACTUAL LOSSES, OUR
EARNINGS COULD BE ADVERSELY AFFECTED.
The inability of borrowers to repay loans can erode earnings and capital
of banks. Like all financial institutions, Team maintains an allowance for loan
losses that may result from loan defaults and nonperformance. Team's allowance
for loan losses may not be adequate to cover actual losses, and future
provisions for loan losses could materially and adversely affect the results of
operations of Team. The allowance for loan losses is based on prior experience
with loan losses, as well as an evaluation of the risks in the current
portfolio. This allowance is maintained at a level considered adequate by
management to absorb anticipated losses. The amount of future losses is
susceptible to changes in economic, operating and other conditions, including
changes in interest rates, that may be beyond management's control. These
losses may exceed current estimates.
State and federal regulatory agencies, as an integral part of their
examination process, review Team's loans and its allowance for loan losses.
Management may determine a need to further increase the allowance for loan
losses. Regulators, when reviewing Team's loan portfolios in the future, may
require Team to increase this allowance, adversely affecting Team's earnings.
Further, Team's actual loan losses may exceed its allowance for loan losses
resulting in additional charges to Team and reducing profitability. For further
information regarding loan loss allowances, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
IF ECONOMIC CONDITIONS IN GENERAL AND IN OUR PRIMARY MARKET AREAS DETERIORATE,
OUR REVENUES COULD DECREASE.
Team's financial results may be adversely affected by changes in
prevailing economic conditions, including declines in real estate values, rapid
changes in interest rates, adverse employment conditions
5
<PAGE> 10
and the monetary and fiscal policies of the federal government. Because Team
has a significant amount of real estate loans, declines in real estate values
could adversely affect the value of property used as collateral.
In addition, substantially all of the loans of Team are to individuals and
businesses in suburban Kansas City, eastern Kansas, western Missouri and the
Omaha, Nebraska area. Any decline in the economy of these market areas could
have an adverse impact on Team's revenues. There can be no assurance that
positive trends or developments discussed in this prospectus will continue or
that negative trends or developments will not have a significant adverse effect
on Team's revenues.
A DECREASE IN INTEREST RATE SPREADS MAY DECREASE OUR PROFITS.
Team's profitability is in part a function of the spread between the
interest rates earned on assets and the interest rates paid on deposits and
other interest-bearing liabilities. A sustained decrease in interest rate
spreads would have a negative effect on the net interest income and
profitability of Team, and there can be no assurance that a decrease will not
occur. Although management believes that the maturities of Team's assets are
moderately balanced in relation to maturities of liabilities, this balance
involves estimates as to how changes in the general level of interest rates
will impact the yields earned on assets and the rates paid on liabilities. For
further information regarding these matters, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Results of
Operations -- Net Interest Income" and "-- Liquidity -- Asset Liability
Management."
YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION OF BOOK VALUE UPON
PURCHASE OF YOUR SHARES.
If you purchase shares in this offering, and 700,000 shares are sold by
Team at the assumed offering price of $12.00 per share, the net tangible book
value of your shares as of December 31, 1998 will be $7.58. As this is $4.42
less than your purchase price, you will incur immediate and substantial dilution
in the book value of your shares. See "Dilution."
SALES OF COMMON STOCK BY EXISTING SHAREHOLDERS COULD ADVERSELY AFFECT THE PRICE
OF YOUR STOCK.
Following completion of the offering, Team will have 3,701,803 shares of
common stock outstanding, or 3,851,803 if the underwriters' over-allotment
option is exercised in full. The shares offered pursuant to this prospectus
will be freely tradeable without restriction, except for any shares which are
purchased by affiliates of Team. The directors and executive officers of Team,
who will hold or beneficially own an aggregate of 1,519,430 shares upon
completion of the offering, have agreed not to offer, sell, or contract to sell
any common stock for 180 days after the date of this prospectus without the
prior written consent of the representative of the underwriters. Team's ESOP,
which will own 1,282,700 shares upon completion of this offering, has agreed
not to sell its shares, for the 180 day period, except in connection with
ordinary course of business distributions of cash or common stock to its
participants. See "Underwriting." Upon expiration of this 180-day period all of
these shares, representing 41.0% of the total number of shares which will be
outstanding following completion of the offering, could be resold by these and
other persons who are affiliates of Team, subject to certain requirements of
Rule 144 under the Securities Act. Rule 144 includes a limit on the number of
shares that may be sold in any three-month period equal to the greater of 1% of
the shares outstanding, or the average weekly trading volume of shares of common
stock for the four-week period prior to the time of the resale. Sales of a
significant number of shares of common stock in the public market following the
offering, or the perception that the sales could occur, could adversely affect
the market price of the common stock. See "Shares Eligible for Future Sale."
6
<PAGE> 11
IMPEDIMENTS TO TAKEOVER ATTEMPTS AND REMOVAL OF DIRECTORS AND EXECUTIVE
OFFICERS MAY DEPRESS THE PRICE OF YOUR SHARES.
There are provisions in the articles of incorporation of Team and other
restrictions that would make it difficult and expensive to pursue a change in
control or takeover attempt which is opposed by Team's board of directors. As a
result, shareholders may not have an opportunity to participate in these types
of transactions and thereby not take advantage of certain premiums paid in
today's market. These restrictions may make the removal of the current board of
directors difficult and could have the effect of depressing the trading price of
the shares of common stock. These restrictions include:
o management, through the ESOP and the board of directors, has
effective voting and operational control of Team.
o federal law imposes restrictions on the acquisition of control of a
bank holding company, including regulatory approval requirements.
o Kansas law, under which Team is incorporated, gives the board of
directors broad discretion to resist takeover attempts, even if such
a transaction would be in the best interests of Team's shareholders.
o provisions in Team's articles of incorporation and bylaws providing
that:
o the board of directors is authorized to issue blank check
preferred stock, which could be issued as part of a takeover
defense.
o the board of directors is divided into three classes that are
elected over a three-year period, thus making it more difficult
for a third party to acquire control of Team.
o allocation of shares in the ESOP. Certain shares of common stock
allocated to Team employees under its ESOP may be voted by the ESOP
trustee at the direction of employees. The ESOP trustee will vote
unallocated shares, and allocated shares as to which no instructions
are received, subject to the requirements of its fiduciary duties.
Team, acting through its board of directors, serves as the ESOP
trustee, although Team has retained an independent fiduciary to act
for the ESOP in connection with this offering.
o employment agreements with several executive officers of Team or of
its subsidiary banks require severance pay of a discounted cash value
for remaining unpaid base salary under the agreements plus the
continuation of other benefits for up to two years upon termination
of the employment agreements without cause. See
"Management--Executive Compensation."
SIGNIFICANT GOVERNMENT REGULATION MAY RESULT IN HIGHER OPERATING COSTS FOR
TEAM.
Team and its banks are subject to extensive federal and state legislation,
regulation and supervision which is intended primarily to protect depositors
and the Federal Deposit Insurance Corporation's Bank Insurance Fund, rather
than investors. Some of the legislative and regulatory changes may increase
Team's and its subsidiary banks' costs of doing business or otherwise adversely
affect them and create competitive advantages for non-bank competitors. For
further information concerning regulation of Team and its banks, see
"Supervision and Regulation."
7
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA
The consolidated statements of operations data for the years ended
December 31, 1998, 1997 and 1996 and the consolidated balance sheet data as of
December 31, 1998 and 1997 are derived from the consolidated financial
statements and related notes which have been audited by KPMG LLP, independent
public accountants, and are included elsewhere in this prospectus. The
consolidated statements of operations data for the years ended December 31,
1995 and 1994 and the balance sheet data as of December 31, 1996, 1995 and 1994
are derived from consolidated financial statements which have been audited by
KPMG LLP, but are not included in this prospectus. The following information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and related notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AT OR FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
INTEREST INCOME...................................... $ 31,854 $ 26,137 $ 21,635 $ 19,661 $ 16,573
INTEREST EXPENSE..................................... 16,573 12,887 10,462 9,745 7,530
NET INTEREST INCOME.................................. 15,281 13,250 11,173 9,916 9,043
PROVISION FOR LOAN LOSSES............................ 1,486 1,095 623 245 121
OTHER INCOME......................................... 4,606 3,279 2,812 2,708 2,106
OTHER EXPENSES....................................... 15,384 12,667 10,132 10,034 9,991
INCOME TAXES......................................... 673 553 938 701 130
NET INCOME........................................... 2,344 2,214 2,292 1,644 907
CONSOLIDATED BALANCE SHEET DATA:
TOTAL ASSETS......................................... $442,352 $386,996 $300,007 $260,268 $237,770
TOTAL LOANS.......................................... 256,126 223,675 183,494 161,492 139,996
ALLOWANCE FOR LOAN LOSSES............................ 2,541 1,629 1,518 1,289 1,199
INVESTMENT SECURITIES AVAILABLE-FOR-SALE............. 109,296 103,304 68,806 67,245 67,611
INVESTMENT SECURITIES HELD-TO-MATURITY............... 25,742 22,399 17,889 13,204 12,290
NONPERFORMING ASSETS(1).............................. 3,578 1,962 2,216 2,259 2,436
DEPOSITS............................................. 384,347 333,864 258,890 225,691 206,407
STOCKHOLDERS' EQUITY................................. 25,401 22,642 19,392 15,796 12,800
PER COMMON SHARE (2):
BASIC INCOME PER SHARE............................... $ 0.85 $ 0.84 $ 1.02 $ 0.74 $ 0.72
BOOK VALUE PER SHARE................................. 8.49 7.68 6.87 6.28 5.00
TANGIBLE BOOK VALUE PER SHARE........................ 6.53 6.21 6.64 6.25 4.98
DIVIDENDS PAID PER COMMON SHARE...................... .23 .23 .23 .22 .10
KEY RATIOS:
NET INTEREST MARGIN (3).............................. 4.00% 4.36% 4.48% 4.26% 4.14%
RETURN ON AVERAGE ASSETS............................. 0.56 0.67 0.85 0.66 0.39
RETURN ON AVERAGE STOCKHOLDERS' EQUITY............... 10.00 10.49 12.96 11.33 6.80
CORE RISK-BASED CAPITAL RATIO........................ 7.05 6.97 9.39 8.97 9.03
TOTAL RISK-BASED CAPITAL RATIO....................... 8.00 7.61 10.15 9.72 9.80
LEVERAGE RATIO ..................................... 4.50 5.39 6.94 6.01 6.00
NONPERFORMING ASSETS TO TOTAL ASSETS................. 0.81 0.51 0.74 0.85 1.02
NONPERFORMING LOANS TO TOTAL LOANS................... 1.04 0.71 1.03 1.05 1.38
ALLOWANCE FOR LOAN LOSSES TO TOTAL LOANS............. 0.99 0.73 0.83 0.80 0.86
ALLOWANCE FOR LOAN LOSSES TO NONPERFORMING LOANS..... 95.10 102.13 80.36 73.83 62.29
</TABLE>
- ----------
(1) Includes loans 90 days or more delinquent and still accruing interest,
nonaccrual loans and other real estate owned.
(2) No difference exists between basic and diluted earnings per share. Gives
effect to the five-for-one stock split of the common stock in December
1998.
(3) On a tax equivalent basis.
8
<PAGE> 13
USE OF PROCEEDS
The net proceeds to Team from the sale of the common stock in this
offering, assuming an initial offering price of $12.00 per share and after
deducting the estimated underwriting discount and offering expenses, will be
$7.5 million or $9.1 million if the over-allotment option is exercised in full.
The net proceeds will be used to repay $6.0 million of debt, which bears
interest at 1% under prime and is due on June 30, 1999, and remaining proceeds
will be contributed to Team Bank N.A., one of Team's subsidiary banks. Although
Team will not receive any of the proceeds from the selling shareholder's sale of
shares, the ESOP currently intends to repay $1.0 million in borrowings which
will reduce Team's liabilities as guarantor and increase its stockholders'
equity. In this instance, Team will incur a one-time federal tax expense of
approximately $60,000. See "Dilution" and "Capitalization."
DIVIDEND POLICY; NO PRIOR MARKET FOR COMMON STOCK
Team has paid yearly dividends on its common stock since 1987. The table
below shows the amount of dividends paid by Team for the years indicated. In
past years dividend payments were advantageous to Team, because under the
Internal Revenue Code, certain dividends paid to the ESOP were deductible as
long as the ESOP had debt outstanding. However, after this offering it is not
contemplated that the ESOP will have debt. Notwithstanding the loss of the
deductibility of dividends paid to the ESOP, Team currently intends to initiate
quarterly dividends on its common stock of $.05 per share beginning in April
1999. However, no assurance can be given that Team will continue to pay or
declare dividends on common stock in the future.
<TABLE>
<CAPTION>
Year Dividends paid per common share
---- -------------------------------
<S> <C>
1994 $ .10
1995 .22
1996 .23
1997 .23
1998 .23
</TABLE>
Kansas law permits Team to pay dividends on its common stock when Team is
solvent and when the dividend payments would not render it insolvent. Under
Kansas law, dividends may be declared and paid only out of the unsecured,
unrestricted earned surplus of a corporation. The ability of Team to pay cash
dividends largely depends on the amount of cash dividends paid to it by its
subsidiary banks. Capital distributions, including dividends by financial
institutions such as the subsidiary banks of Team, are subject to restrictions
tied to the institutions' earnings and capital. Payment of dividends on Team
common stock depends on payment of dividends to Team by its subsidiary banks.
Generally, without prior regulatory approval, the banks cannot pay dividends
during any calendar year in excess of the sum of their earnings during that
year and the two previous years, less any other distributions during that
period. At December 31, 1998, the banks could have paid total dividends to Team
of approximately $3.2 million without prior regulatory approval. See
"Supervision and Regulation" and "Description of Capital Stock."
Prior to this offering, there has been no public market for Team's common
stock, and thus no market price information is available. An application to
list the common stock on the Nasdaq National Market(R) has been filed by Team
but not yet approved. Even if the application is approved there can be no
assurance that a market for the common stock will develop or, if developed,
will be sustained.
9
<PAGE> 14
DILUTION
The net tangible book value of Team at December 31, 1998 was approximately
$19.6 million, or approximately $6.53 per share of common stock. Net tangible
book value is defined as the total stockholders' equity of Team less goodwill.
Net tangible book value per share is determined by dividing the net tangible
book value of Team by the number of outstanding shares of common stock. After
giving effect to the offering, without exercise of underwriters' over-allotment
option, at an assumed offering price of $12.00 per share, and the application
of the estimated net proceeds by Team from the offering, the net tangible book
value of the common stock at December 31, 1998 would have been approximately
$28.0 million, or $7.58 per share. This represents an immediate dilution of
$4.42 per share to investors who purchase shares of common stock in the
offering. Dilution is the difference between the offering price per share and
the pro forma net tangible book value per share as adjusted for the offering.
The following table illustrates this per share dilution as of December 31,
1998, which is determined by subtracting the net tangible book value per share
after the offering from the price paid by a new investor.
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share(1) $ 12.00
Net tangible book value per share of common stock at December 31, 1998 $ 6.53
Increase per share of common stock attributable to new investors(2)(3) 1.05
--------
Pro forma net tangible book value per share of common stock
after the offering(2)(3).................. 7.58
--------
Dilution per share of common stock to new investors $ 4.42
========
</TABLE>
- -----------
(1) Before deducting the estimated underwriting discount and offering
expenses.
(2) After deducting the estimated underwriting discount and offering expenses.
(3) Includes a reduction of $1.0 million of debt by Team's ESOP. See "Use of
Proceeds" and "Capitalization."
The following table summarizes on a pro forma basis as of December 31,
1998, the differences between the average price per share paid by officers and
directors of Team during the past five years compared to the consideration paid
by new investors in this offering at an assumed offering price of $12.00 per
share:
<TABLE>
<CAPTION>
Average
Shares Total Price
Purchased Consideration Per Share
--------- ------------- ---------
<S> <C> <C> <C>
Officers and directors............... 46,974 $ 441,655 $ 9.40
New investors........................ 700,000 8,400,000 12.00
</TABLE>
Team expects that 3,701,803 shares of common stock will be outstanding
after the offering, which includes 8,710 shares issued to certain Team
employees after December 31, 1998, pursuant to Team's employee stock purchase
plan. In addition to the shares outstanding after the offering, Team may issue
up to 75,000 additional shares of common stock under the employee stock
purchase plan and up to 70,000 shares which Team intends to reserve under a
stock incentive plan contemplated to be adopted in 1999 or 2000. See
"Management--Executive Compensation."
10
<PAGE> 15
CAPITALIZATION
The following table sets forth the capitalization of Team at December 31,
1998 and as adjusted to give effect to the issuance and sale by Team of 700,000
shares of the common stock in this offering at an assumed initial public
offering price of $12.00 per share and the use of net proceeds as described in
"Use of Proceeds."
<TABLE>
<CAPTION>
DECEMBER 31, 1998
---------------------------
ACTUAL AS ADJUSTED
--------- -----------
(Dollars in thousands)
<S> <C> <C>
Borrowings:
Federal funds purchased and securities sold under agreements to
repurchase............................................................ $ 6,273 $ 6,273
Notes payable............................................................. 23,060 16,060
--------- ---------
Total borrowings................................................... 29,333 23,333
Stockholders' equity:
Preferred stock, 10,000,000 shares authorized; no shares issued
or outstanding.......................................................... -- --
Common stock, no par value, 50,000,000 shares authorized; 3,020,098
shares issued, (3,720,098 shares issued as adjusted).................... 13,980 21,441
Capital surplus........................................................... 122 122
Retained earnings........................................................... 11,921 11,921
Treasury stock, 27,005 shares of common stock............................... (187) (187)
Accumulated other comprehensive income.................................... 565 565
Unearned compensation..................................................... (1,000) --
--------- ---------
Total stockholders' equity......................................... 25,401 33,862
Total capitalization........................................... $ 54,734 $ 56,195
========= =========
Consolidated regulatory capital ratios:
Total risk-based capital ratio............................................ 8.00% 10.49%
Core risk-based capital ratio............................................. 7.05 9.57
Leverage ratio............................................................ 4.50 6.27
</TABLE>
11
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS ENVIRONMENT AND RISK FACTORS
The following discussion should be read in conjunction with the
consolidated financial statements of Team and the notes included elsewhere in
this prospectus. Team's future operating results may be affected by various
trends and factors that are beyond Team's control. These include the factors
set forth in "Risk Factors" and "Forward-Looking Statements." Accordingly, past
results and trends may not be reliable indicators of future results or trends.
With the exception of historical information, the matters discussed below
include forward-looking statements that involve risks and uncertainties. Team
cautions readers that a number of important factors discussed below could
affect Team's actual results and cause actual results to differ materially from
those in the forward-looking statements.
RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND
1996
GENERAL
Team's earnings over the past three years have essentially remained level,
although asset growth has been substantial. While asset growth has resulted in
increases in revenues, these increases have been offset by operating expenses,
increases in provisions for loan losses and amortization of premiums paid in
acquisitions accounted for by the purchase method. Team believes, however, that
its existing management and systems are capable of supporting additional growth
without significant increases in administrative costs to integrate the growth
into operations. Team's strategy takes into account, and its experience is, that
it takes up to 18 months to realize meaningful net income improvements from
acquisitions and expansion.
At December 31, 1998, total assets of Team were $442.4 million,
representing a $55.4 million, or 14.30% increase over that as of December 31,
1997. This increase is the result of internal growth and the purchase of a
NationsBank branch in Ottawa, Kansas completed during the first quarter of
1998. The branch's deposits of $32.0 million were invested in earning assets
during the year. Team's net income totaled $2.3 million for 1998 compared to
$2.2 million for 1997. Net income in 1998 improved as a result of increased net
interest income of $2.0 million and other income of $1.3 million. These
increases were offset by increased provisions for loan losses of $391,000 and
other expenses of $2.7 million.
At December 31, 1997, total assets of Team were $387.0 million,
representing an $87.0 million, or 29.00% increase over that as of December 31,
1996. This increase is the result of internal growth and the 1997 purchase of
one bank branch from Roosevelt Bank and one branch purchase from Mercantile
Bancorporation. These branch purchases resulted in additional deposits of
approximately $70.0 million. Team's net income totaled $2.2 million for 1997
compared to $2.3 million for 1996. The $78,000 decrease from 1996 is a result
of increases in provisions for loan losses and other expenses which were offset
by increases in net interest income and other income.
NET INTEREST INCOME
Team's income is derived primarily from net interest income. Net interest
income is the difference between interest income, principally from loans,
investment securities and federal funds sold, and interest expense, principally
on customer deposits and other borrowings. Changes in net interest income
result
12
<PAGE> 17
from changes in volume and interest rates earned and expensed. Volume refers to
the average dollar levels of interest-earning assets and interest-bearing
liabilities.
The following table sets forth the average balances of interest-earning
assets and interest-bearing liabilities, as well as the amount of interest
income or interest expense and the average rate for each category of
interest-earning assets and interest-bearing liabilities on a tax-equivalent
basis assuming a 34% tax rate for the periods indicated. Included in the
average balances are non-accruing loans. Loan fees are included in interest
income. Average balances are computed on a daily basis.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 30,
-------------------------------------------------------------------------------------
1998 1997 1996
--------------------------- --------------------------- ---------------------------
AVERAGE AVERAGE AVERAGE
RATE RATE RATE
AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/
BALANCE EXPENSES PAID BALANCE EXPENSES PAID BALANCE EXPENSES PAID
------- -------- ------- ------- -------- ------- ------- -------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
Loans, net (1)(2)(3) .................... $245,012 $ 23,183 9.46% $200,747 $ 19,475 9.70% $165,725 $ 16,196 9.77%
Investment securities-taxable ........... 115,461 7,127 6.17 85,688 5,458 6.37 69,649 4,492 6.45
Investment securities-nontaxable (4) .... 22,387 1,717 7.67 16,151 1,253 7.76 12,495 1,011 8.09
Federal funds sold and interest-bearing
deposits .............................. 13,455 411 3.05 11,338 377 3.33 9,106 280 3.07
-------- ------- ----- -------- -------- ----- -------- -------- -----
Total interest-earning assets ......... $396,315 $ 32,438 8.18% $313,924 $ 26,563 8.46% $256,975 $ 21,979 8.55%
======== ----- ======== ----- ======== -----
INTEREST-BEARING LIABILITIES
Savings deposits and interest bearing
checking............................... $126,963 $ 3,878 3.05% $101,734 $ 3,181 3.13% $ 84,107 $ 2,575 3.06%
Time deposits............................ 198,006 10,929 5.52 153,135 8,613 5.62 124,577 6,957 5.58
Federal funds purchased and securities
sold under agreements to repurchase.... 9,987 528 5.29 10,654 569 5.34 10,086 535 5.30
Notes payable............................ 18,461 1,238 6.71 7,272 524 7.21 6,161 395 6.41
-------- ------- ----- -------- -------- ----- -------- -------- -----
Total interest-bearing liabilities..... $353,417 16,573 4.69% $272,795 12,887 4.72% $224,931 10,462 4.65%
======== ------- ----- ======== -------- ----- ======== -------- -----
Net interest income (tax equivalent)......... $15,865 $ 13,676 $ 11,517
======= ======== ========
Net interest margin (4)(5)................... 4.00% 4.36% 4.48%
===== ===== =====
Ratio of average interest-bearing liabilities
to average interest-earning assets......... 89.18% 86.90% 87.53%
===== ===== =====
</TABLE>
- -----------------------
(1) Loans are net of deferred loan fees.
(2) Non-accruing loans are included in the computation of average balances.
(3) Team includes loan fees in interest income. These fees totaled $974,000 in
1998, $905,000 in 1997 and $713,000 in 1996.
(4) Yield is adjusted for the tax effect of tax exempt securities. The tax
effects were $584,000 in 1998, $426,000 in 1997 and $344,000 in 1996.
(5) The net interest margin is net interest income divided by average
interest-earning assets.
Total interest income on a tax equivalent basis was $32.4 million for 1998
compared to $26.6 million in 1997, representing a 22.12% increase. The overall
increase in interest income is the result of Team's purchase of a NationsBank
branch in the first quarter of 1998, which resulted in increased deposits of
approximately $32.0 million. These deposits were used to fund loans as Team's
growth strategy continued, with the remainder placed in investment securities.
Deployment of purchased deposits into loans, the highest yielding
interest-earning assets, takes a significant period of time to complete. This
time lag of deployment of assets from the branch purchase also contributed to
the decreases in net interest margin for 1997 and 1998. Interest income on
loans increased $3.7 million, or 19.04%, primarily due to increased loan volume
in 1998. For 1998, the average balance of loans increased by $44.3 million or
22.05%. Interest income on loans in 1998 was negatively impacted by a 0.24%
decrease in the yield earned on loans, 9.46% in 1998 compared to 9.70% in 1997.
Tax equivalent interest income on investment securities increased $2.1 million,
or 31.78%, primarily due to increased volume in 1998. For 1998, the average
combined investment balances increased by $36.0 million or 35.36%.
Total interest expense was $16.6 million for 1998 compared to $12.9
million for 1997, representing a 28.60% increase. Interest expense on savings
and interest-bearing checking increased $697,000, or 21.91%, primarily as a
result of an increase in the balance of these deposits of $25.2 million, or
24.80% in 1998 compared to 1997. Interest expense on time deposits increased
$2.3 million, or 26.89%, primarily
13
<PAGE> 18
as a result of an increase in the average balance of these deposits of $44.9
million, or 29.30% in 1998. Interest expense on notes payable increased
$714,000, or 136.26%, primarily as a result of an increase in the average
balance of these borrowings of $11.2 million, or 153.86% in 1998 compared to
1997. Additional borrowings in 1998 were necessary to fund the acquisition of
the branch noted above, meet $1.4 million of payments associated with repurchase
obligations under its ESOP and redeem $937,000 of mandatory equity replacement
notes. See "--Liquidity" and notes 9 and 10 to the consolidated financial
statements.
As a result of the changes described above, the net interest income on a
tax equivalent basis increased $2.2 million, or 16.01% for 1998 compared to
1997.
Total interest income on a tax equivalent basis was $26.6 million for 1997
compared to $22.0 million for 1996, representing a 20.86% increase. Interest
income on loans increased $3.3 million, or 20.25%. This increase was primarily
the result of increased loan volume in 1997 as the average rate decreased
slightly. For 1997, the average balance of loans increased by $35.0 million or
21.13%. Interest income on a tax equivalent basis for investments increased
$1.2 million, or 21.95%, primarily due to increased volume in 1997 as rates
again decreased. For 1997, the average combined investment balance increased by
$19.7 million or 23.98% compared to 1996.
Total interest expense was $12.9 million for 1997 compared to $10.5
million for 1996, representing a 23.18% increase. Interest expense on savings
and interest bearing checking increased $606,000, or 23.53%, as a result of an
increase in the average balance of these deposits of $17.6 million, or 20.96%
and a slight increase paid on these deposits in 1997. Interest expense on time
deposits increased $1.7 million, or 23.80%, as a result of an increase in the
average balance of these deposits of $28.6 million, or 22.92% in 1997 compared
to 1996 and a slight increase in rates paid on these deposits in 1997.
As a result of the changes described above, the net interest income on a
tax equivalent basis increased to $2.2 million, or 18.75% for 1997 compared to
1996.
The following table presents the components of changes in Team's net
interest income, on a tax-equivalent basis, attributed to volume and rate. The
net change attributable to the combined impact of volume and rate has been
solely allocated to the change in rate.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------
1998 compared to 1997 1997 compared to 1996
Total Total
Volume Rate Changes Volume Rate Changes
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
(In thousands)
Interest income
Loans ............................................. $ 4,294 $ (586) $ 3,708 $ 3,423 $ (144) $ 3,279
Investment securities-taxable ..................... 1,896 (227) 1,669 1,034 (68) 966
Investment securities-nontaxable .................. 484 (20) 464 296 (54) 242
Federal funds sold and interest-bearing deposits .. 71 (37) 34 69 28 97
---------- ---------- ---------- ---------- ---------- ----------
Total interest income ........................... 6,745 (870) 5,875 4,822 (238) 4,584
Interest expense
Savings deposits and interest-bearing checking .... 789 (92) 697 540 66 606
Time deposits ..................................... 2,524 (208) 2,316 1,595 61 1,656
Federal funds purchased and securities sold
under agreements to repurchase .................. (36) (5) (41) 30 4 34
Notes payable ..................................... 806 (92) 714 71 58 129
---------- ---------- ---------- ---------- ---------- ----------
Total interest expense ........................ 4,083 (397) 3,686 2,236 189 2,425
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net interest income .......... $ 2,662 $ (473) $ 2,189 $ 2,586 $ (427) $ 2,159
========== ========== ========== ========== ========== ==========
</TABLE>
14
<PAGE> 19
OTHER INCOME
The following table sets forth Team's other income for the indicated
periods.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Service charges .................................. $ 2,039 $ 1,670 $ 1,400
Trust fees ....................................... 454 408 368
Gain on sales of mortgage loans .................. 664 268 230
Gain (loss) on sales of investment securities .... 18 2 (40)
Mortgage servicing fees .......................... 267 239 228
Credit card fees ................................. 289 189 176
ATM fees ......................................... 94 74 33
Other ............................................ 781 429 417
---------- ---------- ----------
Total other income ...................... $ 4,606 $ 3,279 $ 2,812
========== ========== ==========
</TABLE>
Other income was $4.6 million for 1998 compared to $3.3 million for 1997,
representing a 40.47% increase. In 1998, service charges increased $369,000 and
trust fees increased $46,000 in 1998 as a result of a larger customer base.
Gain on sale of mortgage loans increased $396,000 in 1998 as a result of the
lower rate environment. This environment generated significant refinancings and
higher turnover of loans, which in turn resulted in origination fees and gains
from sales of above-market rate loans.
Other income was $3.3 million for 1997 compared to $2.8 million for 1996,
representing a 16.61% increase. This increase was primarily due to an increase
in service charges of $270,000, again resulting from Team's acquisitions and
the resulting increased customer base.
OTHER EXPENSES
The following table presents Team's operating expenses for the indicated
periods.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Salaries and employee benefits ................... $ 7,835 $ 6,419 $ 5,128
Occupancy and equipment .......................... 1,805 1,668 1,298
Data processing .................................. 1,265 1,033 879
Professional fees ................................ 874 717 599
Marketing ........................................ 479 395 274
Goodwill and other intangible amortization ....... 611 202 32
Other ............................................ 2,515 2,233 1,922
---------- ---------- ----------
Total other expenses .................... $ 15,384 $ 12,667 $ 10,132
========== ========== ==========
</TABLE>
Other expense was $15.4 million for 1998 compared to $12.7 million for
1997, representing a 21.45% increase. The increase was attributable to an
increase in salaries and employee benefits of $1.4 million resulting from
employees who were retained in acquisitions and new employees hired in
connection with a branch opening.
Goodwill and other intangible amortization increased from 1997 to 1998
primarily as a result of amortization of goodwill established by premiums paid
on branch acquisitions purchased in the latter part of 1997 and early 1998.
Recent acquisitions by Team of branches have been accounted for as purchases,
which means that the excess of the purchase price over the carrying value of the
assets acquired is recorded in the consolidated financial statements as
goodwill, which is amortized over 15 years from the date of each acquisition.
This amortization is a non-cash operating expense which
15
<PAGE> 20
reduces net income. For example, goodwill amortization was $405,000 in 1998
versus $140,000 in 1997 and $17,000 in 1996. The balance of goodwill on Team's
balance sheet at December 31, 1998 was $5.8 million. Amortization of this amount
over 15 years would result in expense of $387,000 per year.
Other expense was $12.7 million for 1997 compared to $10.1 million for
1996, representing a 25.02% increase. The increase is primarily attributable to
an increase in salaries and employee benefits of $1.3 million in 1997 due
primarily to staff retained at acquired branches. Additionally, occupancy and
equipment expense increased $370,000 in 1997.
INCOME TAX EXPENSE
Income tax expense was $673,000 for 1998 compared to $553,000 for 1997,
representing a 21.70% increase. The effective tax rates were 22% for 1998 and
20% for 1997. The effective tax rate is less than the statutory federal rate of
34% due primarily to municipal interest income and the income tax benefit
resulting from dividends paid to the ESOP. Under the Internal Revenue Code,
Team can deduct dividends paid to its ESOP under limited circumstances.
Income tax expense was $553,000 for 1997 compared to $938,000 for 1996,
representing a 41.04% decrease. The effective tax rates were 20% for 1997 and
29% for 1996. Team's effective tax rate was significantly lower in 1997 as
compared to 1996 as a result of increased municipal interest income, lower
state taxes and the utilization of federal tax credits.
FINANCIAL CONDITION
LOAN PORTFOLIO COMPOSITION
The following table presents the composition of Team's loan portfolio by
type of loan at the dates indicated.
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------------------------------------------
1998 1997 1996 1995
---- ---- ---- ----
Amount % Amount % Amount % Amount %
--------- --------- --------- --------- --------- --------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate:
1-4 family .......... $ 85,093 33.5% $ 74,049 33.3% $ 63,575 34.9% $ 57,618 36.0%
Construction ........ 14,411 5.7 12,292 5.5 9,608 5.3 6,265 3.9
Other ............... 25,809 10.2 26,816 12.1 20,655 11.4 20,576 12.8
--------- --------- --------- --------- --------- --------- --------- ---------
Total ............. 125,313 49.4 113,157 50.9 93,838 51.6 84,459 52.7
Commercial ............ 94,478 37.3 75,048 33.8 57,709 31.7 47,728 29.8
Installment and other . 36,652 14.4 35,785 16.1 32,274 17.7 29,585 18.5
--------- --------- --------- --------- --------- --------- --------- ---------
Gross loans ........... 256,443 101.1 223,990 100.8 183,821 101.0 161,772 101.0
Unearned fees ......... (317) (0.1) (315) (0.1) (327) (0.2) (280) (0.2)
--------- --------- --------- --------- --------- --------- --------- ---------
Loans ................. 256,126 101.0 223,675 100.7 183,494 100.8 161,492 100.8
Less allowance for
loan losses .......... (2,541) (1.0) (1,629) (0.7) (1,518) (0.8) (1,289) (0.8)
--------- --------- --------- --------- --------- --------- --------- ---------
Total net loans ....... $ 253,585 100.0% $ 222,046 100.0% $ 181,976 100.0% $ 160,203 100.0%
========= ========= ========= ========= ========= ========= ========= =========
<CAPTION>
December 31,
---------------------
1994
----
Amount %
--------- ---------
<S> <C> <C>
Real estate:
1-4 family .......... $ 53,998 38.9
Construction ........ 4,870 3.5
Other ............... 17,689 12.7
--------- ---------
Total ............. 76,557 55.2
Commercial ............ 37,372 26.9
Installment and other . 26,341 19.0
--------- ---------
Gross loans ........... 140,270 101.1
Unearned fees ......... (274) (0.2)
--------- ---------
Loans ................. 139,996 100.9
Less allowance for
loan losses .......... (1,199) (0.9)
--------- ---------
Total net loans ....... $ 138,797 100.0
========= =========
</TABLE>
At December 31, 1998, loans totaled $256.1 million compared to $223.7
million at December 31, 1997, representing a $32.4 million increase, or 14.51%.
The increase in loans resulted primarily from internal growth, and was funded
through an increase in deposits associated with the acquisition of a
NationsBank branch in the first quarter of 1998.
Real estate mortgage loans represent the largest type of loans of Team. At
December 31, 1998 these loans were $125.3 million compared to $113.2 million at
December 31, 1997, reflecting an increase
16
<PAGE> 21
of $12.1 million, or 10.74%. Included in real estate mortgage loans are 1 to 4
family residential loans with a balance of $85.1 million at December 31, 1998.
Substantially all of these loans were originated in Team's market area.
Additionally, included in real estate mortgage loans are real estate mortgage
loans held for sale. Team will typically sell fixed rate mortgage loans to
permanent investors with the servicing rights retained. Capitalized servicing
rights are recorded at the time the loan is sold, thereby increasing the gain
on sale by such amount. At December 31, 1998 the balance of these loans held
for sale was $6.3 million.
Real estate construction loans consist primarily of single family
construction in Team's primary market areas. Team has experienced steady growth
in its markets for these loans with the balance increasing in each of the last
five years to $14.4 million at December 31, 1998 from $4.9 million at December
31, 1994.
Commercial loans include loans to service, retail, wholesale and light
manufacturing businesses. At December 31, 1998, commercial loans, excluding
agriculture, were $69.5 million compared to $55.4 million at December 31, 1997,
reflecting an increase of $14.1 million, or 25.40%.
Included within commercial loans are agricultural loans to farmers for
production and other agricultural loans. At December 31, 1998, agricultural
loans were $25.0 million compared to $19.6 million at December 31, 1997,
reflecting an increase of $5.4 million or 27.26%.
Installment and other loans include automobile, residential, and other
personal loans. The majority of these loans are installment loans with fixed
interest rates. Although increasing in dollar amount, installment and other
loans have been decreasing as a percentage of total loans over the past several
years as Team places more emphasis on growing the real estate and commercial
portion of their loan portfolio. Team also has a small portfolio of credit card
loans.
Team believes that its philosophy in extending credit is relatively
conservative in nature, with a presumption that most credit should have both a
primary and secondary source of repayment, and that the primary source should
generally be operating cash flows, while the secondary source should generally
be disposition of collateral. Team engages in very little unsecured lending,
and generally requires personal guarantees of principals for business
obligations. Team's lending policy requires both loan officer and loan
committee approval for significant credits. See "Business --Loan
Administration."
At December 31, 1998 net loans totaled approximately 65.98% of total
deposits and approximately 57.33% of total assets.
17
<PAGE> 22
LOAN MATURITIES
The following table presents, at December 31,1998, loans by maturity in
each major category of Team's portfolio based on contractual repricing
schedules. Actual maturities may differ from the contractual repricing
maturities shown below as a result of renewals and prepayments. Loan renewals
are re-evaluated using substantially the same credit procedures that are used
when loans are made.
<TABLE>
<CAPTION>
Over one year
One year through five years Over five years
or less Fixed rate Floating rate Fixed rate Floating rate Total
---------- ---------- ---------- ---------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate:
1-4 family ................. $ 24,323 $ 4,497 $ 21,325 $ 23,310 $ 11,638 $ 85,093
Construction ............... 13,402 768 155 86 -- 14,411
Other ...................... 11,641 3,215 5,751 4,077 1,125 25,809
---------- ---------- ---------- ---------- ---------- ----------
Total ................... 49,366 8,480 27,231 27,473 12,763 125,313
Commercial ................... 59,865 17,743 11,309 5,061 500 94,478
Installment and other ........ 9,499 25,662 233 1,198 60 36,652
---------- ---------- ---------- ---------- ---------- ----------
Total face amount of loans . 118,730 51,885 38,773 33,732 13,323 256,443
Unearned loan fees ........... (42) (75) (152) (25) (23) (317)
---------- ---------- ---------- ---------- ---------- ----------
Gross loans ................ $ 118,688 $ 51,810 $ 38,621 $ 33,707 $ 13,300 $ 256,126
========== ---------- ========== ========== ========== ----------
</TABLE>
NONPERFORMING LOANS
Nonperforming loans consist of loans 90 days or more delinquent and still
accruing interest, nonaccrual loans and restructured loans. When, in the
opinion of management, a reasonable doubt exists as to the collectibility of
interest, regardless of the delinquency status of a loan, the accrual of
interest income is discontinued and any interest accrued to date is reversed
through a charge to income. While a loan is on nonaccrual status, it is Team's
policy that interest income is recognized only after payment in full of
principal. Generally, management places loans which are greater than 90 days
past due on nonaccrual. At December 31, 1998, Team had an insignificant amount
of restructured loans.
The following table presents information concerning the nonperforming
assets of Team at the dates indicated.
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans ....................................... $ 2,241 $ 1,078 $ 1,652 $ 1,458 $ 1,122
Loans 90 days past due and still accruing .............. 431 517 236 232 803
-------- -------- -------- -------- --------
Non-performing loans ................................. 2,672 1,595 1,888 1,690 1,925
Other real estate owned ................................ 906 367 327 513 511
-------- -------- -------- -------- --------
Total non-performing assets .......................... $ 3,578 $ 1,962 $ 2,215 $ 2,203 $ 2,436
======== ======== ======== ======== ========
Non-performing loans as a percentage of total loans .... 1.04% 0.71% 1.03% 1.05% 1.38%
Non-performing assets as a percentage of total assets .. 0.81% 0.51% 0.74% 0.85% 1.02%
</TABLE>
Other real estate at December 31, 1998 consists of 17 properties held by
Team's subsidiary banks. Two properties with an aggregate book value of
$284,000 represent commercial real estate lots foreclosed in 1998. Another
property with a book value of $141,000 is a commercial office building which is
leased by one of Team's subsidiary banks. Management is not aware of any
adverse trend relating to Team's loan portfolio.
As of December 31, 1998, there was no significant balance of loans
excluded from nonperforming loans set forth above, where known information
about possible credit problems of borrowers caused management to have serious
doubts as to the ability of such borrowers to comply with the present loan
repayment terms and which may result in such loans becoming nonperforming.
18
<PAGE> 23
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
Management maintains its allowance for loan losses based on industry
standards, historical experience and an evaluation of economic conditions. Team
regularly reviews delinquencies and loan portfolio quality. Based upon such
factors, management makes various assumptions and judgments about the ultimate
collectibility of the loan portfolio and provides an allowance for potential
loan losses based upon a percentage of the outstanding balances and for
specific loans if their ultimate collectibility is considered questionable.
Since certain lending activities involve greater risks, the percentage applied
to specific loan types may vary. The allowance is increased by provisions for
loan losses and reduced by loans charged-off, net of recoveries.
The following table sets forth information regarding changes in the
allowance for loan losses of Team for the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Average total loans ....................... $ 245,012 $ 200,747 $ 165,725 $ 158,958 $ 133,694
Total loans at end of year ................ $ 256,126 $ 223,675 $ 183,494 $ 161,492 $ 139,996
Allowance at beginning of year ............ $ 1,629 $ 1,518 $ 1,289 $ 1,199 $ 1,052
Loans charged-off:
Real estate:
1-4 family ............................ (14) (6) (8) (9) (22)
Construction .......................... -- -- -- -- --
Other ................................. -- -- -- -- --
Commercial .............................. (169) (655) (316) (72) (42)
Installment and other ................... (540) (481) (371) (199) (207)
---------- ---------- ========== ---------- ----------
Total charge-offs ..................... (723) (1,142) (695) (280) (271)
Recoveries
Real estate:
1-4 family ............................ 1 -- -- 9 110
Construction .......................... -- -- -- -- --
Other ................................. -- -- 9 -- --
Commercial, financial and
agricultural .......................... 28 59 49 46 109
Installment and other ................... 120 99 92 70 78
---------- ---------- ========== ---------- ----------
Total recoveries ...................... 149 158 150 125 297
Net (charge-offs) recoveries .............. (574) (984) (545) (155) 26
Provision for loan losses ................. 1,486 1,095 623 245 121
Allowance of acquired bank ................ -- -- 151 -- --
---------- ---------- ========== ---------- ----------
Allowance at end of period ................ $ 2,541 $ 1,629 $ 1,518 $ 1,289 $ 1,199
========== ========== ========== ========== ==========
Ratio of net (charge-offs)
to average total loans .................. (0.23)% (0.49)% (0.33)% (0.10)% (0.02)%
Allowance to total loans at end of year ... 0.99 0.73 0.83 0.80 0.86
Allowance to nonperforming loans .......... 95.10 102.13 80.36 73.83 62.29
</TABLE>
The allowance for loan losses at December 31, 1998 totaled $2.5 million,
1997 totaled $1.6 million and 1996 totaled $1.5 million. The allowance for loan
losses as a percentage of total loans was 0.99% at December 31, 1998, 0.73% at
1997 and 0.83% at 1996. The provision for loan losses was $1.5 million for 1998
compared to $1.1 million for 1997 and $623,000 for 1996. Provisions for loan
losses have increased steadily over the past several years to keep pace with
the loan growth Team has experienced and to maintain the allowance at a level
sufficient to absorb identified and unidentified loan losses. The allowance to
non-performing loans ratio was 95.10% at December 31, 1998, 102.13% at 1997 and
80.36% at 1996.
19
<PAGE> 24
Net charge-offs were $574,000 for 1998, $984,000 for 1997 and $545,000 for
1996. Charge-offs in 1997 were higher as a result of a large commercial loan
customer which filed for bankruptcy. As a result, charge-offs of $557,000 were
recognized on this loan.
Team's lending personnel are responsible for continuous monitoring of the
loan portfolio. Additionally, since 1997 Team has retained an independent loan
review company which reviews the loan portfolio on a quarterly basis to
determine compliance with loan policy, including the appropriateness of risk
ratings assigned to individual loans, as well as the allowance for loan losses.
The allowance for loan losses is based primarily on management's estimates of
possible loan losses from the foregoing processes and historical experience.
Team's loan portfolio is also subject to periodic examination by regulatory
agencies. These 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 tables present an allocation of the allowance for loan
losses by loan category as of the dates indicated. The allocation table should
not be interpreted as an indication of the specific amounts, by loan
classification, to be charged to the allowance. Management believes that the
table may be a useful device for assessing the adequacy of the allowance as a
whole. The table has been derived in part by applying historical loan loss
ratios to both internally classified loans and the portfolio as a whole to
determine the allocation of the loan losses attributable to each category of
loans.
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
----------------- ----------------- ----------------- ----------------- ---------------
Loans in Loans in Loans in Loans in Loans in
Category as of Category as of Category as of Category as of Category as of
Amount Percentage Amount Percentage Amount Percentage Amount Percentage Amount Percentage
of Gross of Total of Gross of Total of Gross of Total of Gross of Total of Gross of Total
Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans
------- ------- ------- ------- ------- ------- ------- ------- ------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate:
1-4 family ........... $ 213 33.2% $ 185 33.1% $ 159 34.7% $ 144 35.7% $ 135 38.6%
Construction ......... 36 5.6 31 5.5 24 5.2 16 3.9 12 3.5
Other ................ 65 10.2 67 12.1 52 11.3 51 12.6 44 12.5
Commercial ............. 945 36.8 750 33.5 577 31.3 477 29.5 374 26.6
Installment and other .. 550 14.2 537 15.8 484 17.5 444 18.3 395 18.8
Unallocated ............ 732 -- 59 -- 222 -- 157 -- 239 --
------- ------- ------- ------- ------- ------- ------- ------- ------- -----
Total ................ $ 2,541 100.0% $ 1,629 100.0% $ 1,518 100.0% $ 1,289 100.0% $ 1,199 100.0%
======= ======= ======= ======= ======= ======= ======= ======= ======= =====
</TABLE>
The provision for loan losses takes into account many factors such as
Team's prior experience with loan losses and an evaluation of the risks in the
loan portfolio at any given time, including changes in economic, operating and
other conditions of borrowers, the economies in Team's areas of operations and,
to a lesser extent, the national economy. Management believes that the
approximate amount of charge-offs in 1999 by loan category will be consistent
with historical experience. This is a good faith estimate only and is subject
to several factors beyond the control of Team.
INVESTMENTS
Team invests a portion of its available funds in short-term and long-term
instruments, including federal funds sold and investment securities. Team's
investment portfolio is designed to provide liquidity for cash-flow
requirements, aid in the interest rate risk management process and provide
collateral for certain public deposits and other borrowing arrangements. At
December 31, 1998, the investment portfolio was comprised principally of
obligations of the U.S. Government or its agencies, obligations of states and
political subdivisions and mortgage-backed securities.
20
<PAGE> 25
The following table presents Team's investments in certain securities
accounted for as available-for-sale and held-to-maturity. "Other" investments
is comprised of Federal Home Loan Bank stock, Federal Reserve stock, mutual
funds and certain equity securities, all of which carry no stated maturity.
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1998 1997 1996
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Securities available-for-sale:
U.S. Treasury and government agencies ............... $ 43,172 $ 59,395 $ 62,709
Obligations of state and political subdivisions ..... 2,471 2,205 2,177
Mortgage-backed securities .......................... 59,785 37,326 --
Other ............................................... 3,868 4,378 3,920
----------- ---------- ----------
Total ............................................. $ 109,296 $ 103,304 $ 68,806
Securities held-to-maturity:
U.S. Treasury and government agencies ............... $ 3,925 $ 4,401 $ 4,729
Obligations of state and political subdivisions ..... 21,817 17,998 13,160
Mortgage-backed securities........................... -- -- --
Other................................................ -- -- --
----------- ---------- ----------
Total ............................................. $ 25,742 $ 22,399 $ 17,889
Total investment securities ......................... $ 135,038 $ 125,703 $ 86,695
=========== ========== ==========
</TABLE>
At December 31, 1998, the investment portfolio contained no investments
which were considered to be derivatives, structured notes or similar
instruments that are classified as "High-Risk Securities" as defined by the
Federal Financial Institutions Examinations Council.
The following table sets forth a summary of the maturities in the
investment portfolio at December 31, 1998.
<TABLE>
<CAPTION>
Over one year Over five years
One year or less through five years through ten years Over ten years Total
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
-------- ----- ------- ----- ------ ----- ------ ----- ------ -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and agencies................ $14,297 6.35% $30,895 6.23% $ 1,412 5.73% $ 493 5.96% $ 47,097 6.25%
Obligations of states and political
subdivisions............................ 1,219 7.62 7,472 7.47 9,714 7.40 5,883 7.41 24,288 7.43
Mortgage-backed securities................ 28,029 5.95 23,719 6.16 6,502 6.10 1,535 5.73 59,785 6.04
Other(1).................................. 3,868 -- -- -- -- -- -- 3,868 --
------- ------- ------- ------ --------
Total................................... $47,413 $62,086 $17,628 $7,911 $135,038
======= ======= ======= ====== ========
</TABLE>
- ----------
(1) Other securities consist principally of Federal Home Loan Bank stock,
Federal Reserve stock, and mutual funds which have no stated yield.
DEPOSITS
Team's primary source of funds has historically been customer deposits.
Team's deposit base has increased significantly over the past three years.
Deposits increased to $384.3 million at December 31, 1998 from $225.7 million
at December 31, 1995, representing a $158.7 million increase. The increase is
the result of the purchase of three bank branches and a bank with aggregate
deposits of $115.0 million and internal growth of $43.7 million.
21
<PAGE> 26
The following table sets forth the average balances and weighted average
rates for Team's categories of deposits for the periods indicated.
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------------------------------------
1998 1997 1996
--------------------------- --------------------------- ---------------------------
(Dollars in thousands)
Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand . $ 39,707 --% $ 32,493 --% $ 23,747 --%
Interest-bearing demand .... 107,412 3.12 85,065 3.18 69,579 3.11
Savings .................... 19,551 2.68 16,669 2.84 14,528 2.84
Time ....................... 198,006 5.52 153,135 5.62 124,577 5.58
----------- ----------- -----------
Total .................... $ 364,676 $ 287,362 $ 232,431
=========== =========== ===========
</TABLE>
The following table summarizes at December 31, 1998, Team's
certificates of deposit of $100,000 or more by time remaining until maturity.
<TABLE>
<CAPTION>
Remaining maturity (In thousands)
----------
<S> <C>
Less than three months........... $ 19,911
Three months up to six months.... 9,650
Six months up to one year........ 8,834
One year and over................ 7,073
----------
Total......................... $ 45,468
==========
</TABLE>
FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK BORROWINGS
Team's subsidiary banks are members of the Federal Home Loan Bank of
Topeka (FHLB), which is one of 12 regional Federal Home Loan Banks. The FHLB
system functions as a central bank providing credit for members. As members of
the FHLB, Team's subsidiary banks are entitled to borrow funds from the FHLB
and are required to own FHLB stock in an amount determined by a formula based
upon total assets and FHLB borrowings. Team's subsidiary banks may use FHLB
borrowings to supplement deposits as a source of funds. At December 31, 1998,
FHLB borrowings aggregated $9.2 million compared to $2.6 million at December
31, 1997 reflecting increased borrowing to fund mortgage loans committed to be
sold in the secondary market. At December 31, 1998, based on its FHLB
stockholdings, the aggregate available and unused borrowing capacity of Team's
subsidiary banks was approximately $58.8 million, which was available through a
line of credit and term advances. FHLB borrowings are collateralized by FHLB
stock and certain qualifying mortgage loans of Team.
A variety of borrowing terms and maturities can be chosen from the FHLB.
Maturities available range generally from one day up to 15 years. Interest
rates can be either fixed or variable and prepayment options are available if
desired. The FHLB offers both amortizing and non-amortizing advances. To date,
FHLB stock has been redeemable at the preset price of $100 per share, but there
can be no assurance that this policy will continue.
Three of Team's banks, TeamBank, N.A., Iola Bank and Trust Company and
First National Bank and Trust Co., Inc., are member banks of the Federal
Reserve Bank of Kansas City and may use the Federal Reserve Bank discount
window to meet short-term funding needs. These loans are available on a secured
basis. Generally the banks pledge U.S. Government or qualifying municipal
securities for these notes. None of Team's subsidiary banks has utilized
short-term Federal Reserve Bank borrowings for over five years.
22
<PAGE> 27
CAPITAL RESOURCES
Team monitors compliance with bank and bank holding company regulatory
capital requirements, focusing primarily on risk-based capital guidelines.
Under the risk-based capital method of capital measurement, the ratio computed
is dependent upon the amount and composition of assets recorded on the balance
sheet, and the amount and composition of off-balance sheet items, in addition to
the level of capital. Included in the risk-based capital method are two measures
of capital adequacy, core capital and total capital, which consists of core and
secondary capital. See "Supervision and Regulation--Team--Capital Adequacy."
The following tables present Team's capital ratios as of the indicated
dates.
<TABLE>
<CAPTION>
Risk Based Capital Ratios
----------------------------------------------
At December 31,
----------------------------------------------
1998 1997
---- ----
Amount Ratio Amount Ratio
--------- ------- --------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Core capital................................ $ 18,936 7.05% $ 17,823 6.97%
Core capital minimum requirement(1)......... 10,737 4.00 10,224 4.00
--------- ------- --------- ------
Excess...................................... $ 8,199 3.05 $ 7,599 2.97
========= ======= ========= ======
Total risk-based capital.................... $ 21,477 8.00% $ 19,452 7.61%
Total risk-based capital requirement........ 21,474 8.00 20,450 8.00
--------- ------- --------- ------
Excess (deficit)............................ $ 3 0.00 $ (998) (0.39)
========= ======= ========= ======
Total risk adjusted assets.................. $268,433 $ 255,621
========= =========
</TABLE>
<TABLE>
<CAPTION>
Leverage Ratios
----------------------------------------------
At December 31,
----------------------------------------------
1998 1997
---- ----
Amount Ratio Amount Ratio
--------- ------- --------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Core capital................................ $ 18,936 4.50% $ 17,823 5.39%
Core capital minimum requirement(2)......... 16,847 4.00 13,235 4.00
--------- ------- --------- ------
Excess...................................... $ 2,089 0.50% $ 4,588 1.39%
========= ======= ========= ======
Average total assets........................ $ 421,184 $ 330,884
========= =========
</TABLE>
- ----------
(1) Based on risk-based capital guidelines of the Federal Reserve, a bank
holding company is required to maintain a core capital to risk-adjusted
assets ratio of 4% and a total capital, risk based, to risk-adjusted
assets ratio of 8%.
(2) The leverage ratio is defined as the ratio of core capital to average
tangible assets. Based on Federal Reserve guidelines, a bank holding
company generally is required to maintain a leverage ratio in excess of 4%.
LIQUIDITY
Team continuously forecasts and manages its liquidity in order to satisfy
cash flow requirements of depositors and borrowers and allow Team to meet its
own cash flow needs. Team has developed internal and external sources of
liquidity to meet its continued growth needs. These include, but are not
23
<PAGE> 28
limited to, the ability to raise deposits through branch promotional campaigns,
maturity of overnight funds, short term investment securities classified as
available-for-sale and draws on credit facilities established through the
Federal Home Loan Bank.
Under the provisions of Team's ESOP and the requirements of the Internal
Revenue Code, Team is obligated to repurchase shares of common stock
distributed to participants of the ESOP who terminate employment. In addition,
some ESOP participants, in accordance with the Internal Revenue Code, have the
right to diversify the investment of a portion of their respective ESOP
accounts, and such elections to diversify can create repurchase obligations.
The dollar amount of Team's near-term repurchase obligation is computed
after the ESOP allocations are made following the ESOP's year end appraisal
process. The near-term obligation is the amount that Team would be required to
fund, if the ESOP does not choose to meet the obligation initially, for those
people who terminated employment during the previous year.
Computing ongoing estimated repurchase obligations requires an employer to
study the population of the participants to determine the retirement dates, and
to factor in change of employment, disability, death, and other termination
facts which occur in the course of employee terminations. The studies also
include projections for the future value of stock, dividends paid on stock, and
the projected amount of the contributions to the plan for the participants'
benefit. Team believes that contributions and dividends provide not only
additional value to a participant's account but also cash which can be utilized
to meet the repurchase obligation.
The repurchase obligation studies provide Team with an estimate of the
amount of liquidity required to be available to meet the obligation. At December
31, 1998 this repurchase obligation was estimated to be $17.0 million. Team's
most recent repurchase obligation study estimates the ranges for the amount of
the obligation in each year indicated. To the extent an obligation is not
requested or paid in any given year, the obligation carries over to future
years. There can be no assurance that the actual repurchase payments, if
required, will be within the ranges set forth in the table below.
<TABLE>
<CAPTION>
Year Payable Estimated Range
------------ ---------------
(In thousands)
<S> <C>
1999 $2,191 to 2,457
2000 2,008 to 2,510
2001 1,345 to 1,831
2002 1,826 to 2,791
2003 2,088 to 3,559
2004 1,690 to 2,088
</TABLE>
See note 10 of the consolidated financial statements for further information.
Repurchase obligations can have a major impact on a company whose stock is
closely held and not traded on a public market. In contrast, the ESOP of a
publicly traded company may distribute the stock to the participant who then
can dispose of the stock through the market. Management believes this offering
will result in the Team common stock becoming readily tradable for purposes of
the Internal Revenue Code, which will remove the repurchase obligation. On the
other hand, if Team's common stock is not sufficiently traded following this
offering, or if the ESOP participants are otherwise unable to sell Team common
stock in a public market following their receipt of a distribution of stock
from the ESOP, then the Team common stock that is held by the ESOP may not, for
purposes of the requirements of the Internal Revenue Code, be considered to be
readily tradable on an established securities market. In this case, Team would
not be relieved of the repurchase obligation. See "Risk Factors."
24
<PAGE> 29
ASSET/LIABILITY MANAGEMENT
Asset and liability management encompasses both interest rate risk and
liquidity management. Team's net interest margin can be vulnerable to
significant fluctuations arising from a change in the general level of interest
rates which may affect yield on interest earning assets differently than the
cost of interest bearing liabilities. Team monitors its asset and liability mix
monthly in an effort to maintain consistent earnings performance through
control of interest rate risk.
Below is a static gap schedule for Team as of December 31, 1998. 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 time
period. Excess assets or liabilities repricing in a given time period result in
the interest rate gap shown in the table. 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.
<TABLE>
<CAPTION>
Estimated maturity or repricing at December 31, 1998
---------------------------------------------------------------------
Three months
Less than to less than One to Over
Three months one year five years five years Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest-earning assets: (Dollars in thousands)
Loans ............................................. $ 43,279 $ 75,409 $ 90,431 $ 47,007 $ 256,126
Investment securities - taxable ................... 12,940 33,251 54,617 10,192 111,000
Investment securities - nontaxable ................ 300 918 7,473 15,347 24,038
Federal funds sold and interest bearing deposits .. 4,502 -- -- -- 4,502
---------- ---------- ---------- ---------- ----------
Total interest-earning assets ................... 61,021 109,578 152,521 72,546 395,666
Interest-bearing liabilities:
Savings and interest bearing demand ............... 137,489 -- -- -- 137,489
Time deposits less than $100,000 .................. 30,595 76,361 51,067 1,133 159,156
Time deposits greater than $100,000 ............... 19,911 18,484 6,739 334 45,468
Federal funds purchased and securities sold
under agreements to purchase .................... 6,273 -- -- -- 6,273
Notes payable ..................................... 1,000 17,900 2,725 1,435 23,060
---------- ---------- ---------- ---------- ----------
Total interest-bearing liabilities .............. $ 195,268 $ 112,745 $ 60,531 $ 2,902 $ 371,446
Interest rate gap ................................... $ (134,247) $ (3,167) $ 91,990 $ 69,644 $ 24,220
Cumulative interest rate gap ........................ $ (134,247) $ (137,414) $ (45,424) $ 24,220
Cumulative ratio of interest-earning assets to
interest-bearing liabilities ...................... 31.25% 55.39% 87.67% 106.52%
Ratio of cumulative interest rate gap to interest-
earning assets .................................... (220.00)% (80.55)% (14.06)% 6.12%
</TABLE>
The table indicates that Team is liability sensitive in the less than
three month period and the three months to less than one year period, and it is
asset sensitive for all other periods. This means that during the first two
period classifications, interest bearing liabilities reprice faster than
interest earning assets, thereby improving net interest income when rates are
falling and reducing net interest income when rates are rising. While the
"static gap" method is a widely used measure of interest sensitivity, it is
not, in management's opinion, the only indicator of Team's interest rate
sensitivity position.
25
<PAGE> 30
The following table indicates that at December 31, 1998, if there had been
a sudden and sustained increase in prevailing market interest rates, Team's
1999 interest income would be expected to decrease, while a decrease in rates
would indicate an increase in income.
<TABLE>
<CAPTION>
Net interest (Decrease) Percent
Changes in Interest Rates income Increase Change
- ------------------------- ------------ ---------- -------
(Dollars in thousands)
<S> <C> <C> <C>
200 basis point rise................ $15,571 $ (494) (3.07)%
100 basis point rise................ 15,818 (247) (1.54)
Base rate scenario.................. 16,065 -- --
100 basis point decline............. 16,262 198 1.23
200 basis point decline............. 16,509 445 2.77
</TABLE>
EFFECTS OF INFLATION AND CHANGING PRICES
Unlike most industrial companies, virtually all of the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates generally have a more significant impact on a financial
institution's performance than inflation. Although interest rates do not
necessarily move in the same direction or to the same extent as the prices of
goods and services, increases in inflation generally have resulted in increased
interest rates. Over short periods of time rates may not move in the same
direction or magnitude as inflation.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued SFAS No. 133, Accounting
for Derivative Financial Instruments and Hedging Activities which establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts and for hedging
activities. SFAS No. 133 is effective for fiscal years beginning after June 15,
1999. The adoption of the standard is not expected to have a significant impact
on the consolidated financial statements of Team.
YEAR 2000 CONSIDERATIONS
As the year 2000 approaches, a significant business issue has emerged
regarding how existing software programs and operating systems can accommodate
the date value for the year 2000. Many existing software products, including
products used by Team and its affiliates were designed to accommodate only a
two-digit date value, which represents the year. For example, information
relating to the year 1996 is stored in the system as 96. As a result, the year
1999 could be the maximum date value that these systems will be able to process
accurately. Regulatory agencies monitor bank holding companies and banks'
readiness for the year 2000 as part of the regular examination process.
Team believes that with modifications to existing software and conversion
to new software, the year 2000 issue will not pose significant operational
problems for Team's business operations. Substantially all data processing
services for Team are provided by M&I Data Services, a subsidiary of M&I Bank,
Milwaukee, Wisconsin. M&I Data Services' Year 2000 Outsourcing Solution
division has received Information Technology Association of America 2000
certification. M&I Data Services provides bi-monthly written status reports to
management. Reports to date indicate that M&I Data Services has met all target
dates and is prepared to meet all future target dates for completion of the
project. Currently one of Team's banks is not on the M&I Data Services system.
Management expects this bank to be converted to the M&I Data Services system by
the end of the second quarter 1999. Management is not aware of limitations on
Team's legal remedies should the conversion not be completed on time.
26
<PAGE> 31
Additionally, implementation of Team's plan to test in-house software has
been underway since the fourth quarter of 1998. Testing of applications
considered to be mission critical was completed in the first quarter of 1999.
Total compliance for all systems, including Team's outsourced computer systems,
is expected by management to be completed by the second quarter of 1999.
Management currently estimates that year 2000 compliance for Team will
cost $500,000. Of this amount, $45,000 was expensed through December 31, 1998.
Team expects that the remaining amount will be expended in 1999, of which
$75,000 will be expensed and $380,000 will be capitalized. The plan
implementation team is responsible for progress and will continue to provide a
status report to the board of directors on a bi-monthly basis through December
31, 1999. However, if the modifications and conversion are not made, or are not
completed on time, the year 2000 issue could have a material adverse impact on
the operations of Team. Because of the factors discussed below, management
cannot estimate with any reasonable degree of certainty the magnitude of lost
revenues should the worst case scenario develop in which Team would need to
fully implement its contingency plan to operate in the year 2000 environment
and noncompliant customers are unable to repay their loans.
Team is developing a contingency plan in the event services from its
outsourced computer systems are not available in the year 2000. This plan will
be completed and tested by the end of the second quarter 1999. In the event
Team were to fully implement all phases of the contingency plan, management
believes that operational costs would increase modestly.
Team's banks have sent direct mail to their customers regarding the year
2000 issue and the need for readiness pursuant to guidelines of the banking
industry regulators. Management continues to solicit customer response. Failure
of customers to prepare for year 2000 compatibility could have a significant
adverse effect on customers' operations and profitability, thus inhibiting
their ability to repay loans and adversely affecting Team's operations. At this
time, Team is unable to estimate with reliability the degree to which
customers' operations are susceptible to potential problems relating to the
year 2000 issue or, further, to quantify the potential lost revenue to Team in
this case.
27
<PAGE> 32
BUSINESS
OVERVIEW
Team was formed in 1986 when its founders, including Robert J. Weatherbie,
Chairman and Chief Executive Officer, Michael J. Gibson,
President-Acquisitions/Investments and Chief Financial Officer and Carolyn S.
Jacobs, Treasurer, along with an Employee Stock Ownership Plan or ESOP,
purchased a one-bank holding company in Paola, Kansas in a leveraged
transaction. A majority of the funding for the transaction was obtained through
ESOP borrowings which were guaranteed by Team. ESOP borrowings at December 31,
1998 were $1.0 million, a decrease from its high of $3.5 million at December
31, 1992. Since 1986, total principal payments on debt by the ESOP have been
$4.6 million. Contributions by Team to the ESOP through December 31, 1998 were
$4.9 million.
Team is majority owned by its ESOP. See "Principal Shareholders and
Selling Shareholder." Management believes that the ESOP reflects Team's
corporate culture that employees are the integral component of a financial
institution. Management intends to continue the ESOP, as it is a significant
incentive to attract and retain qualified employees. In addition, because of
tax advantages which are only available to the ESOP, it can be used to assist
in financing acquisitions. Management believes that Team is the only ESOP
majority-owned multi-bank holding company in Team's market areas.
Since 1986 Team has grown from a one-bank holding company with $85 million
in assets to a multibank holding company with $442 million in assets as of
December 31, 1998. This growth was achieved primarily through seven
acquisitions of community banks or branches of large banks that were sold to
Team as a result of consolidations. Additional asset growth was achieved
through internal growth, as well as the establishment of three new branches
during the past five years.
28
<PAGE> 33
The following table summarizes Team's asset growth through its bank
subsidiaries.
<TABLE>
<CAPTION>
Date of Asset size at
Type of acquisition date of acquisition Asset size at
Transaction and Entity or formation or formation December 31, 1998
- ---------------------- ------------ ------------------- -----------------
(In millions)
<S> <C> <C> <C>
Bank purchase - TeamBank, N.A ......................... 1986 $ 85 *
Paola, Kansas
Bank purchase - American State Bank .......... 1993 18 *
Osawatomie, Kansas
Branch startup ............................... 1994 -- *
Spring Hill, Kansas
Branch startup ............................... 1995 -- *
DeSoto, Kansas
Branch purchase - Mercantile Bancorporation .. 1997 30 *
Nevada, Missouri
Branch purchase - Roosevelt Bank ............. 1997 39 *
Lamar, Missouri
Branch purchase - NationsBank ................ 1998 34
Ottawa, Kansas ---------- ----------
Total for TeamBank, N.A ............. $ 206 $ 264
Bank purchase - Iola Bank and Trust Company ........... 1990 35 83
Iola, Kansas
Bank purchase - First National Bank ................... 1992 42 62
and Trust Co., Inc. .................................
Parsons, Kansas
Bank purchase - Crown Bancshares, Inc. ................ 1996 25 33
Omaha, Nebraska
Branch startup ............................... 1998 -- *
Omaha, Nebraska ---------- ---------
Total assets ........................ $ 308 $ 442
========== =========
</TABLE>
- ----------
* Team does not maintain separate branch asset information.
Fundings for the acquisitions were made through a combination of debt,
private stock issuances as well as ESOP borrowings which were either guaranteed
by or made by Team loaning the proceeds to the ESOP. See notes 9 and 14 to the
consolidated financial statements. Contributions by Team to the ESOP, along with
cash dividends paid by Team on shares of common stock held by the ESOP, are used
by the ESOP to pay principal and interest on the borrowings. See note 10 to the
consolidated financial statements. In the event Team acquires banks or bank
branches in the future, management expects that similar funding arrangements may
be used.
29
<PAGE> 34
Team has four wholly-owned bank subsidiaries. The table below presents
information concerning these subsidiaries. Team expects to consolidate or merge
TeamBank Nebraska into TeamBank, N.A. during 1999.
<TABLE>
<CAPTION>
Number of Asset Size at
Name of Bank Banking Locations Lending Limit December 31, 1998
- ------------ ----------------- ------------- -----------------
(In thousands)
<S> <C> <C> <C>
TeamBank, N.A.....................9 $ 2,900 $ 263,873
Freeman, Missouri,
a national banking
association
Iola Bank and Trust...............1 1,700 82,837
Company
Iola, Kansas, a Kansas
state chartered bank
First National Bank...............1 800 61,570
and Trust Co., Inc.
Parsons, Kansas, a
national banking
association
TeamBank Nebraska.................3 570 33,062
Omaha, Nebraska, a
Nebraska state chartered
bank
</TABLE>
MARKET AREAS
TEAMBANK, N.A. TeamBank, N.A.'s primary Kansas service area is in Miami
County, Kansas with a total 1997 estimated population of 26,000. Located in the
Kansas City metropolitan area, Miami County adjoins Johnson County, Kansas,
which is one of the highest per capita income counties in the United States. As
of February 1998, Miami County had 550 businesses and an unemployment rate of
3.2%. Total deposits in FDIC-insured financial institutions located in Miami
County were $342.7 million as of June 30, 1998 and TeamBank, N.A. had the
largest market share in that group, 35%.
TeamBank, N.A.'s Miami County branches are located in Paola, the county
seat of Miami County with 1997 estimated population of 5,500, and Osawatomie,
the second largest city in the county, with 1997 estimated population of 5,000.
Another TeamBank, N.A. Kansas branch location is Ottawa, which is the county
seat of adjoining Franklin County, Kansas, with a total estimated 1997
population of 23,000. TeamBank, N.A. also operates two branches in Johnson
County, Kansas which has a total estimated 1997 population of approximately
417,000. According to available statistical data, TeamBank, N.A.'s Johnson
County branches have less than 1% of the total deposits in all FDIC-insured
institutions in the county which totals approximately $7.2 billion.
TeamBank, N.A. is chartered in Freeman, Missouri, located in Cass County,
Missouri which adjoins Miami County, Kansas. However, TeamBank, N.A.'s primary
Missouri service area is in Barton and Vernon counties which adjoin each other
and are located in the southwest section of Missouri along the Kansas-Missouri
border. Barton County has an estimated 1997 population of 12,000. As of 1997,
Barton
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<PAGE> 35
County had an estimated unemployment rate of 3.7%. Of the total deposits in
FDIC-insured financial institutions in Barton County, TeamBank, N.A. has 16% of
the market. Vernon County has an estimated 1997 population of 18,000 and an
unemployment rate of 4.4%. Of the total deposits in FDIC-insured financial
institutions located in Vernon County, TeamBank, N.A. has 12% of the market.
According to Missouri Regional Economic Profiles produced in July 1998 per
capita income in the southwest region increased 34% between 1990 and 1996
compared to a 9% increase in the United States.
IOLA BANK AND TRUST COMPANY. The primary Kansas service area of Iola Bank
and Trust Company is in Allen County, Kansas, with a total estimated 1996
population of 14,600. Iola Bank and Trust Company is the leading provider of
financial services in Allen County. As of June 30, 1998 Iola Bank and Trust
Company had an approximate 32% market share of the $221 million total deposits
made in all FDIC-insured financial institutions operating in Allen County.
According to the most recent statistics as of October 1998, Allen County had an
unemployment rate of approximately 4.9%. Allen County's primary economic
activity is farming, with 55% of the 323,100 acres being crop land and 35%
pasture and range. Allen County has 25 industries, and the majority of
industrial employment is textile mill products, concrete products, rubber and
plastics, transportation equipment, and food products.
FIRST NATIONAL BANK AND TRUST CO., INC. First National Bank and Trust Co.,
Inc.'s primary Kansas service area is in Labette County, Kansas, with a total
estimated population of 22,850 as of July 1997. Labette County is located in
southeast Kansas along the Oklahoma - Kansas border. First National Bank and
Trust Co., Inc. is the third largest financial institution in Labette County
based upon its 25% market share of deposits in all FDIC-insured financial
institutions operating in Labette County. According to the most recent
statistics available as of October 1998, Labette County had an unemployment
rate of approximately 4.7%. Labette County has a significant industrial base
with a majority of its employment in printing, metal fabrication and machinery.
TEAMBANK NEBRASKA. TeamBank Nebraska operates three facilities in the
Omaha, Nebraska metropolitan area. The primary Nebraska service area is in
Douglas and Sarpy Counties with a combined total estimated 1998 population of
575,000. As of June 30, 1998, total deposits in FDIC-insured financial
institutions located in the two county area were $9 billion, of which TeamBank
Nebraska had less than 1%. As of October 1998, the Omaha area had an
unemployment rate of approximately 2%. Employment in the area is diversified
throughout insurance and other financial services companies, as well as small to
medium-sized businesses.
GROWTH STRATEGIES
Team's growth strategy is focused on a combination of acquisitions,
existing branch growth and establishing new branches.
ACQUISITIONS. Management believes that the consolidation in the banking
industry, along with the easing of branch banking throughout Kansas, Missouri,
Nebraska, Oklahoma and Iowa, as well as increased regulatory burdens, concerns
about technology and marketing, are likely to lead owners of community banks
within these areas to explore the possibility of sale or combination with a
broader-based holding company such as Team.
In addition, branching opportunities have arisen as a result of
divestiture of branches by large national and regional bank holding companies
of certain overlapping branches resulting from consolidations. As a result,
branch locations have become available from time to time for purchase by Team.
Team completed three branch acquisitions from 1997 through 1998. See note 14 to
the consolidated financial statements. At this time, Team does not have any
agreements, either written or oral, for acquisitions.
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<PAGE> 36
Management's strategy in assimilating acquisitions is to emphasize revenue
growth as well as continuously review the operations of the acquired entities
and streamline operations where feasible. Management does not believe that
implementing wholesale administrative cost reductions in acquired institutions
are beneficial to Team's long-term growth, because significant administrative
changes in smaller banks can have an adverse impact on customer satisfaction in
the acquired institution's community. However, management has determined that
certain processing and accounting functions can be consolidated immediately upon
acquisition to achieve higher productivity levels without compromising customer
service. Increases in revenue growth are emphasized by offering customers a
broader product line consistent with full service banking.
BRANCH EXPANSION. Since 1994, Team has established three new branches.
Because of the significant economic growth in the Omaha, Nebraska area, as well
as Johnson County, Kansas, over the past several years, management intends to
focus short term branch expansion in these two areas. However, management does
not rule out branch expansion in other areas experiencing economic growth.
Management has considered and intends to consider a variety of criteria
when evaluating potential acquisition candidates or branching opportunities.
These include:
o the geographic market location of the potential acquisition target or
branch and demographics of the surrounding community;
o the financial soundness of a potential acquisition target;
o opportunities to improve the efficiency and/or asset quality of an
acquisition target through merger;
o the effect of the acquisition on earnings per share and book value.
Management seeks to undertake acquisitions that will be accretive to
earnings within 18 months of the acquisition;
o whether Team has sufficient management and other resources to
integrate or add the operations of the target or branch; and
o the investment required for, and opportunity costs of, the
acquisition or branch.
INTERNAL GROWTH. Management believes that Team's largest source of
internal growth is through Team's ongoing solicitation program conducted by
bank presidents and lending officers, followed by referrals from customers. The
primary reason for referrals is positive customer feedback regarding Team's
customer service and response time.
Team's goal in continuing its expansion is to maintain a profitable,
customer-focused financial institution. Management believes that Team's
existing structure, management, data and operational systems are sufficient to
achieve further internal growth in asset size, revenues and capital without
proportionate increases in operating costs. This growth should also allow Team
to increase the lending limits of its banks, thereby enabling Team to increase
its ability to serve the needs of existing and new customers. Team's operating
strategy has always been to provide high quality community banking services to
its customers and increase market share through active solicitation of new
business, repeat business and referrals from customers, and continuation of
selected promotional strategies.
For the most part, Team's banking customers seek a banking relationship
with a service-oriented community banking organization. Team's operational
systems have been designed to facilitate personalized service. Management
believes Team's banking locations have an atmosphere which
32
<PAGE> 37
facilitates personalized services and decision-making, yet are of sufficient
financial size with broad product lines to meet customers' needs. Management
also believes that economic expansion in Team's market areas will continue to
contribute to internal growth. Through Team's primary emphasis on customer
service and its management's banking experience, Team intends to continue
internal growth by attracting customers and primarily focusing on the
following:
o Products Offered - Team offers personal and corporate banking
services, trusts and estate planning, mortgage origination, mortgage
servicing, personal investment, and financial counseling services as
well as telephone banking. Team offers a full range of commercial
banking services, including the following: checking accounts, ATM's,
checking accounts with interest, savings accounts, money market
accounts, certificates of deposit, NOW accounts, Individual Retirement
Accounts, brokerage and residential mortgage services, branch banking,
and Team Financial Visa debit cards and Visa/MC credit cards. Team
also offers installment loans, including auto, recreational vehicle,
and other secured and unsecured loans sourced directly by its
branches. See "--Loans" below for a discussion of products Team
provides to commercial accounts.
o Operational Efficiencies - Team seeks to maximize operational and
support efficiencies consistent with maintaining high quality
customer service. All of Team's banks are on a common information
system designed to enhance customer service and improve efficiencies
by providing system-wide voice and data communication connections.
Team has consolidated loan processing, bank balancing, financial
reporting, investment management, information system, payroll and
benefit management, loan review and audit. A common data processing
system will be fully implemented in mid-1999.
o Marketing Activities - Team focuses on an active solicitation program
for new business, as well as identifying and developing products and
services that satisfy customer needs. Team's marketing programs also
utilize local print and promotional materials in each location. Team
also actively sponsors community events within its branch areas.
Management believes that active community involvement contributes to
Team's long-term success.
LOANS
Team provides a broad range of commercial and retail lending services.
Each of Team's banks follow a uniform credit policy which contains underwriting
and loan administration criteria, levels of loan commitment, loan types, credit
criteria, concentration limits, loan administration, loan review and grading
and related matters. In addition, Team provides ongoing loan officer training
and review, obtains outside independent loan reviews and operates a centralized
processing and servicing center for loans. At December 31, 1998, substantially
all loans outstanding were to customers within Team's market areas.
LOAN ADMINISTRATION. Team maintains a loan committee approach to lending,
which it believes yields positive results in both responsiveness to customer
needs and asset quality. Each Team bank has a loan committee, which meets at
least once per week to review and discuss loans. Each of Team's banks has a
loan level threshold which, if exceeded, requires the approval of Team's loan
committee, which meets on an on-call basis. Loans greater than $2.5 million
require the approval of the board of directors of Team.
Interest rates charged on loans vary with the degree of risk, maturity,
costs of underwriting and servicing, loan amount, and extent of other banking
relationships maintained with customers, and are
33
<PAGE> 38
further subject to competitive pressures, availability of funds and government
regulations. Most of the loans in Team's portfolio at December 31, 1998, had
floating interest rates.
REAL ESTATE LOANS. These loans include various types of loans for which
Team holds real property as collateral. Of the $125.3 million of real estate
loans at December 31, 1998, approximately $85.1 million were first mortgages on
homes. Interest rates on these loans typically adjust annually. Real estate
construction loans include commercial and residential real estate construction
loans, but are principally made to builders to construct business buildings or
single and multi-family residences. Real estate construction loans typically
have maturities of six to 12 months, and charge origination fees. Terms may
vary depending upon many factors, including location, type of project and
financial condition of the borrower. It is Team's standard practice in making
commercial loans to receive real estate as collateral in addition to other
appropriate collateral. Therefore, loans categorized in the other real estate
loan category can be characterized as commercial loans which are secured by
real estate. Commercial loans secured by real estate typically have adjustable
interest rates.
COMMERCIAL LOANS. These loans consist primarily of loans to businesses for
various purposes, including revolving lines of credit and equipment financing.
The loans secured by collateral other than real estate, generally mature within
one year, have adjustable interest rates and are secured by inventory, accounts
receivable, machinery, government guarantees, or other commercial assets.
Revolving lines of credit are generally for business purposes, mature annually
and have adjustable interest rates.
AGRICULTURAL LOANS. Team makes a variety of agricultural loans which are
included in real estate and commercial loans. These loans relate to equipment,
livestock, crops and farmland.
INSTALLMENT LOANS. Installment loans are primarily to individuals, are
typically secured by the financed assets, generally have terms of two to five
years and bear interest at fixed rates. These loans usually are secured by
motor vehicles or other personal assets and in some instances are unsecured.
LETTERS OF CREDIT
In the ordinary course of business, Team issues letters of credit. See
note 15 to the consolidated financial statements. Team applies the same credit
standards to these commitments as it uses in all its lending activities and has
included these commitments in its lending risk evaluations. Team's exposure to
credit loss under letters of credit is represented by the amount of these
commitments.
COMPETITION
Team faces a high degree of competition. In its market areas, there are
numerous small banks and several larger national and regional financial banking
groups. Team also competes with insurance companies, savings and loan
associations, credit unions, leasing companies, mortgage companies, and other
financial service providers. Many of the banks and other financial institutions
with which Team competes have capital resources and legal lending limits
substantially in excess of the capital resources and legal lending limits of
Team.
Team competes for loans and deposits principally based on the availability
and quality of services provided, responsiveness to customers, interest rates,
loan fees and office locations. Team actively solicits deposit customers and
competes by offering them high quality customer service and a complete product
line. Team believes its personalized customer service, broad product line and
banking franchise enable it to compete effectively in its market area.
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<PAGE> 39
Team faces competition for its personnel. Team competes through its
emphasis as a community banking culture and through the use of its ESOP.
Management believes that Team is able to compete for personnel effectively in
Team's market areas because the ESOP provides incentives for employees to join
Team and motivation to enhance shareholder value.
Team will also face significant competition from other financial
institutions in any potential acquisitions. Many of these competitors have
substantially greater resources than Team.
PROPERTIES
The table below presents property information concerning the offices of
Team and its subsidiary banks.
<TABLE>
<CAPTION>
Square
Name and Address of Office Year Opened Type of Interest footage of facility
- -------------------------- ----------- ---------------- -------------------
<S> <C> <C> <C>
Team Financial, Inc. 1986 Leased 5,000
8 West Peoria
Paola, Kansas 66071
TeamBank, N.A., Paola Branch 1986 Owned 17,951
1 South Pearl
Paola, Kansas 66071
East Bank - Paola Branch 1988 Owned 9,630
1515 Baptiste Drive
Paola, Kansas 66071
TeamBank, N.A., DeSoto Branch 1994 Owned 6,800
34102 West 92 Street
DeSoto, Kansas 66018
TeamBank, N.A., Freeman 1997 Leased 1,375
100 West Main Street
Freeman, Missouri 64746-0246
TeamBank, N.A., Lamar Branch 1997 Leased 2,650
127 West 11th Street
Lamar, Missouri 64759
TeamBank, N.A., Nevada Branch 1997 Owned 16,000
201 East Cherry
Nevada, Missouri 64772
TeamBank, N.A., Osawatomie 1993 Owned 4,756
Branch
6th and Brown
Osawatomie, Kansas 66064
</TABLE>
35
<PAGE> 40
<TABLE>
<S> <C> <C> <C>
TeamBank, N.A., Ottawa Branch 1998 Owned 8,000
421 South Hickory
Ottawa, Kansas 66067
TeamBank, N.A., Spring Hill Branch 1994 Leased 600
110 East Wilson
Spring Hill, Kansas 66083
Iola Bank and Trust Company 1990 Owned 13,768
(Main Office)
119 East Madison
Iola, Kansas 66749
First National Bank of Parsons 1992 Owned 11,000
(including drive in)
1902 Main
Parsons, Kansas 66357
TeamBank Nebraska 1996 Leased 4,679
(Main Office)
1902 Harlan Drive
Bellevue, Nebraska 68005
TeamBank Nebraska - Bellevue 1996 Leased 1,980
Branch
7001 South 36th
Bellevue, Nebraska 68147
TeamBank Nebraska - Omaha 1998 Leased 3,000
Branch
2809 South 160th Street, #20
Omaha, Nebraska 68130
</TABLE>
Other than the Spring Hill branch, which is leased on a month-to-month basis,
all of the leased properties are leased from unrelated third parties and are
subject to long-term leases, none of which expire prior to the year 2002.
LEGAL PROCEEDINGS
Team and its subsidiaries are from time to time parties to various legal
actions arising in the normal course of business. Management believes that
there is no proceeding threatened or pending against Team or any of its
subsidiaries which, if determined adversely, would have a material adverse
effect on the financial condition or results of operations of Team.
36
<PAGE> 41
EMPLOYEES
As of December 31, 1998, Team had approximately 210 full-time equivalent
employees. Neither Team nor any of its subsidiaries is a party to any
collective bargaining agreement. Management considers Team's relationship with
its employees to be good.
37
<PAGE> 42
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of Team, their respective ages and
positions as of March 1, 1999, are as follows:
<TABLE>
<CAPTION>
Officer or
Name Age Position Director Since
- ---- --- -------- --------------
<S> <C> <C> <C>
Robert J. Weatherbie 52 Chief Executive Officer 1986
and Chairman of the Board
Michael L. Gibson 52 President-Acquisitions/Investments, 1986
Chief Financial Officer and Director
Carolyn S. Jacobs 55 Senior Vice President and Trust 1986
Officer of TeamBank, N.A. and
Treasurer and Director(2)
Neil Blakeman 59 Executive Vice President of TeamBank, 1986
N.A. and Director
Denis A. Kurtenbach 61 Director(1)(2) 1995
Glen E. Gilpin 76 Director(1) 1997
R.G. (Gary) Kilkenny 67 Director(1)(2) 1997
Montie K. Taylor 48 Director 1997
Rick P. Bartley 48 President and Chief Executive 1997
Officer of TeamBank, N.A.
</TABLE>
- ----------
(1) Member of the audit committee.
(2) Member of the compensation committee.
There are no family relationships among any of the directors and executive
officers of Team.
ROBERT J. WEATHERBIE has served as Team's Chief Executive Officer since
September 1995, and Chairman of the Board and director since May 1986. Prior to
that time he was an executive officer of TeamBank, N.A., formerly known as
Miami County National Bank, for 13 years. Mr. Weatherbie is a member of the
Miami County Bankers Association. He obtained a Bachelor of Arts degree from
Emporia State University, Emporia, Kansas in 1969 and graduated from the
Colorado School of Banking at the University of Colorado and the American
Institute of Banking - Kansas City Chapter.
MICHAEL L. GIBSON has served as an executive officer and director of Team
since May 1986 and as Chief Financial Officer and
President-Acquisitions/Investments since September 1995. Prior to 1986 he was
an executive officer for TeamBank, N.A., formerly known as Miami County
National Bank, for 15 years. He has also been a member of the board of
directors of Bauersfeld Enterprises, Inc., a retail grocery store operator,
since 1990. He obtained a Bachelor's degree from Kansas State University in
Manhattan, Kansas in 1970, and graduated from the Colorado School of Banking at
the University of Colorado, the Intermediate School of Banking in Lincoln,
Nebraska, and the American Institute of Banking -
38
<PAGE> 43
Kansas City Chapter. He is a member and is currently Chairman of the Kansas
Bankers Association BankPac Committee and past member of the Governing Council.
He is a member of the American Bankers Association BankPac Committee.
CAROLYN S. JACOBS has served as Treasurer and director of Team, as well as
Senior Vice President and Trust Officer of TeamBank, N.A., since May 1986.
Prior to 1986, she had worked for Miami County National Bank, the predecessor
to TeamBank, N.A., since 1961. Ms. Jacobs has attended the American Institute
of Banking Kansas City Chapter, MoKan Basic Trust School, graduating in 1977,
the National Business Institute and was designated as a Certified Trust
Financial Advisor in June 1992. Ms. Jacobs is a member of the Kansas Bankers
Association Trust Division and the Miami County Bankers Association.
NEIL BLAKEMAN has served as a director of Team since April 1986. He has
been Executive Vice President of TeamBank, N.A. since December 1995 and a
director of TeamBank N.A. since June 1996. Prior to December 1995 he worked for
Miami County National Bank, the predecessor to TeamBank, N.A., where he served
as a vice president, beginning in 1976. Mr. Blakeman obtained a Masters of
Business Administration degree in 1970 from the University of Iowa and
graduated with a Bachelor of Science degree in Agriculture in 1964 from Kansas
State University. Mr. Blakeman is a director of the Miami County Economic
Development Corp., a non-profit entity.
DENIS A. KURTENBACH has served as a director of Team since December 1995.
He is Chairman and a director of Pemco, Inc., a privately held construction
management company. He is also Chairman and director of two subsidiaries of
Pemco, Inc., Carrothers Construction Company, L.L.C. and Triangle Builders,
L.L.C. Mr. Kurtenbach is a life director of the Associated General Contractors
of America and was a member of the 1996 - 1997 Executive Committee. He is also
a director of the Kansas Contractors Association. Mr. Kurtenbach graduated in
1962 with a Bachelor's Degree in Civil Engineering from South Dakota State
University.
GLEN E. GILPIN has served as a director of Team since June 1996. Since
1949, Mr. Gilpin has been owner and manager of Blacktop Construction, Inc. Mr.
Gilpin received a Bachelor of Science Degree in Business from the University of
Kansas in 1944.
MONTIE TAYLOR has served as a director of Team since 1997. He has served
as President and a director of First National Bank and Trust Company since
September 1987. Mr. Taylor received a Bachelor of Arts Degree from Pittsburgh
State University, Pittsburgh, Kansas in 1972. He was previously employed by the
thrift industry for 13 years prior to his employment with First National Bank
and Trust Company.
R.G. (GARY) KILKENNY has served as a director of Team since June 1997. He
has been Chairman or President of Taylor Forge Engineered Systems, Inc., a
manufacturing company, since 1982. He currently serves as President of the
Steel Plate Fabricators Association. He received a Bachelor's Degree in 1953
from the University of Santa Clara, Santa Clara, California.
RICK P. BARTLEY has been President and Chief Executive Officer of TeamBank
N.A. since May 1997. From 1993 through April 1997, he worked for Compass Bank,
Alabama, as the Manager of Corporate Banking Division in Montgomery. From 1974
to 1993 he worked for Bank of Oklahoma in several positions, including Manager
of Private Banking and president of a member bank. Mr. Bartley has a Bachelor's
Degree from the University of Arkansas and has attended the Southern Methodist
University Graduate School of Banking.
39
<PAGE> 44
Team's board of directors is divided into three classes that serve
staggered three-year terms as follows:
Class Expiration Members
- ----- ---------- -------
Class I 1999 Glen E. Gilpin, Denis A. Kurtenbach and
Carolyn S. Jacobs
Class II 2000 Neil Blakeman and R.G. (Gary) Kilkenny
Class III 2001 Michael L. Gibson, Montie Taylor and
Robert J. Weatherbie
Non-employee directors of Team receive $200 per month and $150 per board
meeting attended. In addition, directors are reimbursed for expenses incurred
in attending board meetings.
Team's board of directors maintains two committees, an audit committee and
a compensation committee. Each committee meets two to four times a year.
Directors who serve on the committees are paid $150 per committee meeting
attended.
EXECUTIVE COMPENSATION
COMPENSATION. The following table sets forth the compensation paid by Team
to its Chairman and Chief Executive Officer for 1998, 1997 and 1996 as well as
to the other named officers in the table for these years. No other executive
officer of Team received compensation from Team exceeding $100,000 during 1998,
1997 or 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Awards Payouts
---------------------------------
Securities
Other Under-
Annual Restricted lying All Other
Compen- Stock Options/ LTIP Compen-
Name Salary Bonus sation(3) Award(s) SARs Payouts sation
and Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert J. Weatherbie, 1998 135,000 76,350(1) -- -- -- -- --
Chairman of the Board and
Chief Executive Officer 1997 125,000 30,757(1) -- -- -- -- --
1996 113,596 5,206 -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Michael L. Gibson, 1998 128,400 45,818(1) -- -- -- -- --
President-Acquisitions/
Investments and Chief 1997 120,000 26,915(1) -- -- -- -- --
Financial Officer 1996 113,596 5,207 -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Rick P. Bartley, President 1998 110,000 30,210(1) --
and Chief Executive Officer
TeamBank, N.A.(2) 1997 83,300 14,383(1) --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Represents bonuses paid in cash and common stock of Team.
(2) Mr. Bartley became employed by TeamBank, N.A. in May 1997.
(3) Other annual compensation was less than 10% of each executive's salary and
bonuses in each year.
On January 1, 1998, Team entered into a three-year employment agreement
with Mr. Weatherbie under which he receives a beginning base annual salary of
$135,000, an annual bonus at the discretion
40
<PAGE> 45
of the board of directors, life insurance, a car allowance and participation in
all other benefits received by Team employees. Under certain circumstances, such
as his death or disability, Team has also agreed to pay Mr. Weatherbie or his
estate $500,000. Team has obtained life insurance and is in the process of
obtaining disability insurance for these contingencies. In the event of
termination of Mr. Weatherbie's employment without cause, he will be entitled to
payments equal to his annual base salary for the longer of one year or the
remaining term of the agreement discounted at 8% annually, along with
reimbursement for out-of-pocket expenses incurred for professional and tax
advice not to exceed 75% of his annual base salary, as well as job search
expenses incurred not to exceed 50% of his annual base salary. Team has also
entered into an employment agreement with Mr. Gibson, the terms of which are
substantially similar to the employment agreement with Mr. Weatherbie, except
that Mr. Gibson's annual base salary is $128,400. In addition, Team has a
similar agreement with Mr. Bartley except that his annual base salary is
$110,000, his disability or death payment is $100,000, and reimbursement of
out-of-pocket expenses incurred for professional and tax advice in the event of
termination of his employment without cause is over a one year period for a
maximum of 75% of his base salary.
EMPLOYEE STOCK PURCHASE PLAN
The Team Employee Stock Purchase Plan was adopted in 1994. The plan
provides eligible employees the right to purchase Team common stock on an
annual basis through payroll deductions. Up to 75,000 shares of common stock
are reserved under the plan and may be issued in five annual increments of
15,000 beginning in 1999. Shares not issued in any year may be issued in future
years. The price per share of the common stock under the plan is 85% of the
fair market value of the stock at the commencement of each offering period. The
plan has not been registered under the Securities Act with the Commission.
Accordingly, shares issued pursuant to the plan are considered restricted
securities. The plan is not subject to the requirements of the Employee
Retirement Income Security Act of 1974, nor is it a qualified plan under
Section 401(a) of the Internal Revenue Code.
EMPLOYEE STOCK OWNERSHIP PLAN
The ESOP is a restatement and continuation of a plan previously maintained
by a predecessor company, which commenced receiving contributions in 1981. In
1986, the ESOP was the vehicle used in establishing Team and financing the
acquisition of the one-bank holding company that owned TeamBank, N.A. All of
Team's wholly-owned subsidiaries with employees participate in the ESOP.
The ESOP is a retirement plan for eligible employees and is funded
entirely with contributions made by Team and dividends paid by Team with
respect to the common stock owned by the ESOP. The ESOP is designed to be
invested primarily in the securities of Team. The ESOP is a leveraged plan
which permits it to borrow money to buy securities of Team, which are held in a
suspense account until the loan is paid. As the loan is repaid, securities are
gradually released from the suspense account for allocation to the accounts of
ESOP participants. Allocations are made annually and are based on the relative
compensation of the participants. Retirement benefits under the ESOP depend on
the amount of an employee's account balance at death, disability, separation
from service or retirement, and there is no fixed amount. See notes 9 and 10 to
the consolidated financial statements for further information regarding the
ESOP and Team's related borrowings.
Employees are eligible to participate in the ESOP on the January 1 or July
1 following the date six months after the first day of employment. Employees
also must achieve a minimum age in order to participate. To be eligible for
allocations of Team contributions, employees must complete 1,000 hours of
service during a year and must be employed on the last day of the plan year.
The employment requirement does not apply if the participant dies or becomes
disabled or attains age 65 in the plan year. Allocations are also potentially
subject to certain minimums. Following three years of service, employees
41
<PAGE> 46
become vested in their ESOP accounts at 20% per year, with 100% vesting
occurring after seven years. However, if a participant dies or is disabled
while still employed, a participant becomes vested immediately.
OTHER EMPLOYEE PLANS
Team has a 401(k) plan and an employee performance bonus plan that covers
all of its employees, including officers. With respect to the 401(k) plan, Team
makes a matching contribution of 50% of the employee's contribution up to a
maximum contribution of 6% of the employee's salary. The bonus plan utilizes a
continuous improvement model to determine the amount of award for Team and each
of its subsidiaries. The model measures improvements in asset growth,
profitability, productivity and asset quality. Team employees must exceed the
performance of the previous year to earn a bonus. Results are reported monthly.
Also, Team is considering adopting a stock incentive plan for its employees in
1999 or 2000. The number of shares of common stock expected to be reserved under
this type of plan is 70,000.
INDEMNIFICATION
Team's articles of incorporation and Kansas law provide that the board of
directors is authorized to indemnify or advance expenses to directors, officers
and other persons who are a party, or threatened to be made a party, to any
proceeding or action due to such person's relationship with Team.
Indemnification or the advancement of expenses may be made without shareholder
approval. Generally under Team's articles of incorporation and Kansas law, any
director, officer, employee or agent who is made or threatened to be made a
party to any suit or proceeding may be indemnified if such director or officer
acted in good faith and had reasonably believed that:
o in the case of conduct in an official capacity with Team, his or her
conduct was in or not opposed to Team's best interests; and
o with respect to any criminal proceeding, he or she had no reasonable
cause to believe his or her conduct was unlawful.
To the extent a person has been successful on the merits or otherwise in
defense of any proceeding or action, Kansas law and Team's articles of
incorporation require indemnification of such person's reasonable expenses.
Kansas law is not exclusive of any other indemnification, advancement of
expenses or rights which may be allowed under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
There is no pending litigation or proceeding involving a director,
officer, employee or other agent of Team as to which indemnification is being
sought. Team is not aware of any other threatened litigation that may result in
claims for indemnification by any director, officer, employee or other agent.
42
<PAGE> 47
RELATED PARTY TRANSACTIONS
The officers, directors and principal shareholders of Team and businesses
they control are customers of Team's subsidiary banks. Credit transactions with
these parties are subject to review by loan committees of the banks or by
Team's loan committee. All outstanding loans and extensions of credit to these
parties were made in the ordinary course of business on terms substantially
similar to comparable transactions with unaffiliated persons. At December 31,
1998, the aggregate balance of loans and advances under extensions of credits
made by the subsidiary banks to these affiliated parties was approximately
$3,635,000.
At December 31, 1998 Team had $1.0 million of notes payable relating to
borrowings of its ESOP. The notes are also secured by 134,560 shares of common
stock held by the ESOP. The ESOP, as selling shareholder, currently intends to
repay this indebtedness with proceeds from the sales of unallocated shares it is
offering pursuant to this prospectus. See "Use of Proceeds," "Capitalization"
and notes 9 and 10 to the consolidated financial statements.
43
<PAGE> 48
PRINCIPAL SHAREHOLDERS AND SELLING SHAREHOLDER
The following table sets forth certain information regarding the
beneficial ownership of Team's common stock as of December 31, 1998, and as
adjusted to reflect the sale of the common stock offered by this prospectus,
for: (1) each of Team's directors; (2) each person known by Team to own
beneficially more than 5% of the outstanding common stock; (3) each executive
officer; and (4) Team's executive officers and directors as a group. All
information with respect to beneficial ownership by Team's directors, officers
or beneficial owners has been furnished by the respective director, officer or
beneficial owners. Except as otherwise described in the notes below, the owners
have sole voting power and sole investment power with respect to all common
stock set forth opposite their names.
<TABLE>
<CAPTION>
Team Common Shares Beneficially Owned
-------------------------------------------------------------------------------
Before the After the
Offering Shares Offering
---------------------------- Being -------------------------
Names and Addresses of Beneficial Owner(1) Number Percent Offered Number Percent
------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Robert J. Weatherbie(9) .................... 55,359(2) 1.8% -- 55,359 1.5%
8 West Peoria, Suite 200
P.O. Box 402
Paola, Kansas 66071-0402
Michael L. Gibson(9) ....................... 47,050(3) 1.6% -- 47,050 1.3%
8 West Peoria, Suite 200
P.O. Box 402
Paola, Kansas 66071-0402
Rick P. Bartley ............................ 3,128 * -- 3,128 *
8 West Peoria, Suite 200
P.O. Box 402
Paola, Kansas 66071-0402
Carolyn S. Jacobs(9) ....................... 19,450(4) * -- 19,450 *
8 West Peoria, Suite 200
P.O. Box 402
Paola, Kansas 66071-0402
Neil Blakeman(9) ........................... 800(5) * -- 800 *
8 West Peoria, Suite 200
P.O. Box 402
Paola, Kansas 66071-0402
R.G. (Gary) Kilkenny(9) .................... 19,185(6) * -- 19,185 *
4304 West 115th
Leawood, Kansas 66211
Denis A. Kurtenbach(9) ..................... 3,925(7) * -- 3,925 *
8 West Peoria, Suite 200
P.O. Box 402
Paola, Kansas 66071-0402
Glen E. Gilpin(9) .......................... 63,780 2.1% -- 63,780 1.7%
302 Peyton Street
Emporia, Kansas 66801
Montie K. Taylor(9) ........................ 24,080(8) * -- 24,080 *
1900 Main
Parsons, Kansas 67357
Employee Stock Ownership Plan(9) ........... 1,582,700 52.4% 300,000 1,282,700 34.7%
8 West Peoria, Suite 200
P.O. Box 402
Paola, Kansas 66071-0402
All executive officers and
directors as a group (nine persons) (9)... 1,819,457 60.2% -- 1,519,457 41.0%
</TABLE>
44
<PAGE> 49
- ------------
(1) Unless otherwise indicated, the shares are held directly in the
names of the beneficial owners and each person has sole voting and
sole investment power with respect to the shares. Participants to
whom certain shares held by the ESOP have been allocated are
entitled to direct the ESOP trustee as to matters in which voting
rights may be exercised, and the ESOP trustee will vote such
shares, subject to its fiduciary duties. With respect to other
matters, participants are only entitled to direct the ESOP trustee
with respect to voting on major corporate matters, such as
reorganizations, recapitalizations, liquidations, consolidations
or sales of substantially all of Team's assets.
(2) Includes 55,359 shares of common stock owned by his wife, over
which he may be deemed to have shared voting and investment power.
Does not include 120,622 shares of common stock that were allocated
to Mr. Weatherbie's account in the ESOP as of December 31, 1997,
the latest ESOP allocation date.
(3) Includes 500 shares of common stock owned jointly with his wife,
over which he may be deemed to have shared voting and investment
power. Does not include 123,605 shares of common stock that were
allocated to Mr. Gibson's account in the ESOP as of December 31,
1997, the latest ESOP allocation date.
(4) Includes 19,450 shares of common stock owned by her husband's
revocable trust, over which she may be deemed to have shared voting
and investment power. Does not include 104,580 shares of common
stock that were allocated to Ms. Jacobs's account in the ESOP as of
December 31, 1997, the latest ESOP allocation date.
(5) Includes 200 shares owned jointly by Mr. Blakeman and his wife and
300 shares of common stock owned individually by Mr. Blakeman's
wife, over all of which shares Mr. Blakeman may be deemed to have
shared voting and investment power. Does not include 58,452 shares
of common stock that were allocated to Mr. Blakeman's account in
the ESOP as of December 31, 1997, the latest ESOP allocation date.
(6) Includes 8,545 shares owned jointly by Mr. Kilkenny and his wife
and 10,640 shares owned by a corporation controlled by Mr.
Kilkenny.
(7) Includes 925 shares of common stock held by Mr. Kurtenbach in an
Individual Retirement Account over which he may be deemed to have
voting and investment power.
(8) Includes 640 shares owned jointly by Mr. Taylor and his wife. Does
not include 16,751 shares that were allocated to Mr. Taylor's
account in the ESOP as of December 31, 1997, the latest ESOP
allocation date.
(9) The ESOP holds 1,582,700 shares of record. Team, acting through its
board of directors, is the ESOP trustee. Therefore, each of the
above named persons, other than Rick P. Bartley, may be deemed to
be the beneficial owner of the shares in the name of the ESOP,
although each of these persons disclaims beneficial ownership of
these shares. The Team board of directors has appointed an
independent fiduciary, Consulting Fiduciaries, Inc., Northbrook,
Illinois, to represent the ESOP in relation to this offering.
* Less than 1%.
45
<PAGE> 50
SUPERVISION AND REGULATION
GOVERNMENT REGULATION
Team and its banks are extensively regulated under federal, Kansas and
Nebraska law. These laws and regulations are primarily intended to protect
depositors and the deposit insurance fund of the Federal Deposit Insurance
Corporation, not shareholders of Team. The following information is qualified
in its entirety by reference to the particular statutory and regulatory
provisions. Any change in applicable laws, regulations or regulatory policies
may have a material effect on the business, operations and prospects of Team
and its banks. Team is unable to predict the nature or extent of the effects
that fiscal or monetary policies, economic controls or new federal or state
legislation may have on its business and earnings in the future.
TEAM
GENERAL. Team is a bank holding company registered under the Bank
Holding Company Act of 1956 and is subject to regulation, supervision and
examination by the Federal Reserve. Team is required to file an annual report
and the other periodic reports as the Federal Reserve now requires or may
require.
ACQUISITIONS. As a bank holding company, Team is required to obtain
the prior approval of the Federal Reserve before acquiring direct or indirect
ownership or control of more than 5% of the voting shares of a bank or bank
holding company. The Federal Reserve will not approve any acquisition, merger
or consolidation that would have a substantial anti-competitive effect, unless
the anti-competitive effects of the proposed transaction are outweighed by a
greater public interest in meeting the needs and convenience of the community.
The Federal Reserve also considers managerial resources, current and projected
capital positions and other financial factors in acting on acquisition or
merger applications.
PERMISSIBLE ACTIVITIES. Subject to limited exceptions, a bank holding
company may not engage in, or acquire direct or indirect control of more than
5% of the voting shares of any company engaged in a non-banking activity,
unless this activity has been determined by the Federal Reserve to be closely
related to banking or managing or controlling banks. The Federal Reserve has
identified specific non-banking activities in which a bank holding company may
engage with notice to, or prior approval by, the Federal Reserve.
CAPITAL ADEQUACY. The Federal Reserve monitors the regulatory capital
adequacy of bank holding companies. As discussed below, Team's banks are also
subject to the regulatory capital adequacy requirements of the Federal Deposit
Insurance Corporation, the Comptroller of the Currency, and Kansas and Nebraska
regulations, as applicable. The Federal Reserve uses a combination of
risk-based guidelines and leverage ratios to evaluate the regulatory capital
adequacy of Team.
The Federal Reserve has adopted a system using risk-based capital
adequacy guidelines to evaluate the regulatory capital adequacy of bank holding
companies. The guidelines apply on a consolidated basis to bank holding
companies with consolidated assets of at least $150 million. Under the
risk-based capital guidelines, different categories of assets are assigned to
different risk categories based generally on the perceived credit risk of the
asset. The risk weights of the particular category are multiplied by the
corresponding asset balances and added together to determine a risk-weighted
asset base. Some off balance sheet items, such as loan commitments in excess of
one year, mortgage loans sold with recourse and letters of credit, are added to
the risk-weighted asset base by converting them to a credit equivalent and
assigning them to the appropriate risk category. For purposes of the Federal
Reserve's regulatory risk-based capital guidelines, total capital is defined as
the sum of core and secondary capital elements, with secondary capital being
limited to 100% of core capital. For bank holding companies, core
46
<PAGE> 51
capital, also known as Tier 1 capital, generally includes common shareholders'
equity, perpetual preferred stock and minority interests in consolidated
subsidiaries, less goodwill and intangible assets. No more than 25% of core
capital elements may consist of cumulative preferred stock. Secondary capital,
also known as Tier 2 capital, generally includes the allowance for loan losses
limited to 1.25% of weighted risk assets, certain forms of perpetual preferred
stock, as well as hybrid capital instruments. The Federal Reserve's regulatory
guidelines require a minimum ratio of qualifying total capital to weighted risk
assets of 8%, of which at least 4% should be in the form of core capital. At
December 31, 1998, Team's core capital was $19.0 million.
In addition to the risk-based capital guidelines, the Federal Reserve,
the Federal Deposit Insurance Corporation and the Comptroller of the Currency
use a leverage ratio as an additional tool to evaluate capital adequacy. The
leverage ratio is defined by the Federal Reserve to be a company's core capital
divided by its average total consolidated assets, and the Comptroller of the
Currency's and Federal Deposit Insurance Corporation's definitions are similar.
Based upon the current capital status of Team, the applicable minimum required
leverage ratio is 4%.
The table below presents Team's ratios of (1) total capital to
risk-weighted assets, (2) core capital to risk-weighted assets and (3) core
capital to average assets, at December 31, 1998.
<TABLE>
<CAPTION>
At December 31, 1998
--------------------------
Ratio Actual Minimum Required
----- ------ ----------------
<S> <C> <C>
Total capital to risk-weighted assets ....... 8.00% 8.00%
Core capital to risk-weighted assets ........ 7.05% 4.00%
Core capital to average assets .............. 4.50% 4.00%
</TABLE>
Failure to meet the regulatory capital guidelines may result in the
initiation by the Federal Reserve of appropriate supervisory or enforcement
actions.
THE BANKS
GENERAL. Team owns four banks. The deposits of all of the banks are
insured by the Federal Deposit Insurance Corporation. Iola Bank and Trust
Company ("IB&T") and TeamBank Nebraska are subject to supervision and
regulation by the Federal Deposit Insurance Corporation. In addition, IB&T is
regulated by the Kansas Office of the State Bank Commissioner and TeamBank
Nebraska is regulated by the Nebraska Department of Banking and Finance. Team
Bank N.A. and First National Bank and Trust Company ("First National"), as
national banks, are subject to regulation by the Comptroller of the Currency.
PERMISSIBLE ACTIVITIES. A Kansas or Nebraska state chartered bank may
not engage in any activity not permitted for national banks, unless the
institution complies with applicable capital requirements and the Federal
Deposit Insurance Corporation determines that the activity poses no significant
risk to the Bank Insurance Fund. Neither the IB&T nor TeamBank Nebraska are
presently involved in the types of transactions covered by this limitation.
COMMUNITY REINVESTMENT ACT. Enacted in 1977, the federal Community
Reinvestment Act has become important to financial institutions, including
their holding companies. Financial institutions have a continuing and
affirmative obligation, consistent with safe and sound operations of such
institutions, to serve the "convenience and needs" of the communities in which
they are chartered to do business, including low- and moderate-income
neighborhoods. The Community Reinvestment Act currently requires
47
<PAGE> 52
that regulators consider an applicant's Community Reinvestment Act record when
evaluating certain applications, including charters, branches and relocations,
as well as mergers and consolidations. The applicable federal regulators
regularly conduct Community Reinvestment Act examinations to assess the
performance of financial institutions and assign one of four ratings to the
institution's records of meeting the credit needs of its community. During their
last examinations, ratings of at least satisfactory were received by all of
Team's banks. As a result, management believes that the banks' performance under
Community Reinvestment Act will not impede regulatory approvals of any proposed
acquisitions or branching opportunities.
DIVIDEND RESTRICTIONS. Dividends paid by Team's banks provide
substantially all of the operating and investing cash flow of Team. Under
Nebraska law, the approval of the principal regulator is required prior to the
declaration of any dividend by a bank if the total of all dividends declared in
any calendar year exceeds the total of its net profits of that year combined
with its retained net profits for the preceding two years. Under Kansas law,
the current dividends can be paid only from undivided profits after deducting
losses, but before declaring dividends the bank must transfer 25% of its net
profits since the last preceding dividend to its surplus fund until the surplus
fund equals the total capital stock.
With respect to national banks, the directors of any such bank may
quarterly, semiannually, or annually declare a dividend of so much of the
bank's undivided profits as they deem expedient, except until the bank's
surplus fund equals its common capital, no dividends may be declared unless the
bank has carried to the surplus fund at least one-tenth of the bank's net
income of the preceding half year in the case of quarterly or semiannual
dividends, or at least one-tenth of its net income of the preceding two
consecutive half-year periods in the case of annual dividends. However, the
Comptroller of the Currency's approval is required if the total of all
dividends declared by a bank in any calendar year exceeds the total of its net
income of that year combined with its retained net income of the preceding two
years, less any required transfers to surplus or a fund for the retirement of
any preferred stock.
EXAMINATIONS. Team's banks are examined from time to time by their
primary federal banking regulators. Based upon an evaluation, the examining
regulator may revalue a bank's assets and require that it establish specific
reserves to compensate for the difference between the value determined by the
regulator and the book value of the assets. The Kansas Office of the State Bank
Commissioner and the Nebraska Department of Banking and Finance also conduct
examinations of state-chartered banks. Both of these regulators may accept the
results of a federal examination in lieu of conducting an independent
examination. Both the Kansas and Nebraska regulators have the authority to
revalue the assets of a state-chartered institution and require it to establish
reserves.
CAPITAL ADEQUACY. The Federal Deposit Insurance Corporation and the
Comptroller of the Currency have adopted regulations establishing minimum
requirements for the capital adequacy of insured institutions. The requirements
address both risk-based capital and leverage capital, with risk-based assets
and core and secondary capital being determined in basically the same manner as
described above for bank holding companies. The Federal Deposit Insurance
Corporation or the Comptroller of the Currency may establish higher minimum
requirements if, for example, a bank has previously received special attention
or has a high susceptibility to interest rate risk.
The Federal Deposit Insurance Corporation risk-based capital
guidelines require state non-member banks and national banks to have a ratio of
total capital to total risk-weighted assets of 8%, of which total capital at
least 4% points should be in the form of core capital.
48
<PAGE> 53
The table below presents the regulatory capital ratios of the IB&T and
TeamBank Nebraska at December 31, 1998.
<TABLE>
At December 31, 1998
-----------------------------------------------------
IB&T TeamBank Nebraska
Ratio Actual Minimum Required Actual Minimum Required
----- ------ ---------------- ------ ----------------
<S> <C> <C> <C> <C>
Total capital to risk-weighted assets ....... 13.81% 8.00% 12.50% 8.00%
Core capital to risk-weighted assets ........ 12.82 4.00 11.59 4.00
Core capital to assets ...................... 7.67 4.00 7.89 4.00
</TABLE>
The Comptroller of the Currency risk-based capital guidelines expect
national banks to maintain a minimum ratio of total capital, after deductions,
to weighted risk assets of 8%, and national banks and state non-member banks
must have and maintain core capital in an amount equal to at least 3% of
adjusted total assets; but for all but the most highly rated banks, the minimum
core leverage ratio is to be 3% plus an additional cushion of at least 100 to
200 basis points. The applicable guideline for TeamBank, N.A. and First
National are 4%.
The table below presents the regulatory capital ratios of TeamBank
N.A. and First National at December 31, 1998.
<TABLE>
At December 31, 1998
------------------------------------------------------
TeamBank, N.A. First National
Ratio Actual Minimum Required Actual Minimum Required
----- ------ ---------------- ------ ----------------
<S> <C> <C> <C> <C>
Total capital to risk-weighted assets ..... 12.07% 8.00% 13.65% 8.00%
Core capital to risk-weighted assets ...... 11.17 4.00 12.56 4.00
Core capital to assets .................... 7.07 4.00 7.80 4.00
</TABLE>
Banks with regulatory capital ratios below the required minimum are
subject to administrative actions, including the termination of deposit
insurance upon notice and hearing, or a temporary suspension of insurance
without a hearing in the event the institution has no tangible capital.
The Federal Deposit Insurance Corporation and Comptroller of the
Currency regulators have adopted regulations that define five capital levels:
well capitalized, adequately capitalized, undercapitalized, severely
undercapitalized and critically undercapitalized. An institution is critically
undercapitalized if it has a tangible equity to total assets ratio that is
equal to or less than 2%. An institution is well capitalized if it has a total
risk-based capital ratio of 10% or greater, core risk-based capital ratio of 6%
or greater, and a leverage ratio of 5% or greater, and the institution is not
subject to an order, written agreement, capital directive, or prompt corrective
action directive to meet and maintain a specific capital level for any capital
measure. An institution is adequately capitalized if it has a total risk-based
capital ratio of 8% or greater, a core risk-based capital ratio of 4% or
greater, and a leverage ratio of 4% or greater.
The Federal Deposit Insurance Corporation Improvement Act requires the
federal banking regulators to take prompt corrective action to resolve the
problems of insured depository institutions, including capital-deficient
institutions. In addition to requiring the submission of a capital restoration
plan, the Federal Deposit Insurance Corporation Improvement Act contains broad
restrictions on activities of institutions that are not adequately capitalized
involving asset growth, acquisitions, branch establishment, and expansion into
new lines of business. With limited exceptions, an insured depository
institution is prohibited from making capital distributions, including
dividends, and is prohibited from paying management fees to control persons if
the institution would be undercapitalized after any distribution or payment.
49
<PAGE> 54
As an institution's capital decreases, the powers of the federal
regulators become greater. A significantly undercapitalized institution is
subject to mandated capital raising activities, restrictions on interest rates
paid and transactions with affiliates, removal of management, and other
restrictions. The regulators have limited discretion in dealing with a
critically undercapitalized institution and are virtually required to appoint a
receiver or conservator if the capital deficiency is not promptly corrected.
REAL ESTATE LENDING EVALUATIONS. The federal regulators have adopted
uniform standards for evaluations of loans secured by real estate or made to
finance improvements to real estate. Banks are required to establish and
maintain written internal real estate lending policies consistent with safe and
sound banking practices and appropriate to the size of the institution and the
nature and scope of its operations. The regulations establish loan to value
ratio limitations on real estate loans, which generally are equal to or less
than the loan to value limitations established by Team's banks.
DEPOSIT INSURANCE PREMIUMS. Deposits of Team's banks are insured up to
the regulatory limit by the FDIC and are subject to deposit assessments. The
assessment schedule for banks ranges from 0 to 27 cents per $100 of deposits,
based on capital and supervisory factors. The banks' insured deposits are
subject to assessment payable to Bank Insurance Fund. An institution's
assessment is based on the assignment of the institution by the Federal Deposit
Insurance Corporation to one of three capital groups and to one of three
supervisory subgroups. The capital groups are well capitalized, adequately
capitalized and undercapitalized. The three supervisory subgroups are Group A,
for financially solid institutions with only a few minor weaknesses, Group B,
for those institutions with weaknesses which, if uncorrected could cause
substantial deterioration of the institution and increase the risk to the
deposit insurance fund, and Group C, for those institutions with a substantial
probability of loss to the fund absent effective corrective action. Currently,
all four of Team's banks are in Group A.
BRANCHING AUTHORITY. National banks headquartered in Missouri, such as
TeamBank, N.A., have the same branching rights in Missouri as banks chartered
under Missouri law. Missouri law grants Missouri-chartered banks the authority
to establish branches anywhere in the State of Missouri, subject to receipt of
all required regulatory approvals.
Kansas law permits a Kansas bank to install remote service units, also
known as automatic teller machines, throughout the state. Remote service units
which are not located at the principal place of business of the bank or at a
branch location of the bank must be available for use by other banks and their
customers on a non-discriminatory basis. Federal law generally allows national
banks to establish branches in locations which do not violate state law.
INTERSTATE BANKING LEGISLATION. The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994, which became effective September 1995, has
eliminated many of the historical barriers to the acquisition of banks by
out-of-state bank holding companies. This law facilitates the interstate
expansion and consolidation of banking organizations by permitting: (1) bank
holding companies that are adequately capitalized and managed, subject to
certain limitations, to acquire banks located in states outside their home
states regardless of whether acquisitions are authorized under the laws of the
host state; (2) the interstate merger of banks after June 1, 1997, subject to
the right of individual states either to pass legislation providing for earlier
effectiveness of mergers or to opt out of this authority prior to that date;
(3) banks to establish new branches on an interstate basis provided that this
action is specifically authorized by the law of the host state; (4) foreign
banks to establish, with approval of the appropriate regulators in the United
States, branches outside their home states to the same extent that national or
state banks located in that state would be authorized to do so; and (5) banks
to receive deposits, renew time deposits, close loans, service loans and
receive payments on loans and other obligations as agent for any bank or thrift
affiliate, whether the affiliate is located in the same or different state.
Team's banks do not currently have any plans to take any actions permitted by
this law.
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<PAGE> 55
CHANGING REGULATORY STRUCTURE
The laws and regulations affecting banks and bank holding companies
are in a state of flux. The rules and the regulatory agencies in this area have
changed significantly over recent years, and there is reason to expect that
similar changes will continue in the future. It is not possible to predict the
outcome of these changes.
One of the major additional burdens imposed on the banking industry is
the increased authority of federal agencies to regulate the activities of
federal and state banks and their holding companies. The Federal Reserve, the
Comptroller of the Currency and the Federal Deposit Insurance Corporation have
extensive authority to police unsafe or unsound practices and violations of
applicable laws and regulations by depository institutions and their holding
companies. These agencies can assess civil money penalties and other laws have
expanded the agencies' authority in recent years, and the agencies have not yet
fully tested the limits of their powers. In addition, the Kansas Office of the
State Bank Commissioner and the Nebraska Department of Banking and Finance
possess broad enforcement powers to address violations of their banking laws by
banks chartered in each respective state.
PENDING FINANCIAL MODERNIZATION LEGISLATION
In June 1998, in the 105th Congress, the Senate began hearings on the
legislation on a sweeping financial modernization bill, H.R. 10, The Financial
Services Act of 1998, which was passed by the U.S. House of Representatives.
The Senate did not pass that bill prior to the end of the 105th Congress. This
year, in the 106th Congress, a bill referred to as the Financial Services Act
of 1999 (based on The Financial Services Act of 1998) is under consideration by
House and Senate Committees. The House and Senate versions of the bill are
substantially similar.
If passed by Congress, the bill would not become law unless it is
signed by the President, whose Administration, with respect to The Financial
Services Act of 1998, had commented publicly that it will not support the
legislation in the form that was previously passed by the House. Accordingly,
whether The Financial Services Act of 1999 will be passed by Congress in the
near future remains uncertain, and the ultimate form the legislation might take
if enacted cannot be predicted at this time.
The Financial Services Act of 1999, among other things, addresses the
ongoing debate concerning mixing banking and commerce. Under the proposal,
banks could affiliate with insurance and securities companies in a holding
company structure, subject to functional regulation. The proposal provides for
further study of the issues relating to merging the Savings Association
Insurance Fund and Bank Insurance Fund. If adopted, the legislation would
represent the most significant overhaul of financial services laws since the
1930's when the Glass-Steagall Act was enacted.
EFFECT ON ECONOMIC ENVIRONMENT
The policies of regulatory authorities, including the monetary policy
of the Federal Reserve, have a significant effect on the operating results of
bank holding companies and their subsidiaries. Among the means available to the
Federal Reserve to affect the money supply are open market operations in U.S.
Government securities, changes in the discount rate on member bank borrowings,
and changes in reserve requirements against member bank deposits. These means
are used in varying combinations to influence overall growth and distribution
of bank loans, investments and deposits, and their use may affect interest
rates charged on loans or paid on deposits.
The Federal Reserve's monetary policies have materially affected the
operating results of commercial banks in the past and are expected to continue
to do so in the future. The nature of future
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<PAGE> 56
monetary policies and the effect of these policies on the business and earnings
of Team and its subsidiaries cannot be predicted.
TRANSACTIONS WITH AFFILIATES
Transactions between a bank, its holding company and/or affiliated
entities are subject to various restrictions imposed by statute and by state
and federal regulatory agencies. These transactions include loans and other
extensions of credit, purchases of securities and other assets and payments of
fees or other distributions. These restrictions may limit the amount of
transactions between an institution and its affiliates based on a percentage of
a bank's capital and surplus, impose collateral requirements on extensions of
credit in some cases and require transactions with affiliates to be on terms
comparable to those for transactions with unaffiliated entities and consistent
with safe and sound banking practices.
RESERVE REQUIREMENTS
As national banks and state member banks, the banks are subject to
Federal Reserve regulations requiring depository institutions to maintain
reserves against a specified percentage of transaction accounts (primarily NOW
and regular checking). Reserves are maintained in the form of vault cash or
non-interest bearing deposits with the Federal Reserve Bank. The Federal
Reserve regulations generally require 3% reserves on the first $47.8 million of
transaction accounts; however, the first $4 million of these otherwise
reservable balances are exempted from the 3% reserve requirement. Net
transaction account balances over $47.8 million are subject to a reserve
requirement of $1,434,000 plus 10% of the amount of net transaction balances
over $47.8 million. The banks are in compliance with the foregoing
requirements.
LIABILITIES OF COMMONLY CONTROLLED DEPOSITORY INSTITUTIONS
A bank insured by the Federal Deposit Insurance Corporation can be
held liable for any loss incurred by, or reasonably expected to be incurred by,
the Federal Deposit Insurance Corporation in connection with (a) the default of
a commonly controlled FDIC-insured financial institution or (b) any assistance
provided by the Federal Deposit Insurance Corporation to a commonly controlled
depository institution in danger of default. Thus, the banks could incur
liability to the Federal Deposit Insurance Corporation in the event of the
default of any of the other FDIC-insured financial institutions owned or
controlled by Team. Such liability would be subordinate in right of payment to
deposit liabilities, secured obligations, any other general or senior liability
and any obligation subordinate to depositors or other general creditors, other
than obligations owed to any affiliate of the depository institution and any
obligations owed to shareholders in their capacity as shareholders. The
imposition of liabilities in sufficient amounts could lead to the appointment
of the Federal Deposit Insurance Corporation as conservator or receiver for the
banks.
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<PAGE> 57
DESCRIPTION OF CAPITAL STOCK
Team's articles of incorporation, as restated and amended, authorize
the issuance of 60,000,000 shares of stock, comprised of 50,000,000 shares of
common stock and 10,000,000 shares of preferred stock. As of March 1, 1999,
there were a total of 3,001,803 shares of common stock issued and outstanding.
As permitted by Kansas law, Team's articles of incorporation allow its board
to issue additional shares of its stock up to the total amount of common or
preferred stock authorized without obtaining additional approval of its
shareholders. No shares of preferred stock are currently outstanding.
The board may, within certain regulatory guidelines, issue additional
shares of common stock without the prior approval of the Federal Reserve. There
is no current intent to issue any additional common stock at this time except
with respect to this offering, or pursuant to Team's Employee Stock Purchase
Plan. However, Team is considering adopting a stock incentive plan which would
reserve up to 70,000 shares of common stock for issuance to Team employees
under options which may be granted in the future.
COMMON STOCK
DIVIDEND RIGHTS. Holders of common stock will be entitled to dividends
as, if and when declared by the board out of funds legally available for such
dividends. Team has paid dividends on its common stock out of net earnings
since 1987 and intends to pay quarterly dividends on its common stock beginning
in the second quarter of 1999. See "Dividend Policy; No Prior Market for the
Common Stock." However, there can be no assurance that Team will continue to be
able to pay, or that the board of directors of Team will authorize payment of,
dividends on common stock.
VOTING RIGHTS. All voting rights are vested in the holders of common
stock of Team, each share being entitled to one vote. Team's articles of
incorporation specifically provide that holders of common stock have cumulative
voting rights in the election of directors at shareholders' meetings.
Cumulative voting rights permit minority shareholders who control a significant
block of stock to elect a representative to the board. Accordingly, with
cumulative voting rights, minority holders of common stock may be able to elect
persons to the board of directors. Directors are elected by a plurality of the
votes present at a meeting of shareholders called for that purpose.
In all matters other than the election of directors and where otherwise
required by Kansas law, the affirmative vote of holders of a majority of the
shares present in person or by proxy at a meeting will be sufficient to act on a
matter. Mergers and business combinations require the affirmative vote of 51% of
the outstanding shares of common stock.
PREEMPTIVE RIGHTS. Holders of common stock and preferred stock of Team
do not have preemptive rights to subscribe for additional shares or securities
of Team in the event more shares or securities are issued. This lack of
preemptive rights means that Team may issue additional stock or securities
without any obligation to holders of common stock or preferred stock. To the
extent shares of common stock are issued in the future without first offering
the stock to shareholders, the proportionate ownership of Team's shareholders
could be diminished.
LIQUIDATION RIGHTS. Upon liquidation or dissolution of Team, holders
of its stock and securities will share in the proceeds as follows: Subject to
the specific terms of any series of preferred stock, in order of priority and
to the extent funds are available, the holders of preferred stock will be
repaid the liquidation value of the preferred stock, and to the extent
additional funds are available upon liquidation, holders of preferred stock
will receive payments of any unpaid accumulated dividends on preferred stock.
Next, holders of common stock will be entitled to share on a pro rata basis in
the net assets which remain after
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<PAGE> 58
satisfaction of all other liabilities, including payments to holders of
preferred stock as outlined above. In other words, holders of common stock will
have rights to Team's assets subordinate to the rights of all of Team's other
creditors.
OTHER. Shares of common stock to be sold in this offering will, when
issued, be fully paid and nonassessable. Team's common stock is not subject to
any mandatory redemptive provisions, sinking fund provisions or conversion
rights.
PREFERRED STOCK
The preferred stock of Team may be issued from time to time by the
board of directors as in one or more series. The description of shares of each
series of preferred stock will be as set forth in resolutions adopted by the
board of directors and a certificate of designation to be filed as required by
Kansas law prior to the issuance of any shares of the series. The certificate
of designation will set the number of shares to be included in each series of
preferred stock and set the designations, preferences, conversion or other
rights, voting powers, restrictions, limitations as to distributions,
qualifications, or terms and conditions of redemption relating to the shares of
each series. However, the board of directors is not authorized to change the
right of the common stock to vote one vote per share on all matters submitted
for shareholder action. The authority of the board of directors with respect to
each series of preferred stock includes, but is not limited to, setting or
changing the following:
o the designation of the series and the number of shares
constituting the series, provided that the aggregate number of shares
constituting all series of preferred stock may not exceed 10,000,000;
o the annual distribution rate on shares of the series, whether
distributions will be cumulative and, if so, from which date or dates;
o whether the shares of the series will be redeemable and, if
so, the terms and conditions of redemption, including the date or dates upon and
after which the shares will be redeemable, and the amount per share payable in
case of redemption, which amount may vary under different conditions and at
different redemption dates;
o the obligation, if any, of Team to redeem or repurchase shares
of the series pursuant to a sinking fund;
o whether shares of the series will be convertible into, or
exchangeable for, shares of stock of any other class or classes and, if so, the
terms and conditions of conversion or exchange, including the price or prices or
the rate or rates of conversion or exchange and the terms of adjustment, if any;
o whether the shares of the series will have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of the
voting rights;
o the rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding up of Team; and
o any other relative rights, powers, preferences,
qualifications, limitations or restrictions thereof relating to the series which
may be authorized or permitted under Kansas law.
The shares of preferred stock of any one series will be identical with
each other in all respects except as to the dates from and after which
dividends thereon will cumulate, if cumulative.
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ANTI-TAKEOVER PROVISIONS
Article Tenth of Team's articles of incorporation provide authority to
the board of directors to oppose a tender or merger offer on the basis of
factors other than economic benefit to shareholders. Such factors that the
board of directors may but will not be legally obligated to consider, in the
event of a tender offer for Team's securities, are the following:
o whether the offered price is acceptable based on the
historical and present operating results or financial condition of Team;
o whether a more favorable price could be obtained for Team's
securities in the future;
o the impact which an acquisition of Team would have on the
employees, depositors, and customers of Team and its subsidiaries in the
communities which they serve;
o the reputation and business practices of the offeror and its
management and affiliates as they would affect the employees, depositors and
customers of Team and its subsidiaries and the future value of Team's stock;
o the value of the securities, if any, which the offeror is
offering in exchange for Team's securities, based on an analysis of the worth of
Team as compared to the corporation or other entity whose securities are being
offered; and
o any anti-trust or other legal and regulatory issues that are
raised by the offeror.
Article Tenth might discourage a tender offer for Team common stock,
which might be at a price above the prevailing market rate. Management believes
that the advantages of the provisions to all the shareholders of Team outweigh
any possible disadvantages resulting from the decrease in the likelihood of
Team becoming a target of a takeover bid which might be desired or favored by a
majority of Team shareholders.
The board has noted that uninvited or unsolicited tender offers or
other attempts to acquire control of companies, if successful, are sometimes
followed by a merger or similar transaction that involves the elimination of
minority shareholders or a change in their interest as shareholders. Such a
two-step, non-negotiated, or a board of director disapproved, transaction often
results in the elimination of minority shareholders who did not tender their
stock in the first step or who, as a result of proration, did not have all
their tendered stock purchased. In connection with the second step, minority
shareholders are often forced to accept consideration that, in the opinion of
the board, is less valuable or desirable for stock that was available or
offered in the first step.
The board of directors believes that substantial inequities could
befall the remaining shareholders after Team has come under the control of
another person or company and the acquiror then proceeds to combine a company
owned by the person acquiring or the acquiring person itself with Team by
merger or otherwise. The terms of such a business combination may not reflect
arm's-length bargaining and thus may not assure fair treatment of the remaining
shareholders, because the same party controls both sides of the negotiations.
Kansas law permits a Kansas corporation to be merged with or into another
corporation upon the approval of the holders of a majority of its outstanding
stock. Hence, a party who held or controlled a majority of Team's voting stock
after a takeover could force a merger, sale of substantially all of Team or a
subsidiary's assets or other transactions on terms it dictated. While objecting
shareholders have certain statutory rights of appraisal under Kansas law,
pursuant to which they may enforce their right to receive the fair value of
their shares, fair value is a difficult term to define and may
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require significant cost to determine. Team's shareholders could rely on certain
common law rights based on the fiduciary duty of a controlling shareholder to
deal fairly with minority shareholders and upon federal securities laws
governing disclosures in the event of a business combination pursuant to which
shareholder action is required, but efforts to pursue these rights may involve
protracted and expensive litigation. A minority shareholder may not have the
financial resources to wait out such litigation and, faced with the inability to
liquidate his investment at the value equal to that paid under the tender offer,
may be coerced by economic considerations into accepting the terms of a business
combination.
The provisions of Team's articles of incorporation discussed above may
not deter an acquisition of Team. It may, however, discourage attempts by other
persons, companies or groups to acquire control of Team without negotiation
with Team through the acquisition of a substantial number of shares of Team's
stock, possibly followed by a forced merger or other business combination in
which the remaining shareholders of Team may not receive a fair price for their
shares. Management believes that shareholders other than the person seeking
control may suffer inequities and may not receive a fair price if Team falls
under the control of another person without that other person first negotiating
with management to obtain the fairest terms for the shareholders and Team.
TRANSFER AND DIVIDEND PAYING AGENT
American Securities Transfer & Trust, Inc., Denver, Colorado, will act
as transfer and dividend paying agent for Team's common stock.
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SHARES ELIGIBLE FOR FUTURE SALE
After this offering, Team will have 3,701,803 shares of common stock
outstanding, or 3,851,803 shares of common stock if the underwriters'
over-allotment option is exercised in full. The common stock sold in the
offering will be freely transferable without restriction under the Securities
Act, unless such shares are held by affiliates of Team as that term is defined
in the Securities Act. The remaining 3,001,803 shares of common stock held by
existing shareholders are restricted shares. Team issued and sold the
restricted shares in private transactions in reliance on exemptions from
registration under the Securities Act. Restricted shares may be sold in the
public market only if they are registered under the Securities Act or are sold
pursuant to an exemption from registration, such as Rule 144.
Under Rule 144, beginning 90 days after the date of this prospectus, a
person who has beneficially owned restricted shares for at least one year would
be entitled to sell in any three-month period up to the greater of:
o 1% of the then-outstanding shares of common stock, or
o the average weekly trading volume of the common stock during
the four calendar weeks preceding the filing of a Form 144
with respect to such sale.
Also, sales under Rule 144: (1) must be made through customary broker
transactions; (2) are subject to notice requirements; and (3) may only be made
if current public information is available on Team. Finally, Rule 144 permits a
person who is unaffiliated with Team to sell restricted shares without
complying with any of the Rule 144 limitations discussed above.
Team, its directors and executive officers and certain other
shareholders, who will hold an aggregate of 2,802,130 shares upon completion of
the offering, have agreed that they will not, with certain limited exceptions,
offer, sell, grant options to purchase or otherwise dispose of any shares of
common stock without the prior written consent of the representative of the
underwriters for a period of 180 days from the date of this prospectus. Team's
ESOP will be permitted, in the ordinary course of its business, to transfer
shares to ESOP participants who terminate employment with Team or elect to
diversify their portfolio.
Prior to the offering, there was no public market for the common
stock, and there can be no assurance that a significant public market for the
common stock will develop or be sustained after the offering. Any future sale
of substantial amounts of common stock in the open market or the perception
that such sales may occur could adversely affect the market price of the common
stock.
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UNDERWRITING
Subject to the terms and conditions of the underwriting agreement
among Team, the selling shareholder and the underwriters listed on the table
below for whom Howe Barnes Investments, Inc. is acting as representative, the
underwriters have severally agreed to purchase from Team and the selling
shareholder an aggregate of 1,000,000 shares of common stock in the amounts set
forth below opposite their names.
<TABLE>
<CAPTION>
Underwriters Number of Shares
------------ ----------------
<S> <C>
Howe Barnes Investments, Inc.......................
Total....................................... 1,000,000
=========
</TABLE>
Under the terms and conditions of the underwriting agreement, the
underwriters are committed to accept and pay for all of the common stock, if
any are taken.
Team has granted to the underwriters an option, exercisable within 30
days after the date of this prospectus, to purchase up to an additional 150,000
shares of common stock at the public offering price. If the underwriters
purchase any of the additional shares of common stock under this option, each
underwriter will be committed to purchase the additional shares in
approximately the same proportion as in the table above. The underwriters may
exercise the option only for the purpose of covering over-allotments, if any,
made in connection with the distribution of the common stock offered pursuant
to this prospectus.
The table below shows the price and proceeds on a per security and
aggregate basis. The proceeds to be received by Team and the selling
shareholder as shown in the table below do not reflect estimated offering
expenses of $350,000 payable by Team and the selling shareholder.
<TABLE>
<CAPTION>
Per Share of Common Stock Total
------------------------- -------
<S> <C> <C>
Price to Investors.......................... $ $
Proceeds to Team............................ $ $
Proceeds to the selling shareholder......... $ $
</TABLE>
Team has agreed to pay the underwriters $___ per share of common
stock, or a total of $____ as compensation for arranging the sale of common
stock. Should the underwriters exercise the over-allotment option, an aggregate
of $____ will be paid to the underwriters for arranging the sale of the common
stock.
The underwriters propose to offer the common stock in part directly to
the public at the initial public offering price set forth on the cover page of
this prospectus, and in part to securities dealers at this price less a
concession not in excess of $___ per share of common stock. The underwriters
may allow, and the dealers may reallow, a concession not in excess of $___ per
share of common stock to brokers and dealers. After the shares of common stock
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the underwriters.
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Team has agreed to indemnify the several underwriters against several
liabilities, including liabilities under the Securities Act of 1933.
In connection with the offering, the underwriters may purchase and
sell the common stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. Stabilizing
transactions consist of bids or purchases for the purpose of preventing or
retarding a decline in the market price of the common stock; and syndicate
short positions involve the sale by the underwriters of a greater number of
securities than they are required to purchase from Team and the selling
shareholder in the offering. The underwriters also may impose a penalty bid,
whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the securities sold in the offering for their
account may be reclaimed by the syndicate if the shares of common stock are
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
common stock, which may be higher than the price that might otherwise prevail
in the open market. These activities, if begun, may be discontinued at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed
upon for Team by Jones & Keller, P.C., Denver, Colorado. The validity of the
common stock offered under Kansas law pursuant to this prospectus will be
passed upon for Team by Hartley, Nicholson & Hartley, P.A., Paola, Kansas.
Certain legal matters in connection with this offering will be passed upon for
the selling shareholder by Shook, Hardy & Bacon LLP, Kansas City, Missouri.
Certain legal matters in connection with this offering will be passed upon for
the underwriters by Chapman and Cutler, Chicago, Illinois. Jones & Keller, P.C.
and Chapman and Cutler will rely on the opinion of Hartley, Nicholson &
Hartley, P.A. regarding certain matters.
EXPERTS
The consolidated financial statements of Team as of December 31, 1998
and for each of the years in the three year period ended December 31, 1998 have
been included and incorporated herein by reference in reliance upon the report
of KPMG LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that reflect
Team's views about future events and financial performance. Actual results
could differ materially from those suggested by the forwardlooking statements
for various reasons, including those discussed in the "Risk Factors" section
beginning on page 3. Therefore, you should not place undue reliance on these
forward-looking statements.
ADDITIONAL INFORMATION
Team has filed with the Commission a registration statement on Form
S-1. This prospectus, which forms a part of the registration statement, does
not contain all the information included in the registration statement. Certain
information is omitted and you should refer to the registration statement and
its exhibits. With respect to references made in this prospectus to any
contract or other document of Team, these references are not necessarily
complete and you should refer to the exhibits attached to the registration
statement, including exhibits and schedules filed with it, at the Commission's
public reference facilities in Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, or at the regional
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offices of the Commission. Please call the Commission at 1-800-SEC-0330 for more
information on the public reference rooms. You may also obtain copies of these
materials from the Public Reference Section of the Securities and Exchange
Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site
(http:/www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants, such as Team, that file electronically
with the Commission.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report.................................................. F-2
Consolidated Balance Sheets................................................... F-3
Consolidated Statements of Income............................................. F-4
Consolidated Statements of Comprehensive Income............................... F-5
Consolidated Statements of Stockholders' Equity............................... F-6
Consolidated Statements of Cash Flows......................................... F-7
Notes to Consolidated Financial Statements.................................... F-9
</TABLE>
F-1
<PAGE> 66
INDEPENDENT AUDITORS' REPORT
Board of Directors
Team Financial, Inc.:
We have audited the accompanying consolidated balance sheets of Team
Financial, Inc. and subsidiaries as of December 31, 1998 and 1997 and the
related consolidated statements of income, comprehensive income,
stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1998. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Team
Financial, Inc. and subsidiaries as of December 31, 1998 and 1997 and the
results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1998, in conformity with
generally accepted accounting principles.
/s/ KMPG LLP
February 12, 1999
F-2
<PAGE> 67
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1998 and 1997
(Amounts in thousands)
<TABLE>
<CAPTION>
ASSETS 1998 1997
--------- ---------
<S> <C> <C>
Cash and due from banks $ 27,397 17,517
Federal funds sold and interest-bearing deposits 4,502 2,688
--------- ---------
31,899 20,205
--------- ---------
Investment securities (note 2):
Available-for-sale 109,296 103,304
Held-to-maturity 25,742 22,399
--------- ---------
Total investment securities 135,038 125,703
--------- ---------
Loans, net of unearned fees (note 3) 256,126 223,675
Allowance for loan losses (note 5) 2,541 1,629
--------- ---------
Net loans 253,585 222,046
--------- ---------
Bank premises and equipment, net (note 6) 8,560 8,136
Assets acquired through foreclosure 906 367
Goodwill, net of accumulated amortization 5,850 4,332
Other assets (note 4) 6,514 6,207
--------- ---------
$ 442,352 386,996
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits (note 7) $ 384,347 333,864
Federal funds purchased and securities sold under agreements
to repurchase (note 8) 6,273 13,558
Accrued expenses and other liabilities 3,271 3,248
Notes payable (notes 9 and 11) 23,060 13,684
--------- ---------
Total liabilities 416,951 364,354
--------- ---------
Stockholders' equity (note 13):
Preferred stock, no par value; 10,000,000 shares authorized, no shares issued -- --
Common stock, no par value; 50,000,000 shares authorized, 3,020,098 and
2,999,825 shares issued at December 31, 1998 and 1997 (note 10) 13,980 13,834
Capital surplus 122 --
Retained earnings 11,921 10,263
Treasury stock, 27,005 and 52,500 shares of common stock
at December 31, 1998 and 1997 (187) (363)
Accumulated other comprehensive income 565 359
Unearned compensation (note 10) (1,000) (1,451)
--------- ---------
Total stockholders' equity 25,401 22,642
Commitments and contingencies (notes 10 and 15)
--------- ---------
$ 442,352 386,996
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 68
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Years ended December 31, 1998, 1997, and 1996
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Interest income:
Loans, including fees $ 23,183 19,475 16,196
Taxable investment securities 7,127 5,458 4,492
Nontaxable investment securities 1,133 827 667
Other 411 377 280
-------- -------- --------
Total interest income 31,854 26,137 21,635
-------- -------- --------
Interest expense:
Deposits 14,807 11,794 9,532
Federal funds purchased and securities sold under agreements to repurchase 528 569 535
Notes payable 1,238 524 395
-------- -------- --------
Total interest expense 16,573 12,887 10,462
-------- -------- --------
Net interest income 15,281 13,250 11,173
Provision for loan losses (note 5) 1,486 1,095 623
-------- -------- --------
Net interest income after provision for loan losses 13,795 12,155 10,550
-------- -------- --------
Other income:
Service charges 2,039 1,670 1,400
Trust fees 454 408 368
Gain on sales of mortgage loans (note 4) 664 268 230
Gain (loss) on sales of investment securities 18 2 (40)
Other (note 4) 1,431 931 854
-------- -------- --------
Total other income 4,606 3,279 2,812
-------- -------- --------
Other expenses:
Salaries and employee benefits (note 10) 7,835 6,419 5,128
Occupancy and equipment (note 6) 1,805 1,668 1,298
Data processing 1,265 1,033 879
Professional fees 874 717 599
Marketing 479 395 274
Goodwill amortization 405 140 17
Other 2,721 2,295 1,937
-------- -------- --------
Total other expenses 15,384 12,667 10,132
-------- -------- --------
Income before income taxes 3,017 2,767 3,230
Income taxes (note 11) 673 553 938
-------- -------- --------
Net income $ 2,344 2,214 2,292
======== ======== ========
Basic and diluted income per share $ .85 .84 1.02
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 69
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
Years ended December 31, 1998, 1997, and 1996
(Amounts in thousands)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net income $ 2,344 2,214 2,292
------- ------- -------
Other comprehensive income, net of tax:
Unrealized gains (losses) on investment securities available-for-sale 218 280 (251)
Reclassification adjustment for gains included in net income (12) (1) 26
------- ------- -------
Other comprehensive income 206 279 (225)
------- ------- -------
Comprehensive income $ 2,550 2,493 2,067
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 70
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1998, 1997, and 1996
(Amounts in thousands)
<TABLE>
<CAPTION>
ACCUMULATED
other
Common Capital Retained Treasury comprehensive Unearned
stock surplus earnings stock income compensation Total
----- ------- -------- ----- ------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $10,549 -- 7,004 (363) 305 (1,699) 15,796
Common stock issued in acquisition
of subsidiary (300,750 shares) 2,105 -- -- -- -- -- 2,105
Common stock issued in connection
with compensation plans
(6,845 shares) 35 -- -- -- -- -- 35
Net income -- -- 2,292 -- -- -- 2,292
Dividends paid ($.23 per share) -- -- (588) -- -- -- (588)
Income tax benefit of dividends
paid to employee stock ownership
plan related to unallocated shares
of common stock -- -- 24 -- -- -- 24
Other comprehensive income -- -- -- -- (225) -- (225)
Increase of unearned compensation,
net of principal payments on
ESOP notes payable -- -- -- -- -- (47) (47)
------- ------- ------- ------- ------- ------- -------
Balance, December 31, 1996 12,689 -- 8,732 (363) 80 (1,746) 19,392
Common stock issued in connection
with compensation plans
(9,540 shares) 61 -- -- -- -- -- 61
Common stock issued (115,265 shares)
in connection with private placement 1,084 -- -- -- -- -- 1,084
Net income -- -- 2,214 -- -- -- 2,214
Dividends paid ($.23 per share) -- -- (683) -- -- -- (683)
Other comprehensive income -- -- -- -- 279 -- 279
Principal payments on ESOP
notes payable -- -- -- -- -- 295 295
------- ------- ------- ------- ------- ------- -------
Balance, December 31, 1997 13,834 -- 10,263 (363) 359 (1,451) 22,642
Common stock issued in connection
with compensation plans
(20,273 shares) 146 -- -- -- -- -- 146
Net income -- -- 2,344 -- -- -- 2,344
Dividends paid ($.23 per share) -- -- (686) -- -- -- (686)
Treasury stock purchased
(74,310 shares) -- -- -- (869) -- -- (869)
Treasury stock sold in connection
with private placement (31,995 shares) -- 31 -- 343 -- -- 374
Treasury stock sold (67,810 shares)
in exchange for notes payable -- 91 -- 702 -- -- 793
Other comprehensive income -- -- -- -- 206 -- 206
Principal payments on ESOP
notes payable -- -- -- -- -- 451 451
------- ------- ------- ------- ------- ------- -------
Balance, December 31, 1998 $13,980 122 11,921 (187) 565 (1,000) 25,401
======= ======= ======= ======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 71
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1998, 1997, and 1996
(Amounts in thousands)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,344 2,214 2,292
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 1,486 1,095 623
Depreciation and amortization 1,642 1,118 877
Allocation of ESOP shares 451 295 (47)
Net (gain) loss on sales of investment securities (18) (2) 40
Net gain on sales of mortgage loans (664) (268) (230)
Net (gain) loss on sales of assets acquired through
foreclosure (4) (12) 60
Proceeds from sale of mortgage loans 49,024 20,212 20,251
Origination of mortgage loans for sale (53,269) (20,119) (18,926)
Increase in other assets (617) (938) (1,602)
Increase in accrued expenses and other liabilities (148) 40 323
-------- -------- --------
Net cash provided by operating activities 227 3,635 3,661
-------- -------- --------
Cash flows from investing activities:
Net increase in loans (25,818) (23,465) (11,271)
Proceeds from sale of investment securities available-for-sale 13,756 13,179 6,515
Proceeds from maturities and principal reductions of
investment securities available-for-sale 36,703 14,216 12,967
Purchases of investment securities available-for-sale (56,251) (61,515) (21,542)
Proceeds from maturities and principal reductions of
investment securities held-to-maturity 4,624 1,658 1,209
Purchases of investment securities held-to-maturity (8,017) (6,188) (929)
Purchases of bank premises and equipment (825) (1,321) (874)
Proceeds from sales or payments on assets
acquired through foreclosure 70 127 379
Cash received in acquisitions, net of cash paid 28,501 46,368 3,096
-------- -------- --------
Net cash used in investing activities $ (7,257) (16,941) (10,450)
-------- -------- --------
(Continued)
</TABLE>
F-7
<PAGE> 72
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
Years ended December 31, 1998, 1997, and 1996
(Amounts in thousands)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing activities:
Net increase in deposits $ 16,875 5,500 14,102
Net increase (decrease) in federal funds purchased and
securities sold under agreement to repurchase (7,285) 3,250 2,036
Payments on notes payable (1,481) (4,209) (2,860)
Proceeds from notes payable 11,650 9,325 3,544
Common stock issued 146 1,145 35
Purchases of treasury stock (869) -- --
Proceeds from sales of treasury stock 374 -- --
Dividends paid on common stock (686) (683) (588)
-------- -------- --------
Net cash provided by financing activities 18,724 14,328 16,269
-------- -------- --------
Net increase in cash and cash equivalents 11,694 1,022 9,480
Cash and cash equivalents at beginning of year 20,205 19,183 9,703
-------- -------- --------
Cash and cash equivalents at end of year $ 31,899 20,205 19,183
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 16,587 12,764 10,589
Income taxes 274 930 967
======== ======== ========
Noncash activities related to acquisitions:
Investing activities:
Increase in investments $ -- -- 5,023
Net increase in loans 2,903 17,680 12,376
Increase in premises and equipment 429 1,675 419
Financing activities:
Increase in deposits 33,608 69,474 19,097
======== ======== ========
Noncash financing activities - issuance of
treasury stock in exchange for notes payable $ 793 -- --
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE> 73
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Team Financial, Inc. and
subsidiaries (the Company) conform with generally accepted accounting
principles and general practices within the banking industry. The
following is a description of the more significant policies.
(a) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries,
TeamBanc, N.A., Iola Bank and Trust Company, First National Bank
and Trust Company and TeamBank Nebraska. Intercompany
transactions and balances have been eliminated in consolidation.
As described in note 10, the employees of the Company and its
subsidiary participate in the Team Financial Employee Stock
Ownership Plan (ESOP). At December 31, 1998 and 1997, the ESOP
owned 1,582,700 and 1,674,110 shares, respectively (approximately
53% and 57%, respectively), of the Company's outstanding common
stock.
In December 1998, the Company completed a five-for-one stock
split. All share and per share information for all periods
presented has been restated for the split.
(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
are reported as a separate component of stockholders' equity
until realized.
A decline in the market 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.
Dividend and interest income is recognized when earned. Realized
gains and losses upon disposition of available-for-sale
securities are included in income using the specific
identification method for determining the cost of the securities
sold.
(c) LOANS
Loans are stated at the amount of unpaid principal, reduced by
unearned fees. Interest on loans is calculated by using the
simple interest method on daily balances of the principal amount
outstanding. The accrual of interest on loans is discontinued
when, in management's judgment, the interest is uncollectible in
the ordinary course of business. Fees received on loans in excess
of amounts representing the estimated cost of origination are
deferred and credited to income using the interest method.
(CONTINUED)
F-9
<PAGE> 74
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(d) MORTGAGE BANKING
Certain of the Company's subsidiary banks originate first
mortgage loans for sale to permanent investors in the secondary
market. Unearned fees related to the origination of such loans
are recorded as a reduction of the loan's cost. Loans held for
sale are recorded at the lower of aggregate cost or market (as
determined by outstanding commitments from investors or current
investor yield requirements) through the establishment of a
valuation reserve. If, subsequent to origination, management
decides to hold certain loans to maturity or on a long-term
basis, any unrealized holding loss is recorded as a reduction of
the loan's cost, and the unrealized loss is amortized as an
adjustment of yield over the estimated contractual life of the
loan.
Typically, loans are sold to permanent investors with the banks
retaining the right to service the loans. Service fees are
recorded in income when earned. Capitalized servicing rights are
recorded at the time the loan is sold, thereby increasing the
gain on sale by such amount, and subsequently amortized over nine
years on a straight-line basis. Any remaining unamortized amount
is charged to expense if the related loan is repaid prior to
maturity.
Management monitors the capitalized mortgage servicing rights for
impairment based on the fair value of those rights, as determined
on a quarterly basis. Any impairment is recognized through a
valuation allowance.
(e) ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through a provision
for loan losses charged to expense. Loans are charged against the
allowance for loan losses when management believes that the
collectibility of the principal is unlikely. The allowance is an
amount that management believes will be adequate to absorb
possible losses on existing loans that may become uncollectible,
based on evaluations of the collectibility of loans and prior
loan loss experience.
In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the allowance for
loan losses. Such agencies may require charge-offs and/or
additions to the allowance based on their judgment about
information available to them at the time of their examination.
(f) BANK PREMISES AND EQUIPMENT
Land is stated at cost and buildings and equipment are stated at
cost less accumulated depreciation. Depreciation is computed on
the straight-line method over the useful life of the asset
ranging from three to forty years. Maintenance and repairs are
charged to expense as incurred. Major betterments are considered
individually and expensed or capitalized as the facts dictate.
F-10
<PAGE> 75
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(g) GOODWILL
Goodwill resulting from the acquisition of bank branches and
subsidiaries represents the excess of the purchase price over the
fair value of the net assets acquired or net liabilities assumed.
Goodwill is amortized straight-line over ten to fifteen years.
When facts and circumstances indicate potential impairment, the
Company evaluates the recoverability of asset carrying values,
including goodwill, using estimates of undiscounted cash flows
over remaining asset lives. Any impairment is measured by the
excess of carrying values over fair dues.
(h) INCOME TAXES
The Company and its subsidiaries file consolidated federal income
tax returns. Certain income and expense items are treated
differently for financial reporting purposes than for income tax
purposes. Deferred income taxes are provided in recognition of
these temporary differences, using the tax rates expected to be
in effect when the related temporary differences reverse.
(i) CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, clearings and
transit items in process of collection, federal funds sold and
overnight deposits.
(j) 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.
(k) RECLASSIFICATIONS
Certain amounts for the prior year have been reclassified to
conform to the current year presentation.
(l) INCOME PER SHARE
Basic income per share is based upon the weighted average number
of common shares outstanding during the periods presented.
Diluted income per share includes the effects of all dilutive
potential common shares outstanding during each period.
The shares used in the calculation of basic and diluted income
per share are shown below (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Weighted average common shares outstanding 2,765 2,645 2,243
===== ===== =====
</TABLE>
F-11
<PAGE> 76
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(m) COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards
(SFAS) No. 130, Reporting Comprehensive Income, effective January
1, 1998. SFAS No. 130 establishes standards for reporting
comprehensive income and its components (revenues, expenses,
gains, and losses). Components of comprehensive income are net
income and all other nonowner changes in equity. SFAS No. 130
requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement,
and (b) display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial
position. Reclassifications of financial statements for earlier
periods provided for comparative purposes is required. The
Company has disclosed comprehensive income in a separate
statement. The only component of comprehensive income consists of
unrealized holding gains and losses on available-for-sale
securities.
(n) OPERATING SEGMENTS
The Company adopted SFAS No. 131, Disclosures About Segments of
an Enterprise and Related Information, effective January 1, 1998.
SFAS No. 131 establishes standards for reporting information
about segments in annual and interim financial statements. SFAS
No. 131 introduces a new model for segment reporting called the
"management approach." The management approach is based on the
way the chief operating decision-maker organizes segments within
the Company for making operating decisions and assessing
performance. Reportable segments are based on products and
services, geography, legal structure, management structure, and
any other in which management disaggregates a company. Based on
the management approach model, the Company has determined that
its business is comprised of a single operating segment and that
SFAS No. 131, therefore, has no impact on its financial
statements.
(o) FUTURE ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) issued SFAS No.
133, Accounting for Derivative Financial Instruments and Hedging
Activities. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain
derivative instruments embedded in other contracts and for
hedging activities. SFAS No. 133 is effective for fiscal years
beginning after June 15, 1999. The adoption of the standard is
not expected to have a significant impact on the consolidated
financial statements of the Company.
F-12
<PAGE> 77
(2) INVESTMENT SECURITIES
The amortized cost, gross unrealized gains and losses and fair value of
investment securities by major security type at December 31, 1998 and
1997 are as follows (in thousands):
<TABLE>
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED FAIR
1998 COST GAINS LOSSES VALUE
- ---------------------------------------------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. treasury securities $ 7,503 143 -- 7,646
U. S. government agency securities 34,882 670 26 35,526
Mortgage-backed securities 59,735 347 297 59,785
Obligations of state and political subdivisions 2,397 75 1 2,471
Other investments 3,868 -- -- 3,868
-------- -------- -------- --------
108,385 1,235 324 109,296
-------- -------- -------- --------
Held-to-maturity:
U. S. treasury securities 200 2 -- 202
U. S. government agencies 3,725 12 4 3,733
Obligations of state and political subdivisions 21,817 882 13 22,686
-------- -------- -------- --------
25,742 896 17 26,621
-------- -------- -------- --------
$134,127 2,131 341 135,917
======== ======== ======== ========
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- ---------------------------------------------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. treasury securities $ 16,263 135 14 16,384
U. S. government agency securities 42,685 353 27 43,011
Mortgage-backed securities 37,237 245 156 37,326
Obligations of state and political subdivisions 2,170 42 7 2,205
Other investments 4,370 8 -- 4,378
-------- -------- -------- --------
102,725 783 204 103,304
-------- -------- -------- --------
Held-to-maturity:
U. S. treasury securities 799 2 -- 801
U. S. government agencies 3,602 9 6 3,605
Obligations of state and political subdivisions 17,998 359 28 18,329
-------- -------- -------- --------
22,399 370 34 22,735
-------- -------- -------- --------
$125,124 1,153 238 126,039
======== ======== ======== ========
</TABLE>
F-13
<PAGE> 78
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
Maturities of investment securities classified as available-for-sale and
held-to-maturity are as follows at December 31, 1998 and 1997 (in thousands):
<TABLE>
<CAPTION>
AMORTIZED FAIR
1998 COST VALUE
- -------------------------------------- ---- -----
<S> <C> <C>
Available-for-sale:
Due less than one year $ 42,040 42,102
Due after one through five years 51,413 52,163
Due after five through ten years 8,722 8,797
Due after ten years 2,342 2,366
Other investments 3,868 3,868
-------- --------
108,385 109,296
-------- --------
Held-to-maturity:
Due less than one year 1,443 1,458
Due after one through five years 9,923 10,134
Due after five through ten years 8,831 9,229
Due after ten years 5,545 5,800
-------- --------
25,742 26,621
-------- --------
$134,127 135,917
======== ========
1997
- --------------------------------------
Available-for-sale:
Due less than one year $ 15,676 15,677
Due after one through five years 58,535 59,030
Due after five through ten years 15,177 15,294
Due after ten years 9,089 9,048
Other investments 4,248 4,255
-------- --------
102,725 103,304
-------- --------
Held-to-maturity:
Due less than one year 2,125 2,127
Due after one through five years 6,776 6,841
Due after five through ten years 6,567 6,745
Due after ten years 6,931 7,022
-------- --------
22,399 22,735
-------- --------
$125,124 126,039
======== ========
</TABLE>
F-14
<PAGE> 79
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
Other securities consist principally of Federal Home Loan Bank stock,
Federal Reserve stock, and mutual funds.
Investment securities with amortized cost of $93,913,000 and
$75,622,000 and fair value of $95,240,000 and $76,248,000 at December
31, 1998 and 1997, respectively, are pledged to secure public deposits
and for other purposes as required by state law.
(3) LOANS
Major classifications of loans at December 31, 1998 and 1997 are as
follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Real estate:
1-4 family $ 85,093 74,049
Construction 14,411 12,292
Other 25,809 26,816
Commercial 94,478 75,048
Installment and other 36,652 35,785
-------- --------
Gross loans 256,443 223,990
Less unearned fees 317 315
-------- --------
$256,126 223,675
======== ========
</TABLE>
Included in real estate mortgage loans are loans held for sale of
approximately $6,321,000 and $1,418,000 at December 31, 1998 and 1997,
respectively.
Nonaccruing loans approximated $2,241,000 and $1,078,000 at December
31, 1998 and 1997, respectively. The interest income not recognized on
these loans was approximately $157,000, $81,000, and $93,000 in 1998,
1997, and 1996, respectively. Impaired loans, exclusive of nonaccrued
loans, are considered insignificant at December 31, 1998 and 1997, as
is the amount of interest income reported on such loans during their
impairment period.
Activity related to loans made to directors and executive officers of
the Company for 1998 is presented below. Such loans were made in the
ordinary course of business on normal credit terms, including interest
rate and collateralization (in thousands):
<TABLE>
<S> <C>
Balance at January 1, 1998 $ 3,742
Additions 1,399
Amounts collected (1,506)
-------
Balance at December 31, 1998 $ 3,635
=======
</TABLE>
F-15
<PAGE> 80
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
The Company's primary market areas in Kansas are Miami County, Allen
County, Labette County and surrounding counties, in Nebraska are
Douglas County and Sarpy County and in Missouri are Vernon County and
Barton County. Accordingly, the majority of the loans made by the
Company's subsidiary banks are within these primary market areas.
(4) MORTGAGE BANKING ACTIVITIES
The Company services first mortgage loans for permanent investors
aggregating approximately $107,368,000 and $90,240,000 at December 31,
1998 and 1997, respectively. Escrow balances held on deposit in
subsidiary banks aggregated $225,000 and $191,000 at December 31, 1998
and 1997, respectively.
Included in gain on sales of mortgage loans are capitalized mortgage
servicing rights. A summary of the mortgage servicing rights for the
years ended December 31, 1998 and 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Balance at January 1 $ 290 151 --
Mortgage servicing rights capitalized during the year 445 182 166
Amortization (134) (33) (15)
Valuation allowance -- (10) --
------- ------- ------
Balance at December 31 $ 601 290 151
======= ======= =======
</TABLE>
Service fees earned by the Company (net of amortization of capitalized
mortgage servicing rights), included in other income in the
accompanying consolidated statements of income, aggregated
approximately $267,000, $239,000, and $228,000 for the years ended
December 31, 1998, 1997, and 1996, respectively.
(5) ALLOWANCE FOR LOAN LOSSES
A summary of the allowance for loan losses for the years ended December
31, 1998, 1997, and 1996 is as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Balance at January 1 $ 1,629 1,518 1,289
Provision for loan losses 1,486 1,095 623
Allowance for loan losses of acquired bank -- -- 151
Charge-offs (723) (1,142) (695)
Recoveries 149 158 150
------- ------- -------
Balance at December 31 $ 2,541 1,629 1,518
======= ======= =======
</TABLE>
F-16
<PAGE> 81
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(6) BANK PREMISES AND EQUIPMENT
Major classifications of bank premises and equipment at December 31,
1998 and 1997 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Land $ 1,038 973
Bank premises 8,181 7,658
Furniture and equipment 6,251 5,604
------- -------
15,470 14,235
Less accumulated depreciation 6,910 6,099
------- -------
$ 8,560 8,136
======= =======
</TABLE>
Depreciation expense aggregating $830,000, $852,000, and $695,000 for
the years ended December 31, 1998, 1997, and 1996, respectively, has
been included in occupancy and equipment expense in the accompanying
consolidated statements of income.
(7) DEPOSITS
Deposits are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Demand:
Noninterest bearing $ 42,234 39,742
-------- --------
Interest bearing:
NOW 75,679 63,887
Money market 41,560 30,937
-------- --------
117,239 94,824
-------- --------
Total demand 159,473 134,566
Savings 20,250 17,873
Time 204,624 181,425
-------- --------
$384,347 333,864
======== ========
</TABLE>
Time deposits include certificates of deposit of $100,000 and over
totaling approximately $45,468,000 and $43,243,000 at December 31, 1998
and 1997, respectively.
F-17
<PAGE> 82
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
Principal maturities of time deposits at December 31, 1998 are as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------
<S> <C>
1999 $ 145,351
2000 37,705
2001 9,557
2002 6,898
2003 3,646
Thereafter 1,467
---------
$ 204,624
=========
</TABLE>
(8) SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
The Company's obligation to repurchase securities sold at December 31,
1998 and 1997 aggregated $6,273,000 and $8,058,000, respectively.
Information concerning securities sold under agreements to repurchase
is as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Average monthly balance during the year $ 7,479 8,320
Weighted average interest rate during the year 4.83% 5.20%
Maximum month-end balance during the year $ 12,491 10,046
======== ======
</TABLE>
At December 31, 1998, such agreements were secured by investment and
mortgage-backed securities. Pledged securities are maintained by a
safekeeping agent under the control of the Company.
F-18
<PAGE> 83
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(9) NOTES PAYABLE
Following is a summary of notes payable at December 31, 1998 and 1997
(in thousands):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Notespayable of Company related to ESOP borrowings, at interest rates
ranging from 5.60% to 6.75% due in 2002 and 2004, secured by
134,560 shares of Team Financial, Inc. common stock at December 31,
1998 (see note 10) $ 1,000 1,451
Mandatory equity replacement notes of Team Financial, Inc., interest at
6.22%, redeemed in 1998, unsecured -- 1,730
Note payable of Team Financial, Inc. to unrelated bank, interest at 1% under
prime rate (7.75% at December 31, 1998), due June 30, 1999, secured
by common stock of subsidiary banks 12,400 7,900
FHLB borrowings by certain subsidiary banks at interest rates ranging from
4.27% to 6.97%; maturities ranging from 1999 to 2013; secured by real
estate loans, investment securities and FHLB stock 9,160 2,603
Unsecured notes payable of Team Financial, Inc., interest at 7.0%, due in
1999, unsecured 500 --
-------- ------
$ 23,060 13,684
======== ======
</TABLE>
As a result of the Company's acquisition of Teambank, N.A. in 1986, the
Company issued mandatory equity replacement notes (MERNs). Each MERN
had a face value of $90, with interest payable at 6.22% annually. The
MERNs matured in 1998, at which time they were convertible into one
share of $90 par value perpetual preferred stock. The MERNs were
redeemable by the Company at any time prior to this maturity at face
value plus accrued interest, were redeemable by the holders with the
prior written approval of the Company, and were subordinated to the
payment of senior indebtedness. During 1998, the Company redeemed MERNs
with an aggregate face value of $937,000 for cash, and exchanged the
remaining MERNs with an aggregate face value of $793,000 for 67,810
shares of common stock issued out of treasury.
Principal maturities on notes payable outstanding at December 31, 1998
are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------
<S> <C>
1999 $14,199
2000 1,301
2001 704
2002 337
2003 744
Thereafter 5,775
-------
$23,060
=======
</TABLE>
Management expects the $12,400,000 loan maturing June 30, 1999 to be
renewed at maturity, but can provide no assurance to that effect.
F-19
<PAGE> 84
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(10) EMPLOYEE BENEFIT PLANS
Eligible employees of the Company and subsidiary banks participate in
an employee stock ownership plan (ESOP) which was formed in 1986. The
Company has related ESOP borrowings under bank loan agreements (see
note 9) that qualify as "exempt loans" under Internal Revenue Code
(IRC) Section 4975(d)(3), the proceeds of which were used to acquire
Company common stock. Those funds, in turn, were used by the Company to
acquire certain subsidiary banks. Contributions, along with dividends
on unallocated shares of common stock, are used by the ESOP to make
payments of principal and interest on the bank loans. Accordingly, the
debt related to the ESOP is recorded as debt and the shares pledged as
collateral are reported as unearned compensation in the accompanying
consolidated balance sheets. Unearned compensation is reduced as the
related notes payable are reduced or increased upon additional ESOP
borrowings. At December 31, 1998 and 1997, ESOP participants had been
allocated 1,448,140 and 1,473,080 shares of Company common stock,
respectively. Under the terms of the Plan, the Company must repurchase
shares of stock allocated to withdrawing participants at their request.
The repurchase obligation of the Company at December 31, 1998
aggregated approximately $17,000,000. ESOP contributions by the Company
and the banks charged to salaries and benefits expense in 1998 and 1997
aggregated $542,000 and $624,000, respectively.
In May 1994, the Company adopted an employee stock purchase plan. The
plan provides employees the opportunity to purchase common stock in the
Company pursuant to Section 423 of the IRC. The Company issued 8,710,
6,500, and 6,490 shares in January 1999, 1998, and 1997, respectively,
in exchange for cash of $65,000, $45,000, and $40,000.
In January 1996, the Company implemented a bonus program which awards
employees for their performance based on certain financial and growth
targets determined by management. Bonus awards are at the discretion of
the compensation committee and may consist of cash, common stock, or a
combination thereof. The Company and subsidiary banks charged $459,000,
$139,000, and $276,000 to salaries and benefits expense as a result of
this bonus program in 1998, 1997, and 1996, respectively.
In November 1998, the Board of Directors of the Company approved the
Team Financial, Inc. 401(k) Savings Plan. The Plan is effective January
1, 1999. Employees, meeting certain conditions, are eligible to
participate in the Plan immediately upon their employment date. The
Company will match 50% of the first 6% of compensation which employees
contribute to the Plan. The Company's contributions will vest ratably
over five years.
(11) INCOME TAXES
Income tax expense (benefit) attributable to income from operations for
1998 and 1997 consists of the following (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current $ 730 366 862
Deferred (57) 187 76
----- --- ---
$ 673 553 938
===== === ===
</TABLE>
F-20
<PAGE> 85
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
Following is a reconciliation between income tax expense attributable
to income from operations and the amount computed by multiplying
earnings before income taxes by the statutory federal income tax rate
of 34% (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Expected federal income tax expense $ 1,026 941 1,098
Interest on obligations of states and political subdivisions (362) (249) (204)
State income taxes, net of federal tax benefit 114 7 135
Income tax benefit of dividends paid to ESOP (125) (132) (122)
Other 20 (14) 31
------- ------- -------
Income tax expense attributable to
income from operations $ 673 553 938
======= ======= =======
</TABLE>
The income tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities at December 31, 1998 and 1997 are presented below (in
thousands):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses $ 346 87
Net operating loss carryforwards of acquired subsidiary 294 384
Deferred compensation 74 75
Loans 21 32
State taxes -- 7
------- -------
Total gross deferred tax assets 735 585
------- -------
Deferred tax liabilities:
Investment securities 348 291
Mortgage servicing rights 205 --
Bank premises and equipment 138 169
FHLB stock 115 113
Other assets 38 69
State taxes 5 --
------- -------
Total gross deferred tax liabilities 849 642
------- -------
Net deferred tax liabilities $ (114) (57)
------- -------
</TABLE>
The net operating loss carryforward, if not utilized, will expire in
2003.
F-21
<PAGE> 86
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(12) FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates of financial instruments at December 31, 1998 and
1997, including methods and assumptions utilized, are set forth below
(in thousands):
<TABLE>
<CAPTION>
1998 1997
----------------------- ------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Investment securities $135,000 136,000 126,000 126,000
======== ======== ======== ========
Loans, net of unearned discounts and
allowance for loan losses $254,000 256,000 222,000 225,000
======== ======== ======== ========
Demand deposits $ 42,000 43,000 40,000 40,000
Money markets and NOW deposits 117,000 117,000 95,000 95,000
Savings deposits 20,000 20,000 18,000 18,000
Time deposits 205,000 206,000 181,000 182,000
-------- -------- -------- --------
Total deposits $384,000 386,000 334,000 335,000
======== ======== ======== ========
Notes payable $ 23,000 23,000 14,000 14,000
======== ======== ======== ========
</TABLE>
METHODS AND ASSUMPTIONS UTILIZED
The estimated fair value of investment securities is based on bid
prices published in financial newspapers or bid quotations received
from securities dealers.
The estimated fair value of the Company's loan portfolio is based on
the segregation of loans by maturity using a weighted average pool
rate. In estimating the fair value of loans, the carrying amount is
reduced by the allowance for loan losses. The estimated fair value is
calculated by discounting scheduled cash flows through the estimated
maturity using estimated market discount rates based upon the Company's
average cost of funds that reflect the interest rate risk inherent in
the loan, reduced by the allowance for loan losses.
The estimated fair value of deposits with no stated maturity, such as
noninterest bearing demand deposits, savings, NOW accounts and money
market accounts, is equal to the amount payable on demand. The fair
value of interest-bearing time deposits is based on the discounted
value of contractual cash flows of such deposits. The discount rate is
estimated using the rates currently offered for deposits of similar
remaining maturities.
The carrying value of all notes payable approximates fair value, as all
notes are either based upon floating market rates of interest or based
upon fixed rates which approximate market rates.
F-22
<PAGE> 87
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
LIMITATIONS
Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial
instruments. These estimates do not reflect any premium or discount
that could result from offering for sale at one time the Company's
entire holdings of a particular financial instrument. Because no market
exists for a significant portion of the Company's financial
instruments, fair value estimates are based on judgments regarding
future loss experience, current economic conditions, risk
characteristics of various financial instruments and other factors.
These estimates are subjective in nature and involve uncertainties and
matters of significant judgment and, therefore, cannot be determined
with precision. Changes in assumptions could significantly affect the
estimates. Fair value estimates are based on existing balance sheet
financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities
that are not considered financial instruments.
(13) CAPITAL ADEQUACY
Quantitative measures established by regulation to ensure capital
adequacy require the Company and its subsidiary banks to maintain
minimum amounts and ratios (set forth in the table below for the
Company's significant subsidiary banks, dollars in thousands) of total
risk-based and Tier I capital (as defined in the regulations) to
risk-weighted assets, and of Tier I capital to average assets.
Management believes, as of December 31, 1998, that the banks meet all
capital adequacy requirements to which they are subject.
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED
UNDER PROMPT
FOR CAPITAL CORRECTIVE
ADEQUACY ACTION
ACTUAL PURPOSES PROVISIONS
------------------- ------------------- -------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- -------- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
At December 31, 1998:
TeamBank N.A.:
Total risk-based capital
(to risk-weighted assets) $19,318 12.07% $12,805 8.00% $16,006 10.00%
Tier I capital (to risk-weighted asset 17,872 11.17 6,403 4.00 9,604 6.00
Tier I capital (to average assets) 17,872 7.07 10,118 4.00 12,648 5.00
======= ======= ======= ======= ======= =======
Iola Bank and Trust Company:
Total risk-based capital
(to risk-weighted assets) $ 6,612 13.81% $ 3,830 8.00% $ 4,787 10.00%
Tier I capital (to risk-weighted assets 6,136 12.82 1,915 4.00 2,872 6.00
Tier I capital (to average assets) 6,136 7.67 3,200 4.00 4,000 5.00
======= ======= ======= ======= ======= =======
First National Bank and Trust Company:
Total risk-based capital
(to risk-weighted assets) $ 5,230 13.65% $ 3,065 8.00% $ 3,831 10.00%
Tier I capital (to risk-weighted assets 4,811 12.56 1,532 4.00 2,298 6.00
Tier I capital (to average assets) 4,811 7.80 2,466 4.00 3,082 5.00
======= ======= ======= ======= ======= =======
</TABLE>
F-23
<PAGE> 88
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(14) MERGERS AND ACQUISITIONS
In August 1997, the Company assumed the branch deposits and acquired
certain assets, consisting of loans, accrued interest and premises and
equipment, of a Mercantile Bancorporation branch located in Nevada,
Missouri. The deposits and their accrued interest payable approximated
$30,454,000 and the acquired assets aggregated $19,166,000. The Company
paid a premium of $2,523,000 in connection with the transaction, which
has been recorded as goodwill in the accompanying consolidated
financial statements and is being amortized over fifteen years on a
straight-line basis.
In August 1997, the Company assumed the branch deposits and acquired
certain assets, consisting of loans, accrued interest and premises and
equipment, of a Roosevelt Bank branch located in Lamar, Missouri. Such
deposits and their accrued interest payable approximated $39,379,000
and the acquired assets aggregated $442,000. The Company paid a premium
of $1,298,000 in connection with the transaction, which has been
recorded as goodwill in the accompanying consolidated financial
statements and is being amortized over fifteen years.
In March 1998, the Company assumed the branch deposits and acquired
certain assets, consisting of loans, accrued interest and premises and
equipment, of a NationsBank branch located in Ottawa, Kansas. The
deposits and their accrued interest payable approximated $33,777,000
and the acquired assets aggregated $3,585,000. The Company paid a
premium of $1,922,000 in connection with the transaction, which has
been recorded as goodwill in the accompanying consolidated financial
statements and is being amortized over fifteen years.
(15) COMMITMENTS AND CONTINGENCIES
Standby letters of credit were approximately $2,658,000 and $2,268,000
and outstanding loan commitments and available lines of credit with
customers were approximately $45,115,000 and $39,549,000 at December
31, 1998 and 1997, respectively. Substantially all letters of credit
and loan commitments are at variable interest rates which approximate
market rates. The credit risk involved in issuing these standby letters
of credit and loan commitments is essentially the same as that involved
in extending loans to customers.
F-24
<PAGE> 89
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(16) PARENT COMPANY CONDENSED FINANCIAL STATEMENTS
Following is condensed financial information of the Company as of
December 31, 1998 and 1997 and for each of the years in the three-year
period ended December 31, 1998 (in thousands):
CONDENSED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
ASSETS 1998 1997
------ ---- ----
<S> <C> <C>
Cash $ 616 486
Investment in subsidiaries 38,141 32,518
Other 740 792
------- -------
Total assets $39,497 33,796
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Long-term debt $13,900 11,081
Other 196 73
Stockholders' equity 25,401 22,642
------- -------
Total liabilities and stockholders' equity $39,497 33,796
======= =======
</TABLE>
CONDENSED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Dividends from subsidiaries $ 2,300 1,601 1,008
Interest income 29 19 11
Other expense, net (2,363) (1,396) (857)
------- ------- -------
Income (loss) before equity in
undistributed earnings of subsidiaries (34) 224 162
Increase in undistributed equity of subsidiaries 1,418 1,264 1,660
------- ------- -------
Income before income taxes 1,384 1,488 1,822
Income tax benefit 960 726 470
------- ------- -------
Net income $ 2,344 2,214 2,292
======= ======= =======
</TABLE>
F-25
<PAGE> 90
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,344 2,214 2,292
Increase in undistributed equity of subsidiaries (1,418) (1,264) (1,660)
Allocation of ESOP shares 451 295 (47)
Other 218 (237) (155)
------- ------- -------
Net cash provided by operating activities 1,595 1,008 430
------- ------- -------
Cash flows from investing activities:
Capital contributions to subsidiaries (4,000) (7,000) --
Acquisition of subsidiary -- -- (3,117)
Other (42) (161) 24
------- ------- -------
Net cash used in investing activities (4,042) (7,161) (3,093)
------- ------- -------
Cash flows from financing activities:
Proceeds from long-term debt 5,000 7,700 1,344
Principal payments on long-term debt (1,388) (1,745) (397)
Purchase of treasury stock (869) 1,145 --
Proceeds from sales of treasury stock 374 -- --
Issuance of common stock 146 -- 2,140
Payment of dividends (686) (683) (588)
------- ------- -------
Net cash provided by (used in)
financing activities 2,577 6,417 2,499
------- ------- -------
Net increase (decrease) in cash 130 264 (164)
------- ------- -------
Cash at beginning of year 486 222 386
------- ------- -------
Cash at end of year $ 616 486 222
======= ======= =======
Noncash financing activities - issuance of
treasury stock to retire notes payable $ 793 -- --
======= ======= =======
</TABLE>
The primary sources of funds available to the Company is the payment of
dividends by the subsidiaries. Subject to maintaining certain minimum
regulatory capital requirements, regulations limit the amount of
dividends that may be paid without prior approval of the subsidiaries'
regulatory agencies. At December 31, 1998, the subsidiaries could pay
dividends of $3,179,000 without prior regulatory approval.
F-26
<PAGE> 91
================================================================================
We have not authorized any dealer, salesperson or any other
person to give any information or to make any representations
other than those contained in this prospectus authorized by us
and referred to in this prospectus, and, if given or made, you
must not rely upon the information and representations. This
prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any securities in any state to any person to
whom it is unlawful to make an offer. We do not intend the
delivery of this prospectus or any sale made to create the
implication that there has been no change in our affairs since
the date of the information provided in this prospectus.
However, if there is any material change in our affairs during the
time when a copy of this prospectus is required to be delivered,
we will amend or supplement this prospectus to reflect the
change.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUMMARY................................................................................................1
RISK FACTORS......................................................................................................2
SELECTED CONSOLIDATED FINANCIAL DATA..............................................................................8
USE OF PROCEEDS...................................................................................................9
DIVIDEND POLICY; NO PRIOR MARKET FOR COMMON
STOCK.....................................................................................................9
DILUTION.........................................................................................................10
CAPITALIZATION...................................................................................................11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS...............................................................................................12
BUSINESS.........................................................................................................28
MANAGEMENT.......................................................................................................38
RELATED PARTY TRANSACTIONS.......................................................................................43
PRINCIPAL SHAREHOLDERS AND SELLING SHAREHOLDER...................................................................44
SUPERVISION AND REGULATION.......................................................................................46
DESCRIPTION OF CAPITAL STOCK.....................................................................................53
SHARES ELIGIBLE FOR FUTURE SALE..................................................................................57
UNDERWRITING.....................................................................................................58
LEGAL MATTERS....................................................................................................59
EXPERTS .........................................................................................................59
FORWARD-LOOKING STATEMENTS.......................................................................................59
ADDITIONAL INFORMATION...........................................................................................59
INDEX TO FINANCIAL STATEMENTS...................................................................................F-1
</TABLE>
Dealer Prospectus Delivery Obligations. Until _____, 1999, all dealers that
effect transactions in the common stock, whether or not participating in this
distribution, may be required to deliver a prospectus. This is in addition to
the obligation of dealers to deliver a prospectus when acting as underwriters
and regarding their unsold allotments or subscriptions.
================================================================================
================================================================================
1,000,000 Shares
Team Financial, Inc.
Common Stock
---------------
[Logo]
---------------
---------------
PROSPECTUS
---------------
Howe Barnes Investments, Inc.
, 1999
================================================================================
<PAGE> 92
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $ 4,157
NASD fee...................................................... 1,995
Nasdaq National Market fee.................................... 23,500
Legal fees and expenses....................................... 125,000
Accounting fees and expenses.................................. 80,000
Printing expenses............................................. 80,000
Transfer agent fees........................................... 10,000
Miscellaneous expenses ....................................... 25,348
----------
Total $ 350,000
==========
</TABLE>
All of the above items except the registration fee are estimated. The
Selling Shareholder will incur and pay its counsel fees for the offering.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Directors, officers, employees and agents of Team and/or the
subsidiary banks may be entitled to benefit from the indemnification provisions
contained in the Kansas General Corporation Code (the "KGCC"), Team's Articles
of Incorporation and certain indemnification provisions. The general effect of
these provisions is summarized below:
Section 17-6305 of the KGCC permits a Kansas corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
suit, action or other proceeding by reason of the fact that such person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, or other enterprise. Such
indemnification may be against expenses, including attorneys' fees, judgments,
fines and other amounts in connection with such proceeding. Indemnification is
available if such person acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation, or,
with respect to any criminal action or proceeding, such person had no
reasonable cause to believe that the conduct was unlawful. Unless a court of
competent jurisdiction otherwise orders, indemnification is not available in
connection with a proceeding by or in the right of the corporation if the
person is adjudged liable to the corporation. A corporation is required to
indemnify a director or officer who is successful on the merits or otherwise in
the defense of any such proceeding. Expenses (including attorneys' fees)
incurred by a director, officer, employee or agent of the corporation in
defending any such proceeding may be advanced by the corporation before the
final disposition if such person furnishes an undertaking to repay such
advances if it is ultimately determined that such person is not entitled to be
indemnified. Before a corporation may indemnify or advance expenses to a person
under these provisions, the board of directors (excluding any directors who are
parties to such a proceeding), independent legal counsel appointed by the board
of directors, or the shareholders must provide authorization. A corporation may
purchase insurance against any liability of individuals for whom the
corporation may provide such indemnification. The indemnification and
advancement of expenses authorized by the KGCC is not exclusive of any other
rights that such persons may be entitled to under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Article Eleventh of Team's Restated and Amended Articles of
Incorporation provides powers to indemnify and make advances to any person, or
such person's estate, in connection with any threatened,
II-1
<PAGE> 93
pending or completed action, suit or proceeding that such person is involved in
due to their capacity as a director, officer, employee or agent of Team or any
other entity in which they were serving at the request of Team.
Section 11 of the proposed Underwriting Agreement filed herewith as
Exhibit 1.1 among Team, the selling shareholder and the underwriter contains
customary cross indemnification provisions.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
All issuances of common stock discussed below have been adjusted to
reflect the five-for-one stock split made by Team in December 1998.
From 1994 through 1998, Team issued 32,670 shares of its common stock
pursuant to Team's Employee Stock Purchase Plan. Sales were only made to
eligible employees of Team or its subsidiaries who elected to participate in
the plan. The sales were made in transactions exempt from the registration
requirements of Section 5 of the Securities Act, pursuant to Section 4(2) and
Rule 701. Also, in establishing the exemption, pertinent investment information
was made available to participants in the plan and Team received a
representation from each person of his or her intent to acquire the securities
for purposes of investment only and not with a view toward any distribution or
public resale, and each of the certificates representing the securities has
been embossed with a restrictive legend restricting transfer of the securities.
In 1997 and 1998, Team issued 11,378 shares of its common stock to
certain executive officers of Team and its subsidiaries who elected to take
such shares in lieu of a cash bonus. The sales were made in transactions exempt
from the registration requirements of Section 5 of the Securities Act, pursuant
to Section 4(2).
In February 1997, Team issued 23,053 shares of its common stock in a
private offering with nine investors, most of whom were affiliates of Team or
its subsidiary banks. No underwriters or broker-dealers were involved in the
offer and sale of the securities. The sales were made in transactions exempt
from the registration requirements of Section 5 of the Securities Act, pursuant
to Section 4(2) and Rule 506 of Regulation D. With regard to Team's reliance
upon such exemption, sales were limited to affiliates of, or persons with a
business or pre-existing relationship to, Team or its subsidiary banks. Team
also made certain inquiries to establish that such sales qualified for the
exemption. In particular, Team received written representations from each
person, among other things, that he or she was an experienced and sophisticated
investor not in need of the protection afforded investors by the Securities Act
and that he or she had made available all information necessary in order to
make an informed investment decision. Team further obtained a representation
from each person of his or her intent to acquire the securities for purposes of
investment only and not with a view toward any distribution or public resale,
and each of the certificates representing the securities has been embossed with
a restrictive legend restricting transfer of the securities.
In June 1997, 150 shares of common stock were issued and sold to Rick
P. Bartley, President of TeamBank, N.A. The issuance and sale was made to comply
with federal banking laws which required Mr. Bartley to own at least $1,000
worth of Team's common stock. In May 1998, an additional 1,435 shares of common
stock were issued to Mr. Bartley pursuant to the terms of his employment
contract. Both issuances were made in transactions exempt from the registration
requirements of Section 5 of the Securities Act, pursuant to Section 4(2). Each
of the certificates representing the securities have been embossed with a
restrictive legend restricting transfer of the securities.
II-2
<PAGE> 94
In May 1998, Team issued 3,860 shares of its common stock to Heartland
Management Services, Inc. pursuant to the terms of a consulting agreement
between Team and Heartland. The issuance was made in a transaction exempt from
the registration requirements of Section 5 of the Securities Act, pursuant to
Section 4(2). The certificate representing the securities has been embossed
with a restrictive legend restricting transfer of the securities.
In September 1998, Team issued 67,810 shares of its common stock as
part of an exchange with all holders (eight persons) of Team's MERN Preferred
Stock. At the same time, Team also sold 31,995 shares of its common stock to
three investors in a private offering. No underwriters or broker-dealers were
involved in the exchange offering or sale to the singular investor. The
issuances were made in transactions exempt from the registration requirements
of Section 5 of the Securities Act, pursuant to Section 4(2). With regard to
Team's reliance upon such exemption, it made certain inquiries to establish
that such exchange qualified for the exemption. In particular, Team received
written representations from each person, among other things, that he or she
was an experienced and sophisticated investor not in need of the protection
afforded investors by the Securities Act and that he or she had made available
all information necessary in order to make an informed investment decision to
exchange the securities. Team further obtained a representation from each
person of his or her intent to acquire the securities for purposes of
investment only and not with a view toward any distribution or public resale,
and each of the certificates representing the securities has been embossed with
a restrictive legend restricting transfer of the securities.
ITEM 16. EXHIBITS
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1.1 Form of Underwriting Agreement (1).
3.1 Restated and Amended Articles of Incorporation of Team Financial, Inc. (1).
3.2 Amended Bylaws of Team Financial, Inc. (1).
4.1 Specimen common stock Certificate (2).
5.1 Form of opinion of Hartley, Nicholson, Hartley & Arnett (1).
10.1 Employment Agreement between Team Financial, Inc. and Robert J. Weatherbie dated
January 1, 1998 (1).
10.2 Employment Agreement between Team Financial, Inc. and Michael L. Gibson dated
January 1, 1998 (1).
10.3 Employment Agreement between Team Financial, Inc. and Rick P. Bartley dated January
1, 1999 (1).
10.4 Laser Pro License and Maintenance Agreement between Miami County National Bank (now
TeamBank, N.A.) and CFI Bankers Service Group, Inc. dated March 17, 1989 (1).
10.5 Data Processing Services Agreement between TeamBanc, Inc. (now Team Financial, Inc.)
and M&I Data Services, Inc. dated December 22, 1992 (1).
</TABLE>
II-3
<PAGE> 95
<TABLE>
<S> <C>
10.6 401K Plan of Team Financial, Inc. 401(k) Trust, effective January 1, 1999 and administered
by Nationwide Life Insurance Company (1).
10.7 The following documents regarding the loan agreement between Team Financial, Inc.,
Team Financial, Inc. Employee Stock Ownership Plan and Commerce Bank all of which are
dated August 21, 1997, unless otherwise noted: (i) Term Loan Agreement and Amendment
One to Term Loan Agreement dated October 31, 1997; (ii) Term Note in the principal
amount of $1,199,000; (iii) Collateral Assignment; (iv) ESOP Note (and Pledge
Agreement) in the amount of $1,199,000; (v) Lending Agreement; (vi) Corporate
Guaranty for Team Financial Acquisition Subsidiary, Inc.; and (vii) Collateral Pledge
Agreements from Team Financial, Inc. and from Team Financial Acquisition Subsidiary,
Inc.(1)
10.8 The following documents regarding the loan agreement between Team Financial, Inc.,
Team Financial, Inc. Employee Stock Ownership Plan and Commerce Bank all of which are
dated August 21, 1997, unless otherwise noted: (i) Term Loan Agreement and Amendment
One to Term Loan Agreement dated October 31, 1997; (ii) Term Note in the principal
amount of $247,000; (iii) Collateral Assignment; (iv) ESOP Note (and Pledge
Agreement) in the amount of $247,000; and (v) Lending Agreement.(1)
10.9 The following documents regarding the loan agreement between Team Financial, Inc.,
Team Financial, Inc. Employee Stock Ownership Plan and Commerce Bank all of which are
dated September 30, 1997, unless otherwise noted: (i) Term Loan Agreement and
Amendment One to Term Loan Agreement dated October 31, 1997; (ii) Term Note in the
principal amount of $200,018; (iii) Collateral Assignment; (iv) ESOP Note (and Pledge
Agreement) in the amount of $200,018; and (v) Lending Agreement.(1)
10.10 The following documents regarding the loan agreement between Team Financial, Inc. and
Commerce Bank all of which are dated August 9, 1997, unless otherwise noted: (i) Loan
Agreement and Amendment One and Two to the Loan Agreement dated March 19, 1998 and
June 29, 1998, respectively; (ii) Second Amended and Restated Term Note in the
principal amount of $12,400,000 dated June 29, 1998; and (iii) Corporate Guaranty.(1)
10.11 Summary Plan Description for the Team Financial, Inc. Employee Stock Ownership Plan.(1)
11.1 Statement re Computation of per share earnings - see consolidated financial statements.
21 Subsidiaries of Team (1).
23.1 Consent of KPMG LLP (1).
23.2 Consent of Hartley, Nicholson, Hartley & Arnett (included in Exhibit 5.1 above).
24.1 Power of attorney (included on the signature page).
27 Financial Data Schedule (1).
</TABLE>
- ---------
(1) Filed herewith.
(2) To be filed by amendment.
II-4
<PAGE> 96
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, Team 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 Team of expenses incurred or paid
by a director, officer or controlling person of Team in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, Team
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Team hereby undertakes to provide to the underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
Team hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by Team pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of the registration statement as of
the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 97
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 Paola,
State of Kansas, on this 12th day of April, 1999.
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
-------------------------------------
Robert J. Weatherbie,
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Robert J. Weatherbie and Michael L.
Gibson and each of them, his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement and to sign any registration statement and amendments thereto for the
same offering filed pursuant to Rule 462(b), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting upon said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or either of them, or their or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
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.
Signatures Title Date
---------- ----- ----
/s/ Robert J. Weatherbie Director, Chairman and Chief April 12, 1999
- -------------------------- Executive Officer (Principal
Robert J. Weatherbie Executive Officer)
/s/ Michael L. Gibson Director, President-Acquisitions/ April 12, 1999
- -------------------------- Investments and Chief Financial
Michael L. Gibson Officer
/s/ Montie K. Taylor Director April 12, 1999
- --------------------------
Montie K. Taylor
/s/ R.G. (Gary) Kilkenny Director April 12, 1999
- --------------------------
R.G. (Gary) Kilkenny
/s/ Carolyn S. Jacobs Director April 12, 1999
- --------------------------
Carolyn S. Jacobs
<PAGE> 98
/s/ Neil Blakeman Director April 12, 1999
- --------------------------
Neil Blakeman
/s/ Denis A. Kurtenbach Director April 12, 1999
- --------------------------
Denis A. Kurtenbach
/s/ Glen E. Gilpin Director April 12, 1999
- --------------------------
Glen E. Gilpin
<PAGE> 99
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1.1 Form of Underwriting Agreement
3.1 Restated and Amended Articles of Incorporation of Team Financial, Inc.
3.2 Amended Bylaws of Team Financial, Inc.
5.1 Form of opinion of Hartley, Nicholson, Hartley & Arnett
10.1 Employment Agreement between Team Financial, Inc. and Robert J. Weatherbie dated
January 1, 1998
10.2 Employment Agreement between Team Financial, Inc. and Michael L. Gibson dated
January 1, 1998
10.3 Employment Agreement between Team Financial, Inc. and Rick P. Bartley dated January
1, 1999
10.4 Laser Pro License and Maintenance Agreement between Miami County National Bank (now
TeamBank, N.A.) and CFI Bankers Service Group, Inc. dated March 17, 1989
10.5 Data Processing Services Agreement between TeamBanc, Inc. (now Team Financial, Inc.)
and M&I Data Services, Inc. dated December 22, 1992
10.6 401K Plan of Team Financial, Inc. 401(k) Trust, effective January 1, 1999 and administered
by Nationwide Life Insurance Company
10.7 The following documents regarding the loan agreement between Team Financial, Inc.,
Team Financial, Inc. Employee Stock Ownership Plan and Commerce Bank all of which are
dated August 21, 1997, unless otherwise noted: (i) Term Loan Agreement and Amendment
One to Term Loan Agreement dated October 31, 1997; (ii) Term Note in the principal
amount of $1,199,000; (iii) Collateral Assignment; (iv) ESOP Note (and Pledge
Agreement) in the amount of $1,199,000; (v) Lending Agreement; (vi) Corporate
Guaranty for Team Financial Acquisition Subsidiary, Inc.; and (vii) Collateral Pledge
Agreements from Team Financial, Inc. and from Team Financial Acquisition Subsidiary,
Inc.
10.8 The following documents regarding the loan agreement between Team Financial, Inc.,
Team Financial, Inc. Employee Stock Ownership Plan and Commerce Bank all of which are
dated August 21, 1997, unless otherwise noted: (i) Term Loan Agreement and Amendment
One to Term Loan Agreement dated October 31, 1997; (ii) Term Note in the principal
amount of $247,000; (iii) Collateral Assignment; (iv) ESOP Note (and Pledge
Agreement) in the amount of $247,000; and (v) Lending Agreement.
10.9 The following documents regarding the loan agreement between Team Financial, Inc.,
Team Financial, Inc. Employee Stock Ownership Plan and Commerce Bank all of which are
dated September 30, 1997, unless otherwise noted: (i) Term Loan Agreement and
Amendment One to Term Loan Agreement dated October 31, 1997; (ii) Term Note in the
principal amount of $200,018; (iii) Collateral Assignment; (iv) ESOP Note (and Pledge
Agreement) in the amount of $200,018; and (v) Lending Agreement.
</TABLE>
<PAGE> 100
<TABLE>
<S> <C>
10.10 The following documents regarding the loan agreement between Team Financial, Inc. and
Commerce Bank all of which are dated August 9, 1997, unless otherwise noted: (i) Loan
Agreement and Amendment One and Two to the Loan Agreement dated March 19, 1998 and
June 29, 1998, respectively; (ii) Second Amended and Restated Term Note in the
principal amount of $12,400,000 dated June 29, 1998; and (iii) Corporate Guaranty.
10.11 Summary Plan Description for the Team Financial, Inc. Employee Stock Ownership Plan
11.1 Statement re Computation of per share earnings - see consolidated financial statements
21 Subsidiaries of Team
23.1 Consent of KPMG LLP
23.2 Consent of Hartley, Nicholson, Hartley & Arnett (included in Exhibit 5.1 above).
24.1 Power of attorney (included on the signature page).
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 1.1
CHAPMAN AND CUTLER
DRAFT OF MARCH 5, 1999
TEAM FINANCIAL, INC.
1,000,000 SHARES COMMON STOCK*
UNDERWRITING AGREEMENT
May ___, 1999
Howe Barnes Investments, Inc.
As Representative of the several Underwriters
named in Schedule A
135 South LaSalle Street
Chicago, Illinois 60603
Ladies and Gentlemen:
Section 1. Introductory. Team Financial, Inc. (the "Company"), a bank
holding company, has an authorized capital stock consisting of 10,000,000 shares
of Preferred Stock, none of which were outstanding as of May ___, 1999, and
50,000,000 shares of Common Stock ("Common Stock"), of which ____________ shares
were outstanding as of such date. The Company proposes to issue and sell 700,000
shares of its authorized but unissued Common Stock and a shareholder of the
Company (referred to as the "Selling Shareholder" and named in Schedule B)
proposes to sell 300,000 shares of the Company's issued and outstanding Common
Stock to the several underwriters named in Schedule A, as it may be amended by
the Pricing Agreement hereinafter defined (the "Underwriters"), who are acting
severally and not jointly. Collectively, such total of 1,000,000 shares of
Common Stock proposed to be sold by the Company and the Selling Shareholder is
hereinafter referred to as the "Firm Shares." In addition, the Company [and the
Selling Shareholder] propose to grant to the Underwriters an option to purchase
up to 150,000 additional shares of Common Stock ("Option Shares") as provided in
Section 5 hereof. The Firm Shares and, to the extent such option is exercised,
the Option Shares, are hereinafter collectively referred to as the "Shares."
You have advised the Company and the Selling Shareholder that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon as you deem advisable after the registration statement
hereinafter referred to becomes effective, if it has not yet become effective,
and after the Pricing Agreement hereinafter defined has been executed and
delivered.
Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company, the Selling Shareholder and the Representative,
acting on behalf of the several Underwriters, shall enter into an agreement
substantially in the form of Exhibit A hereto ("Pricing Agreement"). The Pricing
Agreement may take the form of an exchange of any standard form of written
communication between the Company, the Selling Shareholder and the
Representative and shall specify such applicable information as is indicated in
Exhibit A hereto.
- --------------------
*Plus an option to acquire up to 150,000 additional shares to cover
overallotments.
<PAGE> 2
The offering of the Shares will be governed by this Agreement, as supplemented
by the Pricing Agreement. From and after the date of the execution and delivery
of the Pricing Agreement, this Agreement shall be deemed to incorporate the
Pricing Agreement.
The Company and the Selling Shareholder hereby confirm their agreements
with the Underwriters as follows:
Section 2. Representations and Warranties of the Company. The Company
represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-1 (File No.
333-______) and a related preliminary prospectus with respect to the
Shares have been prepared and filed with the Securities and Exchange
Commission ("Commission") by the Company in conformity with the
requirements of the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (collectively, the "1933
Act;" unless indicated to the contrary, all references herein to
specific rules are rules promulgated under the 1933 Act); and the
Company has so prepared and has filed such amendments thereto, if any,
and such amended preliminary prospectuses as may have been required to
the date hereof, and will file such additional amendments thereto and
such amended prospectuses as may hereafter be required. There have been
or will promptly be delivered to you three signed copies of such
registration statement and amendments, three copies of each exhibit
filed therewith, and conformed copies of such registration statement
and amendments (but without exhibits) and the related preliminary
prospectus or prospectuses and final forms of prospectus for each of
the Underwriters. Such registration statement (as amended, if
applicable) at the time it becomes effective and the prospectus
constituting a part thereof (including the information, if any, deemed
to be part thereof pursuant to Rule 430A(b) and/or Rule 434), as from
time to time amended or supplemented, are hereinafter referred to as
the "Registration Statement," and the "Prospectus," respectively,
except that if any revised prospectus shall be provided to the
Underwriters by the Company for use in connection with the offering of
the Shares which differs from the Prospectus on file at the Commission
at the time the Registration Statement became or becomes effective
(whether or not such revised prospectus is required to be filed by the
Company pursuant to Rule 424(b)), the term Prospectus shall refer to
such revised prospectus from and after the time it was provided to the
Underwriters for such use. If the Company elects to rely on Rule 434 of
the 1933 Act, all references to "Prospectus" shall be deemed to
include, without limitation, the form of prospectus and the term sheet,
taken together, provided to the Underwriters by the Company in
accordance with Rule 434 of the 1933 Act ("Rule 434 Prospectus"). Any
registration statement (including any amendment or supplement thereto
or information which is deemed part thereof) filed by the Company under
Rule 462(b) ("Rule 462(b) Registration Statement") shall be deemed to
be part of the "Registration Statement" as defined herein, and any
prospectus (including any amendment or supplement thereto or
information which is deemed part thereof) included in such registration
statement shall be deemed to be part of the "Prospectus," as defined
herein, as appropriate. The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder are
hereinafter collectively referred to as the "Exchange Act."
-2-
<PAGE> 3
(b) The Commission has not issued any order preventing or
suspending the use of any preliminary prospectus, and each preliminary
prospectus has conformed in all material respects with the requirements
of the 1933 Act and, as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading; and when the
Registration Statement became or becomes effective, and at all times
subsequent thereto, up to the First Closing Date or the Second Closing
Date hereinafter defined, as the case may be, the Registration
Statement, including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule
430A(b), if applicable, and the Prospectus and any amendments or
supplements thereto, contained or will contain all statements that are
required to be stated therein in accordance with the 1933 Act and in
all material respects conformed or will in all material respects
conform to the requirements of the 1933 Act, and neither the
Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, included or will include any untrue statement of a
material fact or omitted or will omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company makes no representation
or warranty as to information contained in or omitted from any
preliminary prospectus, the Registration Statement, the Prospectus or
any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by or on behalf of
any Underwriter through the Representative specifically for use in the
preparation thereof.
(c) The Company has been duly organized and is validly
existing and in good standing as a bank holding company within the
meaning of the Bank Holding Company Act of 1956, as amended ("BHCA"),
and is registered with the Board of Governors of the Federal Reserve
System ("FRB"). Except as otherwise noted in the financial statements,
the Company does not directly or indirectly own any stock or other
equity interest in any corporation, partnership, joint venture,
unincorporated association or other entity other than TeamBanc, N.A.,
Iola Bank and Trust Company, First National Bank and Trust Company and
TeamBank Nebraska (collectively, the "Banks") and Team Financial
Acquisition Subsidiary, Inc. (the "Acquisition") (the Banks,
Acquisition and any other entities owned by the Company being
collectively referred to herein as the "Subsidiaries"). Each Subsidiary
has been duly incorporated, is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own or lease its properties
and conduct its business as described in the Prospectus, and is duly
qualified to transact business in all jurisdictions in which the
conduct of its business or its ownership or leasing or property
requires such qualification and the failure so to qualify would have a
material adverse effect on the business or condition, financial or
otherwise, of the Company and the Subsidiaries, taken as a whole; and
no proceeding of which the Company has knowledge has been instituted in
any such jurisdiction, revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
All outstanding shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and
non-assessable, and are owned, directly or indirectly, by the Company
free and clear of all liens, encumbrances and security interests,
except as otherwise noted to you. Except as provided in the
Registration Statement, no options, warrants or other
-3-
<PAGE> 4
rights to purchase, agreements or other obligations to issue, or other
rights to convert any obligations into, shares of capital stock or
ownership interests in any of the Subsidiaries are outstanding.
(d) Except as disclosed in the Registration Statement, the
Company owns directly or indirectly 100 percent of the issued and
outstanding capital stock of each of its Subsidiaries, free and clear
of any claims, liens, encumbrances or security interests and all of
such capital stock has been duly authorized and validly issued and is
fully paid and nonassessable.
(e) The issued and outstanding shares of capital stock of the
Company as set forth in the Prospectus have been duly authorized and
validly issued, are fully paid and nonassessable, and conform to the
description thereof contained in the Prospectus.
(f) The Shares to be sold by the Company have been duly
authorized and when issued, delivered and paid for pursuant to this
Agreement, will be validly issued, fully paid and nonassessable, and
will conform to the description thereof contained in the Prospectus.
(g) The making and performance by the Company of this
Agreement and the Pricing Agreement have been duly authorized by all
necessary corporate action and will not violate any provision of the
Company's charter or bylaws and will not result in the breach, or be in
contravention, of any provision of any agreement, franchise, license,
indenture, mortgage, deed of trust, or other instrument to which the
Company or any subsidiary is a party or by which the Company, any
subsidiary or the property of any of them may be bound or affected, or
any order, rule or regulation applicable to the Company or any
subsidiary of any court or regulatory body, administrative agency or
other governmental body having jurisdiction over the Company or any
subsidiary or any of their respective properties, or any order of any
court or governmental agency or authority entered in any proceeding to
which the Company or any subsidiary was or is now a party or by which
it is bound. No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental
body is required for the execution and delivery of this Agreement or
the Pricing Agreement or the consummation of the transactions
contemplated herein or therein, except for compliance with the 1933 Act
and blue sky laws applicable to the public offering of the Shares by
the several Underwriters and clearance of such offering with the
National Association of Securities Dealers, Inc. ("NASD"). This
Agreement has been duly executed and delivered by the Company.
(h) The accountants who have expressed their opinions with
respect to certain of the financial statements and schedules included
in the Registration Statement are independent accountants as required
by the 1933 Act.
(i) The financial statements, together with the related notes
and schedules, contained in the Registration Statement and Prospectus
present fairly the consolidated financial position, results of
operations, shareholders' equity and cash flows of the
-4-
<PAGE> 5
Company and its consolidated Subsidiaries on the basis stated therein
at the indicated dates and for the indicated periods. Such financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, and all adjustments necessary for a fair presentation of
results for such periods have been made, except as otherwise stated
therein. The selected financial and statistical data included in the
Registration Statement present fairly the information shown therein on
the basis stated in the Registration Statement and have been compiled
on a basis consistent with the financial statements presented therein.
(j) Neither the Company nor any Subsidiary is in violation of
its charter or in default under any consent decree, or in default with
respect to any material provision of any lease, loan agreement,
franchise, license, permit or other contract obligation to which it is
a party; and there does not exist any state of facts which constitutes
an event of default as defined in such documents or which, with notice
or lapse of time or both, would constitute such an event of default, in
each case, except for defaults which neither singly nor in the
aggregate are material to the Company and its Subsidiaries taken as a
whole.
(k) There are no material legal or governmental proceedings
pending, or to the Company's knowledge, threatened to which the Company
or any Subsidiary is or may be a party or of which material property
owned or leased by the Company or any Subsidiary is or may be the
subject, or related to environmental or discrimination matters which
are not disclosed in the Prospectus, or which question the validity of
this Agreement or the Pricing Agreement or any action taken or to be
taken pursuant hereto or thereto.
(l) There are no holders of securities of the Company having
rights to registration thereof or preemptive rights to purchase Common
Stock except as disclosed in the Prospectus. Holders of registration
rights have waived such rights with respect to the offering being made
by the Prospectus.
(m) The Company and each of its Subsidiaries have good and
marketable title to all the properties and assets reflected as owned in
the financial statements hereinabove described (or elsewhere in the
Prospectus), subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except those, if any, reflected in such
financial statements (or elsewhere in the Prospectus) or which are not
material to the Company and its Subsidiaries taken as a whole. The
Company and each of its Subsidiaries hold their respective leased
properties which are material to the Company and its Subsidiaries taken
as a whole under valid and binding leases.
(n) The Company has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange Act
or otherwise, in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares.
(o) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or
supplemented, (A) there has not been
-5-
<PAGE> 6
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the condition, financial or
otherwise, of the Company and the Subsidiaries taken as a whole, or the
business affairs, management, financial position, shareholders' equity
or results of operations of the Company and the Subsidiaries, taken as
a whole, whether or not occurring in the ordinary course of business,
(B) there has not been any transaction not in the ordinary course of
business entered into by the Company or any of the Subsidiaries which
is material to the Company and the Subsidiaries, taken as a whole,
other than transactions described or contemplated in the Registration
Statement, (C) the Company and the Subsidiaries have not incurred any
material liabilities or obligations, which are not in the ordinary
course of business or which could result in a material reduction in the
future earnings of the Company and the Subsidiaries, (D) the Company
and the Subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance, (E) there has not been any change in the capital stock of
the Company or the Subsidiaries (other than upon the exercise of
options and warrants described in the Registration Statement), or any
material increase in the short-term or long-term debt (including
capitalized lease obligations) of the Company and the Subsidiaries,
taken as a whole, and (F) there has not been any declaration or payment
of any dividends or any distributions of any kind with respect to the
capital stock of the Company or the Subsidiaries other than any
dividends or distributions described or contemplated in the
Registration Statement.
(p) The Company agrees not to sell, contract to sell or
otherwise dispose of any Common Stock or securities convertible into
Common Stock (except Common Stock issued pursuant to currently
outstanding options, warrants or convertible securities) for a period
of 180 days after this Agreement becomes effective without the prior
written consent of the Representatives. The Company has obtained
similar agreements from each of its officers and directors who own
Common Stock and principal shareholders.
(q) There is no material document of a character required to
be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement which is not
described or filed as required.
(r) The Company together with its Subsidiaries owns and
possesses all right, title and interest in and to, or has duly licensed
from third parties, all patents, patent rights, trade secrets,
inventions, know-how, trademarks, trade names, copyrights, service
marks and other proprietary rights ("Trade Rights") material to the
business of the Company and each of its Subsidiaries taken as a whole.
Neither the Company nor any of its Subsidiaries has received any notice
of infringement, misappropriation or conflict from any third party as
to such material Trade Rights which has not been resolved or disposed
of and neither the Company nor any of its subsidiaries has infringed,
misappropriated or otherwise conflicted with material Trade Rights of
any third parties, which infringement, misappropriation or conflict
would have a material adverse effect upon the condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries
taken as a whole.
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<PAGE> 7
(s) The conduct of the business of the Company and each of
its Subsidiaries is in compliance in all respects with applicable
federal, state, local and foreign laws and regulations, except where
the failure to be in compliance would not have a material adverse
effect upon the condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole.
(t) All offers and sales of the Company's capital stock prior
to the date hereof were at all relevant times exempt from the
registration requirements of the 1933 Act and were duly registered with
or the subject of an available exemption from the registration
requirements of the applicable state securities or blue sky laws.
(u) The Company has filed all necessary federal and state
income and franchise tax returns and has paid all taxes shown as due
thereon, and there is no tax deficiency that has been, or to the
knowledge of the Company might be, asserted against the Company or any
of its properties or assets that would or could be expected to have a
material adverse affect upon the condition (financial or otherwise) or
results of operations of the Company and its subsidiaries taken as a
whole.
(v) The Company has filed a registration statement pursuant
to Section 12(g) of the Exchange Act to register the Common Stock
thereunder, has filed an application to list the Shares on the Nasdaq
National Market, and has received notification that the listing has
been approved, subject to notice of issuance or sale of the Shares, as
the case may be.
(w) The Company is not, and does not intend to conduct its
business in a manner in which it would become, an "investment company"
as defined in Section 3(a) of the Investment Company Act of 1940, as
amended ("Investment Company Act").
(x) The deposit accounts of the Banks are insured by the
Federal Deposit Insurance Corporation (the "FDIC") to the fullest
extent provided by law. No proceeding for the termination of such
insurance is pending or is threatened. Neither the Company nor any
Subsidiary has received or is subject to any directive or order from
the FDIC or the FRB or any other regulatory authority to make any
material change in the method of conducting their respective businesses
that has not been complied with in all material respects.
(y) Neither the Company nor any of its affiliates does any
business, directly or indirectly, with the government of Cuba or with
any person or entity located in Cuba.
(z) The Company and its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to records is permitted
only in accordance with management's general or specific authorization;
and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
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<PAGE> 8
(aa) Other than as contemplated by this Agreement and as
disclosed in the Registration Statement, the Company has not incurred
any liability for any finder's or broker's fee or agent's commission in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(bb) No report or application filed by the Company or any of
its subsidiaries with the FDIC or the FRB, as of the date it was filed,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading when made or failed to comply with
the applicable requirements of the FDIC or the FRB, as the case may be.
Section 3. Representations, Warranties and Covenants of the Selling
Shareholder.
(a) The Selling Shareholder represents and warrants to, and
agrees with, the Company and the Underwriters that:
(i) The Selling Shareholder is a valid employee
stock ownership plan and trust for purposes of Section
4975(e)(7) of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code").
(ii) The trustee of the Selling Shareholder has found
and concluded that the execution of this Agreement and the
Pricing Agreement by the Selling Shareholder and entering into
the transactions contemplated by this Agreement and the
Pricing Agreement are appropriate and consistent with the
trustee's fiduciary responsibility requirements of ERISA and
that such contemplated transactions are exempt from the
prohibitive transaction restrictions under ERISA and the
Internal Revenue Code.
(iii) Such Selling Shareholder has, and on the First
Closing Date or the Second Closing Date hereinafter defined,
as the case may be, will have, valid marketable title to the
Shares proposed to be sold by such Selling Shareholder
hereunder on such date and full right, power and authority to
enter into this Agreement and the Pricing Agreement and to
sell, assign, transfer and deliver such Shares hereunder, free
and clear of all voting trust arrangements, liens,
encumbrances, equities, claims and community property rights;
and upon delivery of and payment for such Shares hereunder,
the Underwriters will acquire valid marketable title thereto,
free and clear of all voting trust arrangements, liens,
encumbrances, equities, claims and community property rights.
(iv) Such Selling Shareholder has not taken and will
not take, directly or indirectly, any action designed to or
which might be reasonably expected to cause or result, under
the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
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<PAGE> 9
(v) Such Selling Shareholder further represents,
warrants and agrees that such Selling Shareholder has
deposited in custody, under a Custody Agreement ("Custody
Agreement") with ______________________________, as custodian
("Custodian"), certificates in negotiable form for the Shares
to be sold hereunder by such Selling Shareholder, for the
purpose of further delivery pursuant to this Agreement. Such
Selling Shareholder agrees that the Shares to be sold by such
Selling Shareholder on deposit with the Custodian are subject
to the interests of the Company and the Underwriters, that the
arrangements made for such custody are to that extent
irrevocable, and that the obligations of such Selling
Shareholder hereunder and under the Custody Agreement shall
not be terminated except as provided in this Agreement or the
Custody Agreement by any act of such Selling Shareholder, by
operation of law, whether, in the case of the individual
Selling Shareholder, by the death or incapacity of such
Selling Shareholder or, in the case of a trust or estate, by
the death of the trustee or trustees or the executor or
executors or the termination of such trust or estate, or, in
the case of a partnership or corporation, by the dissolution,
winding-up or other event affecting the legal life of such
entity, or by the occurrence of any other event. If the
Selling Shareholder, trustee or executor should die or become
incapacitated, or any such trust, estate, partnership or
corporation should be terminated, or if any other event should
occur before the delivery of the Shares hereunder, the
documents evidencing Shares then on deposit with the Custodian
shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such death,
incapacity, termination or other event had not occurred,
regardless of whether or not the Custodian shall have received
notice thereof. The Custodian has been authorized to receive
and acknowledge receipt of the proceeds of sale of the Shares
to be sold by such Selling Shareholder against delivery
thereof and otherwise act on behalf of such Selling
Shareholder. The Custody Agreement has been duly executed by
such Selling Shareholder and a copy thereof has been delivered
to you.
(vi) Each preliminary prospectus, insofar as it has
related to such Selling Shareholder and, to the knowledge of
such Selling Shareholder in all other respects, as of its
date, has conformed in all material respects with the
requirements of the 1933 Act and, as of its date, has not
included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein
not misleading; and the Registration Statement at the time of
effectiveness, and at all times subsequent thereto, up to the
First Closing Date or the Second Closing Date hereinafter
defined, as the case may be, (1) such parts of the
Registration Statement and the Prospectus and any amendments
or supplements thereto as relate to such Selling Shareholder,
and the Registration Statement and the Prospectus and any
amendments or supplements thereto, to the knowledge of such
Selling Shareholder in all other respects, contained or will
contain all statements that are required to be stated therein
in accordance with the
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<PAGE> 10
1933 Act and in all material respects conformed or will in all
material respects conform to the requirements of the 1933 Act,
and (2) neither the Registration Statement nor the Prospectus,
nor any amendment or supplement thereto, as it relates to such
Selling Shareholder, and, to the knowledge of such Selling
Shareholder in all other respects, included or will include
any untrue statement of a material fact or omitted or will
omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading;
provided that neither clause (1) nor (2) shall have any effect
if information has been given by such Selling Shareholder to
the Company and the Representative in writing which would
eliminate or remedy any such untrue statement or omission.
(vii) Such Selling Shareholder agrees with the Company
and the Underwriters not to sell, contract to sell or
otherwise dispose of any Common Stock for a period of 180 days
after this Agreement becomes effective without the prior
written consent of the Representative; provided however,
distributions of Common Stock are permissible if such
distributions are made under the normal operations of the
Selling Shareholder.
The Selling Shareholder represents and warrants to, and agrees with,
the Underwriters to the same effect as the representations and warranties of the
Company set forth in Section 2 of this Agreement.
In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Internal Revenue Code of 1986, as amended,
with respect to the transactions herein contemplated, the Selling Shareholder
agrees to deliver to you prior to or on the First Closing Date, as hereinafter
defined, a properly completed and executed United States Treasury Department
Form W-8 or W-9 (or other applicable form of statement specified by Treasury
Department regulations in lieu thereof).
Section 4. Representations and Warranties of the Underwriters. The
Representative, on behalf of the several Underwriters, represents and warrants
to the Company and the Selling Shareholder that the information set forth (a) on
the cover page of the Prospectus with respect to price, underwriting discount
and terms of the offering and (b) under "Underwriting" in the Prospectus was
furnished to the Company by and on behalf of the Underwriters for use in
connection with the preparation of the Registration Statement and is correct and
complete in all material respects.
Section 5. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and the Selling Shareholder,
severally and not jointly, agree to sell to the Underwriters named in Schedule A
hereto, and the Underwriters agree, severally and not jointly, to purchase
700,000 Firm Shares from the Company and 300,000 Firm Shares from the Selling
Shareholder at the price per share set forth in the Pricing Agreement. The
obligation of each Underwriter to the Company shall be to purchase from the
Company that number of full shares which (as nearly as practicable, as
determined by you) bears to 700,000, the same proportion as the number of Shares
set forth opposite the name of such Underwriter in Schedule A hereto bears
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<PAGE> 11
to the total number of Firm Shares to be purchased by all Underwriters under
this Agreement. The obligation of each Underwriter to the Selling Shareholder
shall be to purchase from such Selling Shareholder the number of full shares
which (as nearly as practicable, as determined by you) bears to 300,000, the
same proportion as the number of Shares set forth opposite the name of such
Underwriter in Schedule A hereto bears to the total number of Firm Shares to be
purchased by all Underwriters under this Agreement. The initial public offering
price and the purchase price shall be set forth in the Pricing Agreement.
At 9:00 A.M., Chicago Time, on the fourth business day, if permitted
under Rule 15c6-1 under the Exchange Act, (or the third business day if required
under Rule 15c6-1 under the Exchange Act or unless postponed in accordance with
the provisions of Section 12) following the date the Registration Statement
becomes effective (or, if the Company has elected to rely upon Rule 430A, the
fourth business day, if permitted under Rule 15c6-1 under the Exchange Act, (or
the third business day if required under Rule 15c6-1 under the Exchange Act)
after execution of the Pricing Agreement), or such other time not later than ten
business days after such date as shall be agreed upon by the Representative and
the Company, the Company and the Custodian will deliver to you at the offices of
counsel for the Underwriters or through the facilities of The Depository Trust
Company for the accounts of the several Underwriters, certificates representing
the Firm Shares to be sold by them, respectively, against payment of the
purchase price therefor by delivery of federal or other immediately available
funds, by wire transfer or otherwise, to the Company and the Custodian. Such
time of delivery and payment is herein referred to as the "First Closing Date."
The certificates for the Firm Shares so to be delivered will be in such
denominations and registered in such names as you request by notice to the
Company and the Custodian prior to 10:00 A.M., Chicago Time, on the second
business day preceding the First Closing Date, and will be made available at the
Company's expense for checking and packaging by the Representative at 10:00
A.M., Chicago Time, on the business day preceding the First Closing Date.
Payment for the Firm Shares so to be delivered shall be made at the time and in
the manner described above at the offices of counsel for the Underwriters.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company [and the Selling Shareholder] hereby grant an option to the
several Underwriters to purchase, severally and not jointly, up to an aggregate
of 150,000 Option Shares, at the same purchase price per share to be paid for
the Firm Shares, for use solely in covering any overallotments made by the
Underwriters in the sale and distribution of the Firm Shares. The option granted
hereunder may be exercised at any time (but not more than once) within 30 days
after the date of the initial public offering upon notice by you to the Company
setting forth the aggregate number of Option Shares as to which the Underwriters
are exercising the option, the names and denominations in which the certificates
for such shares are to be registered and the time and place at which such
certificates will be delivered. Such time of delivery (which may not be earlier
than the First Closing Date), being herein referred to as the "Second Closing
Date," shall be determined by you, but if at any time other than the First
Closing Date, shall not be earlier than three nor later than 10 full business
days after delivery of such notice of exercise. [The number of Option Shares to
be purchased from the Company shall be _______ and the number of Option Shares
to be purchased from the Selling Shareholder shall be _______. If less than all
Option Shares are to be purchased by the Underwriter, the reduction will be
first to the Company and then the Selling Shareholder.]
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<PAGE> 12
The number of Option Shares to be purchased by each Underwriter shall be
determined by multiplying the number of Option Shares to be sold by the Company
[and the Selling Shareholder] pursuant to such notice of exercise by a fraction,
the numerator of which is the number of Firm Shares to be purchased by such
Underwriter as set forth opposite its name in Schedule A and the denominator of
which is the total number of Firm Shares (subject to such adjustments to
eliminate any fractional share purchases as you in your absolute discretion may
make). Certificates for the Option Shares will be made available at the
Company's expense for checking and packaging at 10:00 A.M., Chicago Time, on the
business day preceding the Second Closing Date. The manner of payment for and
delivery of the Option Shares shall be the same as for the Firm Shares as
specified in the preceding paragraph.
You have advised the Company and the Selling Shareholder that each
Underwriter has authorized you to accept delivery of its Shares, to make payment
and to receipt therefor. You, individually and not as the Representative of the
Underwriters, may make payment for any Shares to be purchased by any Underwriter
whose funds shall not have been received by you by the First Closing Date or the
Second Closing Date, as the case may be, for the account of such Underwriter,
but any such payment shall not relieve such Underwriter from any obligation
hereunder.
Section 6. Covenants of the Company. The Company covenants and agrees
that:
(a) The Company will advise you and the Selling Shareholder
promptly of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose, or of any notification of the
suspension of qualification of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceedings for that purpose,
and will also advise you and the Selling Shareholder promptly of any
request of the Commission for amendment or supplement of the
Registration Statement, of any preliminary prospectus or of the
Prospectus, or for additional information.
(b) The Company will give you and the Selling Shareholder
notice of its intention to file or prepare any amendment to the
Registration Statement (including any post-effective amendment) or any
Rule 462(b) Registration Statement or any amendment or supplement to
the Prospectus (including any revised prospectus which the Company
proposes for use by the Underwriters in connection with the offering of
the Shares which differs from the prospectus on file at the Commission
at the time the Registration Statement became or becomes effective,
whether or not such revised prospectus is required to be filed pursuant
to Rule 424(b) and any term sheet as contemplated by Rule 434) and will
furnish you and the Selling Shareholder with copies of any such
amendment or supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file any such
amendment or supplement or use any such prospectus to which you or
counsel for the Underwriters shall reasonably object.
(c) If the Company elects to rely on Rule 434 of the 1933
Act, the Company will prepare a term sheet that complies with the
requirements of Rule 434. If the Company elects not to rely on Rule
434, the Company will provide the Underwriters with
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<PAGE> 13
copies of the form of prospectus, in such numbers as the Underwriters
may reasonably request, and file with the Commission such prospectus in
accordance with Rule 424(b) of the 1933 Act by the close of business in
New York City on the second business day immediately succeeding the
date of the Pricing Agreement. If the Company elects to rely on Rule
434, the Company will provide the Underwriters with copies of the form
of Rule 434 Prospectus, in such numbers as the Underwriters may
reasonably request, by the close of business in New York on the
business day immediately succeeding the date of the Pricing Agreement.
(d) If at any time when a prospectus relating to the Shares
is required to be delivered under the 1933 Act any event occurs as a
result of which the Prospectus, including any amendments or
supplements, would include an 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, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus, including any amendments
or supplements thereto and including any revised prospectus which the
Company proposes for use by the Underwriters in connection with the
offering of the Shares which differs from the prospectus on file with
the Commission at the time of effectiveness of the Registration
Statement, whether or not such revised prospectus is required to be
filed pursuant to Rule 424(b) to comply with the 1933 Act, the Company
promptly will advise you thereof and will promptly prepare and file
with the Commission an amendment or supplement which will correct such
statement or omission or an amendment which will effect such
compliance; and, in case any Underwriter is required to deliver a
prospectus nine months or more after the effective date of the
Registration Statement, the Company upon request, but at the expense of
such Underwriter, will prepare promptly such prospectus or prospectuses
as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the 1933 Act.
(e) Neither the Company nor any of its Subsidiaries will,
prior to the earlier of the Second Closing Date or termination or
expiration of the related option, incur any liability or obligation,
direct or contingent, or enter into any material transaction, other
than in the ordinary course of business, except as contemplated by the
Prospectus.
(f) Neither the Company nor any of its Subsidiaries will
acquire any capital stock of the Company prior to the earlier of the
Second Closing Date or termination or expiration of the related option
nor will the Company declare or pay any dividend or make any other
distribution upon the Common Stock payable to shareholders of record on
a date prior to the earlier of the Second Closing Date or termination
or expiration of the related option, except in either case as
contemplated by the Prospectus.
(g) The Company will make generally available to its
shareholders, as soon as it is practicable to do so, but in any event
not later than 18 months after the effective date of the Registration
Statement, an earnings statement (which need not be audited) in
reasonable detail, covering a period of at least 12 consecutive months
beginning after the effective date of the Registration Statement, which
earnings statement shall satisfy the
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<PAGE> 14
requirements of Section 11(a) of the Act and Rule 158 thereunder and
will advise you in writing when such statement has been so made
available.
(h) During such period as a prospectus is required by law to
be delivered in connection with offers and sales of the Shares by an
Underwriter or dealer, the Company will furnish to you at its expense,
subject to the provisions of subsection (d) hereof, copies of the
Registration Statement, the Prospectus, each preliminary prospectus and
all amendments and supplements to any such documents in each case as
soon as available and in such quantities as you may reasonably request,
for the purposes contemplated by the 1933 Act.
(i) The Company will cooperate with the Underwriters in
qualifying or registering the Shares for sale under the blue sky laws
of such jurisdictions as you designate, and will continue such
qualifications in effect so long as reasonably required for the
distribution of the Shares. The Company shall not be required to
qualify as a foreign corporation or to file a general consent to
service of process in any such jurisdiction where it is not currently
qualified or where it would be subject to taxation as a foreign
corporation.
(j) During the period of five years hereafter, the Company
will furnish you and each of the other Underwriters with a copy (i) as
soon as practicable after the filing thereof, of each report filed by
the Company with the Commission, any securities exchange or the NASD;
(ii) as soon as practicable after the release thereof, of each material
press release in respect of the Company; and (iii) as soon as
available, of each report of the Company mailed to shareholders.
(k) The Company will use the net proceeds received by it from
the sale of the Shares being sold by it in the manner specified in the
Prospectus.
(l) If, at the time of effectiveness of the Registration
Statement, any information shall have been omitted therefrom in
reliance upon Rule 430A and/or Rule 434, then immediately following the
execution of the Pricing Agreement, the Company will prepare, and file
or transmit for filing with the Commission in accordance with such Rule
430A, Rule 424(b) and/or Rule 434, copies of an amended Prospectus, or,
if required by such Rule 430A and/or Rule 434, a post-effective
amendment to the Registration Statement (including an amended
Prospectus), containing all information so omitted. If required, the
Company will prepare and file, or transmit for filing, a Rule 462(b)
Registration Statement not later than the date of the execution of the
Pricing Agreement. If a Rule 462(b) Registration Statement is filed,
the Company shall make payment of, or arrange for payment of, the
additional registration fee owing to the Commission required by Rule
111.
(m) The Company will comply with all registration, filing and
reporting requirements of the Exchange Act and the Nasdaq National
Market.
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<PAGE> 15
Section 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company agrees to pay (i) all costs,
fees and expenses (other than legal fees and disbursements of counsel for the
Underwriters and the expenses incurred by the Underwriters) incurred in
connection with the performance of the Company's obligations hereunder,
including without limiting the generality of the foregoing, all fees and
expenses of legal counsel for the Company and of the Company's independent
accountants, all costs and expenses incurred in connection with the preparation,
printing, filing and distribution of the Registration Statement, each
preliminary prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Pricing Agreement and the Blue Sky Memorandum, (ii) all costs,
fees and expenses (including legal fees not to exceed $3,000 and disbursements
of counsel for the Underwriters) incurred by the Underwriters in connection with
qualifying or registering all or any part of the Shares for offer and sale under
blue sky laws, including the preparation of a blue sky memorandum relating to
the Shares and clearance of such offering with the NASD; and (iii) all fees and
expenses of the Company's transfer agent, printing of the certificates for the
Shares and all transfer taxes, if any, with respect to the sale and delivery of
the Shares to the several Underwriters.
The provisions of this Section shall not affect any agreement which the
Company and the Selling Shareholder may make for the allocation or sharing of
such expenses and costs.
Section 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and the Option Shares on the Second Closing Date shall
be subject to the accuracy of the representations and warranties on the part of
the Company and the Selling Shareholder herein set forth as of the date hereof
and as of the First Closing Date or the Second Closing Date, as the case may be,
to the accuracy of the statements of officers of the Company made pursuant to
the provisions hereof, to the performance by the Company and the Selling
Shareholder of their respective obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become effective
either prior to the execution of this Agreement or not later than 1:00
P.M., Chicago Time, on the first full business day after the date of
this Agreement, or such later time as shall have been consented to by
you but in no event later than 1:00 P.M., Chicago Time, on the third
full business day following the date hereof; and prior to the First
Closing Date or the Second Closing Date, as the case may be, no stop
order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company, the
Selling Shareholder or you, shall be contemplated by the Commission. If
the Company has elected to rely upon Rule 430A and/or Rule 434, the
information concerning the initial public offering price of the Shares
and price-related information shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) within the prescribed
period and the Company will provide evidence satisfactory to the
Representative of such timely filing (or a post-effective amendment
providing such information shall have been filed and declared effective
in accordance with the requirements of Rules 430A and 424(b)). If a
Rule 462(b) Registration Statement is required, such Registration
Statement
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<PAGE> 16
shall have been transmitted to the Commission for filing and become
effective within the prescribed time period and, prior to the First
Closing Date, the Company shall have provided evidence of such filing
and effectiveness in accordance with Rule 462(b).
(b) The Shares shall have been qualified for sale under the
blue sky laws of such states as shall have been specified by the
Representative.
(c) The legality and sufficiency of the authorization,
issuance and sale or transfer and sale of the Shares hereunder, the
validity and form of the certificates representing the Shares, the
execution and delivery of this Agreement and the Pricing Agreement, and
all corporate proceedings and other legal matters incident thereto, and
the form of the Registration Statement and the Prospectus (except
financial statements) shall have been approved by counsel for the
Underwriters exercising reasonable judgment.
(d) You shall not have advised the Company that the
Registration Statement or the Prospectus or any amendment or supplement
thereto, contains an untrue statement of fact, which, in the opinion of
counsel for the Underwriters, is material or omits to state a fact
which, in the opinion of such counsel, is material and is required to
be stated therein or necessary to make the statements therein not
misleading.
(e) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred any change, or any development
involving a prospective change, in or affecting particularly the
business or properties of the Company or its Subsidiaries, whether or
not arising in the ordinary course of business, which, in the judgment
of the Representative, makes it impractical or inadvisable to proceed
with the public offering or purchase of the Shares as contemplated
hereby.
(f) There shall have been furnished to you, as Representative
of the Underwriters, on the First Closing Date or the Second Closing
Date, as the case may be, except as otherwise expressly provided below:
(i) An opinion of Jones & Keller, P.C., Denver,
Colorado, counsel for the Company, addressed to the
Underwriters and dated the First Closing Date or the Second
Closing Date, as the case may be, to the effect that:
(1) the Registration Statement has become
effective under the 1933 Act, and, to the best
knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under
the 1933 Act, and the Registration Statement
(including the information deemed to be part of the
Registration Statement at the time of effectiveness
pursuant to Rule 430A(b) and/or Rule 434, if
applicable), the Prospectus and each amendment or
supplement thereto (except for the financial
statements and other statistical or financial data
included therein as to which such counsel need
express no opinion)
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<PAGE> 17
comply as to form in all material respects with the
requirements of the 1933 Act; such counsel have no
reason to believe that either the Registration
Statement (including the information deemed to be
part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) and/or Rule
434, if applicable) or the Prospectus, or the
Registration Statement or the Prospectus as amended
or supplemented (except as aforesaid), as of their
respective effective or issue dates, contained any
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading or that the Prospectus as amended or
supplemented, if applicable, as of the First Closing
Date or the Second Closing Date, as the case may be,
contained any untrue statement of a material fact or
omitted to state any material fact necessary to make
the statements therein not misleading in light of the
circumstances under which they were made; the
statements in the Registration Statement and the
Prospectus summarizing statutes, rules and
regulations are accurate and fairly and correctly
present the information required to be presented by
the 1933 Act or the rules and regulations thereunder,
in all material respects and such counsel does not
know of any statutes, rules and regulations required
to be described or referred to in the Registration
Statement or the Prospectus that are not described or
referred to therein as required; and such counsel
does not know of any legal or governmental
proceedings pending or threatened required to be
described in the Prospectus which are not described
as required, nor of any contracts or documents of a
character required to be described in the
Registration Statement or Prospectus or to be filed
as exhibits to the Registration Statement which are
not described or filed, as required;
(2) the statements under the captions
["Management - Executive Compensation - Stock
Incentive Plan," "Related Party Transactions,"
"Description of Capital Stock" and "Shares Eligible
for Future Sale"] in the Prospectus, insofar as such
statements constitute a summary of documents referred
to therein or matters of law, are accurate summaries
and fairly and correctly present, in all material
respects, the information called for with respect to
such documents and matters;
(3) this Agreement and the Pricing
Agreement and the performance of the Company's
obligations hereunder have been duly authorized by
all necessary corporate action and this Agreement and
the Pricing Agreement have been duly executed and
delivered by and on behalf of the Company, and are
legal, valid and binding agreements of the Company,
enforceable in accordance with their respective
terms, except as enforceability of the same may be
limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors'
rights and by the exercise of judicial discretion in
accordance with general principles applicable to
equitable and similar remedies and except as to
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<PAGE> 18
those provisions relating to indemnities for
liabilities arising under the 1933 Act as to which no
opinion need be expressed; and no approval,
authorization or consent of any public board, agency,
or instrumentality of the United States or of any
state or other jurisdiction is necessary in
connection with the issue or sale of the Shares by
the Company pursuant to this Agreement (other than
under the 1933 Act, applicable blue sky laws and the
rules of the NASD) or the consummation by the Company
of any other transactions contemplated hereby;
(4) the execution and performance of this
Agreement will not contravene any of the provisions
of, or result in a default under, any agreement,
franchise, license, indenture, mortgage, deed of
trust, or other instrument known to such counsel, of
the Company or any of its subsidiaries or by which
the property of any of them is bound and which
contravention or default would be material to the
Company and its subsidiaries taken as a whole; or
violate any of the provisions of the charter or
bylaws of the Company or any of its Subsidiaries or,
so far as is known to such counsel, violate any
statute, order, rule or regulation of any regulatory
or governmental body having jurisdiction over the
Company or any of its Subsidiaries;
(5) to such counsel's knowledge, all offers
and sales of the Company's capital stock since
January 1, 1996 were at all relevant times exempt
from the registration requirements of the 1933 Act
and were duly registered or the subject of an
available exemption from the registration
requirements of the applicable state securities or
blue sky laws; and
(6) the Company is not an "investment
company" or a person "controlled by" an "investment
company" within the meaning of the Investment Company
Act.
In rendering such opinion, such counsel may state
that they are relying upon the certificate of
___________________________, the transfer agent for the Common
Stock, as to the number of shares of Common Stock at any time
or times outstanding, and that insofar as their opinion under
clause (7) above relates to the accuracy and completeness of
the Prospectus and Registration Statement, it is based upon a
general review with the Company's representatives and
independent accountants of the information contained therein,
without independent verification by such counsel of the
accuracy or completeness of such information. Such counsel may
also rely upon the opinions of other competent counsel and, as
to factual matters, on certificates of the Selling
Shareholders and of officers of the Company and of state
officials, in which case their opinion is to state that they
are so doing and copies of said opinions or certificates are
to be attached to the opinion unless said opinions or
certificates (or, in the case of certificates, the information
therein) have been furnished to the Representatives in other
form.
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<PAGE> 19
(ii) An opinion of Hartley, Nicholson, Hartley &
Arnett, Paola, Kansas, banking counsel for the Company, dated
the First Closing Date or the Second Closing Date, as the case
may be, addressed to the Underwriters, to the effect that:
(1) the Company has been duly incorporated
and is validly existing in good standing as a unitary
thrift holding company under BHCA with corporate
power and authority to own its properties and conduct
its business as described in the Prospectus; and the
Company has been duly qualified to do business as a
foreign corporation under the corporation law of, and
is in good standing as such in, every jurisdiction
where the ownership or leasing of property, or the
conduct of its business requires such qualification
except where the failure so to qualify would not have
a material adverse effect upon the condition
(financial or otherwise) or results of operations of
the Company and its Subsidiaries taken as a whole;
(2) an opinion to the same general effect
as clause (1) of this subparagraph (i) in respect of
each direct and indirect Subsidiary of the Company;
(3) all of the issued and outstanding
capital stock of each Subsidiary of the Company has
been duly authorized, validly issued and is fully
paid and nonassessable, and, except as disclosed in
the Registration Statement, the Company owns directly
or indirectly 100 percent of the outstanding capital
stock of each Subsidiary, and to the best knowledge
of such counsel, such stock is owned free and clear
of any claims, liens, encumbrances or security
interests;
(4) the authorized capital stock of the
Company, of which there is outstanding the amount set
forth in the Registration Statement and Prospectus
(except for subsequent issuances, if any, pursuant to
stock options or other rights referred to in the
Prospectus), conforms as to legal matters in all
material respects to the description thereof in the
Registration Statement and Prospectus;
(5) the issued and outstanding capital
stock of the Company has been duly authorized and
validly issued and is fully paid and nonassessable;
(6) the certificates for the Shares to be
delivered hereunder are in due and proper form, and
when duly countersigned by the Company's transfer
agent and delivered to you or upon your order against
payment of the agreed consideration therefor in
accordance with the provisions of this Agreement and
the Pricing Agreement, the Shares represented thereby
will be duly authorized and validly issued, fully
paid and nonassessable;
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<PAGE> 20
(7) the Banks have been duly chartered to
conduct the business of banking in its state of
domicile and the Company has all necessary power and
authority to own the Banks. The Company and the Banks
have all necessary consents and approvals under
applicable federal and state laws and regulations
relating to thrifts and thrift holding companies
("banking laws") to own their respective assets and
carry on their respective businesses as currently
conducted;
(8) the statements in the Prospectus under
the captions ["Risk Factors -- Competitive Banking
Environment, -- Government Regulation, Recent
Legislation and Monetary Policy," and -- Potential
Liability for Undercapitalized Subsidiary"] insofar
as such statements constitute a summary of banking
laws, are accurate summaries and fairly present the
information called for with respect to such matters;
(9) such counsel knows of no legal or
governmental proceeding, pending or threatened,
before any court or administrative body or regulatory
agency, to which the Company or any of the
Subsidiaries is a party or to which any of the
properties of the Company or any of the Subsidiaries
is subject that are required to be described in the
Registration Statement or Prospectus and are not so
described, or statutes or regulations that are
required to be described in the Registration
Statement or the Prospectus that are not so
described;
(10) the execution and delivery of this
Agreement and the Pricing Agreement and the
consummation of the transactions herein and therein
contemplated do not and will not conflict with or
result in a violation of or default under any banking
laws, or any permit, judgment, decree or order known
to such counsel, or any lease, contract, indenture,
mortgage, loan agreement or other agreement or other
instrument or obligation known to such counsel to
which the Company or the Banks are a party or by
which the Company or the Banks or any of their
respective properties is bound; and
(11) no approval, consent, order,
authorization, designation, declaration or filing by
or with any regulatory, administrative or other
governmental body under banking laws is necessary in
connection with the execution and delivery of this
Agreement and the Pricing Agreement and the
consummation of the transactions herein and therein
contemplated, except such as have been obtained or
made, specifying the same.
(iii) An opinion of Shook, Hardy & Bacon L.L.P.,
Overland Park, Kansas, counsel to the Selling Shareholder,
dated the First Closing Date or the Second Closing Date, as
the case may be, to the effect that:
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<PAGE> 21
(1) this Agreement and the Pricing
Agreement have been duly authorized, executed and
delivered by or on behalf of such Selling
Shareholder; the Custodian for such Selling
Shareholder has been duly and validly authorized to
carry out all transactions contemplated herein on
behalf of such Selling Shareholder; and the
performance of this Agreement and the Pricing
Agreement and the consummation of the transactions
herein contemplated by such Selling Shareholder will
not result in a breach or violation of any of the
terms and provisions of, or constitute a default
under, any statute, any indenture, mortgage, deed of
trust, note agreement or other agreement or
instrument known to such counsel to which such
Selling Shareholder is a party or by which it is
bound or to which any of the property of such Selling
Shareholder is subject, or any order, rule or
regulation known to such counsel of any court or
governmental agency or body having jurisdiction over
such Selling Shareholder or any of its properties;
and no consent, approval, authorization or order of
any court or governmental agency or body is required
for the consummation of the transactions contemplated
by this Agreement and the Pricing Agreement in
connection with the sale of Shares to be sold by such
Selling Shareholder hereunder, except such as have
been obtained under the 1933 Act and such as may be
required under applicable blue sky laws in connection
with the purchase and distribution of such Shares by
the Underwriters and the clearance of such offering
with the NASD;
(2) the Selling Shareholder has full right,
power and authority to enter into this Agreement and
the Pricing Agreement and to sell, transfer and
deliver the Shares to be sold on the First Closing
Date or the Second Closing Date, as the case may be,
by such Selling Shareholder hereunder and good and
marketable title to such Shares so sold, free and
clear of all voting trust arrangements, liens,
encumbrances, equities, claims and community property
rights whatsoever, has been transferred to the
Underwriters (who counsel may assume to be bona fide
purchasers) who have purchased such Shares hereunder;
(3) this Agreement and the Pricing
Agreement are legal, valid and binding agreements of
the Selling Shareholder except as enforceability of
the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting creditors' rights and by the exercise of
judicial discretion in accordance with general
principles applicable to equitable and similar
remedies and except with respect to those provisions
relating to indemnities for liabilities arising under
the 1933 Act, as to which no opinion need be
expressed; and
(4) the Selling Shareholder is a valid
employee stock ownership plan and trust for purposes
of Section 4975(e)(7) of the Internal Revenue Code
and the regulations promulgated thereunder. The sale
of
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<PAGE> 22
Shares and other transactions contemplated by this
Agreement and the Pricing Agreement do not constitute
"prohibited transactions" under Section 4975(c) of
the Internal Revenue Code or Section 406 of ERISA.
(iv) Such opinion or opinions of Chapman and Cutler,
Chicago, Illinois, counsel for the Underwriters, dated the
First Closing Date or the Second Closing Date, as the case may
be, with respect to the incorporation of the Company, the
validity of the Shares to be sold by the Company, the
Registration Statement and the Prospectus and other related
matters as you may reasonably require, and the Company shall
have furnished to such counsel such documents and shall have
exhibited to them such papers and records as they request for
the purpose of enabling them to pass upon such matters.
(v) A certificate of the chief executive officer and
the principal financial officer of the Company, dated the
First Closing Date or the Second Closing Date, as the case may
be, to the effect that:
(1) the representations and warranties of
the Company set forth in Section 2 of this Agreement
are true and correct as of the date of this Agreement
and as of the First Closing Date or the Second
Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all
the conditions on its part to be performed or
satisfied at or prior to such Closing Date; and
(2) the Commission has not issued an order
preventing or suspending the use of the Prospectus or
any preliminary prospectus filed as a part of the
Registration Statement or any amendment thereto; no
stop order suspending the effectiveness of the
Registration Statement has been issued; and to the
best knowledge of the respective signers, no
proceedings for that purpose have been instituted or
are pending or contemplated under the 1933 Act.
The delivery of the certificate provided for in this
subparagraph shall be and constitute a representation and
warranty of the Company as to the facts required in the
immediately foregoing clauses (1) and (2) of this subparagraph
to be set forth in said certificate.
(vi) A certificate of the Selling Shareholder dated
the First Closing Date [or the Second Closing Date, as the
case may be,] to the effect that the representations and
warranties of such Selling Shareholder set forth in Section 3
of this Agreement are true and correct as of such date and the
Selling Shareholder has complied with all the agreements and
satisfied all the conditions on the part of such Selling
Shareholder to be performed or satisfied at or prior to such
date.
(vii) At the time the Pricing Agreement is executed
and also on the First Closing Date or the Second Closing Date,
as the case may be, there shall be
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<PAGE> 23
delivered to you a letter addressed to you, as Representative
of the Underwriters, from KPMG LLP, independent accountants,
the first one to be dated the date of the Pricing Agreement,
the second one to be dated the First Closing Date and the
third one (in the event of a second closing) to be dated the
Second Closing Date, to the effect set forth in Schedule C.
There shall not have been any change or decrease specified in
the letters referred to in this subparagraph which makes it
impractical or inadvisable in the judgment of the
Representative to proceed with the public offering or purchase
of the Shares as contemplated hereby.
(viii) Such further certificates and documents as the
Representative may reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Chapman and Cutler, counsel for the Underwriters, which approval shall not be
unreasonably withheld. The Company shall furnish you with such manually signed
or conformed copies of such opinions, certificates, letters and documents as you
request.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification to the Company and
the Selling Shareholder without liability on the part of any Underwriter or the
Company or the Selling Shareholder, except for the expenses to be paid or
reimbursed by the Company pursuant to Sections 7 and 9 hereof and except to the
extent provided in Section 11 hereof.
Section 9. Reimbursement of Underwriters' Expenses. If the sale to
the Underwriters of the Shares on the First Closing Date is not consummated
because any condition of the Underwriters' obligations hereunder is not
satisfied or because of any refusal, inability or failure on the part of the
Company or the Selling Shareholder to perform any agreement herein or to comply
with any provision hereof, unless such failure to satisfy such condition or to
comply with any provision hereof is due to the default or omission of any
Underwriter, the Company agrees to reimburse you and the other Underwriters upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been reasonably incurred by you and
them in connection with the proposed purchase and the sale of the Shares. Any
such termination shall be without liability of any party to any other party
except that the provisions of this Section, Section 7 and Section 11 shall at
all times be effective and shall apply.
Section 10. Effectiveness of Registration Statement. You, the Company
and the Selling Shareholder will use your, its and their best efforts to cause
the Registration Statement to become effective, if it has not yet become
effective, and to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
Section 11. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the 1933 Act or the Exchange Act against any
losses, claims, damages or liabilities, joint or
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<PAGE> 24
several, to which such Underwriter or such controlling person may become subject
under the 1933 Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent of the
Company and/or such Selling Shareholder, as the case may be), insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, including the information
deemed to be part of the Registration Statement at the time of effectiveness
pursuant to Rule 430A and/or Rule 434, if applicable, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that neither the Company nor the Selling Shareholder will be liable in any such
case to the extent that (i) any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of any Underwriter through the Representatives, specifically for use
therein; or (ii) if such statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus and (1) any such loss,
claim, damage or liability suffered or incurred by any Underwriter (or any
person who controls any Underwriter) resulted from an action, claim or suit by
any person who purchased Shares which are the subject thereof from such
Underwriter in the offering and (2) such Underwriter failed to deliver or
provide a copy of the Prospectus to such person at or prior to the confirmation
of the sale of such Shares in any case where such delivery is required by the
1933 Act. In addition to their other obligations under this Section 11(a), the
Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
this Section 11(a), it will reimburse the Underwriters on a monthly basis for
all reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, and the Selling Shareholder and each person, if any, who controls the
Company within the meaning of the 1933 Act or the Exchange Act, against any
losses, claims, damages or liabilities to which the Company, or any such
director, officer, Selling Shareholder or controlling person may become subject
under the 1933 Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses,
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<PAGE> 25
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto in reliance upon and in conformity with Section
4 of this Agreement or any other written information furnished to the Company by
such Underwriter through the Representatives specifically for use in the
preparation thereof; and will reimburse any legal or other expenses reasonably
incurred by the Company, or any such director, officer, the Selling Shareholder
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action. In addition to their other obligations
under this Section 11(b), the Underwriters agree that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 11(b), they will
reimburse the Company and the Selling Shareholder on a monthly basis for all
reasonable legal and other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company and the
Selling Shareholder for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction.
This indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to the extent that
the indemnifying party was prejudiced by such failure to notify. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, or the indemnified and indemnifying parties may have
conflicting interests which would make it inappropriate for the same counsel to
represent both of them, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defense and otherwise to
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection
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<PAGE> 26
with the defense thereof unless (i) the indemnified party shall have employed
such counsel in connection with the assumption of legal defense in accordance
with the proviso to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more than
one separate counsel, approved by the Representative in the case of paragraph
(a) representing all indemnified parties not having different or additional
defenses or potential conflicting interest among themselves who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising out
of such proceeding.
(d) If the indemnification provided for in this Section is unavailable
to an indemnified party under paragraphs (a) or (b) hereof in respect of any
losses, claims, damages or liabilities referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholder, and the Underwriters from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Selling Shareholder, and the Underwriters in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
respective relative benefits received by the Company and the Selling
Shareholder, and the Underwriters shall be deemed to be in the same proportion
in the case of the Company and the Selling Shareholder, as the total price paid
to the Company and the Selling Shareholder for the Shares by the Underwriters
(net of underwriting discount but before deducting expenses), and in the case of
the Underwriters as the underwriting discount received by them bears to the
total of such amounts paid to the Company and the Selling Shareholder and
received by the Underwriters as underwriting discount in each case as
contemplated by the Prospectus. The relative fault of the Company and the
Selling Shareholder and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied by
the Company or by the Selling Shareholder or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Company, the Selling Shareholder and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation
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<PAGE> 27
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section, no Underwriter shall be required
to contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were offered
to the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section are several in proportion to their respective underwriting commitments
and not joint.
(e) The provisions of this Section shall survive any termination of
this Agreement.
Section 12. Default of Underwriters. It shall be a condition to the
agreement and obligation of the Company and the Selling Shareholder to sell and
deliver the Shares hereunder, and of each Underwriter to purchase the Shares
hereunder, that, except as hereinafter in this paragraph provided, each of the
Underwriters shall purchase and pay for all Shares agreed to be purchased by
such Underwriter hereunder upon tender to the Representatives of all such Shares
in accordance with the terms hereof. If any Underwriter or Underwriters default
in their obligations to purchase Shares hereunder on the First Closing Date and
the aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10 percent of the total number of
Shares which the Underwriters are obligated to purchase on the First Closing
Date, the Representative may make arrangements satisfactory to the Company and
the Selling Shareholder for the purchase of such Shares by other persons,
including any of the Underwriters; but if no such arrangements are made by such
date, the nondefaulting Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the Shares which such
defaulting Underwriters agreed but failed to purchase on such date. If any
Underwriter or Underwriters so default and the aggregate number of Shares with
respect to which such default or defaults occur is more than the above
percentage and arrangements satisfactory to the Representative and the Company
and the Selling Shareholder for the purchase of such Shares by other persons are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any nondefaulting Underwriter or the Company or
the Selling Shareholder, except for the expenses to be paid by the Company
pursuant to Section 7 hereof and except to the extent provided in Section 11
hereof.
In the event that Shares to which a default relates are to be purchased
by the nondefaulting Underwriters or by another party or parties, the
Representative or the Company shall have the right to postpone the First Closing
Date for not more than seven business days in order that the necessary changes
in the Registration Statement, Prospectus and any other documents, as well as
any other arrangements, may be effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
Section 13. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9, 11 and 14 and as to all other provisions at
10:00 A.M., Chicago Time, on the day
-27-
<PAGE> 28
following the date upon which the Pricing Agreement is executed and delivered,
unless such a day is a Saturday, Sunday or holiday (and in that event this
Agreement shall become effective at such hour on the business day next
succeeding such Saturday, Sunday or holiday); but this Agreement shall
nevertheless become effective at such earlier time after the Pricing Agreement
is executed and delivered as you may determine on and by notice to the Company
and the Selling Shareholder or by release of any Shares for sale to the public.
For the purposes of this Section, the Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Shares or upon the release by you of telegrams (i) advising
Underwriters that the Shares are released for public offering, or (ii) offering
the Shares for sale to securities dealers, whichever may occur first.
Section 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice
to you and the Selling Shareholder or by you by notice to the Company
and the Selling Shareholder at any time prior to the time this
Agreement shall become effective as to all its provisions, and any such
termination shall be without liability on the part of the Company or
the Selling Shareholder to any Underwriter (except for the expenses to
be paid or reimbursed pursuant to Section 7 hereof and except to the
extent provided in Section 11 hereof) or of any Underwriter to the
Company or the Selling Shareholder.
(b) This Agreement may also be terminated by you prior to the
First Closing Date, and the option referred to in Section 5, if
exercised, may be cancelled at any time prior to the Second Closing
Date, if (i) trading in securities on the New York Stock Exchange shall
have been suspended or minimum prices shall have been established on
such exchange, (ii) a banking moratorium shall have been declared by
Illinois, New York, or United States authorities, (iii) there shall
have been any change in financial markets or in political, economic or
financial conditions which, in the opinion of the Representative,
either renders it impracticable or inadvisable to proceed with the
offering and sale of the Shares on the terms set forth in the
Prospectus or materially and adversely affects the market for the
Shares, or (iv) there shall have been an outbreak of major armed
hostilities between the United States and any foreign power which in
the opinion of the Representative makes it impractical or inadvisable
to offer or sell the Shares. Any termination pursuant to this paragraph
(b) shall be without liability on the part of any Underwriter to the
Company or the Selling Shareholder or on the part of the Company to any
Underwriter or the Selling Shareholder (except for expenses to be paid
or reimbursed pursuant to Section 7 hereof and except to the extent
provided in Section 11 hereof).
Section 15. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholder and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
principals, members, officers or directors or any controlling person, or the
Selling Shareholder as the case may be, and will survive delivery of and payment
for the Shares sold hereunder.
-28-
<PAGE> 29
Section 16. Notices. All communications hereunder will be in writing
and, if sent to the Underwriters will be mailed, delivered or telegraphed and
confirmed to you c/o Howe Barnes Investments, Inc., 135 South LaSalle Street,
Chicago, Illinois 60603, Attention: Paul A. O'Connor; if sent to the Company
will be mailed, delivered or telegraphed and confirmed to the Company at its
corporate headquarters; and if sent to the Selling Shareholder will be mailed,
delivered or telegraphed and confirmed to the Custodian at such address as they
have previously furnished to the Company and the Representative.
Section 17. Successors. This Agreement and the Pricing Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors, personal representatives and assigns, and to the benefit
of the officers and directors and controlling persons referred to in Section 11,
and no other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the Shares as such from any of
the Underwriters merely by reason of such purchase.
Section 18. Representation of Underwriters. You will act as
Representative for the several Underwriters in connection with this financing,
and any action under or in respect of this Agreement taken by you will be
binding upon all the Underwriters.
Section 19. Partial Unenforceability. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
Section 20. Applicable Law. This Agreement and the Pricing Agreement
shall be governed by and construed in accordance with the laws of the State of
Illinois.
-29-
<PAGE> 30
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Shareholder and the several Underwriters including you, all in accordance with
its terms.
Very truly yours,
TEAM FINANCIAL, INC.
By
---------------------------------------
Robert J. Weatherbie
Chairman and Chief Executive Officer
SELLING SHAREHOLDER
TEAM FINANCIAL, INC. EMPLOYEES' STOCK
OWNERSHIP PLAN
By
---------------------------------------
---------------------------------------
Trustee
The foregoing Agreement is hereby
confirmed and accepted as of the date first
above written.
HOWE BARNES INVESTMENTS, INC.
Acting as Representative of the several
Underwriters named in Schedule A.
By
-----------------------------------------
Michael E. Sammon
Senior Vice President
-30-
<PAGE> 31
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF FIRM
SHARES TO BE
UNDERWRITER PURCHASED
<S> <C>
Howe Barnes Investments, Inc.
---------
TOTAL 1,000,000
=========
</TABLE>
<PAGE> 32
SCHEDULE B
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
FIRM SHARES OPTION SHARES
TO BE SOLD TO BE SOLD
<S> <C> <C>
Company 700,000 -------
Team Financial, Inc.
Employee Stock Ownership Plan 300,000 -------
--------- -------
TOTAL 1,000,000 150,000
========= =======
</TABLE>
<PAGE> 33
SCHEDULE C
COMFORT LETTER OF KPMG LLP
(1) They are independent public accountants with respect to the Company
and its subsidiaries within the meaning of the 1933 Act.
(2) In their opinion the consolidated financial statements and
schedules of the Company and its Subsidiaries included in the Registration
Statement and the consolidated financial statements of the Company from which
the information presented under the caption "Selected Consolidated Financial
Data" has been derived which are stated therein to have been examined by them
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act.
(3) On the basis of specified procedures (but not an examination in
accordance with generally accepted auditing standards), including inquiries of
certain officers of the Company and its Subsidiaries responsible for financial
and accounting matters as to transactions and events subsequent to December 31,
1998, a reading of minutes of meetings of the shareholders and directors of the
Company and its Subsidiaries since December 31, 1998, a reading of the latest
available interim unaudited consolidated financial statements of the Company and
its Subsidiaries (with an indication of the date thereof) and other procedures
as specified in such letter, nothing came to their attention which caused them
to believe that (i) the unaudited consolidated financial statements of the
Company and its Subsidiaries included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act or that such unaudited financial statements are not
fairly presented in accordance with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited financial
statements included in the Registration Statement, and (ii) at a specified date
not more than five days prior to the date thereof in the case of the first
letter and not more than two business days prior to the date thereof in the case
of the second and third letters, there was any change in the capital stock or
long-term debt or short-term debt (other than normal payments) of the Company
and its Subsidiaries on a consolidated basis or any decrease in consolidated net
current assets or consolidated shareholders' equity as compared with amounts
shown on the latest unaudited balance sheet of the Company included in the
Registration Statement or for the period from the date of such balance sheet to
a date not more than five days prior to the date thereof in the case of the
first letter and not more than two business days prior to the date thereof in
the case of the second and third letters, there were any decreases, as compared
with the corresponding period of the prior year, in consolidated net sales,
consolidated income before income taxes or in the total or per share amounts of
consolidated net income except, in all instances, for changes or decreases which
the Prospectus discloses have occurred or may occur or which are set forth in
such letter.
(4) They have carried out specified procedures, which have been agreed
to by the Representative, with respect to certain information in the Prospectus
specified by the Representative, and on the basis of such procedures, they have
found such information to be in agreement with the general accounting records of
the Company and its Subsidiaries.
<PAGE> 34
EXHIBIT A
TEAM FINANCIAL, INC.
1,000,000 Shares Common Stock*
PRICING AGREEMENT
May ___, 1999
Howe Barnes Investments, Inc.
As Representative of the several Underwriters
135 South LaSalle Street
Chicago, Illinois 60603
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated May ___, 1999
(the "Underwriting Agreement") relating to the sale by the Company and the
Selling Shareholder and the purchase by the several Underwriters for whom Howe
Barnes Investments, Inc. is acting as the representative (the "Representative"),
of the above Shares. All terms herein shall have the definitions contained in
the Underwriting Agreement except as otherwise defined herein.
Pursuant to Section 5 of the Underwriting Agreement, the Company and
the Selling Shareholder agree with the Representative as follows:
1. The initial public offering price per share for the
Shares shall be $______.
2. The purchase price per share for the Shares to be paid by
the several Underwriters shall be $___________, being an amount equal
to the initial public offering price set forth above less $____________
per share.
Schedule A is amended as follows:
- -------------------------
*Plus an option to acquire up to 150,000 additional shares to cover
overallotments.
<PAGE> 35
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Shareholder and the several Underwriters, including you, all in accordance with
its terms.
Very truly yours,
TEAM FINANCIAL, INC.
By
---------------------------------------
Robert J. Weatherbie
Chairman and Chief Executive Officer
SELLING SHAREHOLDER
TEAM FINANCIAL, INC. EMPLOYEES' STOCK
OWNERSHIP PLAN
By
---------------------------------------
---------------------------------------
Trustee
The foregoing Agreement is hereby
confirmed and accepted as of the date first
above written.
HOWE BARNES INVESTMENTS, INC.
Acting as Representative of the several
Underwriters.
By
-------------------------------------------
Michael E. Sammon
Senior Vice President
-2-
<PAGE> 1
EXHIBIT 3.1
RESTATED AND AMENDED ARTICLES OF INCORPORATION
TEAM FINANCIAL, INC.
The undersigned does hereby, pursuant to the vote of a majority of the
stockholders at the annual meeting of the stockholders on the 13th day of June,
1998, restate and amend the Articles of Incorporation of Team Financial, Inc.,
originally known as TeamBanc, Inc., a corporation FOR profit originally
incorporated on the 7th day of April, 1986, under the laws of the State of
Kansas.
FIRST: The name of the corporation is:
TEAM FINANCIAL, INC.
SECOND: The location of its registered office in Kansas is 8 West
Peoria, Paola, Miami County, Kansas, and the resident agent in charge thereof at
such address is Michael L. Gibson.
THIRD: This corporation is organized FOR profit and the nature of its
business or purposes to be conducted or promoted is to engage in any lawful act
or activity for which corporations may be organized under the Kansas General
Corporation Code.
FOURTH: The total number of shares of all classes which the Corporation
has authority to issue is Sixty Million (60,000,000) shares, of which Fifty
Million (50,000,000) shares shall be Common Stock of a par value of zero ($0.00)
per share, and Ten Million (10,000,000) shares shall be Preferred Stock, of
which Thirty Five Thousand (35,000) shares shall be MERN Preferred Stock.
The designations and the preferences, conversion and other rights,
voting powers, restrictions, limitations as to distributions, qualifications and
terms and conditions of redemption of the shares of each class of stock are as
follows:
COMMON STOCK
Subject to all of the rights of the Preferred Stock as expressly
provided herein, by law or by the Board of Directors pursuant to this Article,
the Common Stock of the Corporation shall possess all such rights and privileges
as are afforded to capital stock by applicable law in the absence of any express
grant of rights or privileges in these Articles of Incorporation, including but
not limited to, the following rights and privileges:
(a) distributions may be declared and paid or set apart for
payment upon the Common Stock out of any assets or funds of the
Corporation legally available for the payment of distributions;
<PAGE> 2
(b) the holders of Common Stock shall have the right to vote
for the election of directors and on all other matters requiring
stockholder action, each share being entitled to one vote; and
(c) upon the voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the net assets of the Corporation
shall be distributed pro rata to the holders of the Common Stock in
accordance with their respective rights and interests.
PREFERRED STOCK
The Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more series. The description of shares of each
series of Preferred Stock, including any preferences, conversion and other
rights, voting powers, restrictions, limitations as to distributions,
qualifications, and terms and conditions of redemption shall be as set forth in
resolutions adopted by the Board of Directors and a Certificate of Designation
to be filed as required by law from time to time prior to the issuance of any
shares of such series.
The Board of Directors is expressly authorized, prior to issuance, by
adopting resolutions providing for the issuance of shares of any particular
series of Preferred Stock and, if and to the extent from time to time required
by law, by filing a Certificate of Designation to set the number of shares to be
included in each series of Preferred Stock and to set the designations,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to distributions, qualifications, or terms and conditions of
redemption relating to the shares of each such series. Notwithstanding the
foregoing, the Board of Directors shall not be authorized to change the right of
the Common Stock of the Corporation to vote one vote per share on all matters
submitted for stockholder action. The authority of the Board of Directors with
respect to each series of Preferred Stock shall include, but not be limited to,
setting or changing the following:
(a) The distinctive serial designation of such series and the
number of shares constituting such series (provided that the aggregate
number of shares constituting all series of Preferred Stock shall not
exceed 10,000,000);
(b) The annual distribution rate on shares of such series,
whether distributions shall be cumulative and, if so, from which date
or dates;
(c) Whether the shares of such series shall be redeemable and,
if so, the terms and conditions of such redemption, including the date
or dates upon and after which
2
<PAGE> 3
such shares shall be redeemable, and the amount per share payable in
case of redemption, which amount may vary under different conditions
and at different redemption dates;
(d) The obligation, if any, of the Corporation to redeem or
repurchase shares of such series pursuant to a sinking fund;
(e) Whether shares of such series shall be convertible into,
or exchangeable for, shares of stock of any other class or classes and,
if so, the terms and conditions of such conversion or exchange,
including the price or prices or the rate or rates of conversion or
exchange and the terms of adjustment, if any;
(f) Whether the shares of such series shall have voting
rights, in addition to the voting rights provided by law, and, if so,
the terms of such voting rights;
(g) The rights of the shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and
(h) Any other relative rights, powers, preferences,
qualifications, limitations or restrictions thereof relating to such
series which may be authorized or permitted under the Kansas General
Corporation Code.
The shares of Preferred Stock of any one series shall be identical with
each other in all respects except as to the dates from and after which dividends
thereon shall cumulate, if cumulative.
MERN PREFERRED STOCK
The nature and extent of preferences, rights, privileges, and
restrictions granted to or imposed upon the holds of the MERN Preferred class
stock are as follows:
(a) The holders of MERN Preferred stock shall be entitled to
receive dividends, when and if declared by the Board of Directors out
of any funds at the time legally available for dividends, at the rate
of $5.60 per annum per share, payable in cash. Such dividend shall be
cumulative and accrue from the date of original issue, whether or not
earned, or declared but accumulations and dividends on preferred stock
shall not bear interest. After such payments to MERN Preferred
stockholders, there shall be no further participation by such shares in
any additional dividends declared.
3
<PAGE> 4
(b) Upon the dissolution, liquidation, or winding-up of the
corporation, whether voluntary or involuntary, the holders of the
shares of MERN Preferred stock then outstanding shall be entitled to
receive out of the assets of the corporation, whether representing
capital or surplus of any nature an amount equal to $90.00 per share,
and in addition thereto, an amount equal of the dividends unpaid and
accumulated on such share, whether or not such dividends have been
earned or declared, to the date of final distribution to the holders of
the MERN Preferred stock, before any payment or distribution shall be
made on the common stock. After such payments to the MERN Preferred
stock, there shall be no further participation by such shares in the
remaining assets of the corporation. If the assets distributable in the
dissolution, liquidation, or winding-up shall be insufficient to pay
the MERN Preferred stock owners the full preferential amounts to which
they are entitled, then such assets, or the proceeds thereof shall be
distributed among the holders of MERN Preferred stock ratably, in
proportion to the respective amounts the holders of such shares would
be entitled to receive if they were paid the full preferential amounts.
A consolidation or merger of this corporation with or into any other
corporation or corporations, or a sale of the assets of the corporation
if the proceeds are reinvested and the corporation existence retained,
shall not be deemed a liquidation, dissolution, or winding-up within
the meaning of this paragraph.
(c) The corporation shall have the right, from time to time,
to purchase, redeem, retire, and/or cancel any and all outstanding MERN
Preferred stock of the corporation upon thirty (30) days written notice
to the holder or holders of the MERN Preferred stock to be purchased,
redeemed, retired, or canceled in such manner and amounts as the Board
of Directors shall have determined at the time of issuance of said
share of MERN Preferred stock.
(d)Except as provided by law, the holders of MERN Preferred
stock shall have no stockholder voting rights.
(e) The corporation shall not, without first obtaining written
consent of the holders of all then outstanding MERN Preferred stock, do
any of the following:
1) Increase the authorized shares of MERN Preferred
stock;
2) Alter or change the rights, preferences, or
privileges of the MERN Preferred stock so as to
materially adversely affect the outstanding MERN
Preferred stock;
4
<PAGE> 5
3) Create any new class of stock having preferences
over or being on a parity with the MERN Preferred
stock as to dividends or assets.
FIFTH: The name and mailing address of the INCORPORATOR is as follows:
Robert J. Weatherbie Michael L. Gibson
106 Overhill Drive 103 Crestview Drive
Paola, Kansas 66071 Paola,Kansas 66071
Mary Ellen Gilchrist Carolyn Jacobs
1633 Virginia Road 807 E. Osage
Osawatomie, Kansas 66064 Paola, Kansas 66064
SIXTH: The Incorporator may adopt the original bylaws and thereafter
the power to make, alter, and repeal the bylaws is conferred upon the Board of
Directors.
SEVENTH: The term for which the corporation is to exist is: perpetual.
EIGHTH: No merger, consolidation, liquidation or dissolution of the
corporation nor any action that would result in the sale or other disposition of
all or substantially all of the assets of the corporation shall be valid unless
first approved by the affirmative vote of the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the outstanding shares of common stock. This
Article Eighth may not be amended unless first approved by the affirmative vote
of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the
outstanding shares of common stock.
NINTH:Cumulative voting rights shall exist with respect to the election
of directors.
TENTH:
A. The Board of Directors may, if it deems it advisable, oppose a
tender of other offer for the corporation's securities, whether the offer is in
cash or in the securities of a corporation or otherwise. When considering
whether to oppose an offer, the Board of Directors may, but it is not legally
obligated to, consider any pertinent issue; by way of illustration, but not of
limitation, the Board of Directors may, but shall not be legally obligate to,
consider any or all of the following:
1) Whether the offer price is acceptable based on the historical and
present operating results or financial condition of the corporation;
2) Whether a more favorable price could be obtained for the
corporations securities in the future;
5
<PAGE> 6
3) The impact which an acquisition of the corporation would have on the
employees, depositors, and customers of the corporation and its
subsidiaries and the communities which they serve;
4) The reputation and business practices of the offeror and its
management and affiliates as they would effect the employees,
depositors and customers of the corporation and its subsidiaries and
the future value of the corporation's stock;
5) The value of the securities (if any) which the offeror is offering
in exchange for the corporation's securities, based on an analysis
of the worth of the corporation as compared to the corporation or
other entity whose securities are being offered; and
6) Any antitrust or other legal and regulatory issues that are raised
by the offer.
B. If the Board of Directors determines that an offer should be
rejected, it may take any lawful action to accomplish its purpose, including,
but not limited to, any or all of the following: advising shareholders not to
accept the offer; litigation against the offeror; filing complaints with all
governmental and regulatory authorities; acquiring the corporation's securities;
selling or otherwise issuing authorized but unissued securities or treasury
stock or granting options with respect thereto; acquiring a company to create an
antitrust or other regulatory problem for the offeror; and soliciting a more
favorable offer from another individual or entity.
ELEVENTH:
A. Unless ordered by a court, upon a determination by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit, or proceeding, or if such a quorum is not
obtainable, or even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or by the
stockholders, that indemnification is proper in the circumstances because the
applicable standard of conduct has been met, the bank may indemnify any person,
such person's heirs, executors, or administrators, who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
other than an action by or in the right of the bank, by reason of the fact that
such person is or was a director, officer, employee or agent of the bank, or is
or was serving at the request of the bank as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
6
<PAGE> 7
action, suit or proceeding, including attorney's fees, if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the bank, and with respect to any criminal act
or proceeding, has no reasonable cause to believe such person's conduct was
unlawful. The termination of any action, suite or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, or itself, create a presumption that the person did not act in good
faith and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the bank, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that such person's conduct
was unlawful.
B. Upon a determination as provided in paragraph (A), unless ordered by
a court, the bank may indemnify any person, his heirs, executors and
administrators, who to any threatened, pending or completed action or suit by or
in the right of the bank to procure a judgment in its favor by reason of the
fact that such person is or was a director, officer, employee or agent of the
bank, or is or was serving at the request of the bank as a director, officer,
employee or agent or another corporation, partnership, joint venture, trust or
other enterprise against expenses actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit,
including attorney's fees, if such person acted in good faith and in a manner
such person reasonably incurred by such person in connection with the defense or
settlement of such action or suit, including attorney's fees, if such person
acted in good f faith and in a manner such person reasonably believed to be in
or not opposed to the best interests of the bank and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the bank unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
C. To the extent that a director, officer, employee or agent of a bank
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (A) and (B), or in the defense of any
claim, issue or matter therein, such director, officer, employee or agent shall
be indemnified against expenses actually and reasonably incurred by such person
in connection therewith, including attorneys fees.
D. Expenses incurred by a director or officer in defending a civil or
criminal action, suit or proceeding may be paid by the bank in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the
7
<PAGE> 8
director or officer to pay such amount if it is ultimately determined that the
director or officer is not entitled to be indemnified by the bank. such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
E. The foregoing rights of indemnification or reimbursement shall not
be exclusive or other rights to which such person, such person's heirs,
executors, and administrators, may be entitled as a matter of law.
F. The bank may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the bank, or is or was
serving at the request of the bank as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether or
not the bank may indemnify such person against such liability under paragraph
(A) or (B) , provided that, the policy shall explicitly exclude insurance
coverage for a formal order assessing civil penalties against a bank director or
employee.
G. The foregoing rights or indemnification or reimbursement
notwithstanding, the bank shall not indemnify against expenses, penalties or
other payments incurred in an administrative proceeding or action instituted by
an appropriate regulatory agency which proceeding or action results in a final
order assessing civil penalties or requiring affirmative action by an individual
or individuals in the form of payments to the bank.
In Witness Whereof, I have hereunto set my hand and affixed the seal of
said corporation this 13 day of June, 1998.
/s/ ROBERT J. WEATHERBIE
-----------------------------------------
Robert J. Weatherbie, Chairman
and Chief Executive Officer
8
<PAGE> 9
STATE OF KANSAS, COUNTY OF MIAMI, SECTION:)
Be it remembered that before me, a Notary Public in and for the
aforesaid county and state, personally appeared Robert J. Weatherbie, Chairman
and Chief Executive Officer of the corporation named in this document, who is
known to me to be the same person who executed the foregoing Restated and
Amended Articles of Incorporation, and duly acknowledged the execution of the
same this 13 day of June, 1998.
/s/ CLARENE B. PROTHE
[SEAL] -----------------------------------------
Notary Public
My Appointment Expires: 11-25-2001
9
<PAGE> 1
EXHIBIT 3.2
TEAM FINANCIAL, INC.
AMENDED BYLAWS
MAY 20,1998
Article I
Offices
Section 1. Principal Office. The principal office for the transaction of
the business of the corporation is hereby located at 8 West Peoria, Paola, Miami
County, Kansas 66071.
Section 2. Registered Office. The corporation, by resolution of its board
of directors, may change the location of its registered office as designated in
the Articles of Incorporation to any other place. By like resolution, the
resident agent at such registered office may be changed to any other person or
corporation, including itself. Upon adoption of such a resolution, a certificate
certifying the change shall be executed, acknowledged and filed with the
Secretary of State, and a certified copy thereof shall be recorded in the office
of the Register of Deeds for the county in which the new registered office is
located (and in the old county, if such registered office is moved from one
county to another.)
Section 3. Other Offices. Branch or subordinate offices may at any time be
established by the board of directors at any place or places where the
corporation is qualified to do business.
Article II
Stockholders
Section 1. Place of Meetings. All annual meetings of stockholders and all
other meetings of stockholders shall be held in Paola, Kansas at the principal
office of the corporation or other designated facility in Paola, Kansas unless
another place within or without the State of Kansas is designated either by
resolution of the board of directors pursuant to authority hereinafter granted
to said board, or by the written consent of all stockholders entitled to vote
thereat, given either before or after the meeting and filed with the secretary
of the corporation.
Section 2. Annual Meetings. The annual meetings of the stockholders shall
be held on the second Saturday of June, in each year at 2:00 o'clock p.m. of
said day, or at such other time of day as designated by the board of directors.
At such meeting, directors shall be elected, reports of the affairs of the
corporation shall be considered, and any other business may be transacted which
is within the power of the stockholders.
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Written notice of each annual meeting shall be given to each stockholder
entitled to vote, either personally or by mail or other means of written
communication, charges prepaid, addressed to such stockholder at his/her address
appearing on the books of the corporation or given by him/her to the corporation
for the purpose of notice. If a stockholder gives no address, notice shall be
deemed to have been given if published at least once in some newspaper of
general circulation in the county in which the corporate office is located. All
such notices shall be sent to each stockholder entitled thereto not less than
ten (10) days nor more than fifty (50) days before each annual meeting, and
shall specify the place, the day and the hour of such meeting, and shall state
such other matters, if any, as may be expressly required by statute. If the
place for a meeting to elect directors is changed, the notice of meeting shall
be given to stockholders at least twenty (20) days prior to the date of such
meeting.
Section 3. Special Meetings. Special meetings of the stockholders, for any
purpose or purposes whatsoever, may be called at any time by the Chairman of the
Board, Chief Executive officer, or by the board of directors, or by one or more
stockholders holding not less than ten percent (10%) of the voting power of the
corporation. Except in special cases where other express provision is made by
statute, notice of such special meetings shall be given in the same manner as
for annual meetings of stockholders. Notices of any special meeting shall
specify in addition to the place, day and hour of such meeting, the general
nature of the business to be transacted.
Section 4. Adjourned Meetings and Notice Thereof. Any stockholders,
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum, no other business may be transacted at such meeting.
When any stockholders' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Except as aforesaid, it shall not be necessary
to give any notice of an adjournment or of the business to be transacted at an
adjourned meeting, if the time and place thereof are announced at the meeting at
which such adjournment is taken.
Section 5. Voting. Unless the board of directors has fixed in advance
(pursuant to Article V, Section 1) a record date for purposes of determining
entitlement to vote at the meeting, the record date shall be as of the close of
business on the day next preceding the date on which notice is given, or if
notice is
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May 20, 1998
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waived, at the close of business on the day next preceding the day on which the
meeting shall be held. Such vote may be viva voce or by written and/or
electronic ballot; provided, however, that all elections for directors must be
by written ballot upon demand made by a stockholder at any election before the
voting begins. Every stockholder entitled to vote at any election for directors
shall have the right to cumulate his/her votes and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which his/her shares are entitled, or to distribute his/her votes on
the same principle among as many candidates as he/she shall think fit. The
candidates receiving the highest number of votes up to the number of directors
to be elected shall be elected.
Section 6. Quorum. The presence in person or by proxy of persons entitled
to vote one third (1/3) of the voting shares at any business meeting shall
constitute a quorum for the transaction of business. The stockholders present at
a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 7. Consent of Absentees. The transactions of any meeting of
stockholders, either annual or special, however called and noticed, shall be as
valid as though had at a meeting duly held after regular call and notice, if a
quorum be present either in person or by proxy, and if, either before or after
the meeting, each of the stockholders entitled to vote, not present in person or
by proxy, signs a written waiver of notice, or a consent to the holding of such
meeting, or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 8. Action Without Meeting. Any action which under any provision of
the Kansas General Corporation Code, may be taken at a meeting of the
stockholders, may be taken without a meeting if authorized by a writing signed
by all of the persons who would be entitled to vote upon such action at a
meeting, and filed with the secretary of the corporation, or such other
procedure followed as may be prescribed by statute, except approval of an
agreement for merger or consolidation of the corporation with other
corporations, or a sale of all or substantially all of the corporate property.
The use of consent minutes shall be a substitute for conducting regular meetings
of the board of directors.
Section 9. Proxies. Every person entitled to vote or execute consents shall
have the right to do so either in person or by one or more agents authorized by
a written proxy executed by such person or his duly authorized agent and filed
with the secretary of
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TFI Bylaws
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the corporation; provided that no such proxy shall be valid after the expiration
of three (3) years from the date of its execution, unless the person executing
it specified therein the length of time for which such proxy is to continue in
force.
Section 10. Inspection of Corporate Records. The stock ledger or duplicate
stock ledger, the books of account, and minutes of proceedings of the
stockholders, of the board of directors and of standing committees of the
directors shall be open to inspection upon the written demand of any stockholder
or the holder of a voting trust certificate within five (5) days of such demand
during ordinary business hours if for a purpose reasonably related to his/her
interests as a stockholder, or as the holder of such voting trust certificate. A
list of the stockholders entitled to vote shall be exhibited at any reasonable
time and at meetings of the stockholders when required by the written demand of
any stockholder received at least twenty (20) days prior to the meeting. Such
inspection may be made in person or by an agent or attorney authorized in
writing by a stockholder, and shall include the right to make abstracts. Demand
of inspection other than at a stockholders' meeting shall be made in writing
upon the Chairman, Chief Executive Officer, Chief Financial Officer, or
Secretary of the corporation.
Section 11. Inspection of Bylaws. The corporation shall keep in its
principal office for the transaction of business the original or a copy of these
bylaws as amended or otherwise altered to date, certified by the secretary,
which shall be open to inspection by the stockholders at all reasonable times
during ordinary business hours.
Article III
Directors
Section 1. Powers. Subject to limitations of the Articles of Incorporation,
of the Bylaws, and of the Kansas General Corporation Code as to action which
shall be authorized or approved by the stockholders, and subject to the duties
of directors as prescribed by the Bylaws; all corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the board of directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the directors shall have the following powers, to-wit:
First - To alter, amend or repeal the bylaws of the corporation.
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TFI Bylaws
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Page 5
Second - To select and remove all the other officers, agents and
employees of the corporation, prescribe such powers and duties for them as
may not be inconsistent with law, or with the articles of incorporation or
the bylaws, fix their compensation, and require from them security for
faithful service.
Third - To conduct, manage, and control the affairs and business of
the corporation, and to make such rules and regulations therefor not
inconsistent with the law, or with the articles of incorporation or the
bylaws, as they may deem best, including but not limited to the power to
declare dividends.
Fourth - To change the principal office and registered office for the
transaction of the business of the corporation from one location to another
as provided in Article I hereof; to fix and locate from time to time one or
more subsidiary offices of the corporation within or without the State of
Kansas, as provided in Article I, Section 3 hereof; to designate any place
within or without the State of Kansas for the holding of any stockholders,
meeting or meetings except annual meetings; to adopt, make and use a
corporate seal, to prescribe the forms of certificates of stock, and to
alter the forms of such seal and of such certificates from time to time, as
in their judgment they may deem best, provided such seal and such
certificate shall at all times comply with the provisions of law.
Fifth - To authorize the issue of shares of stock of the corporation
from time to time, upon such terms as may be lawful, in consideration of
money paid, labor done or services actually rendered, debts or securities
canceled, or tangible or intangible property actually received, or in the
case of shares issued as a dividend, against amounts transferred from
surplus to stated capital.
Sixth - To borrow money and incur indebtedness for purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations or other evidences of debt and
securities therefor.
Seventh - To appoint and delegate to standing committees and other
committees as the board shall deem appropriate any of the powers and
authority of the board
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TFI Bylaws
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in the management of the business and affairs of the corporation, except
the power to declare dividends and to adopt, amend or repeal bylaws. Any
such committee shall be composed of two or more directors.
Section 2. Number and Qualification of Directors. The authorized number of
directors of the corporation shall be eight (8) until changed by amendment to
this bylaw. Directors need not be stockholders, except as otherwise provided for
by law or regulation. A two-thirds (2/3) vote of the Board of Directors shall be
required to amend this section of the bylaws with respect to the number of
authorized directors of the corporation.
Section 3. Election and Term of Office. The directors shall be elected at
each annual meeting of stockholders, but if any such annual meeting is not held,
or the directors are not elected thereat, the directors may be elected at a
special meeting of stockholders held for that purpose as soon thereafter as
conveniently may be. All directors shall hold office until their respective
successors are elected. A director may be removed from office at any time for
good cause; however, a director may be removed without cause by an affirmative
vote of two-thirds of the stockholders, unless he/she shall have sufficient
stockholder support that by use of cumulative voting he/she would otherwise be
able to maintain his/her position on the board of directors in a regular
election of board members.
Directors shall be elected in accordance with the rotation of categories
set forth below:
Category A Three (3) directors each serving a three (3)
year term;
Category B Two (2) directors each serving a three (3)
year term;
Category C Three (3) directors each serving a three (3)
year term;
The election of directors shall rotate for Categories A, B, and C in
alphabetical sequence annually, so that at each successive, annual meeting of
stockholders, only one category of directors among Categories A, B, and C shall
have terms which have expired. The purpose of this bylaw is to assure continuity
on the board of directors by rotating annually the election of approximately one
third (1/3) of the directors at each annual meeting of stockholders. Commencing
with the 1998 annual meeting of stockholders, stockholders shall elect Category
C directors. In 1999, Category A directors shall be elected. In 2000, Category B
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TFI Bylaws
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Page 7
directors shall be elected. Thereafter, Categories A, B, and C respectively
shall rotate in sequence for election. Notwithstanding any provisions herein to
the contrary, the repeal of the provisions herein for the staggered election of
the directors shall require approval by two-thirds vote of the stockholders.
Although the authorized number of directors can be changed by a two-thirds vote
of the board of directors, no such change may have the effect of eliminating a
category.
Section 4. Vacancies. Vacancies on the board of directors may be filled by
a majority of the remaining directors, although less than a quorum, or by a sole
remaining director. If at any time, by reason of death, resignation, or other
cause, the corporation should have no directors in office, then any officer or
any stockholder or any executor, administrator, trustee or guardian of a
stockholder or other fiduciary entrusted with like responsibility for the person
or estate of a stockholder may call a special meeting of the stockholders in
accordance with the provisions of these bylaws, or may apply to the District
Court for a decree summarily ordering election as provided for by the Kansas
General Corporation Code. Each director so elected shall hold office until
his/her successor is elected at an annual or a special meeting of the
stockholders.
A vacancy or vacancies of the board of directors shall be deemed to exist:
(1) in case of the death, resignation or removal of any director; or (2) if the
authorized number of directors be increased; or (3) if the stockholders fail to
elect the full number of authorized directors at any annual or special meeting
of stockholders at which any director or directors are to be elected; or (4) if
any director or directors elected shall refuse to serve.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his/her term of office.
Section 5. Place of Meeting. Regular and special meetings of the board of
directors shall be held at any place within or without the State of Kansas which
has been designated from time to time by resolution of the board or by written
consent of all members of the board. In the absence of such designation, all
meetings shall be held at the principal office of the corporation.
Section 6. Organizational Meeting. Following each annual meeting of
stockholders, the board of directors shall hold a regular meeting for the
purpose of organization, election of officers, and the transaction of other
business at the next regularly schedule meeting time. Notice of such meeting is
hereby dispensed with.
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TFI Bylaws
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Section 7. Other Regular Meetings. Other regular meetings of the board of
directors shall be held without call at such time as the board of directors may
from time to time designate in advance of such meetings; provided, however,
should said day fall upon a legal holiday, then said meeting shall be held at
the same time on the next day thereafter ensuing which is not a legal holiday.
Notice of all such regular meetings of the board of directors is hereby
dispensed with.
Section 8. Special Meetings. Special meetings of the board of directors for
any purpose or purposes shall be called at any time by the chairman or, if
he/she is absent or unable or refuses to act, by the secretary or by any other
director. Notice of such special meetings, unless waived by attendance thereat
or by written consent to the holding of the meeting, shall be given by written
notice mailed at least three (3) days before the date of such meeting or be hand
delivered or notified by telegram or facsimile transmission confirmed at least
two (2) days before the date such meeting is to be held. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail, with
postage thereon addressed to the director at his residence or usual place of
business. If notice be given by telegraph, such notice shall be deemed to be
delivered when the same is delivered to the telegraph company. If notice be
given by facsimile transmission, such notice shall be deemed to be delivered
when the receipt of the same is confirmed electronically.
Section 9. Notice of adjournment. Notice of the time and place of holding
an adjourned meeting need not be given to absent directors if the time and place
be fixed at the meeting adjourned.
Section 10. waiver of Notice. The transactions of any meeting of the board
of directors, however called and noticed or wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice; if a quorum be
present, and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice, or a consent to holding such meeting,
or an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 11. Quorum . A majority of the total number of directors shall be
necessary to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the board of directors, unless a greater
number be required by law or by the articles of incorporation. The directors
present at a duly called or held meeting at which a
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TFI Bylaws
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quorum is present may continue to do business until adjournment, notwithstanding
the withdrawal of enough directors to leave less than a quorum.
Section 12. Meetings by Telephone and Electronic Means. Members of the
board of directors of the corporation, or any committee designated by such
board, may participate in a meeting of the board of directors or any meeting of
any committee by means of conference telephone or similar electronic
communications device/equipment, by means of which all persons participating in
the meeting can hear one another, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 13. Adjournment. A majority of the directors present may adjourn
any directors' meeting to meet again at a stated day and hour or until the time
fixed for the next regular meeting of the board.
Section 14. Fees and Compensation. Directors shall receive an annual fee as
prescribed by resolution of the board which shall be paid quarterly. In
addition, directors shall be entitled to receive special attendance fees for any
meeting as more particularly provided for by resolution of the board of
directors. Directors shall not receive any stated salary for their services as
directors. Nothing herein contained shall be construed to preclude any director
from serving the corporation in any other capacity as an officer, agent,
employee, or otherwise, and receiving compensation therefor.
Section 15. Standing and Other Committees of the Board. There shall be two
standing committees: (1) The Audit Committee and the (2) The Executive
Compensation Committee. The Chairman of the Board shall recommend to the Board
of Directors at least three directors of whom no less than two shall be outside
directors to be appointed to the Audit Committee who shall be responsible for
financial oversight and asset quality and other regularly required functions of
an audit committee. All such appointments shall be approved by a majority vote
of the Board of Directors. The Chairman of the Board shall recommend to the
Board of Directors at least two outside directors to be appointed to the
Executive Compensation Committee who shall be responsible for negotiation and
review of the Chairman and/or CEO employment contract(s) and the establishment
of approved guidelines for employment contracts and performance review standards
for all executive employment contracts. All such appointments shall be approved
by a majority of the Board of Directors. The Chairman of the Board may appoint
from time to time such other committees as shall be deemed necessary or
beneficial.
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Article IV
officers
Section 1. Officers. The officers of the corporation shall be a chairman
and a secretary. The corporation may also have, at the discretion of the board
of directors, a vice chairman, a chief executive officer, a president, a chief
financial officer, one or more secretaries, one or more treasurers and such
other officers as may be appointed in accordance with the provisions of Section
3 of this Article IV. Any number of offices may be held by the same person,
except that the chairman of the board and vice chairman of the board, if there
be one, and secretary shall not be the same.
Section 2. Election. The officers of the corporation, except such officers
as may be appointed in accordance with the provisions of Section 3 or Section 5
of this Article IV shall be chosen annually by the board of directors at the
first meeting following the annual stockholders meeting, and each shall hold his
office until he/she shall resign or shall be removed or otherwise disqualified
to serve, or his/her successor shall be elected and qualified.
Section 3. Subordinate officers, Etc. The board of directors may appoint
such other officers as the business of the corporation may require; each of whom
shall have authority and perform such duties as are provided in these bylaws or
as the board of directors may from time to time specify, and shall hold office
until he/she shall resign or shall be removed or otherwise disqualified to
serve.
Section 4. Compensation of Chairman, Chief Executive Officer and Officers.
The Chief Executive Officer shall receive such salary or other compensation as
determined by the Executive Compensation Committee, pursuant to the guidelines
adopted by the board of directors. The Chairman and Chief Executive Officer
shall, pursuant to the guidelines adopted by the board of directors and/or its
designated committees, establish salaries of all other officers.
Section 5. Vacancies. A vacancy in any of f ice because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these bylaws for regular appointment to such office.
Section 6. Removal and Resignation. Any officer may be removed, either with
or without cause, by a majority of the directors at the time in office, at any
regular or special meeting of the board. With the exception of the chairman,
vice chairman and/or secretary; the Chief Executive Officer may remove any
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TFI Bylaws
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Page 11
officer with or without cause, unless said power shall be specifically
restricted by special resolution of the board of directors.
Section 7. Chairman of the Board. The chairman of the board shall, if
present, preside at all meetings of the board of directors, and exercise and
perform such other powers and duties as may be from time to time assigned to
him/her by the board of directors or prescribed by these bylaws. The chairman
shall be subject to the control of the board of directors. He/she shall preside
at all meetings of the stockholders. He/she shall be an ex officio member of all
the standing committees, except the Audit and Executive Compensation Committees
and shall have the general powers and duties usually vested in the chairman of
the board of a corporation, not specifically prescribed by these bylaws to
another officer and shall have such other powers and duties as may be prescribed
by the board of directors or these bylaws.
Section 8. Chief Executive Officer (CEO). Subject to the supervisory powers
of the chairman of the board, the chief executive officer shall have general
supervision, direction and control of the business and officers of the
corporation. The CEO shall have the general powers and duties of management
usually vested in the office of chief executive officer of a corporation, not
specifically prescribed by these bylaws to another officer and shall have such
other powers and duties as may be prescribed by the chairman of the board of
directors or these bylaws. The CEO shall report directly to the chairman of the
board of directors.
Section 9. Chief Financial Officer (CFO). The chief financial officers
shall have general supervision , direction and control of financial accounting,
audit, regulatory compliance and business development of the corporation. The
CFO shall keep and maintain or cause to be kept and maintained, adequate and
correct accounts of the properties and business transactions of the corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, surplus and shares. Any surplus, including earned surplus,
paid-in surplus and surplus arising from a reduction of stated capital, shall be
classified according to source and shown in a separate account. The books of
account shall at all reasonable times be open to inspection by any director. The
CFO shall deposit or cause to be deposited all monies and other valuables in the
name and to the credit of the corporation with such depositories as may be
designated by the board of directors. The CFO shall disburse the funds of the
corporation as may be ordered by the board of directors and shall render to the
CEO and board of directors, whenever so requested, an account of all of
transactions and of the financial condition of the corporation. The CFO shall be
bonded,
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TFI Bylaws
May 20, 1998
Page 12
only if specially required by the board of directors. The CFO's duties shall be
prescribed by the CEO and/or these bylaws. CFO shall report to the CEO.
Section 10. Vice-Chairman. If the Chairman is deceased, totally disabled,
not reelected, terminated, or resigns, the Vice Chairman shall perform all the
duties of the Chairman, and when so acting shall have all the powers of, and be
subject to all the restrictions upon said officer and other restrictions as the
board of directors shall direct. In the event the offices of Chairman and Chief
Executive Officer shall be held by the same person and any of above referenced
circumstances occur, the Vice Chairman will also perform all the duties of the
Chief Executive Officer, and when acting shall have all the powers of, and be
subject to all the restrictions upon said officer and other restrictions as the
board of directors shall direct.
If the Chairman cannot attend a scheduled board meeting or cannot preside
over several consecutive meetings or is temporarily disabled for an indefinite
time or at the request of the Chairman, the Vice Chairman may perform the
following duties: 1) preside at a meeting of the board to carry out the
scheduled agenda; 2) call a special meeting of the board to facilitate
conducting pressing business of the board or the company, except as here
excluded -acquisitions, sales, stock transactions, changes in bylaws, changes in
Articles, changes in membership of the board, etc.; 3) sign for the Chairman for
those purposes as are prescribed in writing by the Board, the Chairman and/or
these bylaws; 4) perform other specific duties as may be prescribed by the board
or these bylaws.
The Vice Chairman shall have such other powers and perform such other
duties as from time to time may be prescribed by the board of directors and/or
these bylaws.
Section 11. Secretary. The secretary or designated assistant secretaries
shall keep, or cause to be kept, a book of minutes at the principal office or
such other place as the board of directors may order, of all meetings of
directors and stockholders, with the time and place of holding, whether regular
or special, and if special, how authorized, the notice thereof given, the names
of those present at directors' meetings, the number of shares present or
represented at stockholders, meetings and the proceedings thereof. He/she shall
keep, or cause to be kept, at the principal office or at the office of the
corporation's transfer agent, a stock ledger, or a duplicate stock ledger,
showing the names of the stockholders and their addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the same; and the number and date of cancellation of every certificate
surrendered for cancellation. He/she shall give, or cause to be
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TFI Bylaws
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given, notice of all the meetings of the stockholders and of the board of
directors required by these bylaws or by law to be given and he/she shall keep
the seal of the corporation in safe custody, and shall have such other powers
and perform such other duties as may be prescribed by the board of directors or
these bylaws.
Section 12. Other Officers. The board of directors shall in their absolute
discretion be entitled to appoint such other officers, together with such tiles,
duties and compensation as it shall deem appropriate and may, by resolution,
delegate its power to so appoint other and additional officers, together with
such titles, duties and compensation, to the Chief Executive Officer.
Article V
Miscellaneous
Section 1. Record Date and Closing Stock Books. The board of directors
shall fix a time in the future as a record date for the determination of the
stockholders entitled to notice of and to vote at any meeting of stockholders or
entitled to receive any dividend or distribution or any allotment of rights or
to exercise rights in respect to any change, conversion or exchange of shares.
The record date so fixed shall be not more than sixty (60) days prior to the
date of the meeting or event for purposes of which it is fixed. When a record is
so fixed, only stockholders who are such of record on that date are entitled to
notice of and to vote at the meeting or to receive the dividend, distribution,
or allotment of rights, or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date.
The board of directors may, in its discretion, close the books of the
corporation against transfers of shares during the whole or any part of a period
not more than sixty (60) days prior to the date of a stockholders, meeting, the
date when the right to any dividend, distribution, or allotment or rights vest,
or the effective date of any change, conversion or exchange of shares.
Section 2. Indemnification of Directors and officers. Article Eleven of the
Articles of Incorporation as amended and restated provides for the
indemnification of Directors and Officers and are subject to modification by the
stockholders. The provisions provided therein and any subsequent amendment
thereto are herewith incorporated by reference herein.
Section 3. Check. Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation,
<PAGE> 14
TFI Bylaws
May 20, 1998
Page 14
shall be signed or endorsed by such person or persons and in such manner as from
time to time, shall be determined by resolution of the board of directors.
Section 4. Annual Report. No annual report to stockholders shall be
required, but the board of directors may cause to be sent to the stockholders
reports in such form and at such times as the board of directors in its sole
discretion may be deemed appropriate.
Section 5. Contracts, Deeds, Etc., How Executed. The board of directors,
except as in these bylaws otherwise provided, may by resolution authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances. Unless so authorized by the
board of directors; no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose in any amount; provided, however,
that any deeds or other instruments conveying lands or any interest therein
shall be executed on behalf of the corporation by Chairman of the Board, thee
Chief Executive Officer or Vice Chairman, or by any agent or attorney so
authorized under letter of attorney or other written power which was executed on
behalf of the corporation by the Chairman of the Board or Chief Executive
Officer or Vice Chairman of the Board.
Section 6. Certificates. The board of directors shall be authorized to
issue any of its classes of shares with or without certificates. The fact that
the shares are not represented by certificates shall have no effect on the
rights and obligations of shareholders. If the shares are represented by
certificates, such shares shall be represented by consecutively numbered
certificates signed, either manually or by facsimile, in the name of the
corporation by the chairman of the board, the chief executive officer or
vice-chairman and the secretary or an assistant secretary. In case any officer
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, such certificate may nonetheless be issued by the corporation with the
same effect as if he/she were such officer at the date of its issue. All
certificates shall be consecutively numbered, and the names of the owners, the
number of shares, and the date of issue shall be entered on the books of the
corporation. Each certificate representing shares shall state upon its face: (i)
that the corporation is organized under the laws of Kansas; (ii) the name of the
person to whom issued; (iii) the number and class of the shares and the
designation of the series, if any, that the certificate
<PAGE> 15
TFI Bylaws
May 20, 1998
Page 15
represent; (iv) the par value, if any, of each share represented by the
certificate; (v) a conspicuous statement, on the front or the back, that the
corporation will furnish to the shareholder, on request in writing and without
charge, information concerning the designations, preferences, limitations, and
relative rights applicable to each class, the variations in preferences
limitations, and rights determined for each series, and the authority of the
board of directors to determine variations for future classes or series; and
(vi) any restrictions imposed by the corporation under the transfer of the
shares represented by the certificate.
If shares are not represented by certificates, within a reasonable time
following the issue or transfer of such shares, the corporation shall send the
shareholder a complete written statement of all of the information required to
be provided to holders of uncertificated shares by the Kansas General
Corporation Code.
Transfer of Shares. Upon surrender to the corporation or to a transfer
agent of the corporation of the certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and receipt of such documentary stamps as may be required by law and
evidence of compliance with all applicable securities laws and other
restrictions, the corporation shall issue a new certificate to the person
entitled thereto, and cancel the old certificate. Every such transfer of stock
shall be entered on the stock books of the corporation which shall be kept at
its principal office or by the person and at the place designated by the board
of directors.
Except as otherwise expressly provided in these bylaws, and except for the
assertion of dissenters' rights to the extent provided in the Kansas General
corporation Code, the corporation shall be entitled to treat the registered
holder of any shares of the corporation as the owner thereof for all purposes,
and the corporation shall not be bound to recognize any equitable or other claim
to, or interest in, such shares or rights deriving from such shares on the part
of any person other than the registered holder, including without limitation any
purchaser, assignee or transferee of such shares or rights deriving from such
shares, unless and until such other person becomes the registered holder of such
shares, whether or not the corporation shall have either actual or constructive
notice of the claimed interest of such other person.
Transfer Agent, Registrars and Paying Agents. The board may at its
discretion appoint one or more transfer agents, registrars and agents for making
payment upon any class of stock, bond, debenture or other security of the
corporation. Such agents and registrars may be located either within or outside
Kansas. They
<PAGE> 16
TFI Bylaws
May 20, 1998
Page 16
shall have such rights and duties and shall be entitled to such compensation as
may be agreed.
Section 7. Representation of Securities of Other Corporations or Entities.
The chairman or chief executive officer or any vice chairman or the secretary or
assistant secretary of this corporation are authorized to vote, represent and
exercise on behalf of this corporation all rights incident to any and all
securities of any other corporation or entity standing in the name of this
corporation, as directed by the board of directors. The authority herein granted
to said officers to vote or represent on behalf of this corporation any and all
securities held by the corporation in any other corporation or entity may be
exercised either by such officers in person or by any person authorized to do so
by proxy or power of attorney duly executed by said officers.
Section 8. Fiscal Year. The board of directors shall have the power to fix
and from time to time change the fiscal year of the corporation. In the absence
of action by the board of directors, however, the fiscal year of the corporation
shall end each year on the date which the corporation treated as the close of
its first fiscal year, until such time, if any, as the fiscal year shall be
changed by the board of directors.
Section 9. Standard of Care. A director shall perform his/her duties as a
director, including without limitation his/her duties as a member of any
committee of the board, in good faith, in a manner he/she reasonably believes to
be in the best interests of the corporation, and with the care an ordinary
prudent person in a like position would exercise under similar circumstances. In
performing his/her duties, a director shall be entitled to rely on information,
opinions, reports or statements, including financial statements and other
financial date, in each case prepared or presented by the persons herein
designated. However, he/she shall not be considered to be acting in good faith
if he/she has knowledge concerning the matter in question that would cause such
reliance to be unwarranted. A director shall not he liable to the corporation or
its shareholders for any action he/she takes or omits to take as a director if,
in connection with such action or omission, he/she performs his/her duties in
compliance with this Section 9.
The designated persons on whom a director is entitled to rely are: (i) one
or more officers or employees of the corporation whom the director reasonably
believes to be reliable and competent in the matters presented; (ii) legal
counsel, public accountant, or other person as to matters which the director
reasonably believes to be within such person's professional or expert
competence; or (iii) a committee of the board of directors on which the director
<PAGE> 17
TFI Bylaws
May 20, 1998
Page 17
does not serve if the director reasonably believes the committee merits
confidence.
Article VI
Amendments
Section 1. Power of Directors. Except as otherwise provided for herein or
by the Articles of Incorporation, new bylaws may be adopted or these bylaws may
be amended or repealed by a two-thirds vote of the board of directors at any
regular or special meeting thereof, provided, however, that place fixed by the
bylaws for the annual election of directors shall not be changed within sixty
(60) days next preceding the date on which such elections are to be held.
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
(1) That I am the duly elected and acting secretary of Team Financial,
Inc. a Kansas Corporation; and
(2) That the foregoing bylaws, comprising 15 pages, constitute the
amended bylaws of said corporation as of May 20, 1998.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed the
seal of the said corporation this 20th day of May, 1998.
/s/ Clarene B. Prothe
------------------------------------
Clarene B. Prothe, Secretary
<PAGE> 1
EXHIBITS 5.1
AND 23.2
April ___, 1999
Team Financial, Inc.
8 West Peoria
Paola, Kansas 66071
Re: Common Stock of Team Financial, Inc.
Ladies and Gentlemen:
We have examined the Registration Statement (No._______) on Form S-1
(the "Registration Statement") originally filed on April ___, 1999 by Team
Financial, Inc. (the "Company") with the Securities and Exchange Commission (the
"Commission") in connection with the registration under the Securities Act of
1933, as amended (the "Securities Act"), of 1,150,000 shares of the Company's
Common Stock (the "Registered Shares"), of which 700,000 shares are to be sold
by the Company, 300,000 shares are to be sold by a selling shareholder and
150,000 shares are subject to an over-allotment option granted by the Company to
the underwriters. All of the Registered Shares are to be sold to several
underwriters (the "Underwriters") of which Howe Barnes Investments, Inc. is the
representative (the "Representative") pursuant to an underwriting agreement (the
"Underwriting Agreement") to be entered into between the Company and the
Representative. We are familiar with the proceedings taken and proposed to be
taken by the Company in connection with the proposed authorization, issuance and
sale of the Registered Shares.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records and other instruments
as we have deemed necessary for the purposes of this opinion, including the
following: (a) the Restated and Amended Articles of Incorporation of the
Company; (b) the Amended Bylaws of the Company; and (c) resolutions by the Board
of Directors of the Company pertaining to the offering.
For purposes of this opinion, we have assumed the authenticity of all
documents submitted to us as originals, the conformity to the originals of all
documents submitted to us as copies, and the authenticity of the originals of
all documents submitted to us as copies. We have also assumed the genuineness of
the signatures of persons signing all documents in connection with which this
opinion is rendered, the authority of such persons signing on behalf of the
parties thereto other than the Company, and the due authorization, execution and
delivery of all documents by the parties thereto other than the Company.
<PAGE> 2
Team Financial, Inc.
April ___, 1999
Page 2
Based upon the foregoing, we are of the opinion that: when, as and if
(i) the Registration Statement shall have become effective pursuant to the
provisions of the Securities Act, (ii) the Registered Shares are sold to the
Underwriters and paid for pursuant to the terms of the Underwriting Agreement,
(iii) the Registered Shares shall have been issued in the form and containing
the terms described in the Registration Statement, and (iv) any legally required
consents or any other regulatory authorities shall have been obtained, the
Registered Shares will be legally issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of our name under the heading "Legal Matters" in the
Registration Statement.
We are admitted to practice law in the State of Kansas and we express
no opinions as to the matters under or involving any laws other than the laws of
the State of Kansas and the federal laws of the United States of America.
This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purposes.
Very truly yours,
HARTLEY, NICHOLSON, HARTLEY &
ARNETT, P.A.
<PAGE> 1
EXHIBIT 10.1
===============================================================================
EMPLOYMENT AGREEMENT
BETWEEN
TEAM FINANCIAL, INC.
AND
ROBERT J. WEATHERBIE
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page No.
- ------- --------
<S> <C>
1. Term of Agreement and Definitions....................................................................... 1
2. Entire Agreement........................................................................................ 2
3. Validity............................................................................................... 2
4. Paragraphs and other headings............................................................................2
5. Successors...............................................................................................2
6. Designation of beneficiaries.............................................................................2
7. Duties...................................................................................................3
8. Salary, Bonus, Benefits, Additional Compensation.........................................................3
9. Protection of Company's Interests........................................................................5
10. Termination by Company...................................................................................5
11. Termination by Executive.................................................................................8
12. Consequences of Breach..................................................................................10
13. Mitigation and Offset...................................................................................10
14. Tax "Gross-Up" Provision................................................................................10
15. Remedies................................................................................................10
16. Binding Agreement.......................................................................................11
17. Arbitration.............................................................................................11
18. Amendment; Waiver.......................................................................................11
19. Governing Law...........................................................................................11
20. Notices.................................................................................................11
Signatures.......................................................................................................12
</TABLE>
(i)
<PAGE> 3
EMPLOYMENT AGREEMENT
BETWEEN
TEAM FINANCIAL, INC.
AND
ROBERT J. WEATHERBIE
This Agreement is made this 1st day of January, 1998, between Team Financial,
Inc., a Kansas corporation ("COMPANY") and Robert J. Weatherbie ("EXECUTIVE").
A. Executive is employed as Chairman and Chief Executive Officer, has
rendered valuable services to Company and has acquired an extensive
background in and knowledge of Company's business.
B. Company desires to continue the services of Executive and Executive
desires to continue to serve Company as Chairman and Chief Executive
Officer.
In consideration of the foregoing recitals and the agreements set
forth herein, Company and Executive agree as follows:
1. TERM OF AGREEMENT AND DEFINITIONS:
1.0 TERM OF AGREEMENT: Company shall employ Executive and Executive
accepts such employment for a period beginning on the date of this
Agreement and ending the 31st day of December, 2000, subject to the
terms and condition set forth herein, unless earlier termination of
the agreement shall occur in accordance with the subsequent provisions
set forth herein.
1.1 AUTOMATIC EXTENSION OF AGREEMENT TERM: Not withstanding the
foregoing, if this Agreement shall not have been terminated in
accordance with the provisions herein on or by the 31st day of
December, 2000; the term of this Agreement shall be extended
automatically without further action by either party such that at
every moment of time thereafter, the term shall be one year.
Provided, however, during such period of automatic extension of the
term, this Agreement may be terminated in accordance with the
termination provisions of this Agreement as set forth in Sections 10
and 11.
1.2 DEFINITIONS: The following definitions shall be used in the
interpretation of this Agreement.
1.2.1 EMPLOYMENT ON AN ACTIVE FULL TIME BASIS means the Executive's
professional services shall be substantially devoted to Company.
Although prior approval by the Company of Executive's employment by
third parties is not required, the Company shall have the right to
review any employment of Executive by any entity and shall have the
right to require Executive to abandon any unsuitable employment as may
be determined by Company or any activities competitive with Company.
The term "active full time basis" includes the requirement that
Executive refrain from any activities which interfere with Executive's
Company duties.
1.2.2 YEAR, MONTH, WEEK AND DAY, unless otherwise provided in this
agreement, the word "year" shall be construed to mean a calendar year
of 365 days, the word "month" shall be construed to mean a calendar
month, the word "week" shall be construed to mean a calendar week of 7
days, and the word "day" shall be construed to mean a period of 24
hours running from midnight to midnight.
Page 1 of 12
<PAGE> 4
1.2.3 ANNUAL BASE SALARY is the sum of money regularly paid by Company
to Executive each year of the term of this Agreement pursuant to
provisions of Section 8.0 of this Agreement.
1.2.4 CUSTOMARY PAYROLL PRACTICES are those policies and procedures
routinely followed by the Company concerning the time and method of
payment of compensation to its employees as may from time to time be
adopted by the Company during course of this Agreement.
1.2.5 COMPANY POLICIES are those written policies adopted by the
Company and/or customary practices routinely followed by the Company
which may from time to time be adopted by the Company during the
course of the Agreement. The parties acknowledge the Company may from
time to time reasonably enact new policies or alter existing policies.
1.2.6 ORGANIZATION as used herein shall be broadly defined to include
any business, civic or community group or entity.
1.2.7 WILLFUL MISCONDUCT is any act performed with a designed purpose
or intent on the part of a person to do wrong.
1.2.8 GROSS MISAPPROPRIATION OF FUNDS shall be any misappropriation of
company funds by any means which is intentional and not of an
inconsequential nature or amount.
2. ENTIRE AGREEMENT
2.0 With respect to the matters specified herein, this Agreement
contains the entire agreement between the parties and supersedes all
prior oral and written agreements, understandings and commitments
between the parties. This Agreement shall not affect the provisions of
any other compensation, retirement or other benefit programs of
Company to which Executive is a party or of which he is a beneficiary.
3. VALIDITY
3.0 In the event that any provision of this Agreement is held to be
invalid, void or unenforceable, the same shall not affect, in any
respect whatsoever, the validity of any other provision of the
Agreement.
4. PARAGRAPHS AND OTHER HEADINGS
4.0 Paragraphs and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
5. SUCCESSORS
5.0 The rights and duties of a party hereunder shall not be assignable
by that party; provided, however, that this Agreement shall be binding
upon and inure to the benefit of any successor of Company, and any
such successor shall be deemed substituted for Company under the terms
of this Agreement. The term "successor" as used herein shall include
any person, firm, corporation or other business entity which at any
time, by merger, purchase or otherwise, acquires all or substantially
all of the assets or business of Company.
Page 2 of 12
<PAGE> 5
6. DESIGNATION OF BENEFICIARIES
6.0 If Executive should die during the term of this Agreement, all
such sums due to Executive hereunder shall be paid as designated by
Executive on the attached Beneficiary Designation Form.
6.1 The spouse of the Executive shall join in any designation of a
beneficiary other than the spouse.
6.2 If Executive wholly fails to designate a beneficiary as provided
for in this paragraph, or if the Executive's spouse at the time of his
death shall not have joined in the designation of a beneficiary, then
the sums due Executive shall be paid to his estate.
7. DUTIES
7.0 Company employs Executive upon an active full-time basis, as
Chairman of the Board of Directors and Chief Executive Officer subject
to the order and direction of the Board of Directors ("BOARD") of
Company.
7.1 During the term of this Agreement Executive shall devote
substantially all of his time, attention, and best efforts to the
business of Company and its subsidiaries. Executive shall perform such
duties and shall exercise such power and authority as delegated by the
Board from time to time provided that such duties are commensurate
with the positions of Chairman of the Board and Chief Executive
Officer. Executive may engage in other non-business activities such as
charitable, educational, religious and similar types of activities so
long as such activities do not prevent the performance of Executive's
duties herein or conflict in any material way with the business of
Company. Notwithstanding the above, Executive shall be permitted to
serve as a Director or Trustee of other organizations, in accordance
with the policies of Company.
7.2 The duties of Chairman of the Board and Chief Executive Officer
shall be defined using a written job definition, developed by an
executive compensation committee appointed by the Board of Directors.
The Board shall consult with Executive in the development of the
written job definition. Executive and said written job definition
shall be subject to any systematic evaluation system(s) that the Board
may from time to time employ.
7.3 Executive's duties shall be performed principally at Company's
headquarters located in Paola, Kansas. During the term of the
Agreement, it is understood that Company expects to maintain its
principal place of business in Paola, Kansas. If the requirements of
Company, as determined by the Board, make it desirable to relocate the
principal offices of Company to another location during any period of
employment, Executive will be consulted in advance of any such
relocation. Unless Executive otherwise consents, the principal place
of Executive's employment shall be within a 50 mile radius of Paola,
Kansas.
8. SALARY, BONUS, BENEFITS, ADDITIONAL COMPENSATION
8.0 ANNUAL BASE SALARY.
Executive shall receive an annual base salary of $135,000.00 payable
according to the customary payroll practices of Company and subject to
all required withholding taxes. The compensation committee of Board,
in its discretion, may increase this annual base salary upon relevant
circumstances. Executive will be reviewed at least annually. At least
every two years compensation committee will review Executive's annual
base salary for competitiveness and appropriateness in the industry.
Any increase in annual base salary awarded to the Executive by
Company, shall constitute a new annual base salary for the purpose of
this Agreement. To be effective such changes in the annual base salary
shall be in writing signed by the Company.
Page 3 of 12
<PAGE> 6
8.1 BONUS.
8.1.1 STANDARD COMPANY BONUSES. Executive shall be eligible to
receive, in addition to his salary, any contributions or sums
specified as additional compensation through any established plan or
policy of Company which is available to senior executives as
compensation over and above established salaries.
8.1.2 ANNUAL EXECUTIVE BONUS. In addition, Executive shall be entitled
to receive a yearly annual bonus. The amount of such bonus shall be
based upon criteria established by the compensation committee of Board
and may include either or both stock and cash. Provided, however, such
bonus shall not exceed fifty percent (50%) of Executive's annual base
salary in effect for the period for which the bonus is granted. During
the term of this Agreement, the yearly annual bonus shall be paid not
later than January 31 of the calendar year following annual bonus
year.
8.2 BENEFITS.
8.2.0 Executive shall be entitled to receive all benefits generally
made available to executives of Company as may from time to time be in
effect.
8.2.1 Executive shall be entitled, in addition to life insurance
coverage in effect for all employees, to a life insurance policy in
the amount of $240,000.00 all premiums to be paid by Company.
8.2.2 Executive shall be entitled to participate, during the term of
the Agreement, under the terms and conditions thereof, in any group
life, medical, dental or other health and welfare plans generally
available to management personnel of Company which may be in effect
from time to time; provided that nothing herein shall require the
Company to establish or maintain such plans.
8.2.3 EXECUTIVE EXPENSES. Executive shall be entitled to reimbursement
for business expenses. Executive shall be expected to incur various
business expenses customarily incurred by persons holding like
positions, including but not limited to traveling, entertainment and
similar expenses, all of which are to be incurred by Executive for the
benefit of Company. Executive shall be subject to Company's policies
regarding the reimbursement and non-reimbursement of said expense.
Executive acknowledges that Company policies do not necessarily
provide for the reimbursement of all expenses.
8.2.4 SPECIAL EXECUTIVE ALLOWANCE. Company agrees to pay reasonable
room, board, travel, and sponsored event expenses of Executive's
spouse on three (3) business trips per year of Executive's choice.
8.2.5 ACCOUNTING. Executive shall account to Company for any
reimbursement or payment of such expenses in such a manner as Company
practices may from time to time require. Subject to Company's policy
regarding the payment of reimbursable expenses, Company shall
reimburse Executive for such expenses from time to time, at
Executive's request.
8.2.6 Executive shall be entitled to reimbursement, not to exceed
$5,000.00 for the term of the agreement, for home office use,
including, but not limited to, an appropriate computer/modem
installation, printer, desk, chair, and such business related supplies
as are used for Company's business.
8.2.7 Company shall indemnify and hold Executive harmless for any
legal fees and expenses incurred by Executive in the performance of
his duties as a result of civil or criminal actions against him in
accordance with the indemnification provisions of the Articles of
Incorporation and Bylaws of Company.
8.2.8 During (i) the term of this Agreement, (ii) the twelve month
period following the termination of this
Page 4 of 12
<PAGE> 7
Agreement as a result of death, (iii) a two year period following the
termination of this Agreement as a result of disability, (iv) a three
year period following termination of this Agreement by Executive for
material breach or good cause, and (v) a three year period following a
termination of this Agreement by Company without cause; Company shall
pay to Executive, or his estate if he be deceased, a sum as
reimbursement for reasonable out-of-pocket expenses incurred for
third-party professional financial and tax advice provided by a
licensed professional of Executive's choice. Provided, however, that
in (i) above, the sum shall not exceed fifteen percent (15%) of
Executive's annual base salary for that year; (ii) above, the sum
shall not exceed twenty-five percent (25%) of Executive's annual base
salary for that year; (iii), (iv) and (v) above, the sum shall not
exceed twenty-five percent (25%), each year, of Executive's annual
base salary at the time of Executive's disability or time of
termination.
8.2.9 Executive shall be provided with a personal automobile under
arrangements equivalent to those currently in effect with respect to
other Company executives and of equivalent size and features as
presently driving.
8.3 ADDITIONAL COMPENSATION.
Executive shall be eligible to receive, in addition to his salary, any
contributions or sums specified for additional compensation through
any established plan or policy of Company which is available to senior
executives as compensation over and above established salaries,
including but not limited to stock options.
8.4 TAX LIABILITY.
Any tax liability which these benefits create for Executive will be
the sole responsibility of Executive.
9. PROTECTION OF COMPANY'S INTERESTS
9.0 During the term of this Agreement Executive shall not directly or
indirectly engage in competition with, or not own any interest in any
business which competes with, any business of Company; provided,
however, that the provisions of this Section 9 shall not prohibit his
ownership of not more than 5% of voting stock of any publicly held
corporation.
9.1 Except for actions taken in the course of his employment
hereunder, at no time shall Executive divulge, furnish or make
accessible to any person any information of a confidential or
proprietary nature obtained by him while in the employ of Company.
Upon termination of his employment by Company, Executive shall return
to Company all such information which exists in writing or other
physical form and all copies thereof in his possession or under his
control.
9.2 Company, its successors and assigns, shall, in addition to
Executive's services, be entitled to receive and own all of the
results and proceeds of said services (including, without limitation,
literary material and other intellectual property) produced or created
during the term of Executive's employment hereunder. Executive will,
at the request of Company, execute such assignments, certificates or
other instruments as Company may from time to time deem necessary or
desirable to evidence, establish, maintain, protect, enforce or defend
its right or title to any such material.
10. TERMINATION BY COMPANY
10.0 Company shall have the right to terminate this Agreement under
the following circumstances:
(i) Upon the death of Executive;
(ii) Upon the disability of Executive;
Page 5 of 12
<PAGE> 8
(iii) Upon material breach or good cause; and
(iv) Upon written notice by Company without cause.
(v) Upon written notice by Company, during the period of
automatic extension of the term, of Company's intention
to have this Agreement expire in one year.
10.1 If executive dies before his employment with Company is otherwise
terminated, Company shall pay to the designated beneficiary of
Executive, or in the absence of a designated beneficiary, to the
estate of the Executive, at the time of his death, the sum of
$500,000.00. Company may purchase life insurance to cover all or any
part of its obligations contained in this paragraph and Executive
agrees to take a physical examination to facilitate the placement of
such insurance. In the event that Executive is uninsurable, Company
may elect to disperse the funds due in equal monthly payments over the
remaining period of the year of Executive's death, or if less than six
(6) months, over a period of twelve (12) consecutive months.
Executive's dependents will also be entitled to:
(i) All Company insured and self insured medical and dental
plans in which Executive was participating immediately prior to
termination, provided, however, that if Company so elects, or
such continued participation is not possible under the general
terms and conditions of such plans or under such policies,
Company shall, in lieu of the foregoing, arrange to have issued
for the benefit of Executive's dependents equivalent benefits (on
an after-tax basis); provided, further that, in no event shall
Executive's dependents be required to pay any premiums or other
charges in an amount greater than that which Executive would have
paid in order to participate in Company's plans and policies.
Entitlement (i) above shall be maintained in effect for the continued
benefit of Executive's dependents for a period of six (6) months after
the date of termination due to death.
10.2 For the purposes of this Agreement, Executive shall be deemed to
have become disabled, if, during any year of the term of this
Agreement, because of ill health, physical or mental impairment, or
for other causes beyond Executive's control, Executive shall have been
continuously unable or unwilling, or shall have failed to perform his
duties under this Agreement for ninety (90) consecutive days, or if,
during any calendar year of the term of this Agreement, Executive
shall have been unable or unwilling or shall have failed to perform
his duties for a total period of one hundred eighty (180) days,
irrespective of whether or not such days are consecutive. With respect
to any termination by Company for disability, the specifics of the
basis of termination shall be communicated to Executive in writing at
least thirty (30) days before the date on which the termination is
proposed to take effect. Executive shall have until the effective date
of the notice to cure or remedy such disability and or correct the
misconception of the disability. If this Agreement is terminated for
disability, any questions as to the existence of the Total and
Permanent disability of Executive as to which Executive and Company
cannot agree shall be determined in writing by a qualified independent
physician mutually acceptable to Executive and Company. If Executive
and Company cannot agree as to a qualified independent physician, each
shall appoint such a physician and those two physicians shall select a
third who shall make such determination in writing. If there is a
disagreement between Executive and Company as to the disability of
Executive, the effective date of the termination will be extended a
reasonable time to allow for a determination by a physical, as
described above. Any refusal by Executive to submit to a medical
examination for the purpose of certifying disability under this
section shall be deemed to constitute evidence of Executive's
disability. If Executive is disabled before his employment with
Company is otherwise terminated, Company shall pay to the Executive,
or if the Executive is totally incapacitated, to his appointed
guardian, at the time he is determined to be disabled, the sum of
$500,000.00. Whenever compensation is payable to Executive hereunder,
during a time when he is disabled, pursuant to the terms of any
insurance provided by Company, the compensation payable to him
hereunder shall be inclusive of any such disability insurance and
shall not be in addition thereto.
Page 6 of 12
<PAGE> 9
10.3 For purposes of this Agreement, material breach and good cause
shall mean willful misconduct in following the legitimate directions
of the compensation committee of the Board of Directors; commission of
a significant act of dishonesty, deceit or breach of fiduciary duty in
the performance of Executive's duties; gross misappropriation of
Company funds or property; habitual drunkenness; excessive absenteeism
not related to illness, sick leave or vacations. Provided, however,
Executive shall be entitled to notice of any acts which the Board
considers to be misconduct or excessive absenteeism as described in
this paragraph. Such notice shall include the specifics of the basis
for possible termination and shall be communicated to Executive in
writing at least thirty (30) days prior to any such intended
termination. Prior to any such termination, if requested before the
effective date of the intended termination, Executive shall be given a
reasonable period of time in which to show that he has corrected any
specified deficiencies. Upon the cure or remedy of such deficiencies,
the Company shall rescind its notice of termination. If there is any
question about the effective correction of the deficiencies, a
decision will be sought from a lawyer agreed to by Company and
Executive. If the Company and Executive cannot agree on a lawyer, each
will pick a lawyer who will together pick a lawyer who will render a
decision.
If this agreement is terminated for material breach or good cause,
Executive shall be entitled to:
(i) All Company insured and self insured medical and dental
plans in which Executive was participating immediately prior to
termination; and
(ii) The group individual life insurance and disability
insurance policies of Company then in effect for Executive;
provided, however, that if Company so elects, or such continued
participation is not possible under the general terms and conditions
of such plans or under such policies, Company shall, in lieu of the
foregoing, arrange to have issued for the benefit of Executive and
Executive's dependents equivalent benefits (on an after-tax basis);
provided, further that, in no event shall Executive be required to pay
any premiums or other charges in an amount greater than that which
Executive would have paid in order to participate in Company's plans
and policies.
Entitlement of (i) and (ii) of this section shall be maintained in
effect for the continued benefit of Executive and his dependents for a
period of six (6) months after the date of termination or until the
commencements of each equivalent benefit from Executive's new
employer, but not to be provided longer than six (6) months.
10.4 Company shall be entitled to terminate this Agreement without
cause upon ninety (90) days written notice to Executive. If Company
shall so terminate this Agreement, Executive shall be entitled to:
(i) All Company insured and self insured medical and dental
plans in which Executive was participating immediately prior to
termination; and
(ii) The group individual life insurance and disability
insurance policies of Company then in effect for Executive;
provided, however, that if Company so elects, or such continued
participation is not possible under the general terms and conditions
of such plans or under such policies, Company shall, in lieu of the
foregoing, arrange to have issued for the benefit of Executive and
Executive's dependents equivalent benefits (on an after-tax basis);
provided, further that, in no event shall Executive be required to pay
any premiums or other charges in an amount greater than that which
Executive would have paid in order to participate in Company's plans
and policies.
Entitlement of (i) and (ii) of this section shall be maintained in
effect for the continued benefit of Executive and his dependents for a
period of three (3) years after the date of termination or until the
commencement of each equivalent benefit from Executive's new employer,
but not to be provided longer than three (3) years after the date of
termination.
(iii) A furnished office, equivalent to his Company office,
from which to operate for a period of one (1) year or until
Executive accepts employment with another employer, which ever
occurs
Page 7 of 12
<PAGE> 10
first. Executive's office will be provided, at Company's expense,
with a desk; credenza; conference table; phone; access to fax for
outgoing and incoming faxes; computer, software, and printer. All
of the above will be equivalent to what Executive was using at
the time of termination.
(iv) A cash payment equal to the present value (based on a
discount rate of 8%) of Executive's annual base salary hereunder
for the remainder of the term of the Agreement, or for one (1)
year, which ever is longer, payable within thirty (30) days of
the date of such termination;
(v) All such Bonuses and Other Compensation as provided for
in Section 8 above, it being understood, however, that all such
payments due, if made pursuant to this clause shall be paid in
cash within thirty (30) days of the date of termination. All
stock options granted by Company to Executive under any provision
of Section 8 or granted by Company to Executive prior to the date
hereof will accelerate and become immediately exercisable;
(vi) A sum as reimbursement for reasonable out-of-pocket
expenses incurred for third-party professional financial and tax
advice provided by a licensed professional of Executive's choice
for a period of three (3) years after the date of termination,
sum not to exceed, in any one year, twenty-five percent (25%) and
in the aggregate, seventy-five percent (75%) of Executive's base
salary, as provided in Section 8;
(vii) A sum as reimbursement for reasonable out-of-pocket
expenses incurred for out-placement advice and counseling
provided by a professional placement agency and/or recruiter of
Executive's choice for a period of twelve (12) months after date
of termination, sum not to exceed fifty percent (50%) of
Executive's base salary, as provided in Section 8;
(viii) Company shall pay Executive a sum to pay for a Country
Club membership dues for one (1) year;
(ix) Company shall transfer to Executive title of the personal
car, furnished Executive by Company, in use at the time of
the termination.
10.5 Company shall be entitled to terminate this Agreement during the
period of automatic extension of the term as set forth in Section 1.1,
by giving written notice to Executive of the Company's intention to
have the term of this Agreement expire one year from the date of such
notification. If Company shall so terminate this agreement, Executive
shall be entitled only to those benefits provided under existing law.
10.6 Company may purchase life insurance to cover all or any part of
its obligations contained in this paragraph and Executive agrees to
take a physical examination to facilitate the placement of such
insurance. In the event that Executive is uninsurable, Company may
elect to disperse the funds due in equal monthly payments over the
remaining period of the year due, or if less than six (6) months, over
a period of twelve (12) consecutive months.
11. TERMINATION BY EXECUTIVE
11.0 Executive shall have the right to terminate this Agreement under
the following circumstances:
(i) Upon material breach or good cause; and
(ii) Upon written notice to the Chief Executive Officer
without cause.
11.1 For purposes of this Agreement, a material breach by Company of
the terms of this Agreement shall entitle Executive, upon written
notice to the Board of Directors, to terminate his services under this
Agreement effective thirty (30) days from and after receipt of such
notice by Board. Such notice shall include a specific description of
such breach and Board shall have until the effective date of the
notice to cure or remedy such breach. Upon the cure or remedy of such
breach, Executive shall rescind his notice of termination. For
purposes of this Agreement, a termination for good cause by Executive
shall be based upon the following action by the Board: a failure,
without good cause or Executive's consent to continue Executive as
Chairman and Chief Executive Officer of Company and a director of
Company; a failure,
Page 8 of 12
<PAGE> 11
without good cause or Executive's consent to continue to vest
Executive with the power and authority of Chairman and Chief Executive
Officer of Company; the loss, without good cause or Executive's
consent, of any significant duties or responsibilities attending such
office. Provided, however, Executive shall have the exclusive right
and option to approve any resulting salary and benefits, title, duties
and responsibilities of Executive if Company is (or substantially all
of its assets are) sold to or combined with another entity and
Executive is offered continuing employment with such entity. Upon the
failure of Executive to approve any such resulting salary and
benefits, title, duties and responsibilities he shall be deemed to
have elected to terminate this Agreement for a good cause. Upon the
occurrence of any happening which would authorize Executive to
terminate his employment for good cause, Executive shall notify Board
in writing within sixty (60) days following such occurrence or
Executive shall be deemed to have waived his right to terminate this
Agreement for such occurrence. Board shall have until the effective
date of the notice to cure or remedy such good cause occurrence. Upon
the cure or remedy of such good cause occurrence, Executive shall
rescind his notice of termination. Upon termination of employment by
Executive for material breach or good cause, Executive shall be
entitled to:
(i) All company insured and self insured medical and dental
plans in which Executive was participating immediately prior to
termination; and
(ii) The group individual life insurance and disability
insurance policies of Company then in effect for Executive;
provided, however, that if Company so elects, or such continued
participation is not possible under the general terms and conditions
of such plans or under such policies, Company shall, in lieu of the
foregoing, arrange to have issued for the benefit of Executive and
Executive's dependents equivalent benefits (on an after-tax basis);
provided, further that, in no event shall Executive be required to pay
any premiums or other charges in an amount greater than that which
Executive would have paid in order to participate in Company's plans
and policies.
Entitlement of (i) and (ii) of this section shall be maintained in
effect for the continued benefit of Executive and his dependents for a
period of three (3) years after the date of termination or until the
commencement of each equivalent benefit from Executive's new employer,
but not to be provided longer than three (3) years after the date of
termination.
(iii) A furnished office, equivalent to his Company office,
from which to operate for a period of one (1) year or until
Executive accepts employment with another employer, which ever
occurs first. Executive's office will be provided, at Company
expense, with a desk; credenza; conference table; phone; access
to fax for outgoing and incoming faxes; computer, software, and
printer. All the above will be equivalent to what Executive was
using at the time of termination;
(iv) A cash payment equal to the present value (based on a
discount rate 8%) of Executive's base salary hereunder for the
remainder of the term of the Agreement, or for one (1) year,
which ever is longer, payable within thirty (30) days of the date
of such termination;
(v) All such Bonuses and Other Compensation as provided for
the Section 8 above, it being understood, however, that all such
payments due, if made pursuant to this clause shall be paid in
cash within thirty (30) days of the date of termination. All
stock options granted by Company to Executive under any provision
of Section 8 or granted by Company to Executive prior to the date
hereof will accelerate and become immediately exercisable;
(vi) A sum as reimbursement for reasonable out-of-pocket
expenses incurred for third-party professional financial and tax
advice provided by a licensed professional of Executive's choice
for a period of three (3) years after date of termination, sum
not to exceed, in any one year, twenty five percent (25%) and in
the aggregate, seventy five percent (75%) of Executive's base
salary, as provided in Section 8;
(vii) A sum as reimbursement for reasonable out-of-pocket
expenses incurred for out-placement advice and counseling
provided by a professional placement agency and/or recruiter of
Executive's
Page 9 of 12
<PAGE> 12
choice for a period of twelve (12) months after date of
termination, sum not to exceed fifty (50) percent of Executive's
base salary;
(viii) Company shall pay Executive a sum to pay for Country
Club membership dues for one (1) year; and
(ix) Company shall transfer to Executive title of the
personal car, furnished Executive by company, in use at the time
of the termination.
11.2 Company may purchase life insurance to cover all or any part of
its obligations contained in this paragraph and Executive agrees to
take a physical examination to facilitate the placement of such
insurance. In the event that Executive is uninsurable, Company may
elect to disperse the funds due in equal monthly payments over the
remaining period of the year due, or if less than six (6) months, over
a period of twelve (12) consecutive months.
11.3 Executive shall be entitled to terminate this Agreement without
cause upon ninety (90) days written notice to Company. If Executive
shall so terminate this Agreement, Executive shall be entitled to
those benefits provided under existing law.
12. CONSEQUENCES OF BREACH
12.0 If this Agreement is terminated pursuant to Section 11.01 hereof,
or if Company shall terminate Executive's employment under this
Agreement in any other way that is a breach of this Agreement by
Company, the following shall apply:
(i) The parties believe that because of the limitations of
Section 11 the payments to Executive do not constitute "Excess
Parachute Payments" under Section 280G of the Internal Revenue
Code of 1954, as amended (the "Code"). Notwithstanding such
belief, if any benefit under the preceding paragraph is
determined to be an "Excess Parachute Payment" Company shall pay
Executive an additional amount ("Tax Payment") such that (x) the
excess of all Excess Parachute Payments (including payments under
this sentence) over the sum of excise tax thereon under Section
4999 of the Code and income tax thereon under Subtitle A of the
Code and under applicable state law is equal to (y) the excess of
all Excess Parachute Payments (excluding payments under this
sentence) over income tax thereon under Subtitle A of the Code
and under applicable state law.
13. MITIGATION AND OFFSET
13.0 Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking employment or
otherwise, nor to offset the amount of any payment provided for in
this Agreement by amounts earned as a result of Executive's employment
or self-employment during the period he is entitled to such payment.
14. TAX "GROSS-UP" PROVISION
14.0 If any payment due Executive under this Agreement results in
Executive's liability for an excise tax ("parachute tax") under
Section 49 of the Internal Revenue Code of 1986, as amended (the
"Code"), the Company will pay to Executive, after deducting any
Federal, state or local income tax imposed on the payment, an amount
sufficient to fully satisfy the "parachute tax" liability. Such
payment shall be made to Executive no later than thirty (30) days
prior to the due date of the "parachute tax".
15. REMEDIES
15.0 Company recognizes that because of Executive's special talents,
stature and opportunities in the
Page 10 of 12
<PAGE> 13
financial services industry, in the event of termination by Company
hereunder (except under Section 10.0), or in the event of termination
by Executive under Section 11, before the end of the agreed term,
Company acknowledges and agrees that the provisions of this Agreement
regarding further payments of base salary, bonuses and the
exerciseability of stock options constitute fair and reasonable
provisions for the consequences of such termination, do not constitute
a penalty, and such payments and benefits shall not be limited or
reduced by amounts Executive might earn or be able to earn from any
other employment or ventures during the remainder of the agreed term
of this Agreement.
16. BINDING AGREEMENT
16.0 This Agreement shall be binding upon and inure to the benefit of
Executive, his heirs, distributes and assigns and company, its
successors and assigns. Executive may not, without the express written
permission of the Company, assign or pledge any rights or obligations
hereunder to any person, firm or corporation.
17. ARBITRATION
17.0 Company and Executive agree that any dispute or claim concerning
this Agreement, or the terms and conditions of employment under this
Agreement, shall be settled by arbitration. The arbitration
proceedings will be conducted under the Commercial Arbitration Rules
of the American Arbitration Association in effect at the time a demand
for arbitration under the Rules is made. The decision of the
arbitrators, including determination of the amount of any damages
suffered, will be exclusive, final and binding on Company and
Executive, their heirs, executors, administrators, successors and
assigns. Each party will bear that party's own expenses in the
arbitration proceedings for arbitrators' fees and attorney fees, for
that party's witnesses, and other expenses of presenting the case.
Other arbitration costs, including administrative fees and fees for
records or transcripts, will be borne equally by Company and
Executive.
18. AMENDMENT; WAIVER
18.0 This instrument contains the entire agreement of the parties with
respect to the employment of Executive by Company and supersedes any
prior Agreement between Company and Executive (it being understood,
however, that this agreement shall not affect any stock options
granted to Executive prior to the date hereof). No amendment or
modification of this Agreement shall be valid unless evidenced by a
written instrument executed by the parties hereto. No waiver by either
party of any breach by the other party of any provision or condition
of this Agreement shall be deemed a waiver of any similar or
dissimilar provision or condition at the same or any prior or
subsequent time.
19. GOVERNING LAW
19.0 This Agreement shall be governed by and construed in accordance
with the laws of the State of Kansas.
20. NOTICES
20.0 All notices which a party is required or may desire to give to
the other party under or in connection with this Agreement shall be
given in writing by addressing the same to the other party as follows:
If to Executive, to:
Robert J. Weatherbie
2205 Lakeview Drive
Paola, Kansas 66071
Page 11 of 12
<PAGE> 14
If to Company, to:
Team Financial, Inc.
Chairman of Compensation Committee
8 West Peoria
Paola, Kansas 66071
or at such other place as may be designated in writing by like notice.
Any notice shall be deemed to have been given within forty-eight (48)
hours after being addressed as required herein and deposited,
first-class postage prepaid, in the United States mail.
IN WITNESS THEREOF, the parties have executed this agreement this ____ day of
_________________, 1998, effective as of the day and year first above written.
TEAM FINANCIAL, INC.
By:
--------------------------------------
Chairman of Compensation Committee
ROBERT J. WEATHERBIE
-----------------------------------------
Executive
Page 12 of 12
<PAGE> 1
===============================================================================
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
BETWEEN
TEAM FINANCIAL, INC.
AND
MICHAEL L. GIBSON
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page No.
- ------- --------
<S> <C>
1. Term of Agreement and Definitions....................................................................... 1
2. Entire Agreement........................................................................................ 2
3. Validity............................................................................................... 2
4. Paragraphs and other headings............................................................................2
5. Successors...............................................................................................2
6. Designation of beneficiaries.............................................................................2
7. Duties...................................................................................................3
8. Salary, Bonus, Benefits, Additional Compensation.........................................................3
9. Protection of Company's Interests........................................................................5
10. Termination by Company...................................................................................5
11. Termination by Executive.................................................................................8
12. Consequences of Breach..................................................................................10
13. Mitigation and Offset...................................................................................10
14. Tax "Gross-Up" Provision.............................................................................. 10
15. Remedies................................................................................................10
16. Binding Agreement.......................................................................................10
17. Arbitration.............................................................................................11
18. Amendment; Waiver.......................................................................................11
19. Governing Law...........................................................................................11
20. Notices.................................................................................................11
Signatures.......................................................................................................12
</TABLE>
(i)
<PAGE> 3
EMPLOYMENT AGREEMENT
BETWEEN
TEAM FINANCIAL, INC.
AND
MICHAEL L. GIBSON
This Agreement is made this 1st day of January, 1998, between Team Financial,
Inc., a Kansas corporation ("COMPANY") and Michael L. Gibson ("EXECUTIVE").
A. Executive is employed as President Acquisitions and Investments, has
rendered valuable services to Company and has acquired an extensive
background in and knowledge of Company's business.
B. Company desires to continue the services of Executive and Executive
desires to continue to serve Company as President Acquisitions and
Investments.
In consideration of the foregoing recitals and the agreements set forth
herein, Company and Executive agree as follows:
1. TERM OF AGREEMENT AND DEFINITIONS:
1.0 TERM OF AGREEMENT: Company shall employ Executive and Executive
accepts such employment for a period beginning on the date of this
Agreement and ending the 31st day of December, 2000, subject to the
terms and condition set forth herein, unless earlier termination of the
agreement shall occur in accordance with the subsequent provisions set
forth herein.
1.1 AUTOMATIC EXTENSION OF AGREEMENT TERM: Not withstanding the
foregoing, if this Agreement shall not have been terminated in
accordance with the provisions herein on or by the 31st day of
December, 2000; the term of this Agreement shall be extended
automatically without further action by either party such that at every
moment of time thereafter, the term shall be one year.
Provided, however, during such period of automatic extension of the
term, this Agreement may be terminated in accordance with the
termination provisions of this Agreement as set forth in Sections 10
and 11.
1.2 DEFINITIONS: The following definitions shall be used in the
interpretation of this Agreement.
1.2.1 EMPLOYMENT ON AN ACTIVE FULL TIME BASIS means the Executive's
professional services shall be substantially devoted to Company.
Although prior approval by the Company of Executive's employment by
third parties is not required, the Company shall have the right to
review any employment of Executive by any entity and shall have the
right to require Executive to abandon any unsuitable employment as may
be determined by Company or any activities competitive with Company.
The term "active full time basis" includes the requirement that
Executive refrain from any activities which interfere with Executive's
Company duties.
1.2.2 YEAR, MONTH, WEEK AND DAY, unless otherwise provided in this
agreement, the word "year" shall be construed to mean a calendar year
of 365 days, the word "month" shall be construed to mean a calendar
month, the word "week" shall be construed to mean a calendar week of 7
days, and the word "day" shall be construed to mean a period of 24
hours running from midnight to midnight.
Page 1 of 12
<PAGE> 4
1.2.3 ANNUAL BASE SALARY is the sum of money regularly paid by Company
to Executive each year of the term of this Agreement pursuant to
provisions of Section 8.0 of this Agreement.
1.2.4 CUSTOMARY PAYROLL PRACTICES are those policies and procedures
routinely followed by the Company concerning the time and method of
payment of compensation to its employees as may from time to time be
adopted by the Company during course of this Agreement.
1.2.5 COMPANY POLICIES are those written policies adopted by the
Company and/or customary practices routinely followed by the Company
which may from time to time be adopted by the Company during the course
of the Agreement. The parties acknowledge the Company may from time to
time reasonably enact new policies or alter existing policies.
1.2.6 ORGANIZATION as used herein shall be broadly defined to include
any business, civic or community group or entity.
1.2.7 WILLFUL MISCONDUCT is any act performed with a designed purpose
or intent on the part of a person to do wrong.
1.2.8 GROSS MISAPPROPRIATION OF FUNDS shall be any misappropriation of
company funds by any means which is intentional and not of an
inconsequential nature or amount.
2. ENTIRE AGREEMENT
2.0 With respect to the matters specified herein, this Agreement
contains the entire agreement between the parties and supersedes all
prior oral and written agreements, understandings and commitments
between the parties. This Agreement shall not affect the provisions of
any other compensation, retirement or other benefit programs of Company
to which Executive is a party or of which he is a beneficiary.
3. VALIDITY
3.0 In the event that any provision of this Agreement is held to be
invalid, void or unenforceable, the same shall not affect, in any
respect whatsoever, the validity of any other provision of the
Agreement.
4. PARAGRAPHS AND OTHER HEADINGS
4.0 Paragraphs and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
5. SUCCESSORS
5.0 The rights and duties of a party hereunder shall not be assignable
by that party; provided, however, that this Agreement shall be binding
upon and inure to the benefit of any successor of Company, and any such
successor shall be deemed substituted for Company under the terms of
this Agreement. The term "successor" as used herein shall include any
person, firm, corporation or other business entity which at any time,
by merger, purchase or otherwise, acquires all or substantially all of
the assets or business of Company.
Page 2 of 12
<PAGE> 5
6. DESIGNATION OF BENEFICIARIES
6.0 If Executive should die during the term of this Agreement, all such
sums due to Executive hereunder shall be paid as designated by
Executive on the attached Beneficiary Designation Form.
6.1 The spouse of the Executive shall join in any designation of a
beneficiary other than the spouse.
6.2 If Executive wholly fails to designate a beneficiary as provided
for in this paragraph, or if the Executive's spouse at the time of his
death shall not have joined in the designation of a beneficiary, then
the sums due Executive shall be paid to his estate.
7. DUTIES
7.0 Company employs Executive upon an active full-time basis, as
President Acquisitions and Investments subject to the order and
direction of the Chief Executive Officer ("CEO") of Company.
7.1 During the term of this Agreement Executive shall devote
substantially all of his time, attention, and best efforts to the
business of Company and its subsidiaries. Executive shall perform such
duties and shall exercise such power and authority as delegated by the
CEO from time to time provided that such duties are commensurate with
the position of President Acquisitions and Investments. Executive may
engage in other non-business activities such as charitable,
educational, religious and similar types of activities so long as such
activities do not prevent the performance of Executive's duties herein
or conflict in any material way with the business of Company.
Notwithstanding the above, Executive shall be permitted to serve as a
Director or Trustee of other organizations, in accordance with the
policies of Company.
7.2 The duties of President Acquisitions and Investments shall be
defined using a written job definition, developed by CEO on behalf of
Company. The CEO shall consult with Executive in the development of the
written job definition. Executive and said written job definition shall
be subject to any systematic evaluation system(s) that the Company may
from time to time employ.
7.3 Executive's duties shall be performed principally at Company's
headquarters located in Paola, Kansas. During the term of the
Agreement, it is understood that Company expects to maintain its
principal place of business in Paola, Kansas.
8. SALARY, BONUS, BENEFITS, ADDITIONAL COMPENSATION
8.0 ANNUAL BASE SALARY.
Executive shall receive an annual base salary of $128,400.00 payable
according to the customary payroll practices of Company and subject to
all required withholding taxes. The Chief Executive Officer, in his
discretion, may increase this base salary upon relevant circumstances.
Executive will be reviewed at least annually. At least every two years
Company will review Executive's annual base salary for competitiveness
and appropriateness in the industry. Any increase in annual base salary
awarded to the Executive by the Company, shall constitute a new annual
base salary for the purpose of this Agreement. To be effective such
changes in the annual base salary shall be in writing signed by the
Company.
8.1 BONUS.
8.1.1 STANDARD COMPANY BONUSES. Executive shall be eligible to receive,
in addition to his salary, any contributions or sums specified as
additional compensation through any established plan or policy of the
Company which is available to senior executives as compensation over
and above established salaries.
Page 3 of 12
<PAGE> 6
8.1.2 ANNUAL EXECUTIVE BONUS. In addition, Executive shall be entitled
to receive a yearly annual bonus. The amount of such bonus shall be
based upon criteria established by the CEO and may include either or
both stock and cash. Provided, however, such bonus shall not exceed
fifty percent (50%) of Executive's annual base salary in effect for the
period for which the bonus is granted. During the term of this
Agreement, the yearly annual bonus shall be paid not later than January
31 of the calendar year following annual bonus year.
8.2 BENEFITS.
8.2.0 Executive shall be entitled to receive all benefits generally
made available to executives of Company as may from time to time be in
effect.
8.2.1 Executive shall be entitled, in addition to life insurance
coverage in effect for all employees, to a life insurance policy in the
amount of $240,000.00 all premiums to be paid by Company.
8.2.2 Executive shall be entitled to participate, during the term of
the Agreement, under the terms and conditions thereof, in any group
life, medical, dental or other health and welfare plans generally
available to management personnel of Company which may be in effect
from time to time; provided that nothing herein shall require the
Company to establish or maintain such plans.
8.2.3 EXECUTIVE EXPENSES. Executive shall be entitled to reimbursement
for business expenses. Executive shall be expected to incur various
business expenses customarily incurred by persons holding like
positions, including but not limited to traveling, entertainment and
similar expenses, all of which are to be incurred by Executive for the
benefit of Company. Executive shall be subject to Company's policies
regarding the reimbursement and non-reimbursement of said expense.
Executive acknowledges that Company policies do not necessarily provide
for the reimbursement of all expenses.
8.2.4 SPECIAL EXECUTIVE ALLOWANCE. Company agrees to pay reasonable
room, board, travel, and sponsored event expenses of Executive's spouse
on two (2) business trips per year of Executive's choice. 8.2.5
ACCOUNTING. Executive shall account to Company for any reimbursement or
payment of such expenses in such a manner as Company practices may from
time to time require. Subject to Company's policy regarding the payment
of reimbursable expenses, Company shall reimburse Executive for such
expenses from time to time, at Executive's request.
8.2.6 Company shall indemnify and hold Executive harmless for any legal
fees and expenses incurred by Executive in the performance of his
duties as a result of civil or criminal actions against him in
accordance with the indemnification provisions of the Articles of
Incorporation and Bylaws of Company.
8.2.7 During (i) the term of this Agreement, (ii) the twelve month
period following the termination of this Agreement as a result of
death, (iii) a two year period following the termination of this
Agreement as a result of disability, (iv) a three year period following
termination of this Agreement by Executive for material breach or good
cause, and (v) a three year period following a termination of this
Agreement by Company without cause; Company shall pay to Executive, or
his estate if he be deceased, a sum as reimbursement for reasonable
out-of-pocket expenses incurred for third-party professional financial
and tax advice provided by a licensed professional of Executive's
choice. Provided, however, that in (i) above, the sum shall not exceed
fifteen percent (15%) of Executive's annual base salary for that year;
(ii) above, the sum shall not exceed twenty-five percent (25%) of
Executive's annual base salary for that year; (iii), (iv) and (v)
above, the sum shall not exceed twenty-five percent (25%), each year,
of Executive's annual base salary at the time of Executive's disability
or time of termination.
8.2.8 Executive shall be provided with a personal automobile under
arrangements equivalent to those
Page 4 of 12
<PAGE> 7
currently in effect with respect to other Company executives and of
equivalent size and features as presently driving.
8.3 ADDITIONAL COMPENSATION.
Executive shall be eligible to receive, in addition to his salary, any
contributions or sums specified for additional compensation through any
established plan or policy of Company which is available to senior
executives as compensation over and above established salaries,
including but not limited to stock options.
8.4 TAX LIABILITY.
Any tax liability which these benefits create for Executive will be the
sole responsibility of Executive.
9. PROTECTION OF COMPANY'S INTERESTS
9.0 During the term of this Agreement Executive shall not directly or
indirectly engage in competition with, or not own any interest in any
business which competes with, any business of Company; provided,
however, that the provisions of this Section 9 shall not prohibit his
ownership of not more than 5% of voting stock of any publicly held
corporation.
9.1 Except for actions taken in the course of his employment hereunder,
at no time shall Executive divulge, furnish or make accessible to any
person any information of a confidential or proprietary nature obtained
by him while in the employ of Company. Upon termination of his
employment by Company, Executive shall return to Company all such
information which exists in writing or other physical form and all
copies thereof in his possession or under his control.
9.2 Company, its successors and assigns, shall, in addition to
Executive's services, be entitled to receive and own all of the results
and proceeds of said services (including, without limitation, literary
material and other intellectual property) produced or created during
the term of Executive's employment hereunder. Executive will, at the
request of Company, execute such assignments, certificates or other
instruments as Company may from time to time deem necessary or
desirable to evidence, establish, maintain, protect, enforce or defend
its right or title to any such material.
10. TERMINATION BY COMPANY
10.0 Company shall have the right to terminate this Agreement under
the following circumstances:
(i) Upon the death of Executive;
(ii) Upon the disability of Executive;
(iii) Upon material breach or good cause; and
(iv) Upon written notice by Company without cause.
(v) Upon written notice by Company, during the period of
automatic extension of the term, of Company's
intention to have this Agreement expire in one year.
10.1 If executive dies before his employment with Company is otherwise
terminated, Company shall pay to the designated beneficiary of
Executive, or in the absence of a designated beneficiary, to the estate
of the Executive, at the time of his death, the sum of $500,000.00.
Company may purchase life insurance to cover all or any part of its
obligations contained in this paragraph and Executive agrees to take a
physical examination to facilitate the placement of such insurance. In
the event that Executive is uninsurable, Company may elect to disperse
the funds due in equal monthly payments over the remaining period of
the year of Executive's death, or if less than six (6) months, over a
period of twelve (12) consecutive months.
Page 5 of 12
<PAGE> 8
Executive's dependents will also be entitled to:
(i) All Company insured and self insured medical and dental
plans in which Executive was participating immediately prior
to termination,
provided, however, that if Company so elects, or such continued
participation is not possible under the general terms and conditions of
such plans or under such policies, Company shall, in lieu of the
foregoing, arrange to have issued for the benefit of Executive's
dependents equivalent benefits (on an after-tax basis); provided,
further that, in no event shall Executive's dependents be required to
pay any premiums or other charges in an amount greater than that which
Executive would have paid in order to participate in Company's plans
and policies.
Entitlement (i) above shall be maintained in effect for the continued
benefit of Executive's dependents for a period of six (6) months after
the date of termination due to death.
10.2 For the purposes of this Agreement, Executive shall be deemed to
have become disabled, if, during any year of the term of this
Agreement, because of ill health, physical or mental impairment, or for
other causes beyond Executive's control, Executive shall have been
continuously unable or unwilling, or shall have failed to perform his
duties under this Agreement for ninety (90) consecutive days, or if,
during any calendar year of the term of this Agreement, Executive shall
have been unable or unwilling or shall have failed to perform his
duties for a total period of one hundred eighty (180) days,
irrespective of whether or not such days are consecutive. With respect
to any termination by Company for disability, the specifics of the
basis of termination shall be communicated to Executive in writing at
least thirty (30) days before the date on which the termination is
proposed to take effect. Executive shall have until the effective date
of the notice to cure or remedy such disability and or correct the
misconception of the disability. If this Agreement is terminated for
disability, any questions as to the existence of the Total and
Permanent disability of Executive as to which Executive and Company
cannot agree shall be determined in writing by a qualified independent
physician mutually acceptable to Executive and Company. If Executive
and Company cannot agree as to a qualified independent physician, each
shall appoint such a physician and those two physicians shall select a
third who shall make such determination in writing. If there is a
disagreement between Executive and Company as to the disability of
Executive, the effective date of the termination will be extended a
reasonable time to allow for a determination by a physical, as
described above. Any refusal by Executive to submit to a medical
examination for the purpose of certifying disability under this section
shall be deemed to constitute evidence of Executive's disability. If
Executive is disabled before his employment with Company is otherwise
terminated, Company shall pay to the Executive, or if the Executive is
totally incapacitated, to his appointed guardian, at the time he is
determined to be disabled, the sum of $500,000.00. Whenever
compensation is payable to Executive hereunder, during a time when he
is disabled, pursuant to the terms of any insurance provided by
Company, the compensation payable to him hereunder shall be inclusive
of any such disability insurance and shall not be in addition thereto.
10.3 For purposes of this Agreement, material breach and good cause
shall mean willful misconduct in following the legitimate directions of
the Chief Executive Officer; commission of a significant act of
dishonesty, deceit or breach of fiduciary duty in the performance of
Executive's duties; gross misappropriation of Company funds or
property; habitual drunkenness; excessive absenteeism not related to
illness, sick leave or vacations. Provided, however, Executive shall be
entitled to notice of any acts which the CEO considers to be misconduct
or excessive absenteeism as described in this paragraph. Such notice
shall include the specifics of the basis for possible termination and
shall be communicated to Executive in writing at least thirty (30) days
prior to any such intended termination. Prior to any such termination,
if requested before the effective date of the intended termination,
Executive shall be given a reasonable period of time in which to show
that he has corrected any specified deficiencies. Upon the cure or
remedy of such deficiencies, the Company shall rescind its notice of
termination. If there is any question about the effective
Page 6 of 12
<PAGE> 9
correction of the deficiencies, a decision will be sought from a lawyer
agreed to by Company and Executive. If the Company and Executive cannot
agree on a lawyer, each will pick a lawyer who will together pick a
lawyer who will render a decision.
If this agreement is terminated for material breach or good cause,
Executive shall be entitled to:
(i) All Company insured and self insured medical and dental
plans in which Executive was participating immediately prior
to termination; and
(ii) The group individual life insurance and disability
policies of Company then in effect for Executive;
provided, however, that if Company so elects, or such continued
participation is not possible under the general terms and conditions of
such plans or under such policies, Company shall, in lieu of the
foregoing, arrange to have issued for the benefit of Executive and
Executive's dependents equivalent benefits (on an after-tax basis);
provided, further that, in no event shall Executive be required to pay
any premiums or other charges in an amount greater than that which
Executive would have paid in order to participate in Company's plans
and policies.
Entitlement of (i) and (ii) of this section shall be maintained in
effect for the continued benefit of the Executive and his dependents
for a period of six (6) months after the date of termination or until
the commencements of each equivalent benefit from Executive's new
employer, but not to be provided longer than six (6) months.
10.4 Company shall be entitled to terminate this Agreement without
cause upon ninety (90) days written notice to Executive. If Company
shall so terminate this Agreement, Executive shall be entitled to:
(i) All Company insured and self insured medical and dental
plans in which Executive was participating immediately prior
to termination; and
(ii) The group individual life insurance and disability
insurance policies of Company then in effect for Executive;
provided, however, that if Company so elects, or such continued
participation is not possible under the general terms and conditions of
such plans or under such policies, Company shall, in lieu of the
foregoing, arrange to have issued for the benefit of Executive and
Executive's dependents equivalent benefits (on an after-tax basis);
provided, further that, in no event shall Executive be required to pay
any premiums or other charges in an amount greater than that which
Executive would have paid in order to participate in Company's plans
and policies.
Entitlement of (i) and (ii) of this section shall be maintained in
effect for the continued benefit of Executive and his dependents for a
period of three (3) years after the date of termination or until the
commencement of each equivalent benefit from Executive's new employer,
but not to be provided longer than three (3) years after the date of
termination.
(iii) A furnished office, like his Company office, from which
to operate for a period of one (1) year or until Executive
accepts employment with another employer, which ever occurs
first. Executive's office will be provided, at Company's
expense, with a desk; phone; access to fax for outgoing and
incoming faxes; computer, software, and access to a printer.
(iv) A cash payment equal to the present value (based on a
discount rate of 9%) of Executive's annual base salary
hereunder for the remainder of the term of the Agreement, or
for one (1) year, which ever is longer, payable within thirty
(30) days of the date of such termination;
(v) All such Bonuses and Other Compensation as provided for in
Section 8 above, it being understood, however, that all such
payments due, if made pursuant to this clause shall be paid in
cash within thirty (30) days of the date of termination. All
stock options granted by Company to Executive under any
provision of Section 8 or granted by Company to Executive
prior to the date hereof will accelerate and become
immediately exercisable;
Page 7 of 12
<PAGE> 10
(vi) A sum as reimbursement for reasonable out-of-pocket
expenses incurred for third-party professional financial and
tax advice provided by a licensed professional of Executive's
choice for a period of three (3) years after the date of
termination, sum not to exceed, in any one year, twenty-five
percent (25%) and in the aggregate, seventy-five percent (75%)
of Executive's base salary, as provided in Section 8;
(vii) A sum as reimbursement for reasonable out-of-pocket
expenses incurred for out-placement advice and counseling
provided by a professional placement agency and/or recruiter
of Executive's choice for a period of twelve (12) months after
date of termination, sum not to exceed fifty percent (50%) of
Executive's base salary, as provided in Section 8;
(viii) Company shall pay Executive a sum to pay for a Country
Club membership dues for one (1) year;
(ix) Company shall transfer to Executive title of the personal
car, furnished Executive by Company, in use at the time of the
termination.
10.5 Company shall be entitled to terminate this Agreement during the
period of automatic extension of the term as set forth in section 1.1,
by giving written notice to Executive of the company's intention to
have the term of this Agreement expire one year from the date of such
notification. If Company shall so terminate this agreement, Executive
shall be entitled only to those benefits provided under existing law.
10.6 Company may purchase life insurance to cover all or any part of
its obligations contained in this paragraph and Executive agrees to
take a physical examination to facilitate the placement of such
insurance. In the event that Executive is uninsurable, Company may
elect to disperse the funds due in equal monthly payments over the
remaining period of the year due, or if less than six (6) months, over
a period of twelve (12) consecutive months.
11. TERMINATION BY EXECUTIVE
11.0 Executive shall have the right to terminate this Agreement
under the following circumstances:
(i) Upon material breach or good cause; and
(ii) Upon written notice to the Chief Executive Officer
without cause.
11.1 For purposes of this Agreement, a material breach by Company of
the terms of this Agreement shall entitle Executive, upon written
notice to the Company, to terminate his services under this Agreement
effective thirty (30) days from and after receipt of such notice by
Company. Such notice shall include a specific description of such
breach and the Company shall have until the effective date of the
notice to cure or remedy such breach. Upon the cure or remedy of such
breach, the Executive shall rescind his notice of termination. For
purposes of this Agreement, a termination for good cause by Executive
shall be based upon the following action by the Company: a failure,
without good cause to continue Executive as President Acquisitions and
Investments of Company; a failure, without good cause to continue to
vest Executive with the power and authority of President Acquisitions
and Investments of Company; the loss, without good cause of Executive's
consent, of any significant duties or responsibilities attending such
office. Provided, however, Executive's title, duties and
responsibilities shall be deemed to be altered with good cause by the
Chief Executive Officer if Company is (or substantially all of its
assets are) sold to or combined with another entity and Executive shall
thereafter continue to have the same significant duties and
responsibilities with respect to Company's continuing business and if
Executive shall report to the Chief Executive Officer of the continuing
Company with a like Agreement, for a term no less than that remaining
on this Agreement or two (2) years, whichever is longer. Upon the
occurrence of any happening which would authorize Executive to
terminate his employment for good cause, Executive shall notify the
Chief Executive Officer in writing within sixty (60) days following
such occurrence or Executive shall be deemed to have waived his right
to terminate this Agreement for such occurrence. The Chief Executive
Officer shall have until the effective
Page 8 of 12
<PAGE> 11
date of the notice to cure or remedy such good cause occurrence. Upon
the cure or remedy of such good cause occurrence, the Executive shall
rescind his notice of termination. Upon termination of employment by
Executive for material breach or good cause, Executive shall be
entitled to:
(i) All company insured and self insured medical and dental
plans in which Executive was participating immediately prior
to termination; and
(ii) The group individual life insurance and disability
insurance policies of Company then in
effect for Executive; provided, however, that if Company so elects, or
such continued participation is not possible under the general terms
and conditions of such plans or under such policies, Company shall, in
lieu of the foregoing, arrange to have issued for the benefit of
Executive and Executive's dependents equivalent benefits (on an
after-tax basis); provided, further that, in no event shall Executive
be required to pay any premiums or other charges in an amount greater
than that which Executive would have paid in order to participate in
Company's plans and policies.
Entitlement of (i) and (ii) of this section shall be maintained in
effect for the continued benefit of Executive and his dependents for a
period of three (3) years after the date of termination or until the
commencement of each equivalent benefit from Executive's new employer,
but not to be provided longer than three (3) years after the date of
termination.
(iii) A furnished office, like his Company office, from which
to operate for a period of one (1) year or until Executive
accepts employment with another employer, which ever occurs
first. Executive's office will be provided, at Company
expense, with a desk; phone; access to fax for outgoing and
incoming faxes; computer, software, and access to printer.
(iv) A cash payment equal to the present value (based on a
discount rate 9%) of Executive's base salary hereunder for the
remainder of the term of the Agreement, or for one (1) year,
which ever is longer, payable within thirty (30) days of the
date of such termination;
(v) All such Bonuses and Other Compensation as provided for
the Section 8 above, it being understood, however, that all
such payments due, if made pursuant to this clause shall be
paid in cash within thirty (30) days of the date of
termination. All stock options granted by Company to Executive
under any provision of Section 8 or granted by Company to
Executive prior to the date hereof will accelerate and become
immediately exercisable;
(vi) A sum as reimbursement for reasonable out-of-pocket
expenses incurred for third-party professional financial and
tax advice provided by a licensed professional of Executive's
choice for a period of three (3) years after date of
termination, sum not to exceed, in any one year, twenty five
percent (25%) and in the aggregate, seventy five percent (75%)
of Executive's base salary, as provided in Section 8;
(vii) A sum as reimbursement for reasonable out-of-pocket
expenses incurred for out-placement advice and counseling
provided by a professional placement agency and/or recruiter
of Executive's choice for a period of twelve (12) months after
date of termination, sum not to exceed fifty (50) percent of
Executive's base salary.
(viii) Company shall pay Executive a sum to pay for Country
Club membership dues for one (1) year; and
(ix) Company shall transfer to Executive title of the personal
car, furnished Executive by company, in use at the time of the
termination.
11.2 Company may purchase life insurance to cover all or any part of
its obligations contained in this paragraph and Executive agrees to
take a physical examination to facilitate the placement of such
insurance. In the event that Executive is uninsurable, Company may
elect to disperse the funds due in equal monthly payments over the
remaining period of the year due, or if less than six (6) months, over
a period of twelve (12) consecutive months.
11.3 Executive shall be entitled to terminate this Agreement without
cause upon ninety (90) days written
Page 9 of 12
<PAGE> 12
notice to Company. If Executive shall so terminate this Agreement,
Executive shall be entitled to those benefits provided under existing
law.
12. CONSEQUENCES OF BREACH
12.0 If this Agreement is terminated pursuant to Section 11.01 hereof,
or if Company shall terminate Executive's employment under this
Agreement in any other way that is a breach of this Agreement by
Company, the following shall apply:
(i) The parties believe that because of the limitations of
Section 11 the payments to Executive do not constitute "Excess
Parachute Payments" under Section 280G of the Internal Revenue
Code of 1954, as amended (the "Code"). Notwithstanding such
belief, if any benefit under the preceding paragraph is
determined to be an "Excess Parachute Payment" Company shall
pay Executive an additional amount ("Tax Payment") such that
(x) the excess of all Excess Parachute Payments (including
payments under this sentence) over the sum of excise tax
thereon under Section 4999 of the Code and income tax thereon
under Subtitle A of the Code and under applicable state law is
equal to (y) the excess of all Excess Parachute Payments
(excluding payments under this sentence) over income tax
thereon under Subtitle A of the Code and under applicable
state law.
13. MITIGATION AND OFFSET
13.0 Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking employment or
otherwise, nor to offset the amount of any payment provided for in this
Agreement by amounts earned as a result of Executive's employment or
self-employment during the period he is entitled to such payment.
14. TAX "GROSS-UP" PROVISION
14.0 If any payment due Executive under this Agreement results in
Executive's liability for an excise tax ("parachute tax") under Section
49 of the Internal Revenue Code of 1986, as amended (the "Code"), the
Company will pay to Executive, after deducting any Federal, state or
local income tax imposed on the payment, an amount sufficient to fully
satisfy the "parachute tax" liability. Such payment shall be made to
Executive no later than thirty (30) days prior to the due date of the
"parachute tax".
15. REMEDIES
15.0 Company recognizes that because of Executive's special talents,
stature and opportunities in the financial services industry, in the
event of termination by Company hereunder (except under Section 10.0),
or in the event of termination by Executive under Section 11, before
the end of the agreed term, Company acknowledges and agrees that the
provisions of this Agreement regarding further payments of base salary,
bonuses and the exerciseability of stock options constitute fair and
reasonable provisions for the consequences of such termination, do not
constitute a penalty, and such payments and benefits shall not be
limited or reduced by amounts Executive might earn or be able to earn
from any other employment or ventures during the remainder of the
agreed term of this Agreement.
16. BINDING AGREEMENT
16.0 This Agreement shall be binding upon and inure to the benefit of
Executive, his heirs, distributes and assigns and company, its
successors and assigns. Executive may not, without the express written
permission of the Company, assign or pledge any rights or obligations
hereunder to any person, firm or corporation.
Page 10 of 12
<PAGE> 13
17. ARBITRATION
17.0 Company and Executive agree that any dispute or claim concerning
this Agreement, or the terms and conditions of employment under this
Agreement, shall be settled by arbitration. The arbitration proceedings
will be conducted under the Commercial Arbitration Rules of the
American Arbitration Association in effect at the time a demand for
arbitration under the Rules is made. The decision of the arbitrators,
including determination of the amount of any damages suffered, will be
exclusive, final and binding on Company and Executive, their heirs,
executors, administrators, successors and assigns. Each party will bear
that party's own expenses in the arbitration proceedings for
arbitrators' fees and attorney fees, for that party's witnesses, and
other expenses of presenting the case. Other arbitration costs,
including administrative fees and fees for records or transcripts, will
be borne equally by Company and Executive.
18. AMENDMENT; WAIVER
18.0 This instrument contains the entire agreement of the parties with
respect to the employment of Executive by Company and supersedes any
prior Agreement between Company and Executive (it being understood,
however, that this agreement shall not affect any stock options granted
to Executive prior to the date hereof). No amendment or modification of
this Agreement shall be valid unless evidenced by a written instrument
executed by the parties hereto. No waiver by either party of any breach
by the other party of any provision or condition of this Agreement
shall be deemed a waiver of any similar or dissimilar provision or
condition at the same or any prior or subsequent time.
19. GOVERNING LAW
19.0 This Agreement shall be governed by and construed in accordance
with the laws of the State of Kansas.
20. NOTICES
20.0 All notices which a party is required or may desire to give to the
other party under or in connection with this Agreement shall be given
in writing by addressing the same to the other party as follows:
If to Executive, to:
Michael L. Gibson
103 Crestview Drive
Paola, Kansas 66071
If to Company, to:
Team Financial, Inc.
Chairman of the Board
8 West Peoria
Paola, Kansas 66071
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<PAGE> 14
or at such other place as may be designated in writing by like notice.
Any notice shall be deemed to have been given within forty-eight (48)
hours after being addressed as required herein and deposited,
first-class postage prepaid, in the United States mail.
IN WITNESS THEREOF, the parties have executed this agreement this ____
day of _____________, 1998, effective as of the day and year first
above written.
TEAM FINANCIAL, INC.
By:
-----------------------------------
Chief Executive Officer
MICHAEL L. GIBSON
--------------------------------------
Executive
Page 12 of 12
<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
BETWEEN
TEAMBANK, N.A.
AND
RICK PAUL BARTLEY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page No.
- ------- --------
<S> <C>
1. Term of Agreement and Definitions....................................................................... 1
2. Entire Agreement........................................................................................ 2
3. Validity............................................................................................... 2
4. Paragraphs and other headings............................................................................3
5. Successors...............................................................................................3
6. Designation of beneficiaries.............................................................................3
7. Duties...................................................................................................3
8. Salary, Bonus, Benefits, Additional Compensation.........................................................4
9. Protection of Company's Interests........................................................................6
10. Termination by Company...................................................................................6
11. Termination by Executive.................................................................................7
12. Consequences of Breach...................................................................................9
13. Mitigation and Offset...................................................................................11
14. Tax "Gross-Up" Provision.............................................................................. 11
15. Remedies................................................................................................12
16. Binding Agreement.......................................................................................12
17. Arbitration.............................................................................................12
18. Amendment; Waiver.......................................................................................12
19. Governing Law...........................................................................................13
20. Notices.................................................................................................13
Signatures.......................................................................................................13
</TABLE>
<PAGE> 3
EMPLOYMENT AGREEMENT
BETWEEN
TEAMBANK, N.A.
AND
RICK PAUL BARTLEY
This Agreement is made this 1st day of January, 1999 between TeamBank, N.A., a
National Association located in Freeman, Missouri ("COMPANY") and Rick Paul
Bartley ("EXECUTIVE").
A. Executive is employed as President and Chief Executive Officer, has
rendered valuable services to Company and has acquired a background in
and knowledge of Company's business.
B. Company desires to continue the services of Executive, and Executive
desires to continue to serve Company as President and Chief Executive
Officer of TeamBank, N.A.
In consideration of the foregoing recitals and the agreements set forth
herein, Company and Executive agree as follows:
1. TERM OF AGREEMENT AND DEFINITIONS:
1.0 TERMS OF AGREEMENT: Company shall employ Executive and Executive
accepts such Employment for a term beginning on the date of this
Agreement and ending the 31st day of December, 2001, subject to the
terms and conditions set forth herein, unless earlier termination of
the agreement shall occur in accordance with the subsequent provisions
set forth herein.
1.1 AUTOMATIC EXTENSION OF AGREEMENT TERM: Notwithstanding the
foregoing, if this Agreement shall not have been terminated in
accordance with the provisions herein on or by the 31st day of
December, 2001; the term of this Agreement shall be extended
automatically without further action by either party such that at every
moment of time thereafter, the term shall be one year.
Provided, however, during such period of automatic extension of the
term, this Agreement may be terminated in accordance with the
termination provisions of this Agreement as set forth in Sections 10
and 11.
1.2 DEFINITIONS: The following definitions shall be used in the
interpretation of this Agreement.
1.2.1 EMPLOYMENT ON AN ACTIVE FULL TIME BASIS means the Executive's
professional services shall be substantially devoted to Company.
Although prior approval by the Company of Executive's employment by
third parties is not required, the Company shall have the right to
review any employment of Executive by any entity and shall have the
right to require Executive to abandon any unsuitable employment as may
be determined by Company or any activities competitive with Company.
The term "active full time basis" includes the requirement that
Executive refrain from any activities which interfere with Executive's
Company duties.
1
<PAGE> 4
1.2.2 YEAR, MONTH, WEEK AND DAY, unless otherwise provided in this
agreement, the word "year" shall be construed to mean a calendar year
of 365 days, the word "month" shall be construed to mean a calendar
month, the work "week" shall be construed to mean a calendar week of 7
days, and the word "day" shall be construed to mean a period of 24
hours running from midnight to midnight.
1.2.3 ANNUAL BASE SALARY is the sum of money regularly paid by Company
to Executive each year of the term of this Agreement pursuant to
provisions of Section 8.0 of this Agreement.
1.2.4 CUSTOMARY PAYROLL PRACTICES are those policies and procedures
routinely followed by the Company concerning the time and method of
payment of compensation to its employees as may from time to time be
adopted by the Company during course of this Agreement.
1.2.5 COMPANY POLICIES are those written policies adopted by the
Company and/or customary practices routinely followed by the Company
which may from time to time be adopted by the Company during the course
of the Agreement. The parties acknowledge the Company may from time to
time reasonably enact new policies or alter existing policies.
1.2.6 ORGANIZATION as used herein shall be broadly defined to include
any business, civic or community group or entity.
1.2.7 WILFUL MISCONDUCT is any act performed with a designed purpose or
intent on the part of a person to do wrong.
1.2.8 GROSS MISAPPROPRIATION OF FUNDS shall be any misappropriation of
company funds by any means which is intentional and not of an
inconsequential nature or amount.
2. ENTIRE AGREEMENT
2.0 With respect to the matters specified herein, this Agreement
contains the entire agreement between the parties and supersedes all
prior oral and written agreements, under standings and commitments
between the parties. This Agreement shall not affect the provisions of
any other compensation, retirement or other benefit programs of Company
to which Executive is a party or of which Executive is a beneficiary.
3. VALIDITY
3.0 In the event that any provision of this Agreement is held to be
invalid, void or unenforceable, the same shall not affect, in any
respect whatsoever, the validity of any other prevision of the
Agreement.
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<PAGE> 5
4. PARAGRAPHS AND OTHER HEADINGS
4.0 Paragraphs and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
5. SUCCESSORS
5.0 The rights and duties of a party hereunder shall not be assignable
by that party; provided, however, that this Agreement shall be binding
upon and inure to the benefit of any successor of Company, and any such
successor shall be deemed substituted for Company under the terms of
this Agreement. The term "successor" as used herein shall include any
person, firm, corporation or other business entity which at any time,
by merger, purchase or otherwise, acquires all or substantially all of
the assets or business of Company.
6. DESIGNATION OF BENEFICIARIES
6.0 If Executive should die during the term of this Agreement all sums
due to Executive hereunder shall be paid as designed by Executive on
the attached Beneficiary Designation Form.
6.1 The spouse of the Executive shall join in any designation of a
beneficiary other than the spouse..
6.2 If Executive wholly fails to designate a beneficiary as provided
for in this paragraph, or if the Executive's spouse at the time of his
death shall not have joined in the designation of a beneficiary, then
the sums due Executive shall be paid to his estate.
7. DUTIES
7.0 Company employs Executive upon an active full-time basis, as
President and Chief Executive Officer subject to the order and
direction of the Board of Directors (Board) of Company.
7.1 During the term of this Agreement Executive shall devote
substantially all of his time, attention, and best efforts to the
business of Company. Executive shall perform such duties and shall
exercise such power and authority as delegated by the Board from time
to time, provided that such duties are commensurate with the position
of President and Chief Executive Officer of a chartered bank. Executive
may engage in other nonbusiness activities such as charitable,
educational, religious and similar types of activities so long as such
activities do not prevent the performance of Executive's duties herein
or conflict in any material way with the business of Company.
Notwithstanding the above, Executive shall be permitted to serve as a
Director or Trustee of other organizations, in accordance with the
policies of Company.
7.2 The duties of Executive shall be defined using a written job
definition, developed by the Board. The Board shall consult with
Executive in the development of the written job definition. Executive
and said written job definition shall be subject to any systematic
evaluation system(s) that the Company may from time to time employ.
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<PAGE> 6
7.3 Executive's duties shall be performed principally at Company's
headquarters, located in Paola, Kansas. During the term of the
Agreement it is understood that Company expects to maintain its
principal place of business in Paola, Kansas.
8. SALARY, BONUS, BENEFITS, ADDITIONAL COMPENSATION
8.0 ANNUAL BASE SALARY.
Executive shall receive an annual base salary of $115,000.00 payable
according to the customary payroll practices of Company and subject to
all required withholding taxes. The Board, in their discretion, may
increase this annual base salary upon relevant circumstances. Executive
will be reviewed at least annually. At least every two years Company
will review Executive's annual base salary for competitiveness and
appropriateness in the industry. Any increase in annual base salary
awarded by the Board, will constitute a new annual base salary for the
purpose of the Agreement.
8.1 BONUS
8.1.1 STANDARD COMPANY BONUSES. Executive shall be eligible to receive,
in addition to his salary, any contributions or sums specified as
additional compensation through any established plan or policy of
Company which is available to senior executive as compensation over and
above established salaries.
8.1.2 ANNUAL EXECUTIVE BONUS. In addition, Executive shall be entitled
to receive a yearly annual bonus. The amount of such bonus shall be
based upon criteria established by the Board and may include either or
both stock and cash. Provided, however, such bonus shall not exceed
fifty percent (50%) of Executive's annual base salary in effect for the
period for which the bonus is granted. During the term of this
Agreement, the yearly annual bonus shall be paid not later than January
31 of the calendar year following annual bonus year.
8.2 BENEFITS
8.2.0 Executive shall be entitled to receive all benefits generally
made available to executives of Company as may from time to time be in
effect.
8.2.1 Executive shall be entitle to participate, during the term of the
Agreement, under the terms and conditions thereof, in any group life,
medical, dental or other health and welfare plans generally available
to management personnel of Company which may be in effect from time to
time; provided that nothing herein shall require the Company to
establish or maintain such plans.
8.2.2 EXECUTIVE EXPENSES. Executive shall be entitled to reimbursement
for business expenses. Executive shall be expected to incur various
business expenses customarily incurred by persons holding like
positions, including but not limited to traveling, entertainment and
similar expenses, all of which are to be incurred by Executive for the
benefit of Company. Executive shall be subject to Company's policies
regarding the reimbursement and non-reimbursement of said expense.
Executive acknowledges that Company policies do not necessarily provide
for the reimbursement of all expenses.
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<PAGE> 7
8.2.3 ACCOUNTING. Executive shall account to the Company for any
reimbursement or payment of such expenses in such a manner as Company
practices may from time to time require. Subject to Company's policy
regarding the payment of reimbursable expenses, Company shall reimburse
Executive for such expenses from time to time, at Executive's request.
8.2.4 Company shall indemnify and hold Executive harmless for any legal
fees and expenses incurred by Executive in the performance of his
duties as a result of civil or criminal actions against him in
accordance with the indemnification provisions of the Articles of
Incorporation and bylaws of Company.
8.2.5 During (i) the term of this Agreement, (ii) the twelve month
period following the termination of this Agreement as a result of
death, (iii) the twelve month period following the termination of this
Agreement as a result of disability, (iv) a three year period following
termination of this Agreement by Executive for material breach or good
cause, and (v) a three year period following a termination of this
Agreement by Company without cause, Company shall pay to Executive, or
his estate if he be deceased, a sum as reimbursement for reasonable
out-of-pocket expenses incurred for third-party professional financial
and tax advice provided by a licensed professional of Executive's
choice. Provided, however, that in (i) above, the sum shall not exceed
fifteen percent (15%) of Executive's annual base salary for that year;
(ii) above, the sum shall not exceed twenty five percent (25%) of
Executive's annual base salary for that year; (iii), (iv), and (v)
above, the sum shall not exceed twenty five percent (25%), each year,
of executive's annual base salary at the time of his disability or time
of termination.
8.2.6 Executive shall be provided with a personal automobile under
arrangements equivalent to those currently in effect with respect to
other Company executives and of equivalent size and features as
presently driving.
8.3 ADDITIONAL COMPENSATION.
Executive shall be eligible to receive, in addition to his salary, any
contributions or sums specified for additional compensation through any
established plan or policy of the Company which is available to senior
executives as compensation over and above established salaries.
8.4 TAX LIABILITY.
Any tax liability which these benefits create for Executive will be the
sole responsibility of Executive.
9. PROTECTION OF COMPANY'S INTERESTS
9.0 During the term of this Agreement Executive shall not directly or
indirectly engage in competition with, or not own any interest in any
business which competes with, any business of Company; provided,
however, that the provisions of this Section 9 shall not prohibit his
ownership of not more than five percent (5%) of voting stock of any
publicly held corporation.
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<PAGE> 8
9.1 Except for actions taken in the course of his employment hereunder,
at no time shall Executive divulge, furnish or make accessible to any
person any information of a confidential or proprietary nature obtained
by him while in the employ of Company. Upon termination of his
employment by Company, Executive shall return to Company all such
information which exists in writing or other physical form and all
copies thereof in his possession or under his control.
9.2 Company, its successors and assigns, shall, in addition to
Executive's services, be entitled to receive and own all of the results
and proceeds of said services (including, without limitation, literary
material and other intellectual property) produced or created during
the term of Executive's employment hereunder. Executive will, at the
request of Company, execute such assignments, certificates or other
instruments as Company may from time to time deem necessary or
desirable to evidence, establish, maintain, protect, enforce or defend
its right or title to any such material.
10. TERMINATION BY COMPANY
10.0 Company shall have the right to terminate this Agreement under the
following circumstances:
(i) Upon the death of Executive;
(ii) Upon the disability of Executive;
(iii) Upon material breach or good cause; and
(iv) Upon written notice by Company without cause.
(v) Upon written notice by Company, during the period of
automatic extension of the term, of Company's
intention to have this Agreement expire in one year.
10.1 If Executive dies before his employment with Company is otherwise
terminated, Company shall pay to the designated beneficiary of
Executive, or in the absence of a designated beneficiary, to the estate
of the Executive, at the time of his death, the sum of $ 100,000.00.
Company may purchase life insurance to cover all or any part of its
obligations contained in this paragraph and Executive agrees to take a
physical examination to facilitate the placement of such insurance. In
the event that Executive is uninsurable, Company may elect to disperse
the funds due in equal monthly payments over the remaining period of
the year of Executives death, or if less than six (6) months, over a
period of twelve consecutive months. Executive dependents will also be
entitles to:
All Company insured and self insured medical and dental plans
in which Executive was participating immediately prior to
termination,
provided, however, that if Company so elects, or such continued
participation is not possible under the general terms and conditions of
such plans or under such policies, Company shall, in lieu of the
foregoing, arrange to have issued for the benefit of Executive's
dependents equivalent benefits (on an after-tax basis); provided,
further that, in no event shall Executive's dependents be required to
pay any premiums or other charges in an amount greater than that which
Executive would have paid in order to participate in Company's plans
and policies.
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<PAGE> 9
Entitlement (i) above shall be maintained in effect for the continued
benefit of Executive's dependents for a period of six (6) months after
the date of termination due to death.
10.2 For the purposes of this Agreement, Executive shall be deemed to
have become disabled, if, during any year of the term of this
Agreement, because of ill health, physical or mental impairment, or for
other causes beyond Executive's control, Executive shall have been
continuously unable or unwilling, or shall have failed to perform his
duties under this Agreement for ninety (90) consecutive days, or if,
during any calendar year of the term of this Agreement, Executive shall
have been unable or unwilling or shall have failed to perform his
duties for a total period of one hundred eighty (180) days,
irrespective of whether or not such days are consecutive. With respect
to any termination by Company for disability, the specifics of the
basis of termination shall be communicated to Executive in writing at
least thirty (30) days before the date on which the termination is
proposed to take effect. Executive shall have until the effective date
of the notice to cure or remedy such disability and or correct the
misconception of the disability. If this Agreement is terminated for
disability, any question as to the existence of the Total and Permanent
disability of Executive as to which Executive and Company cannot agree
shall be determined in writing by a qualified independent physician
mutually acceptable to Executive and Company. If Executive and Company
cannot agree as to a qualified independent physician, each shall
appoint such a physician and those two physicians shall select a third
who shall make such determination in writing. If there is a
disagreement between Executive and Company as to the disability of
Executive, the effective date of the termination will be extended a
reasonable time to allow for a determination by a physician, as
described above. Any refusal by Executive to submit to a medical
examination for the purpose of certifying disability under this section
shall be deemed to constitute evidence of Executive's disability. If
Executive is disabled before his employment with Company is otherwise
terminated, Company shall pay to the Executive, or if the Executive is
totally incapacitated, to his appointed guardian, at the time he is
determined to be disabled, the sum of $ 100,000.00. Whenever
compensation is payable to Executive hereunder, during a time when he
is disabled, pursuant to the terms of any insurance provided by
Company, the compensation payable to him hereunder shall be inclusive
of any such disability insurance and shall not be in addition thereto.
10.3 For purposes of this Agreement, material breach and good cause
shall mean willful misconduct in following the legitimate directions of
the Board; commission of a significant act of dishonesty, deceit or
breach of fiduciary duty in the performance of Executive's duties;
gross misappropriation of Company funds or property; habitual
drunkenness; excessive absenteeism not related to illness, sick leave
or vacations. Provided, however, Executive shall be entitled to notice
of any acts which the Board considers to be misconduct or excessive
absenteeism as described in this paragraph. Such notice shall include
the specifics of the basis for possible termination and shall be
communicated to Executive in writing at least thirty (30) days prior to
any such intended termination. Prior to any such termination, if
requested before the effective date of the intended termination,
Executive shall be given a reasonable period of time in which to show
that he has corrected any specified deficiencies. Upon the cure or
remedy of such deficiencies, Company shall rescind its notice of
termination. If there is any question about the effective correction of
the deficiencies, a decision will be sought from a lawyer
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<PAGE> 10
agreed to by Company and Executive. If Company and Executive can not
agree on a lawyer, each will pick a lawyer who will together pick a
lawyer who will render a decision.
If this Agreement is terminated for material breach or good cause,
Executive shall be entitled to:
All Company insured and self insured medical and dental plans
in which Executive was participating immediately prior to
termination; and The group individual life insurance and
disability insurance policies of Company then in effect for
Executive;
provided, however, that if Company so elects, or such continued
participation is not possible under the general terms and conditions of
such plans or under such policies, Company shall, in lieu of the
foregoing, arrange to have issued for the benefit of Executive and
Executive's dependents equivalent benefits (on an after-tax basis);
provided, further that, in no event shall Executive be required to pay
any premiums or other charges in an amount greater than that which
Executive would have paid in order to participate in Company's plans
and policies.
Entitlements of (i) and (ii) of this section shall be maintained in
effect for the continued benefit of the Executive and his dependents
for a period of six (6) months after the date of termination or until
the commencement of each equivalent benefit from Executive's new
employer, but not to be provided longer than six (6) months.
10.4 Company shall be entitled to terminate this Agreement without
cause upon ninety (90) days written notice to Executive. If Company
shall so terminate this agreement, Executive shall be entitled to:
(i) All Company insured and self insured medical and dental
plans in which Executive was participation immediately prior
to termination; and
(ii) The group individual life insurance and disability
insurance policies of Company then in effect for Executive;
provided, however, that if Company so elects, or such continued
participation is not possible under the general terms and conditions of
such plans or under such policies, Company shall, in lieu of the
foregoing, arrange to have issued for the benefit of Executive and
Executive's dependents equivalent benefits (on an after-tax basis);
provided, further that, in no event shall Executive be required to pay
any premiums or other charges in an amount greater than that which
Executive would have paid in order to participate in Company's plans
and policies.
Entitlements of (i) and (ii) of this section shall be maintained in
effect for the continued benefit of Executive and his dependents for a
period of two (2) years after the date of termination or until the
commencement of each equivalent benefit from Executive's new employer,
but not to be provided longer than two (2) years after the date of
termination.
(iii) A cash payment equal to the present value (based on a
discount rate of 9%) of Executive's annual base salary
hereunder for the remainder of the term of the Agreement, or
for one (1) year, which ever is longer, payable within thirty
(30) days of the date of such termination;
(iv) All such Bonuses and Other Compensation as provided for
in Section 8 above, it being understood, however, that all
such payments due, if made pursuant to this clause shall be
paid in cash within thirty (30) days of the date of
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<PAGE> 11
termination. All stock options granted by Company to Executive
under any provision of Section 8 or granted by Company to
Executive prior to the date hereof will accelerate and become
immediately exercisable;
(v) A sum as reimbursement for reasonable out-of-pocket
expenses incurred for third-party professional financial and
tax advice provided by a licensed professional of Executive's
choice for a period of one (1) year after date of termination,
sum not to exceed twenty five percent (25%) of Executive's
annual base salary, as provided in Section 8:
(vi) A sum as reimbursement for reasonable our-of-pocket
expenses incurred for out-placement advice and counselling
provided by a professional placement agency and/or recruiter
of Executive's choice for a period of twelve (12) months after
date of termination, sum not to exceed fifty percent (50%) of
Executive's annual base salary, as provided in Section 8;
(vii) Company shall pay Executive a sum to pay for a Country
Club membership dues for one (1) year.
(viii) Company shall transfer to Executive title of the
personal car, furnished Executive by company, in use at the
time of the termination.
10.5 Company shall be entitled to terminate this Agreement during the
period of automatic extension of the term as set forth in Section 1.1,
by giving written notice to Executive of the Company's intention to
have the term of this Agreement expire one year from the date of such
notification. If company shall so terminate this agreement, Executive
shall be entitled only to those benefits provided under existing law.
10.6 Company may purchase life insurance to cover all or any part of
its obligations contained in this paragraph and Executive agrees to
take a physical examination to facilitate the placement of such
insurance. In the event that Executive is uninsurable, Company may
elect to disperse the funds due in equal monthly payments over the
remaining period of the year due, or if less than six (6) months, over
a period of twelve (12) consecutive months.
11. TERMINATION BY EXECUTIVE
11.0 Executive shall have the right to terminate this Agreement under
the following circumstances:
Upon material breach or good cause; and
Upon written notice to the Board without cause.
11.01 For purposes of this Agreement, a material breach by Company of
the terms of this Agreement shall entitle Executive, upon written
notice to Company, to terminate his services under this Agreement
effective thirty (30) days from and after receipt of such notice by
Company. Such notice shall include a specific description of such
breach and Company shall have until the effective date of the notice to
cure or remedy such breach. Upon the cure or remedy of such breach,
Executive shall rescind his notice of termination. For purposes of this
Agreement, a termination for good cause by Executive shall be based
upon the following action by the Company: a failure, without good cause
to continue Executive as President and Chief Executive Office of
Company; a failure, without good cause to continue to vest Executive
with the power and authority of
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<PAGE> 12
President and Chief Executive Officer of Company; the loss, without
good cause or Executive's consent, of any significant duties or
responsibilities attending such office. Provided, however, Executive's
title, duties and responsibilities shall be deemed to be altered with
good cause by the Board if Company is (or substantially all of its
assets are) sold to or combined with another entity and Executive shall
thereafter continue to have the same significant duties and
responsibilities with respect to Company's continuing business and with
a like Agreement, for a term no less than that of this Agreement. Upon
the occurrence of any happening which would authorize Executive to
terminate his employment for good cause, Executive shall notify the
Board in writing within sixty (60) days following such occurrence or
Executive shall be deemed to have waived his right to terminate this
Agreement for such occurrence. The Board shall have until the effective
date of the notice to cure or remedy such good cause occurrence. Upon
the cure or remedy of such good cause occurrence, the Executive shall
rescind his notice of termination. Upon termination of employment by
Executive for material breach or good cause, Executive shall be
entitled to:
All Company insured and self insured medical and dental plans
in which Executive was participating immediately prior to
termination; and The group individual life insurance and
disability insurance policies of Company than in effect for
Executive;
provided, however, that if company so elects, or such continued
participation is not possible under the general terms and conditions of
such plans or under such policies, Company shall, in lieu of the
foregoing, arrange to have issued for the benefit of Executive and
Executive's dependents equivalent benefits (on an after-tax basis);
provided, further that, in no event shall Executive be required to pay
any premiums or other charges in an amount greater than that which
Executive would have paid in order to participate in Company's plans
and policies.
Entitlements of (i) and (ii) of this section shall be maintained in
effect for the continued benefit of Executive and his dependents for a
period of one (1) year after the date of termination or until the
commencement of each equivalent benefit from Executive's new employer,
but not to be provided longer than one (1) year after the date of
termination.
A cash payment equal to the present value (based on a discount
rate of 9%) of Executive's base salary hereunder for the
remainder of the term of the Agreement, or for one (1) year,
which ever is longer, payable within thirty (30) days of the
date of such termination; All such Bonuses and Other
Compensation as provided for in Section 8 above, it being
understood, however, that all such payments due, if made
pursuant to this clause shall be paid in cash within thirty
(30) days of the date of termination. All stock options
granted by Company to Executive under any provision of Section
8 or granted by Company to Executive prior to the date hereof
will accelerate and become immediately exercisable; A sum as
reimbursement for reasonable out-of-pocket expenses incurred
for third-party professional financial and tax advice provided
by a licensed professional of Executive's choice for a period
of one (1) year after date of termination, sum not to exceed
twenty five percent (25%) of Executive's annual base salary,
as provided in Section 8; A sum as reimbursement for
reasonable out-of-pocket expenses incurred for out-placement
advice and counselling provided by a professional placement
agency and/or recruiter of Executive's choice for a period of
twelve (12) months
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<PAGE> 13
after date of termination, sum not to exceed fifty percent
(50%) of Executive's annual base salary, as provided in
Section 8;
11.02 Executive shall be entitled to terminate this Agreement without
cause upon ninety (90) days written notice to Company. If Executive
shall so terminate this agreement, Executive shall be entitled only to
those benefits provided under existing law.
12. CONSEQUENCES OF BREACH
12.0 If this Agreement is terminated pursuant to Section 11.01 hereof,
or if Company shall terminate Executive's employment under this
Agreement in any other way that is a breach of this Agreement by
Company, the following shall apply:
(i) The parties believe that because of the limitations of
Section 11 the payments to Executive do not constitute "Excess
Parachute Payments" under Section 280G of the Internal Revenue
Code of 1954, as amended (the "Code"). Notwithstanding such
belief, if any benefit under the preceding paragraph is
determined to be an "Excess Parachute Payment" Company shall
pay Executive an additional amount ("Tax Payment") such that
(x) the excess of all Excess Parachute Payments (including
payments under this sentence) over the sum of excise tax
thereon under section 4999 of the Code and income tax thereon
under Subtitle A of the Code and under applicable state law is
equal to (y) the excess of all Excess Parachute Payments
(excluding payments under this sentence) over income tax
thereon under Subtitle A of the Code and under applicable
state law.
13. MITIGATION AND OFFSET
13.0 Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking employment or
otherwise, nor to offset the amount of any payment provided for in this
Agreement by amounts earned as a result of Executive's employment or
self-employment during the period he is entitled to such payment.
14. TAX "GROSS-UP" PROVISION
14.0 If any payment due Executive under this Agreement results in
Executive's liability for an excise tax ("parachute tax") under Section
49 of the Internal Revenue Code of 1986, as amended (the "Code"), the
Company will pay to Executive, after deducting any Federal, state or
local income tax imposed on the payment, an amount sufficient to fully
satisfy the "parachute tax" liability. Such payment shall be made to
Executive no later than thirty (30) days prior to the due date of the
"parachute tax."
15. REMEDIES
15.0 Company recognizes that because of Executive's special talents,
stature and opportunities in the financial services industry, in the
event of termination by Company hereunder (except under Section 10.0),
or in the event of termination by Executive under Section 11, before
the end of the agreed term, Company acknowledges and agrees that the
provisions of this Agreement regarding further payments of base salary,
bonuses and
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<PAGE> 14
the exerciseability of stock options constitute fair and reasonable
provisions for the consequences of such termination, do not constitute
a penalty, and such payments and benefits shall not be limited or
reduced by amounts Executive might earn or be able to earn from any
other employment or ventures during the remainder of the agreed term of
this Agreement.
16. BINDING AGREEMENT
16.0 This agreement shall be binding upon and inure to the benefit of
Executive, his heirs, distributes and assigns and company, its
successor and assigns. Executive may not, without the express written
permission of the Company assign or pledge any right or obligations
hereunder to any person, firm or corporation.
17. ARBITRATION
17.0 Company and Executive agree that any dispute or claim concerning
this Agreement, or the terms and conditions of employment under this
Agreement, shall be settled by arbitration. The arbitration proceedings
will be conducted under the Commercial Arbitration Rules of the
American Arbitration Association in effect at the time a demand for
arbitration under the Rules is made. The decision of the arbitrators,
including determination of the amount of any damages suffered, will be
exclusive, final and binding on Company and Executive, their heirs,
executors, administrators, successors and assigns. Each party will bear
that party's own expenses in the arbitration proceedings for
arbitrators' fees and attorney fees, for that party's witnesses, and
other expenses of presenting the case. Other arbitration costs,
including administrative fees and fees for records or transcripts, will
be borne equally by Company and Executive.
18. AMENDMENT; WAIVER
18.0 This instrument contains the entire agreement of the parties with
respect to the employment of Executive by Company and supersedes any
prior Agreement between Company and Executive (it being understood,
however, that this agreement shall not affect any stock options granted
to Executive prior to the date hereof). No amendment or modification of
this Agreement shall be valid unless evidenced by a written instrument
executed by the parties hereto. No waiver by either party of any breach
by the other party of any provision or condition of this Agreement
shall be deemed a waiver of any similar or dissimilar provision or
condition at the same or any prior or subsequent time.
19. GOVERNING LAW
19.0 This Agreement shall be governed by and construed in accordance
with the laws of thee State of Kansas.
20. NOTICES
20.0 All notices which a party is required or may desire to give to the
other party under or in connection with this Agreement shall be given
in writing by addressing the same to the other party as follows:
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If to Executive, to:
Rick Paul Bartley
210 Brookside Drive
Paola, Kansas 66071
If to Company, to:
TeamBank, N.A.
Chairman of the Board
One South Pearl, P.O. Box 369
Paola, Kansas 66071
or at such other place as may be designated in writing by like notice.
Any notice shall be deemed to have been given within forty-eight (48)
hours after being addressed as required herein and deposited,
first-class postage prepaid, in the United States mail.
IN WITNESS THEREOF, the parties have executed this agreement this _____ day of
_______, 1999, effective as of the day and year first above written.
TeamBank, N.A. (Company)
By:
-----------------------------------
Chairman of the Board
Rick Paul Bartley
----------------------------------
Executive
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<PAGE> 1
EXHIBIT 10.4
[CFI LETTERHEAD]
DATE 11/25/91
ORDER REQUEST
<TABLE>
<CAPTION>
ORDER NO. ORDER DATE CUSTOMER NO. CUSTOMER P.O. NO. SALESPERSON REGION
<S> <C> <C> <C> <C> <C>
1844 Groskop 50
</TABLE>
SOLD TO:
- -------
NAME: MIAMI COUNTY NATIONAL BANK
ATTN: BETTY KERN
STREET: ONE S. PEARL STREET
CITY: PAOLA, KS 66071
PHONE: (913) 294-4311
FAX: (913) 294-4233
<TABLE>
<CAPTION>
QTY ORDERED ITEM NO./DESCRIPTION UNIT LIST PRICE EXTENDED LIST PRICE
<S> <C> <C> <C>
1 16200NN/Laser Pro Novell Network Disks N/C N/C
Upgrading to network - Not adding users.
Bank agrees to have only one workstation on
The network processing loans through LASER PRO.
</TABLE>
Special Instructions: 3 1/2 Disk Size Required
Customer Signature ACCEPTED BY
/s/ Phyllis Trickett /s/ J.M Swan
- ---------------------------- -----------------------------------
Printed Name/Title Printed Name/Title
Phyllis Trickett, Asst. V.P. Jeffrey M. Swan, SR. Vice President
- ---------------------------- -----------------------------------
Date: 11/29/91 Phone (913) 294-4311 Date: 12/3/91
<PAGE> 2
[CFI LETTERHEAD]
CFI LASER PRO
Maintenance and Service Agreement
[CF1 LOGO]
We are pleased to provide your LASER PRO Maintenance and Service Agreement from
CFI. It is effective once we have signed below and you have accepted our service
by installing LASER PRO. Please read this agreement carefully. Store your copy
of this agreement in a safe place. Make sure users keep the Agreement Number
handy when they call for assistance.
AGREEMENT NO. DATE OF AGREEMENT SUPPORT TELEPHONES TO CALL
91LP-0531U KSM100 9/27/91 1-800-274-7280
CUSTOMER NAME, STREET ADDRESS, CITY, STATE, ZIP
MIAMI COUNTY NATIONAL BANK
MARY ELLEN GILCHRIST
I SOUTH PEARL ST
PAOLA KS 66071
Application X Closing Tracking
-- --- --
Maintenance Fees
VARIABLE, $3.00 PER LOAN, $3000.00 ANNUAL MINIMUM, BILLED IN ADVANCE IN
QUARTERLY INCREMENTS.
State Laws Under Which you will Lend: KS
Expiration Date , 19 X Continuous
- -- ------------- -- ---
1. You may terminate this agreement
with 60 days written notice to CFI.
If Maintenance fees have been
prepaid, you will be entitled to a
prorata refund on the unused amount
less a $250 termination charge.
2. CFI may change its terms upon a
minimum 90 days written notice.
SERVICES PROVIDED: Payment of maintenance fees listed above entitles you to the
following services by CFI:
1. Updates - Updates to the presently editing functions of the software.
2. Toll Free Support - Unlimited access to CFI's 800 telephone support
during CFI's support hours (6:00 am to 6:00 PM Pacific Time).
3. Compliance Newsletter - Or a copy of the CFI compliance newsletter as
it is Published.
4. Corrections - Prompt corrections of any problems in the software that
are attributable to CFI and which significantly affect the use of the
software. CFI must be notified of the situation and you must help CFI
duplicate the problem. CFI will fix the problem without additional
charge. Correction will be made by CFI at the location of its
choosing.
CUSTOMER REQUIREMENTS:
You will pay CFI the maintenance fees as set forth above in accordance with the
terms of any related Invoice.
2. You will promptly Install mid use arty updates or corrections supplied
by CFI
3. You will run and promptly submit the activity mid transaction data
reports produced by the system. If the maintenance fees above are
based upon the number of loans produced by the system, then for the
purposes of this agreement a loan produced by the system shall mean
any lending transaction where some or all of the lending documents are
generated on LASER PRO and the transaction is consummated and boarded
on your books of account This includes all new loam, renewals.
extensions. and substitutions of older loans whether those loan
documents were created on LASER PRO or not.
4. If the maintenance fees we based upon the system transaction volume,.
then you realize these maintenance fees are rightfully due to CFI and
CFI has the right to audit your books (at CFI's cost) solely for the
purpose of determining that the appropriate information is being
provided to CFI so it may generate maintenance billings.
ADDITIONAL PROVISIONS:
1. CFI will not be required to fix any problems which are attributable to
your modifying the software or moving it to new or different hardware,
operating systems. networks or the like. CFI is not required to fix
any problems not caused by LASER PRO (such as local area network
problems).
2. Travel expenses we not covered by this agreement if CFI is required to
travel to your site to fix a problem, and that problem is caused by
you, then you will reimburse CFI its reasonable out-of-pocket travel
expenses.
3. This agreement is governed by the laws of the state of Oregon
CFI SHALL NOT BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER
OR ANY OTHER REMEDIES UNDER CONTRACT OR TORT THEORIES OF LAW, INCLUDING BUT NOT
LIMITED TO LOSS OF PROFITS, BUSINESS INTERRUPTIONS, LOSS OF BUSINESS REVENUE. OR
LOSS OF BUSINESS INFORMATION, ARISING OUT OF THE USE OF THE SOFTWARE EVEN IF CFI
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. CFI DISCLAIMS ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Additional Terms and Conditions (if any) shown on reverse.
CFI BANKERS SERVICE GROUP, INC.
AUTHORIZED SIGNATURE PRINTED NAME
/s/ J.M. Swan Jeffrey H. Swan, Sr. Vice President
-------------------------------- -----------------------------------
<PAGE> 3
[CFI LETTERHEAD]
CFI LASER PRO
Maintenance and Service Agreement
[CF1 LOGO]
We are pleased to provide your LASER PRO Maintenance and Service Agreement from
CFI. It is effective once we have signed below and you have accepted our service
by installing LASER PRO. Please read this agreement carefully. Store your copy
of this agreement in a safe place. Make sure users keep the Agreement Number
handy when they call for assistance.
AGREEMENT NO. DATE OF AGREEMENT SUPPORT TELEPHONES TO CALL
91LP-0531 KSM100 06/21/91 1-800-274-7280
CUSTOMER NAME, STREET ADDRESS, CITY, STATE, ZIP
MIAMI COUNTY NATIONAL BANK
MARY ELLEN GILCHRIST
I SOUTH PEARL ST
PAOLA KS 66071
Application X Closing Tracking
-- --- --
Maintenance Fees
$0.00 Per Loan or $350.00 Monthly Minimum
State Laws Under Which you will Lend: KS
Expiration Date , 19 X Continuous
- -- ------------- -- ---
1. You may terminate this agreement
with 60 days written notice to CFI.
If Maintenance fees have been
prepaid, you will be entitled to a
prorata refund on the unused amount
less a $250 termination charge.
2. CFI may change its terms upon a
minimum 90 days written notice.
SERVICES PROVIDED: Payment of maintenance fees listed above entitles you to the
following services by CFI:
1. Updates - Updates to the presently editing functions of the software.
2. Toll Free Support - Unlimited access to CFI's 800 telephone support
during CFI's support hours (6:00 am to 6:00 PM Pacific Time).
3. Compliance Newsletter - Or a copy of the CFI compliance newsletter as
it is Published.
4. Corrections - Prompt corrections of any problems in the software that
are attributable to CFI and which significantly affect the use of the
software. CFI must be notified of the situation and you must help CFI
duplicate the problem. CFI will fix the problem without additional
charge. Correction will be made by CFI at the location of its
choosing.
CUSTOMER REQUIREMENTS:
You will pay CFI the maintenance fees as set forth above in accordance with the
terms of any related Invoice.
2. You will promptly Install mid use arty updates or corrections suppled
by CFI.
3. You will run and promptly submit the activity mid transaction data
reports produced by the system. If the maintenance fees above are
based upon the number of loans produced by the system, then for the
purposes of this agreement a loan produced by the system shall mean
any lending transaction where some or all of the lending documents are
generated on LASER PRO and the transaction is consummated and boarded
on your books of account. This includes all new loam, renewals.
extensions. and substitutions of older loans whether those loan
documents were created on LASER PRO or not.
4. If the maintenance fees we based upon the system transaction volume,.
then you realize these maintenance fees are rightfully due to CFI and
CFI has the right to audit your books (at CFI's cost) solely for the
purpose of determining that the appropriate information is being
provided to CFI so it may generate maintenance billings.
ADDITIONAL PROVISIONS:
1. CFI will not be required to fix any problems which are attributable to
your modifying the software or moving it to new or different hardware,
operating systems. networks or the like. CFI is not required to fix
any problems not caused by LASER PRO (such as local area network
problems).
2. Travel expenses we not covered by this agreement if CFI to required to
travel to your site to fix a problem, and that problem is caused by
you, then you will reimburse CFI its reasonable out-of-pocket travel
expenses.
3. This agreement is governed by the laws of the state of Oregon
CFI SHALL NOT BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER
OR ANY OTHER REMEDIES UNDER CONTRACT OR TORT THEORIES OF LAW, INCLUDING BUT NOT
LIMITED TO LOSS OF PROFITS, BUSINESS INTERRUPTIONS, LOSS OF BUSINESS REVENUE. OR
LOSS OF BUSINESS INFORMATION, ARISING OUT OF THE USE OF THE SOFTWARE EVEN IF CFI
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. CFI DISCLAIMS ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Additional
Terms and Conditions (if any) shown on reverse.
CFI BANKERS SERVICE GROUP, INC.
AUTHORIZED SIGNATURE PRINTED NAME
/s/ J.M. Swan Jeffrey H. Swan, Sr. Vice President
-------------------------------- -----------------------------------
<PAGE> 4
[CFI LETTERHEAD]
CFI LASER(TM) PRO
Maintenance and Service Agreement
[CF1 LOGO]
We are pleased to provide your LASER PRO Maintenance and Service Agreement from
CFI. It is effective once we have signed below and you have accepted our service
by installing LASER PRO. Please read this agreement carefully. Store your copy
of this agreement in a safe place. Make sure users keep the Agreement Number
handy when they call for assistance.
AGREEMENT NO. DATE OF AGREEMENT SUPPORT TELEPHONES TO CALL
91LP-0531 KSM100 06/21/91 1-800-274-7280
CUSTOMER NAME, STREET ADDRESS, CITY, STATE, ZIP
MIAMI COUNTY NATIONAL BANK
MARY ELLEN GILCHRIST
I SOUTH PEARL ST
PAOLA KS 66071
Application X Closing Tracking
-- --- --
Maintenance Fees
$0.00 Per Loan or $350.00 Monthly Minimum
State Laws Under Which you will Lend: KS
Expiration Date , 19 X Continuous
- -- ------------- -- ---
1. You may terminate this agreement
with 60 days written notice to CFI.
If Maintenance fees have been
prepaid, you will be entitled to a
prorata refund on the unused amount
less a $250 termination charge.
2. CFI may change its terms upon a
minimum 90 days written notice.
SERVICES PROVIDED: Payment of maintenance fees listed above entitles you to the
following services by CFI:
1. Updates - Updates to the presently editing functions of the software.
2. Toll Free Support - Unlimited access to CFI's 800 telephone support
during CFI's support hours (6:00 am to 6:00 PM Pacific Time).
3. Compliance Newsletter - Or a copy of the CFI compliance newsletter as
it is Published.
4. Corrections - Prompt corrections of any problems in the software that
are attributable to CFI and which significantly affect the use of the
software. CFI must be notified of the situation and you must help CFI
duplicate the problem. CFI will fix the problem without additional
charge. Correction will be made by CFI at the location of its
choosing.
CUSTOMER REQUIREMENTS:
You will pay CFI the maintenance fees as set forth above in accordance with the
terms of any related Invoice.
2. You will promptly Install mid use arty updates or corrections suppled
by CFI.
3. You will run and promptly submit the activity mid transaction data
reports produced by the system. If the maintenance fees above are
based upon the number of loans produced by the system, then for the
purposes of this agreement a loan produced by the system shall mean
any lending transaction where some or all of the lending documents are
generated on LASER PRO and the transaction is consummated and boarded
on your books of account. This includes all new loam, renewals.
extensions. and substitutions of older loans whether those loan
documents were created on LASER PRO or not.
4. If the maintenance fees we based upon the system transaction volume,.
then you realize these maintenance fees are rightfully due to CFI and
CFI has the right to audit your books (at CFI's cost) solely for the
purpose of determining that the appropriate information is being
provided to CFI so it may generate maintenance billings.
ADDITIONAL PROVISIONS:
1. CFI will not be required to fix any problems which are attributable to
your modifying the software or moving it to new or different hardware,
operating systems. networks or the like. CFI is not required to fix
any problems not caused by LASER PRO (such as local area network
problems).
2. Travel expenses we not covered by this agreement if CFI to required to
travel to your site to fix a problem, and that problem is caused by
you, then you will reimburse CFI its reasonable out-of-pocket travel
expenses.
3. This agreement is governed by the laws of the state of Oregon
CFI SHALL NOT BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER
OR ANY OTHER REMEDIES UNDER CONTRACT OR TORT THEORIES OF LAW, INCLUDING BUT NOT
LIMITED TO LOSS OF PROFITS, BUSINESS INTERRUPTIONS, LOSS OF BUSINESS REVENUE. OR
LOSS OF BUSINESS INFORMATION, ARISING OUT OF THE USE OF THE SOFTWARE EVEN IF CFI
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. CFI DISCLAIMS ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Additional
Terms and Conditions (if any) shown on reverse.
CFI BANKERS SERVICE GROUP, INC.
AUTHORIZED SIGNATURE PRINTED NAME
/s/ J.M. Swan Jeffrey H. Swan, Sr. Vice President
-------------------------------- -----------------------------------
<PAGE> 5
x YES I accept and agree to the terms of the $1 Million CFI Warranty and the
- --- CFI LASER PRO Maintenance and Service Agreement, both which I have
received.
/s/ Mary E. Gilchrist
- ------------------------------------
Signature
Sr. V.P. 7/19/91
- ------------------------------------
Title Date
<PAGE> 6
[CFI LETTERHEAD]
CFI LASER(TM) PRO
Maintenance and Service Agreement
[CFI LOGO]
We are pleased to provide your LASER PRO Maintenance and Service Agreement from
CFI. It is effective once we have signed below and you have accepted our service
by installing LASER PRO. Please read this agreement carefully. Store your copy
of this agreement in a safe place. Make sure users keep the Agreement Number
handy when they call for assistance.
AGREEMENT NO. DATE OF AGREEMENT SUPPORT TELEPHONES TO CALL
91LP-0531U KSM100 9/27/91 1-800-274-7280
CUSTOMER NAME, STREET ADDRESS, CITY, STATE, ZIP
MIAMI COUNTY NATIONAL BANK
MARY ELLEN GILCHRIST
I SOUTH PEARL ST
PAOLA KS 66071
Application X Closing Tracking
-- --- --
Maintenance Fees
VARIABLE, $3.00 PER LOAN, $3000.00 ANNUAL MINIMUM, BILLED IN ADVANCE IN
QUARTERLY INCREMENTS.
State Laws Under Which you will Lend: KS
Expiration Date , 19 X Continuous
- -- ------------- -- ---
1. You may terminate this agreement
with 60 days written notice to CFI.
If Maintenance fees have been
prepaid, you will be entitled to a
prorata refund on the unused amount
less a $250 termination charge.
2. CFI may change its terms upon a
minimum 90 days written notice.
SERVICES PROVIDED: Payment of maintenance fees listed above entitles you to the
following services by CFI:
1. Updates - Updates to the presently editing functions of the software.
2. Toll Free Support - Unlimited access to CFI's 800 telephone support
during CFI's support hours (6:00 am to 6:00 PM Pacific Time).
3. Compliance Newsletter - Or a copy of the CFI compliance newsletter as
it is Published.
4. Corrections - Prompt corrections of any problems in the software that
are attributable to CFI and which significantly affect the use of the
software. CFI must be notified of the situation and you must help CFI
duplicate the problem. CFI will fix the problem without additional
charge. Correction will be made by CFI at the location of its
choosing.
CUSTOMER REQUIREMENTS:
You will pay CFI the maintenance fees as set forth above in accordance with the
terms of any related Invoice.
2. You will promptly Install mid use arty updates or corrections supplied
by CFI
3. You will run and promptly submit the activity mid transaction data
reports produced by the system. If the maintenance fees above are
based upon the number of loans produced by the system, then for the
purposes of this agreement a loan produced by the system shall mean
any lending transaction where some or all of the lending documents are
generated on LASER PRO and the transaction is consummated and boarded
on your books of account This includes all new loam, renewals.
extensions. and substitutions of older loans whether those loan
documents were created on LASER PRO or not.
4. If the maintenance fees we based upon the system transaction volume,.
then you realize these maintenance fees are rightfully due to CFI and
CFI has the right to audit your books (at CFI's cost) solely for the
purpose of determining that the appropriate information is being
provided to CFI so it may generate maintenance billings.
ADDITIONAL PROVISIONS:
1. CFI will not be required to fix any problems which are attributable to
your modifying the software or moving it to new or different hardware,
operating systems. networks or the like. CFI is not required to fix
any problems not caused by LASER PRO (such as local area network
problems).
2. Travel expenses we not covered by this agreement if CFI is required to
travel to your site to fix a problem, and that problem is caused by
you, then you will reimburse CFI its reasonable out-of-pocket travel
expenses.
3. This agreement is governed by the laws of the state of Oregon
CFI SHALL NOT BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER
OR ANY OTHER REMEDIES UNDER CONTRACT OR TORT THEORIES OF LAW, INCLUDING BUT NOT
LIMITED TO LOSS OF PROFITS, BUSINESS INTERRUPTIONS, LOSS OF BUSINESS REVENUE. OR
LOSS OF BUSINESS INFORMATION, ARISING OUT OF THE USE OF THE SOFTWARE EVEN IF CFI
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. CFI DISCLAIMS ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Additional
Terms and Conditions (if any) shown on reverse.
CFI BANKERS SERVICE GROUP, INC.
AUTHORIZED SIGNATURE PRINTED NAME
/s/ J.M. Swan Jeffrey H. Swan, Sr. Vice President
-------------------------------- -----------------------------------
<PAGE> 7
ADDENDUM TO
LASER PRO [TM] LICENSE AND MAINTENANCE AGREEMENT
FOR CUSTOMIZED LOGO ON LASER PRO FORMS
MIAMI COUNTY NATIONAL BANK
1 South Pearl St "CLIENT"
Paola, Kansas 66071
ATTN: Mary Ellen Gilchrist
PHONE: (913) 294-4311
CFI Bankers Service Group, Inc. "CFI"
220 N.W. Second Avenue, Suite 900
Portland, Oregon 97209
Client has entered into an Agreement with CFI entitled "CFI LASER PRO License
and Maintenance Agreement" (the"LASER PRO Agreement"). CFI will "develop the
customized Logo to be printed on LASER PRO Forms (the "Logo").
MODIFY LASER PRO AGREEMENT. The Client and CFI agree to modify the LASER PRO
Agreement by adding a Logo to the LASER PRO Agreement. The parties agree that
the terms and conditions contained In the LASER PRO Agreement are incorporated
by reference as part of this Addendum (Including without limitation to paragraph
entitled "Property Rights of CFI in the Software"), and the parties agree that
this Addendum is a part of the LASER PRO Agreement. The parties also agree to
the terms and conditions set forth In this Addendum.
PROGRAM CUSTOMIZED LOGO. CFI agrees to program the customized Logo submitted by
the Client and attached to this Addendum for the LASER PRO software and to
Incorporate the Client Logo in the software. The Customized Logo shall be a
camera ready sample and be attached to Exhibit A to this Addendum.
LICENSE. CFI hereby grants to Client a non-exclusive License for use of the
proprietary Logo. Client accepts from CFI a non-exclusive License for the use of
the proprietary Logo under this Addendum.
LICENSE AND FEE. Client will pay CFI the License Fee and the services for
programming and developing the customized Logo as follows:
<TABLE>
<CAPTION>
DESCRIPTION QUANTITY FEE PER UNIT TOTAL
----------- -------- ------------ -----
<S> <C> <C> <C>
LASER PRO Customized LOGO 1 $ 650.00 $650.00
</TABLE>
CLIENT UNDERSTANDING. In accepting a License for the use of the proprietary Logo
the Client understands that the Logo:
(a) Will print on the first line on the first page of LASER PRO forms
designated by CFI-.
(b) Cannot be printed on LASER PRO recorded documents or federal forms; and
(c) The Logo Is dedicated to the LASER PRO program licensed to the Client in
the LASER PRO Agreement.
PAYMENT TERMS. Ail payments due under this Addendum shall be made In accordance
with the payment schedule set forth In Exhibit A. All payments shall be made
within thirty (30) days of the date of Invoice. If partial deliveries are
authorized on Exhibit A, each shipment will be Invoiced and paid for when due
without regard to other scheduled deliveries. Prices and fees are exclusive of
all federal, state. municipal, and other governmental. excise, sales, use,
occupational, and like taxes now in force or enacted In the future and.
therefore, prices are subject to increase or subsequent adjustment equal in
amount to any tax CFI may be required to collect or pay upon the the sale or
delivery of items licensed under this Addendum. If a certificate of exemption or
similar document or proceeding is to be made In order to exempt the granting of
the license hereunder from sales or use tax liability, Client will obtain and
pursue the certificate, document, or proceeding.
RESTRICTIONS ON LOGO. Client agrees that it will not copy or duplicate, or
permit any physical or magnetic version of the Logo.
<PAGE> 8
ADDENDUM FOR CUSTOMIZED LOGO FOR LASER PRO(TM) FORMS
(Continued)
LIMITED WARRANTY AND REMEDIES. The following warranty and remedy provisions
apply to the Logo Licensed under this Addendum:
(a) Client Warranty. Client represents that the sample Logo submitted by
the Client is the Logo to program authority to reproduce and published
the Logo in the LASER PRO software.
(b) Logo. CFI provides the following limited warranty with respect to the
Logo Licensed under this Addendum. This limited warranty is for this
Addendum and is extended only to the Client.
(I) There is no legal impediment to the grant of the License for the
Logo,
(II) The Logo is fully recorded upon the disk.
(c) Remedies. Client acknowledges that in the event of any programming
errors, its sole remedy shall constitute correction by CFI of any such
errors and CFI shall not be liable for any incidental or consequential
damages whatsoever.
(d) NO OTHER WARRANTIES. CFI EXCLUDES ANY AND ALL IMPLIED WARRANTIES,
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, AND LIMITS CLIENT'S REMEDY WITH RESPECT TO THE LOGO TO RETURN
OF THE LOGO.
TERMINATION RIGHTS. If this Addendum lapses or is terminated, the License for
the Logo is canceled and the Client agrees to return the original Logo disks and
any backup disks. The provisions in the paragraph entitled "Proprietary Rights
of CFI in the Software" in the LASER PRO Agreement shall survive in the event
that the LASER PRO Agreement lapses or is terminated and the Client agrees to be
bound by those provisions.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be duly
executed and delivered as of the date it is accepted by CFI, which is shown
below.
MIAMI COUNTY NATIONAL BANK
DATE SIGNED: AUGUST 17, 1990 BY: /s/ MARY E. GILCHRIST
-------------------------------
(SIGNATURE)
MARY E. GILCHRIST,
SR. VICE-PRESIDENT
-------------------------------
(PRINT NAME AND TITLE)
CFI BANKERS SERVICE GROUP, INC.
DATE SIGNED: AUGUST 18, 1990 BY: /s/ J.M. SWAN
-------------------------------
(SIGNATURE)
JEFFREY M. SWAN,
SENIOR VICE PRESIDENT
-------------------------------
(PRINT NAME AND TITLE)
<PAGE> 9
EXHIBIT A TO ADDENDUM
LASER PRO [TM] LICENSE AND MAINTENANCE AGREEMENT
FOR CUSTOMIZED LOGO ON LASER PRO FORMS
PLEASE ATTACHE A CAMERA READY LOGO TO THIS PAGE
INSTRUCTIONS: PAPER CLIP THE LOGO ON THIS EXHIBIT. DO NOT STAPLE, TAPE, OR GLUE
LOGO TO THIS PAGE.
Return To: Debbie Lenoir
CFI Bankers Service Group, Inc.
220 N.W. Second Avenue, Suite 900
Portland, OR 97209
<PAGE> 10
AMENDMENT
TO
CFI LASER PRO [TM] LICENSE AND MAINTENANCE AGREEMENT
THE MIAMI COUNTY NATIONAL BANK
1 SOUTH PEARL
P.O. BOX 369 "CLIENT"
PAOLA, KANSAS 66071
ATTN: MARY ELLEN GILCHRIST
PHONE: (913) 294-4311
CFI Bankers Service Group, Inc.
220 N.W. Second Avenue "CFI"
Portland, Oregon 97209
Client has entered Into an Agreement with CFI entitled "CFI LASER PRO License
and Maintenance Agreement" (the "LASER PRO Agreement") dated____________.
Client desires to add additional LASER PRO programs or other Items to the LASER
PRO Agreement.
AMENDMENT TO LASER PRO AGREEMENT. The Client and CFI agree to amend the LASER
PRO Agreement by adding the LASER PRO programs and items set forth In Exhibit A
attached to this Amendment. The Client agrees to pay as set forth In Exhibit A.
Exhibits "A". "B"attached to this Amendment are part of this Amendment.
LIMITED WARRANTY AND REMEDIES. The following warranty and remedy provisions
apply to all Software licensed under this Amendment. This limited warranty Is
for the term of this Amendment and Is extended only to Client
(a) Technical Software Warranty. CFI provides the following limited warranty
with respect to all Software licensed under this Amendment:
(i) There is no legal impediment to the grant In this Amendment of the
License of the Software;
(ii) CFI will transfer to Client all manufacturers' warranties with respect
to the material of the Software disk;
(iii) The Computer Programs are fully recorded upon the disks;
(iv) The User's Manual contains the information which CFI deems to be
reasonably necessary for use of the Computer Programs; and
(v) The Computer Programs function substantially as described In the Users
Manual. CFl does not warrant that the operation of the Computer
Programs will be uninterrupted or error free.
(b) Exclusive Remedies Under Technical Software Warranty. During the technical
software warranty period, CFI wig design, code, review, document, and
deliver promptly any amendments or alterations to the Software that may be
required to correct errors In the Software and which significantly affect
performance, contingent upon Client advising CFI of errors. CLIENT
ACKNOWLEDGES THAT IN THE EVENT OF ANY SUCH PROGRAMMING ERRORS, ITS SOLE
REMEDY SHALL CONSTITUTE CORRECTION BY CFI OF ANY SUCH ERRORS AND CFI SHALL
NOT BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER.
(c) NO OTHER WARRANTIES. CFI EXCLUDES ANY AND ALL IMPLIED WARRANTIES, INCLUDING
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND
LIMITS CLIENTS REMEDY WITH RESPECT TO THE SOFTWARE TO RETURN OF THE
SOFTWARE AND THE USER'S MANUAL TO CFI FOR REPLACEMENT OR CORRECTION.
CONSUMER REVOLVING LINE-OF-CREDIT MODULE. CFI hereby grants to Client a
nonexclusive License for use of the Consumer Revolving Line-of-Credit Module
subject to the provisions set forth In this section on Consumer Revolving
Line-of-Credit Module. Client accepts from CFl a nonexclusive License for the
use of the Consumer Revolving Line-of-Credit Module pursuant to the conditions
and terms contained In this Amendment.
(a) Restrictions on CONSUMER REVOLVING UNE-OF-CREDIT MODULE. The Consumer
Revolving Line-Of-Credit Module License Is restricted for use with the
LASER PRO Program acquired by the Client. The Consumer Revolving
Line-Of-Credit Module License Is limited to the quantity set forth In
Exhibit A.
<PAGE> 11
PAGE 2
AMENDMENT TO CFI LICENSE AND MAINTENANCE AGREEMENT
(CONTINUED)
(b) MAINTENANCE FEES. The maintenance fees will billed monthly based on actual
use of LASER PRO in accordance with the terms and conditions contained in
this Amendment.
CONTINUING VALIDITY. Except as set forth above, all of the terms and conditions
of the LASER PRO Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AMENDMENT TO BE DULY
EXECUTED AND DELIVERED AS OF THE DATE IT IS ACCEPTED BY CFI, WHICH IS SHOWN
BELOW.
THE MIAMI COUNTY NATIONAL
BANK
Date Signed: Oct. 17, 1989 BY: /s/ MARY ELLEN GILCHRIST,
SR. VICE-PRESIDENT
--------------------------
(SIGNATURE) (TITLE)
Mary Ellen Gilchrist,
Sr. Vice-President
--------------------------
(PRINTED NAME AND TITLE)
CFI BANKERS SERVICE GROUP,
INC.
Date Signed: Oct. 20, 1989 BY: /s/ MICHAEL J. CLEMENT
--------------------------
(SIGNATURE) (TITLE)
Michael J. Clement VP
--------------------------
(PRINTED NAME AND TITLE)
<PAGE> 12
EXHIBIT A
FOR
AMENDMENT TO
CFI LASER PRO TM LICENSE AND MAINTENANCE AGREEMENT
OTHER LICENSE FEES AND PRODUCTS
<TABLE>
<CAPTION>
DESCRIPTION QUANTITY PRICE PER UNIT TOTAL
- ----------- -------- -------------- -----
<S> <C> <C> <C>
First Consumer Revolving
Line-of-Credit Module 1 $ 1,500.00 $ 1,500.00
SUB-TOTAL AMOUNT (Other Software and Services) $ 1,500.00
TOTAL AMOUNT* $ 1,500.00
BALANCE DUE UPON DELIVERY* 1,500.00
</TABLE>
(*Price does not include sales tax where applicable.)
ALL PRICES FIRM UNTIL SEPTEMBER 21,1989
Extension of pricing may be made upon receipt of written request.
CLIENT NAME: THE MIAMI COUNTY NATIONAL BANK
<PAGE> 13
EXHIBIT B
FOR
AMENDMENT TO
CFl LASER PRO [TM] LICENSE AND MAINTENANCE AGREEMENT
LOCATIONS FOR LASER PRO SOFTWARE
LOCATION ONE: THE MIAMI COUNTY NATIONAL BANK
1 SOUTH PEARL
P.O. BOX 369
PAOLA, KANSAS 66071
ATTN: MARY ELLEN GILCHRIST
PHONE: (913) 294-4311
CLIENT NAME: THE MIAMI COUNTY NATIONAL BANK
<PAGE> 14
CFI LASER PRO [TM] LICENSE AND MAINTENANCE AGREEMENT
MIAMI COUNTY NATIONAL BANK
P.O. BOX 369 "CLIENT"
PAOLA, KANSAS 66071
ATTN: MARY ELLEN GILCHRIST
PHONE: 913 294 4311
CFI Bankers Service Group, Inc.
220 N.W. Second Avenue "CFI"
Portland, Oregon 97209
Client wishes to obtain a license for software developed and owned by CFI.
CLIENT AND CFI AGREE AS FOLLOWS:
1. DEFINITIONS. Unless otherwise Indicated, the following terms shall have the
following meanings:
(a) AGREEMENT. The term "Agreement" means this License and exhibits
attached to this Agreement. Exhibits "A" and "B" attached to this
Agreement are part of this Agreement.
(b) CFL. The term "CFI" means CFI Bankers Service Group, Inc., an Oregon
corporation.
(c) CLIENT. The term "Client" means the customer named above In this
Agreement
(d) COMPUTER PROGRAMS. Th a term 'Computer Programs" means all computer
software programs specifically described on Exhibit A to this
Agreement, Including LASER PRO.
(e) INITIAL TERM. The term "Initial Term" means the Initial term of this
Agreement described in paragraph entitled "Term"
(f) LICENSE. The term "License" means the non-exclusive license and any
sublicense granted in this Agreement by CFI to Client of the Computer
Program.
(g) SOFTWARE. The term "Software" means all Computer Programs, the Users
Manual, and all related documentation. Information, data, manuals, and
training materials.
(h) USER'S MANUAL. The term "User's Manual" means any operator manuals or
manuals for the Computer Programs.
2. LICENSE. CFI hereby grants to Client and Client accepts from CFI, in
accordance with the terms and conditions of this Agreement, a non-exclusive
License for the use of the proprietary Computer Programs for the term of
this Agreement.
3. TERM. The Initial term of this Agreement will commence on the date this
Agreement is accepted by CFI and will continue until December 31, 1989
("Initial Term"). After the Initial Term, this Agreement automatically will
be renewed on an annual basis each year thereafter unless and until either
party notifies the other In writing, at least sixty (60) days prior to the
end of the year then ending, of that party's Intention to terminate this
Agreement as of that year and.
4. LICENSE AND MAINTENANCE FEES. During the term of this Agreement, the
following fee provisions will apply:
(a) LICENSE FEES. Client will pay CFI the License fee as set forth In
Exhibit A.
(b) MAINTENANCE FEES. Client will pay CFl the maintenance fees as set
forth In Exhibit A. The maintenance fees will be billed monthly as set
forth in Exhibit A and will be based on actual use of LASER PRO.
Promptly at the start of each month. Client will run the billing
report generated by LASER PRO covering loans for the prior month and
remit to CFl the fees shown on the report, less any adjustments
claimed by Client. It the form printed by LASER PRO does not
constitute an Invoice, Client shall send the form promptly to CFl for
preparation by CFI of an Invoice.
For purposes of this Agreement, the term "a loan made on LASER PRO"
shall mean any lending transaction where some or all of the lending
documents are generated on LASER PRO and the transaction Is
consummated and boarded on the Clients books of account. Without
imitation, the term Includes all now loans and all renewals,
extensions, and substitutions made on LASER PRO for old loans.
Client shall keep proper books, records, and accounts which shall show
all loans made on LASER PRO. CFI shall have the right, at Its expense,
at any time or from time to time, upon written notice of not less than
ton (10) days, to have an audit made of Client's relevant books,
records, and accounts by an accountant appointed by CFI. Any such
audit shall be made by an Independent certified public accountant or
registered accountant duly licensed and authorized to practice In
Client's state. It Is further understood that the scope of the audit
shall be strictly limited to a determination of the number of loans
made on
<PAGE> 15
PAGE 2
CFI LASER PRO [TM] LICENSE AND MAINTENANCE AGREEMENT
(Continued)
LASER PRO and that in conducting the audit, the confidentiality of
Client's records with its borrowers shall be given the highest
practical regard. It is further understood and agreed that CFl will
retain as confidential all audit information contained In the
above-described reports required by this Agreement, unless CFl is
required to divulge this confidential information pursuant to a valid
order of governmental entity with the legal right to order the
production of the information.
(c) CHANGE IN TERMS, CONDITIONS AND FEES. After the initial Term, CFl may
change any of its maintenance fees, terms and conditions at the
beginning of any calendar year, provided that CFI has given Client not
less than ninety (90) days prior written notice of the change.
(d) PAYMENT TERMS. All payments due under this Agreement shall be made In
accordance with the payment schedule set forth In Exhibit A. All
payments shall be made within thirty (30) days of the date of Invoice.
If partial deliveries are authorized on Exhibit A, each shipment will
be Invoiced and paid for when due without regard to other scheduled
deliveries. Prices and fees are exclusive of all federal, state,
municipal, and other governmental, excise, sales, use, occupational,
and like taxes now In force or enacted in the future and, therefore,
prices are subject to Increase or subsequent adjustment equal in
amount to any tax CFI may be required to collect or pay upon the sale
or delivery of Items licensed under this Agreement. If a certificate
of exemption or similar document or proceeding Is to be made In order
to exempt the granting of the license hereunder from sales or use tax
liability, Client will obtain and pursue the certificate, document or
proceeding.
5. DELAYS. CFI will not be liable for any damages or penalties due to delay in
delivery of the Software, or for failure to give notice of delay, when such
delay is due to factors beyond CFI's reasonable control, including, without
limitation, labor disputes, fire, delays in transportation, casualty, or
other acts of God, and delays In delivery by CFI's vendors or other
suppliers of materials. If Client Is unable to continue normal use of the
Software due to CFI's failure to provide maintenance as provided in
paragraph entitled "Software Maintenance," then Client shall be entitled to
an abatement of the monthly maintenance fee until such ti me as the failure
is cured.
6. PROPRIETARY RIGHTS OF CFL IN THE SOFTWARE. The following provisions relate
to CFI proprietary rights in the Software:
(a) NATURE OF RIGHTS AND TITLE. Client recognizes that the Software is
subject to the proprietary rights of CFI or CFI's licensor. Client
agrees with CFl that the Computer Programs, documentation, and all
information and data supplied by CFI In machine-readable form are
trade secrets of CFI or Its licensor, are protected by civil and
criminal law and by the law of copyright, are valuable to CFI, and
that their use and disclosure must be carefully and continuously
controlled. Client further understands that the Users Manual. training
aids, and other written materials are subject to federal and state
copyright laws.
(b) TITLE. CFl and/or its licensor retain title to the Software. Including
without Limitation the Computer Programs. Client shall keep each and
every Item to which CFI retains title free and clear of all claims,
liens, and encumbrances except those of CFI, and any act of Client,
voluntary or Involuntary, purporting to create such a claim, lien, or
encumbrance on such an Item shall be void and of no effect.
(c) RESTRICTIONS ON CLIENT'S USE. The Software supplied by CFI under this
Agreement Is for the sole use of Client on Clients owned or leased
equipment at the locations listed on Exhibit B.
(i) COMPETITIVE USES. Client agrees that while this Agreement Is In
effect or while it has custody or possession of any Computer Program
licensed under this Agreement, It will not directly or Indirectly
lease, license. sublicense, sell, offer, or negotiate to lease,
license, sell, or otherwise transfer any interest or permit any use by
a third party of the Software supplied under this Agreement. This
clause shall not be construed to prohibit Client from acquiring for
Its own use other software from third parties.
(ii) COPIES. Client agrees that it will not copy or duplicate, or
permit anyone else to copy or duplicate, any physical or magnetic
version of the Computer Programs, documentation, Information, or data
furnished by CFI in machine-readable form, or create or attempt to
create, or permit others to create or attempt to create, by reverse
engineering or otherwise, the source program or any part of the source
program from the object program or from other information made
available under this Agreement or otherwise, whether oral, written,
tangible, or Intangible. If Client desires additional copies for
multiple Installations, Client may purchase such copies from CFI at
CFI's then current multiple License fee sale discount price. ANY
BACKUP DISKS SENT TO CLIENT BY CFI SHALL BE USED BY CLIENT ONLY AS A
BACKUP TO THE ORIGINAL AND SHALL BE USED IF AND ONLY IF THE ORIGINAL
DISK BECOMES INOPERATIVE, DAMAGED, OR DESTROYED.
(d) NETWORK RESTRICTIONS. Client agrees that It will not Install any of
the Computer Programs on a network, including without limitation a
local area network, without notifying CFI and paying CFI the than
current fees for use of the Computer Programs on a network.
(e) OTHER USE RESTRICTIONS. All Computer Programs, documentation,
information, and data in machine-readable form supplied under this
License shall be kept by Client In a secure piece, under reasonably
limited access and use restrictions.
(f) UNAUTHORIZED ACTS. Immediately upon Client's knowledge, Client agrees
to notify CFl immediately of the unauthorized possession, use, or
knowledge of any Software supplied under this License and of other
Information made available to Client under this Agreement by any
person or organization not authorized by this Agreement to have such
possession, use or knowledge. Client will promptly furnish full
details of such possession, use, or knowledge to CFI, will assist In
preventing the recurrence of such possession, use, or knowledge, and
will otherwise cooperate with CFI to protect CFI's proprietary rights
in the Software.
(g) RETURN OF SOFTWARE. Upon termination of this Agreement or upon demand
of CFl after breach of this Agreement, Client will promptly deliver or
mail to CFl all Software, Including without limitation all Computer
Programs and backup disks.
<PAGE> 16
PAGE 3
CFI LASER PRO LICENSE AND MAINTENANCE AGREEMENT
(CONTINUED)
(h) RIGHT TO SOURCE PROGRAM. If CFI or its legal successor ceases to be In
the software business or if CFI or Its legal successor should be
declared bankrupt by a court of competent jurisdiction, Client will
have the right to obtain, for its own and sole use only, a single copy
of the then current version of the source. program of the object
programs supplied under this Agreement, and a single copy of the
documentation associated with the source program, upon payment to the
person In control of the source program of the reasonable cost of
making each copy. Each source program supplied to Client under this
section shall be subject to each and every restriction use set forth
In this Agreement, and Client acknowledges that the source program and
its associated documentation are valuable proprietary property of CFI
and will be guarded against unauthorized use or disclosure with great
care.
(i) RIGHTS RESERVED AN LAPSE OR TERMINATION. The provisions In paragraph
entitled "Proprietary Rights of CFI In the Software" shall survive In
the event that this Agreement lapses or is terminated and the Client
agrees to be bound to the provisions In paragraph entitled
"Proprietary Rights of CFl in the Software." After this Agreement
lapses or Is terminated, the Client shall return all Software and any
backup disks of the Software to CFI.
7. LIMITED WARRANTY AND REMEDIES. The following warranty and remedy provisions
apply to all software licensed under this Agreement.
(a) SOFTWARE. CFI provides the following limited warranty with respect to
all Software licensed under this Agreement. This limited warranty is
for the term of this Agreement and Is extended only to Client:
(i) There Is no legal impediment to the grant of the License of the
Software;
(ii) CFI will transfer to Client all manufacturers' warranties with
respect to the material of the Software disk;
(iii) The Computer Programs are fully recorded upon the disks;
(iv) The User's Manual is substantially complete and contains the
information which CFI deems to be reasonably necessary for use
of the Computer Programs; and
(v) The Computer Programs function substantially as described In the
User's Manual.
(b) REMEDIES. During the warranty period, CFI will design, code, review,
document, and deliver promptly any amendments or alterations to the
Software that may be required to correct errors in the Software and
which significantly affect performance In accordance with the
specifications, contingent upon Client advising CFl of errors. Client
acknowledges that in the event of any such programming errors, its
sole remedy shall constitute correction by CFI of any such errors and
CFI shall not be liable for any Incidental or consequential damages
whatsoever.
(c) NO OTHER WARRANTIES. CFI EXCLUDES ANY AND ALL IMPLIED WARRANTIES,
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE AND LIMITS CLIENTS REMEDY WITH RESPECT TO THE SOFTWARE TO
RETURN OF THE SOFTWARE AND THE USERS MANUAL TO CFI FOR REPLACEMENT OR
CORRECTION.
8. MAINTENANCE. During the term of this Agreement, upon payment of the
maintenance fees specified In Exhibit A, CFI will provide the following
maintenance support, services, and coverages:
8.1 SOFTWARE MAINTENANCE
(a) ENHANCEMENTS. CFI will supply Client free of charge with all updates (
including changes to reflect new legislation and case law), new
enhancements and modifications to the Software, excluding, however,
those which are sold by CFI as separate programs, modules, or as
options to the Software. Any changes, additions, and enhancements In
the form of new or partial programs or documentation as may be
provided by CFI under this Agreement shall remain as the proprietary
property of CFl as provided In the paragraph entitled "Proprietary
Rights of CFI In The Software of this Agreement, and shall be subject
to warranty and remedies provisions of paragraph entitled " Limited
Warranty and Remedies" of this Agreement.
(b) CORRECTIONS. CFI will correct the Software by remedying any
programming error which Is attributable to CFI and which significantly
affects the use of the Software. The correction will be accomplished
promptly by CFI after Client has Identified and notified CFI of any
such error in accordance with CFI's established reporting procedures.
Client agrees, if requested by CFI, to provide CFI with sufficient
support and lost time on Client's computer system to duplicate the
problem, certify that the problem Is related to CFI's Software, and
determine that the problem has been corrected.
(c) MODIFICATIONS. Client shall Inform CFI in writing of any modifications
or additions made by Client to the Software or created by Client on
the Software and shall send a copy of all such modifications and
additions to CFl on a floppy disk. CFI will not be responsible for
maintaining portions of the Software which are modified by Client or
modified by CFI at Client's request.
(d) CUSTOMER ERRORS. Corrections for difficulties or defects traceable to
Client error or system changes will be billed at standard time and
material rates.
(e) EXPENSES. The maintenance provided by CFI under this Agreement covers
only corrections and work performed at CFI's offices. If maintenance,
as a result of Client action, requires travel by CFl, Client shall
reimburse CFI for all travel related out-of-pocket expenses, Including
travel to and from the Clients site, lodging, meals, and telephone, as
may be necessary In connection with the duties performed hereunder by
CFI.
8.2 COMPLIANCE INFORMATION
(a) NEWSLETTER. CFl shall publish a monthly compliance and documentation
newsletter and deliver one copy to Client. Additional
<PAGE> 17
PAGE 4
CFI LASER PRO LICENSE AND MAINTENANCE AGREEMENT
(CONTINUED)
copies may be obtained at CFI's then prevailing fee for multiple
copies of the newsletter.
(b) COMPLIANCE QUESTIONS. CFI shall answer questions relating to LASER PRO
and other CFI products. Including loan documentation and compliance
issues as well as technical issues. CFI cannot and shall not, vender
legal advice to client.
(c) UPDATE FORMS. CFI shall update forms and systems, and develop new
forms as needed, to comply with applicable laws affecting the use of
the Software.
(d) LEGAL COUNSEL. Client recognizes that state law prevents CFI and any
Industry association sponsoring CFI (including the American Bankers
Association) from engaging in the practice of law. Therefore, neither
CFI nor any Industry association has or will make any representation
or issue any opinion express or implied, concerning the compliance of
the CFI forms or the LASER PRO forms with the laws of any state or to
laws of the United States, nor make any warranty of any nature,
express or implied. Any implied warranties of merchantability or
fitness for a particular purpose are disclaimed and excluded by CFI
and by the law firms retained by CFI. However, this shall In no way
relieve CFI of Its obligation to select competent legal counsel for
the purpose of generating and reviewing the CFI forms and LASER PRO
for purposes of both federal law and state law. Client agrees that the
initial selection of a law firm In the Client's home state represents
a sufficient exercise of that obligation. However, Client also
acknowledged that the responsibilities of the law firms go in favor of
CFI exclusively.
9. GENERAL PROVISIONS. The following general provisions am a part of this
Agreement:
(a) AMENDMENTS. Subject to paragraph entitled "'License and Maintenance
Fees" this Agreement or any term hereof may be changed, waived.
discharged, or terminated only In writing signed by each of the
parties to this Agreement.
(b) ASSIGNABILITY. This Agreement, or any interest herein or in the
Software, shall not be assigned, sublicensed, or otherwise transferred
to any party by Client without the prior written consent of CFI. Any
such transfer or attempt to transfer without such consent shall be
void and of no affect.
(c) ENTIRE AGREEMENT: This Agreement constitutes the entire understanding
between the parties with respect to the subject matter of this
Agreement and shall supersede any prior discussions, agreements, and
understandings between the parties with respect to such subject
matter.
(d) LAW GOVERNING. This Agreement will be governed by the laws of the
state of Oregon.
(e) NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have
been duly given if delivered or mailed, registered or certified mail,
postage prepaid, to the address at the beginning of this Agreement or
to such other address as any such party may have furnished to the
other party in writing.
(f) SUCCESSORS. Subject to the foregoing provision on assignability, all
of do terms and conditions of this Agreement shall be binding upon,
and shall Inure to the benefit of, and shall be enforceable by the
respective successors and assigns of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date is accepted by CFI, which Is shown below.
MIAMI COUNTY NATIONAL BANK
Date Signed: March 17 1989
BY: /s/ Mary E. Gilchrist, Sr. VP
----------------------------------
(Signature) (Title)
Mary E. Gilchrist
Sr. Vice-President
----------------------------------
(Printed Name and Title)
CFI Bankers Service Group, Inc.
Date Signed: March 21, 1989
BY: /s/ Steve Gould Vice President
----------------------------------
(Signature) (Title)
Steve-Gould Vice President
----------------------------------
(Printed Name and Title)
<PAGE> 18
EXHIBIT A
TO
CFI LASER PRO [TM] LICENSE AND MAINTENANCE AGREEMENT
LASER PRO SOFTWARE
<TABLE>
<CAPTION>
Fees
Quantity Per Unit Total
-------- -------- -----
<S> <C> <C> <C>
First Copy 1 $7,495.00 $7,495.00
Additional Copies
Total Price $7,495.00
Less 15% ABA Discount (For ABA Members Only) $1,124.00
NET PRICE $6,370.75
</TABLE>
OTHER SOFTWARE PRODUCTS AND SERVICES
<TABLE>
<CAPTION>
Fees
Quantity Per Unit Total
-------- -------- -----
<S> <C> <C> <C>
(1) Training $ 500.00
(2)
(3)
TOTAL* 6,870.75
</TABLE>
PAYMENT SCHEDULE
<TABLE>
<CAPTION>
Amount
------
<S> <C> <C>
A. 40% Advance deposit with Agreement 2,748.30
B. 60% Payment on Installation or delivery 4,122.45
TOTAL PAYMENT* $6,870.75
</TABLE>
SOFTWARE MONTHLY MAINTENANCE FEE
Maintenance will be billed monthly based on loans made per month by Client on
the Software at the following rates:
Each loan* N/A
Minimum monthly fee for each Client* $ 300.00
(* Price does not include sales tax where applicable.)
ALL PRICES FIRM UNTIL JANUARY 30,1999
Extension of pricing may be made upon receipt of written request.
CLIENT NAME: MIAMI COUNTY NATIONAL BANK
<PAGE> 19
EXHIBIT B
TO
CFI LASER PRO TM LICENSE AND MAINTENANCE AGREEMENT
LOCATION ONE: MIAMI COUNTY NATIONAL BANK
----------------------------------
(Name of Institution)
P.O. BOX 369
----------------------------------
(Street Address)
PAOLA, KANSAS 66071
----------------------------------
(City, State Zip)
(Phone Number)
MARY ELLEN GILCHRIST
----------------------------------
(Contact Person)
LOCATION TWO:
(Name of Institution)
(Street Address)
(City, State Zip)
(Phone Number)
(Contact Person)
LOCATION THREE:
(Name of Institution)
(Street Address)
(City, State Zip)
(Phone Number)
(Contact Person)
CLIENT NAME:
<PAGE> 1
EXHIBIT 10.5
DATA PROCESSING SERVICES AGREEMENT
THIS DATA PROCESSING SERVICES AGREEMENT is made as of this 22nd day of December
1992 (the "Agreement") by and between M&I Data Services, Inc., a Wisconsin
corporation ("M&I") and TeamBanc, Inc., Miami County National Bank, Iola Bank
and Trust Company, Kansas corporations, together with their subsidiaries and
affiliates (collectively referred to as the "Customer").
RECITALS
WHEREAS, M&I provides data processing services to customers located across the
country; and
WHEREAS, M&I desires to provide data processing services to Customer, and
Customer desires to have M&I provide it with such services.
NOW, THEREFORE, in consideration of the recitals and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Services M&I shall provide Customer with the data processing services
requested by Customer utilizing the version of the banking system software made
available from time to time by M&I through the M&I Service Bureau (the
"Services"). The functionality of the software and a further description of the
Services is attached as Exhibit A, and the User Manuals, copies of which will
be provided, or made available, to Customer. Unless otherwise indicated on
Exhibit A, Customer shall purchase all of its required data processing services
from M&I. Subject to M&I's consent, and Customer paying applicable conversion
fees, Customer shall have the right to process affiliates and subsidiaries it
may acquire using the Services. Unless otherwise agreed in writing between M&I
and Customer, and subject to the other provisions of the Agreement, M&I shall
make the On-line Services available to Customer, subject to normal downtime and
maintenance, at times indicated on the M&I On-line Availability Schedule,
attached hereto, as modified from time to time, with prior consent of Customer.
2. FEES AND TAXES. Customer agrees to pay for the Services received
hereunder as follows:
a. Amount of Fees. Commencing on the Conversion Date (as defined in
Section 3) and on the first day of each month thereafter through the end of the
term of this Agreement, Customer shall pay M&I a fixed monthly fee of eighteen
thousand seventy dollars ($18,070) per month (the "Fixed Monthly Fee"). The
Fixed Monthly Fee will be adjusted in accordance with the provisions of Exhibit
C. Customer also agrees to pay all communication costs, telecommunication
charges, printline charges and other output costs, start-up fees, pass-through
charges, out-of-pocket expenses, conversion expenses and fees, workshop fees,
training fees, and late fees or charges billed as miscellaneous on Customer's
invoice (the "Miscellaneous Fees"). The M&I standard published prices as of that
of this Agreement are set forth on the fee attached as Exhibit B.
1
<PAGE> 2
b. Additional Charges. In addition to the charges described above or
set forth in Exhibit B, Customer agrees to pay for any manufacturers, sales.
use, excise, personal property. or any other tax or charge, or duty or
assessment levied or assessed by any governmental authority upon or as a direct
result of the execution or performance of any service pursuant to this
Agreement or as direct materials furnished with respect to the Agreement,
except those taxes based on M&Is net income or based on personal property owned
by M&I.
c. Terms of Payment. Customer shall pay the Fixed Monthly Fee on the
first day of the month in which the Services are to be performed, and shall pay
all other amounts due hereunder within ten (10) days of the date such amounts
are invoiced to Customer. To effect the payment of the Fixed Monthly Fee,
Customer hereby authorizes M&I to initiate debit entries from and, if
necessary, initiate credit entries and adjustments to Customers, account at the
depository designated in the ACH Authorization Agreement. Debit entries for the
Fixed Monthly Fee will be made on the first day of each month for which
Services will be rendered under the Agreement. In the event that a payment day
is a nonbusiness day, entries will be made on the first preceding business day.
Customer shall authorize, on the attached ACH Authorization Agreement, debits
from and credits to its account for payment for Services received under the
Agreement. Amounts due other than the Fixed Monthly Fee shall not be subject to
payment through ACH. The Customer shall also pay reasonable collection fees and
reasonable attorneys' fees incurred by M&I in collecting payment of the charges
and any other amounts for which Customer is liable under the terms and
conditions of this Agreement.
d . Modification of Terms and Pricing. If Customer is in default and
M&I elects to continue to perform the Services, or if the Customer's tangible
capital or reserve requirements computed in accordance with applicable federal
regulations for itself or any of its affiliates receiving Services hereunder
are less than the required regulatory minimums, Customer agrees to pay M&I all
unamortized conversion expenses in advance of M&I performing any additional
Services. In addition, Customer agrees that all charges for Services shall be
computed using M&I's then-current standard published prices, paid in advance as
determined by M&I. At M&I's option, such Services shall be provided on a
month-to-month basis after providing Customer one hundred twenty (120) days'
prior written notice. Upon Customers cure of default, the pricing structure
shall revert to that described in Section 2a of this agreement.
3. Term.
a. Initial Term. This Agreement shall be effective upon execution by
both parties, and both parties will promptly undertake the conversion
activities necessary to process Customer's data. M&I currently anticipates,
subject to Customer's timely and satisfactory completion of its
responsibilities described in the M&I Conversion Manual and in the Conversion
Schedule to be established by M&L and agreed to by Customer, that all
conversion activities will be completed on July 26. 1993 (the "Conversion
Date"). The term of this Agreement shall continue for a period of ninety-seven
(97) months from the Conversion Date.
b. Renewal Obligations. During any renewal term, or for any Services
provided after the end of the initial term, whether or not the Agreement is
renewed, Customer agrees that the terms of this Agreement shall continue to
apply.
4. AFFILIATES. All processing for Customer and Customer's subsidiaries and
affiliates for which M&I provides Services under this Agreement shall be done
in accordance with the terms and conditions of this Agreement, Customer agrees
that it is responsible for assuring compliance with the
2
<PAGE> 3
Agreement by its affiliates and subsidiaries. Customer agrees to be responsible
for the submission of its affiliates data to M&I for processing and for the
transmission to Customer's affiliates of such data processed by and received
from M&I. Customer agrees to pay any and all fees owed under this Agreement for
Services hereunder.
5. CONFIDENTIALITY. Both parties will, to the extent and in accordance with
their policies used to protect their own information of similar importance, use
their best efforts to refrain from and prevent the use of or disclosure of any
confidential information of the other party, disclosed or obtained by such
party while performing its obligations under this Agreement, except when such
use or disclosure is for the purpose of providing the Services. Neither party
will have an obligation of confidentiality with regard to any information
insofar as the same: (a) was known to such party prior to disclosure; (b) is or
becomes publicly available other than as a result of a breach of this
Agreement; or (c) is disclosed to such party by a third party not subject to an
obligation of confidentiality. Nor shall the obligation of confidentiality
occur where disclosure is made pursuant to: (a) any law of the United States or
any state thereof, (b) the order of any court or governmental agency; or (c)
the rules and regulations of any governmental agency.
6. PROGRAMMING. M&I reserves the right to determine the programming
(whether hardware or software) utilized with the equipment used in fulfilling
its duties under this Agreement. All programs (including ideas and know-how and
concepts) developed by M&I are and remain its sole property.
7. EQUIPMENT. Customer shall obtain and maintain at its own expense such
data processing and communications equipment as may be necessary or appropriate
to facilitate the proper use and receipt of the Services. Customer shall pay
all installation, monthly, and other charges relating to the installation and
use of communications lines in connection with the Services. M&I shall not be
responsible for the reliability monitoring or continued availability of the
communications lines used by Customer in accessing the Services.
8. SUPPLIES. Customer shall pay for all supplies used in connection with
the Services. All forms, supplies, or materials used in processing Customer's
items and input data shall meet M&I's specifications.
9. SYSTEMS MODIFICATION; AMENDMENT OF SERVICES. M&I may modify, amend,
enhance, update, or provide the appropriate replacement for any of the
Services, the software used to provide the Services, or any element of its
systems at any time to: (a) improve the Services or (b) facilitate the
continued economic provisions of the Service. M&I may, at any time, withdraw
any of the Services upon providing one hundred twenty (120) days' prior written
notice to Customer, provided, however, that there shall be no material
reduction in the functionality of the Core Services (Deposit System, Loan
System, CIS, and FC). M&I may also terminate any of the Services immediately
upon any regulatory, legislative, or judicial determination that providing such
Services is inconsistent with applicable law or regulation or upon imposition
by any such authority of restrictions or conditions which would detract from
the economic or other benefits to M&I or Customer to any element of the
Services.
10. DISASTER RECOVERY. M&I maintains, and shall continue to maintain
throughout the term of this Agreement, off-site disaster recovery capabilities
which permit M&I to recover from a disaster and continue providing Services to
Customers within a commercially reasonable period. An executive summary of the
current disaster recovery plan, which may change from time to time, is
available upon request from M&I at no charge. M&I shall test the operation and
effectiveness of its disaster recovery plan at least annually. M&I maintains,
and shall continue to maintain throughout the term of this Agreement, a backup
power supply system to guard against electrical outages.
11. EVENTS OF DEFAULT. It shall be an Event of Default on the part of the
Customer if (a) Customer is insolvent, or a receiver or conservator shall be
appointed with respect to the Customer; or (b) Customer shall fail to pay any
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sum due M&I within the prescribed time; or (c) if the Customer shall fail to
perform any of its other material covenants or obligations under this Agreement
where the failure of Customer to perform has a material adverse impact on M&I
and is material to the performance of Customer's obligation hereunder. It shall
be an Event of Default on the part of M&I if (a) M&I is insolvent or a receiver
or conservator shall be appointed with respect to M&I; or (b) M&I shall fail to
perform any of its obligations under this Agreement where the failure of M&I to
perform has a material adverse impact on Customer and is material to the
provision of the Services, except for those obligations under Section 20 of
this Agreement as to which the Agreement provides specific remedies for M&I's
failure to perform. The defaulting party shall have forty-five (45) days from
the date of receipt of notice from the nondefaulting party of nonpayment or
nonperformance to cure such an Event of Default, before the nondefaulting party
may exercise any remedies it may have as a result of the Event of Default.
12. REMEDIES UPON DEFAULT: LIMITATION OF LIABILITIES. If an Event of
Default occurs on the part of the Customer, and is not cured within the
forty-five (45) day period prescribed in Section 11, M&I may (a) terminate this
Agreement; (b) terminate access to its central processing unit by the Customer
as hereinafter provided; and (c) declare all sums then due and owing plus a sum
equal to forty percent (40%) of the total estimated remaining unpaid monthly
processing fees immediately due and payable and file suit for or otherwise
obtain payment from the Customer of any fees or other sums due it pursuant to
this Agreement, plus any actual damages to its equipment or systems caused by
the Customer's actions, failures to act, equipment, systems, or communication
facilities. If an Event of Default occurs on the part of M&I, and is not cured
within the forty-five (45) day period prescribed in Section 11, the Customer
may only: (a) terminate this Agreement and (b) file suit or otherwise obtain
payment of an aggregate amount of up to the greater of (1) one hundred thousand
dollars ($ 100,000) or (2) the amount of fees paid by the Customer to M&I
hereunder during the six (6) months immediately preceding the Event of Default.
Either party may also seek specific performance, including injunctive relief,
for a breach of Section 5 of this Agreement. M&I and the Customer agree that
these damage provisions are reasonable in light of all present predictable
circumstances (including expectable actual damages in that the fees to be
charged by M&I hereunder do not include amounts sufficient to insure against
greater claims). M&I and Customer expressly waive all claims for additional,
incidental, consequential, compensatory, or punitive damages and agree that the
remedies set forth in this Agreement shall be the sole and exclusive remedies
of the parties. No lawsuit or other action may be brought by either party
hereto or on any claim or controversy based upon or arising in any way out of
this Agreement after one (1) year from the date of the occurrence allegedly
giving rise to the action, except for nonpayment of sums due to M&I by
Customer. M&I agrees that except in the case of an Event of Default relating to
a breach by the Customer of its confidentiality obligations under Section 5 of
this Agreement, M&I will not exercise its remedy to terminate Customer's access
to the M&I central processing unit so long as: (a) Customer is current in the
payment of all amounts due M&I as reflected on M&I's last invoice to Customer;
and (b) only exercise such remedy after providing Customer with one hundred
twenty (120) days' prior written notice.
13. TERMINATION.
a. End of Initial Term. This Agreement shall automatically be extended
at the end of the initial ninety-seven (97) month term for one additional six
(6) month renewal term, unless the Customer gives M&I at least one hundred
eighty (180) days' prior written notice of its intent to terminate, which
notice may be given during the initial term of the Agreement.
b. Termination Upon Default This Agreement may also terminate upon an
Event of Default and failure to cure beyond applicable cure periods at the
option of the nondefaulting party as set forth in Section 12 hereof.
c. Termination by Customer. Customer may terminate this Agreement at
any time, and without cause, by giving M&I at least one hundred eighty (180)
days' prior written notice and paying M&I the then-applicable buyout amount set
forth in Section 21a.
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d. Termination for Change in Control of M&I. This Agreement may be
terminated at the option of the Customer by paying the buyout amount stated in
Section 21c herein in the event of a change in control of M&I during the term
of this Agreement or any extension thereof; provided, however, (1) the Customer
gives M&I ninety (90) days' prior written notice of such termination, (2) such
termination occurs not less than one (1) year and not more than eighteen (18)
months following the date of the change in control M&I, and (3) during the one
(1) year period following the date of the change in control of M&I, (a) the
Customer is required to convert any one or more of the Core Services (M&I's
Deposit, Loan, Customer Information, and Bank Control Systems) to a different
system, and (b) there has been a material adverse change in the functionality
of the Core Services following such conversion, compared with the standard
described in Section 16a of this Agreement, and (c) M&I has failed to correct
such deficiency following written notice thereof from the Customer and an
opportunity to cure the same.
For the purpose of this Section, change in control shall mean the
acquisition by a person not now in control (within the meaning of this
definition) of more than fifty percent (50%) of either the voting power or
value of the outstanding capital of M&I or the right to elect at least fifty
percent (50%) of the directors of M&I.
14. REGULATORY ASSURANCES. M&I and Customer acknowledge and agree that the
performance of these Services will be subject to regulation and examination by
Customer's regulatory agencies to the same extent as if such Services were
being performed by Customer. Upon request, M&I agrees to provide any
appropriate assurances to such agency and agrees to subject itself to any
required examination or regulation. Customer agrees to reimburse M&I for
reasonable costs actually incurred due to any such examination or regulation
that is performed solely for the purpose of examining data processing services
used by Customer.
a. NOTICE REQUIREMENTS. The Customer shall be responsible for
complying with all regulatory notice provisions to any applicable governmental
agency, which shall include providing timely and adequate notice to the Chief
Examiner of the Federal Home Loan Bank Board, the Office of Thrift Supervision,
the Office of the Comptroller of the Currency, The Federal Deposit Insurance
Corporation, the Federal Reserve Board, or their successors, as applicable
(collectively, the "Federal Agency"), as of the effective date of Services
under this Agreement, identifying those records to which this Agreement shall
apply and the location at which such Services are to be performed.
b . EXAMINATION OF RECORDS. The parties agree that the records
maintained and produced under this Agreement shall, at all times, be available
for examination and audit by governmental agencies having jurisdiction over the
Customer's business, including (without limitation) the Federal Agency. The
Director of Examinations of the Federal Agency or his designated representative
shall have the right to ask for and to receive directly from M&I any reports,
summaries, or information contained in or derived from data in the possession
of M&I related to the Customer. M&I shall notify Customer as soon as possible
of any formal request by an authorized governmental agency to examine
Customer's records maintained by M&I, if M&I is permitted to make such a
disclosure to Customer under applicable law or regulations. Customer agrees
that M&I is authorized to provide all such described records when formally
required to do so by this authorized governmental agency.
c. FIDELITY BONDS. M&I shall maintain fidelity bond coverage for M&I
and its employees throughout the term of the Agreement.
d. NOTICE OF CHANGES. Customer shall give to the Director of
Examinations of the Federal Agency at least thirty (30) days' notice of the
termination of this Agreement or of any material changes in the Services to be
provided hereunder.
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e. Insurance. Throughout the term of this Agreement, M&I shall
maintain insurance coverage (or shall be self-insured) for losses from fire,
disaster, and other causes contributing to interruption of the Services. The
proceeds of such insurance shall be payable to M&I. Nothing in this Agreement
shall be construed as to permit Customer to receive any of such proceeds, or to
be named as an additional loss payee under any insurance policy.
f. FINANCIAL INFORMATION. Upon request, Customer agrees to provide M&I
with a copy of the call report filed with the Federal Agency and to provide
such additional financial information as to its creditors or others as M&I may
reasonably request.
15. TRANSPORTATION AND/OR TRANSMISSION OF DATA. The responsibility and
expense for transportation and/or transmission of and risk of loss of data and
media to and from M&I's datacenters, shall be borne by Customer. M&I will
notify Customer of the time by which Customer's data and media must be
delivered to M&I for processing for M&I to provide Customer's processed data
within the time period indicated by M&I.
16. RESPONSIBILITY.
a. GENERAL. M&I agrees to perform the Services in a commercially
reasonable manner and in a manner which is similar to the services provided to
other M&I customers, and no other or higher degree of care. M&I shall be held
to no other or higher standard of care except as may be expressly set forth in
this Agreement. M&I shall not be responsible for loss or damage due to delays
in processing or in the delivery of processed data as a result of any of the
causes excused by Section 19 hereof. M&I WILL IN NO EVENT BE LIABLE FOR ANY
INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES INCURRED BY CUSTOMER INCLUDING,
BUT NOT LIMITED TO, LOST PROFITS OR BUSINESS OPERATION LOSS, REGARDLESS OF
WHETHER M&I WAS ADVISED OF THE POSSIBLE OCCURRENCE OF SUCH DAMAGES.
b. RELIANCE ON DATA SUPPLIED. M&I will process items and data and
perform those Services described in this Agreement on the basis of information
furnished by Customer. M&I shall be entitled to rely upon any such data,
information, or instructions as provided by Customer. If any error results from
incorrect input supplied by Customer, Customer shall be responsible for
discovering and reporting such error and supplying the data necessary to
correct such error to M&I for processing at the earliest possible time. In the
event of any damage to a third party as a result of such error, Customer will
indemnify and hold M&I harmless from any cost, claim, damage, or liability
(including attorneys' fees) whatsoever arising out of such data, information or
instructions, or any inaccuracy or inadequacy therein. Customer assumes all
risk of loss, delay, and miscommunication in the transportation or transmission
by electronic means of data and information from any terminal or remote unit
unless the same is caused by or attributable to any act or omission on M&I's
part, which act or omission does not meet the standard of care in Section
16(a), or was caused by or attributable to any gross negligence or willful
failure on M&I's part to comply with its obligations under THIS Agreement.
c. DATA BACKUP. Customer shall maintain adequate records including
microfilm images of items being transported to M&I for at least ten (10)
business days' backup on magnetic tape or other electronic media where
transactions are being transmitted to M&I, from which reconstruction of lost or
damaged items or data can be made. Customer assumes an responsibility and
liability for any loss or damage resulting from failure to maintain such
records.
d. AUDIT. M&I shall cause a third-party review of its data processing
systems and Services to be conducted annually by its independent auditors. M&I
shall provide Customer, upon request, at its then-current charge, one copy of
the report resulting from such review.
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e. REGULATORY COMPLIANCE. The Services will be provided in compliance
with applicable federal laws and regulatory requirements. Customer is
responsible for determining that the forms which are used which are provided by
Customer or third-party vendors and the method of retaining its records comply
with all applicable laws. Should Customer need information from the Services
M&I provides in order to comply with applicable federal or state laws and
regulations, Customer is sole remedy, ind M&I's sole obligation shall be for W
to provide the ability to process the information requested from the Customer
as promptly as is commercially practicable. M&I agrees that with respect to
changes required as a result of changes in state or federal law, such changes
shall be undertaken as a priority project based on the regulatory deadline
imposed for compliance.
f. BALANCING AND CONTROLS. On a daily basis, Customer shall review all
input and output, controls, reports, and documentation, to ensure the integrity
of data processed by M&I. In addition, Customer shall, on a daily basis, check
exception reports to verify that all file maintenance entries and nondollar
transactions were correctly entered. Customer is responsible for initiating
timely remedial action to correct any improperly processed data which these
reviews would disclose.
g. SERVICE DEFICIENCIES. If Customer is aware that a defect exists in
a Service, Customer shall be responsible for making whatever appropriate
adjustments may thereafter be necessary until M&I corrects the defect and, if
requested by Customer, M&I will, at M&I's expense, assist Customer in making
such corrections through the most cost-effective means, whether manual, by
system reruns, or program modifications. M&I will make every effort to correct
any known material defect as soon as commercially reasonable at M&I's expense.
17. OWNERSHIP OF DATA. Customer is the owner of all of its data supplied by
Customer to M&I for processing hereunder. Customer acknowledges that it has no
rights in any of the software, systems documentation, guidelines, procedures,
and similar related materials or any modifications thereof except with respect
to M&Is use of the same during the term of this Agreement to process data. Upon
termination of this Agreement, M&I shall provide Customer with all copies of
Customer's data in a format that is being used by M&I at that time for
processing such data. Prior to the release of the Customer's data: (a) all
amounts owed under this Agreement by Customer to M&I shall be current and paid
in full, and (b) Customer shall pay M&I its "Estimated Deconversion Expenses"
as described below. Customer agrees to pay M&I for M&I's work in providing such
data at M&I's rates then in effect for computer and personnel time, supplies,
and other items as required, and Customer further agrees to pay M&I for any and
all charges associated with the deconversion of Customer's data based on M&I's
then-current charges for such Services. M&I shall make a good faith estimate of
all of such costs, expenses, and charges which shall be paid by Customer in
advance (the "Estimated Deconversion Expenses"). The difference, if any,
between the actual expenses and the prepaid Estimated Deconversion Expenses
shall be promptly paid after determination.
18. WARRANTIES M&I REPRESENTS AND WARRANTS that:
a. Capability of Computer Systems and Software. M&I's computer systems
(hardware and software) are capable of performing the Services in accordance
with the provisions of this Agreement. The software used to provide the Services
will operate substantially in accordance with the specifications and
documentation for the software as modified from time to time to incorporate
enhancements or modifications of the software to provide the Services.
b. Quality of Service. The reports and Services made available to
Customer shall be in substantial conformity with the User Manuals, as amended
from time to time, copies of which have been, or will be, provided to Customer.
c. Property Rights. M&I has the right to provide the Services
hereunder, using all computer software required for that purpose.
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d . Organization and Approvals. M&I is a validly organized corporate
entity with valid authority to enter into this Agreement. This Agreement has
been duly authorized by all necessary corporate action.
e. Disclaimer of Warranties EXCEPT AS DESCRIBED IN THIS AGREEMENT, M&I
DISCLAIMS ALL OTHER WARRANTIES, WHETHER WRITTEN, ORAL, EXPRESSED OR IMPLIED
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
19. FORCE MAJEURE. M&I and Customer shall not be liable to each other if
either party's fulfillment or performance of any terms or provisions of this
Agreement is delayed or prevented by revolution or other civil disorders, wars,
acts of enemies, strikes or labor disputes involving third par-ties, fires,
floods, acts of God, federal, state, or municipal action, statute, ordinance or
regulation, or, without limiting the foregoing, any other causes not within its
reasonable control, and which by the exercise of reasonable diligence it is
unable to prevent, whether of the class of causes hereinbefore enumerated or
not. Nothing contained herein shall limit Customer's obligation to pay for
Services actually received.
20. DATA SERVICES RELIABILITY AND RESPONSIVENESS Subject to the
nonoccurrence of a force majeure and the performance of Customer's obligations
described in this Agreement, M&I agrees that the services will be provided in
accordance with the following standard. M&I will initiate batch processing
transmission to Customer or make the processed items and reports available for
delivery within six (6) hours after receiving all input data from Customer, and
with such performance being achieved a minimum of ninety percent (90%) of the
time measured over a calendar month. M&I will ensure that its on-line network
is available for the processing of Customer's on-line transactions at a minimum
of ninety-five percent (95%) of the time measured over a calendar month at the
point of departure from M&I's communications controller. Upon receipt of data
transmitted by Customer at M&rs communications controller, M&I will process the
transaction within 2.5 seconds for teller transactions and within 4.0 seconds
for CRT transactions at a minimum ninety-seven percent (97%) of the time
measured over a calendar month. Customer will notify M&I in writing if this
level of performance is not achieved, and M&I shall have ninety (90) days to
meet this performance standard. If after ninety (90) days the performance
standard still has not been met, the Customer's sole remedy shall be to either
(a) terminate the Agreement without payment of any contract buyout upon giving
M&I written notice within thirty (30) days after the expiration of the ninety
(90) day cure period, or (b) accept such deficient levels which M&I does
achieve. M&I assumes no other liability, express or implied, with respect to
its obligations set forth in this paragraph. Notwithstanding the foregoing to
the extent M&I's performance falls below the performance standard set for the
above and the resulting performance constitutes a violation of the provision of
Section 16a, Customer retains its rights thereunder to terminate this Agreement
for a default.
21. CONTRACT BUYOUT
a. Customer may terminate this Agreement at any time by giving M&I at
least one hundred eighty (180) days' prior written notice and paying M&I forty
percent (40%) of the total estimated remaining unpaid monthly processing fees.
For the purpose of this computation, total estimated remaining unpaid monthly
processing fees shall be equal to the mean average of the total monthly fees
paid in the three (3) months preceding the termination notice, multiplied by
the number of months remaining in the Agreement.
b. The contract buyout amount set forth above shall be paid prior to
the deconversion of any affected accounts. The contract buyout amount shall be
paid by Customer regardless of the form by which the termination occurs.
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c. Customer may terminate this Agreement in accordance with the
provisions of Section 13d by paying M&I thirty percent (30%) of the total
estimated remaining unpaid monthly processing fees. For the purpose of this
computation, total estimated remaining unpaid monthly processing fees shall be
equal to the mean average of the total monthly fees paid in the three (3)
months preceding the termination notice, multiplied by the number of months
remaining in the Agreement.
22. IRS FILING. Customer has complied with all laws, regulations,
procedures, and requirements in attempting to secure correct tax identification
numbers (TINs) for Customer's payees and agrees to attest to this compliance by
an affidavit provided annually. Customer authorizes M&I to act as Customer's
agent and sign on Customer's behalf the Affidavit required by the Internal
Revenue Service on Form 4804, or any successor form.
Customer acknowledges that M&I's execution of the Form 4804 Affidavit
on Customer's behalf does not relieve Customer of responsibility to provide
accurate TINs or liability for any penalties which may be assessed for failure
to comply with TIN requirements. Customer agrees to hold M&I harmless from any
liabilities, claims, expenses, penalties, or damages (including attorneys'
fees) which may be assessed or incurred as a result of the failure to comply
with TIN requirements.
23. EXPENSE REIMBURSEMENTS. Customer agrees to reimburse M&I for all
out-of-pocket expenses (travel, lodging, meals, long distance telephone calls,
and printing and copying charges) reasonably incurred in connection with the
conversion of Customer's accounts to the M&I system. The reimbursement of such
expenses is in addition to conversion charges which may arise after the
conversion, or with respect to accounts which are not currently customer
accounts which are to be converted to the M&I system. M&I shall estimate such
expenses in advance, and Customer shall pay such expenses upon execution of
this Agreement. M&I shall provide Customer with a summary invoice of actual
expenses, and any adjustments shall be paid upon delivery of the invoice.
24. FINDER'S FEES. M&I will provide Customer with a credit which may be
used to offset data processing fees for Services (excluding Miscellaneous Fees)
in an amount equal to one (1) month's processing fees for Customer's
correspondent or affiliated institutions whose data was not being processed by
M&I, but will be processed by M&I utilizing remote input processing sites owned
by Customer; provided, however, that the credit shall not exceed fifty thousand
dollars ($50,000) for any individual bank, or more than one hundred thousand
dollars ($ 100,000) for any group of banks or bank holding company.
If Customer introduces a lead to M&I, which M&I was not previously
working, and Customer assists M&I by introducing the prospect to M&I, followed
by Customer assistance and involvement in the selling process (not limited to
Customer site visits, referrals, presentations, etc.) for the purpose of
selling M&I Services, and the financial institution signs a processing
agreement with M&I, M&I will credit Customer an amount equal to one (1) month's
processing fees of the new customer, which may be used to offset data
processing fees for Services (excluding Miscellaneous Fees) provided M&I agrees
in advance to pay such compensation to Customer. The Finder's Fee, as described
above, shall be based upon and payable after the first month's use of the
ordinary Services following the completion of all conversions of the new
financial institution as proposed. The credit shall not exceed fifty thousand
dollars ($50,000) for any individual bank, or more than one hundred thousand
dollars ($100,000) for any group of banks or bank holding company.
25. PRODUCT SUPPORT. Customer agrees to maintain a staff of individuals who
are trained and understand the system used to provide the Services required for
M&I to provide the ongoing Services. The individual's will have primary
responsibility for assisting and guiding the Customer's user community in the
proper use of the systems, and providing first line of support to the users
after conversion. The primary contact with M&Is technical, operational, and
product support staff will be through these individuals.
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26. CONVERSION OBLIGATIONS. Both parties agree to make a good faith effort
to convert Customer's data in a timely fashion and to perform the conversion in
accordance with the responsibilities set forth in the M&I Conversion Manual,
the Conversion Schedule, and this Agreement. Customer agrees to maintain an
adequate staff of persons who are knowledgeable with the systems currently used
by Customer to process data. Customer further agrees to provide such Services
and perform such obligations as are contemplated by the M&I Conversion Manual
and the Conversion Schedule, and as necessary for Customer to timely and
adequately perform its obligations herein and therein. Customer shall pay or
reimburse M&I for all out-of-pocket expenses and on a time- and- materials
basis for any of its personnel, or any independent contractors, who perform
conversion or related services (including items identified as Customer
Responsibilities in the Conversion Manual) for Customer. Customer further
agrees to cooperate fully with all reasonable requests of M&I necessary to
effect the conversion in a timely and efficient manner. Customer agrees to
reimburse M&I for all conversion charges whether for the initial conversion, or
for the subsequent conversion of additional accounts as they are incurred or
for the conversion of products not identified in the Proposal.
27. USE OF THE SERVICES. (a) Customer assumes responsibility for the
consequences of any instructions Customer may give M&L for Customer's failure
to properly access the Services in the manner prescribed by M&I, and for
Customer's failure to supply accurate input information; (b) Customer agrees
that it will use the Services in accordance with such reasonable policies as
may be established by M&I from time to time as set forth in any materials
furnished by M&I to Customer; (c) Customer agrees that, except as otherwise
permitted by M&I, Customer will use the Services only for its own internal
business purposes and will not sell or otherwise provide, directly or
indirectly, any of the Services or any portion thereof to any third party; and
(d) Customer agrees and represents that (1) this Agreement has been approved by
its board of directors, or that the officer executing this Agreement is
authorized to execute this Agreement by the Customer, (2) the performance of
this Agreement by the Customer will not affect the safety or soundness of the
Customer or any of its affiliates, and (3) this Agreement, and the obligations
evidenced hereby, will be properly reflected on the books and records of the
Customer, and the Customer will provide evidence of the same to M&I upon
request.
28. MISCELLANEOUS
a. Amendment. This Agreement, including the Schedules hereto, may be
amended only by an instrument in writing executed by the parties or their
permitted assignees.
b. Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party, which such consent shall
not be unreasonably withheld, provided that M&I may freely assign this
Agreement to any company that is directly or indirectly (1) in control of M&I,
(2) under the control of M&I, or (3) under common control with M&I.
c. Section Headings. Section headings are for reference purposes only
and shall not affect the interpretation or meaning of this Agreement.
d. Notices. All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given at
the earlier of the date when actually delivered to an officer of a party or
when deposited in the United States mail, certified or registered mail, postage
prepaid, return receipt requested, and addressed as set forth on the signature
page, unless and until any of such parties notifies the others.
e. No Waiver of Performance, Failure by either party at any time to
require performance by the other party to claim a breach of any provision of
this Agreement will not be construed as a waiver of any right accruing under
this Agreement, nor affect any subsequent breach, nor affect the effectiveness
of this Agreement or any part hereof, nor prejudice either party as regards any
subsequent action.
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f. Entire Agreement: Conflicting Provisions. This Agreement, together
with the Schedules hereto, constitutes the entire agreement between the
Customer and M&I with respect to the subject matter hereof. There are no
restrictions, promises, warranties, covenants, or undertakings other than those
expressly set forth herein and therein. This Agreement supersedes all prior
negotiations, agreements, and undertakings between the parties with respect to
such subject matter. In the event of any conflict between the terms of the main
body of this Agreement and any of the Schedules hereto, the terms of the main
body of this Agreement shall govern.
g. Execution in Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original but all of which shall together constitute one and the same Agreement.
h. Enforceability. The invalidity or enforceability of any provision
hereof shall not affect or impair any other provisions.
i. Scope of Agreement. If the scope of any of the provisions of the
Agreement is too broad in any respect whatsoever to permit enforcement to its
full extent, then such provisions shall be enforced to the maximum extent
permitted by law and the parties hereto consent and agree that such scope may
be judicially modified accordingly and that the whole of such provisions of
this Agreement shall, not thereby fail, but that the scope of such provisions
shall be curtailed only to the extent necessary to conform to law.
j. Trust Services Option. Until July 1, 1993, Customer has the option
to contract for the Trust Services described in Exhibit A and based upon the
price schedule contained in Exhibit CHI, provided conversion to M&I Trust
Services occurs no later than. February 2, 1994.
(The remainder of this page has been intentionally left blank.)
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desired response time. The cost of "M&I's network management" is covered by
M&I's modem 'monitoring fee schedule attached hereto as Schedule 1, as modified
from time to time. All data communication lines, modems, and related equipment
are the responsibility of the Customer.
D. Future expansion and/or changes in the data communication network
resulting in increased communication costs will necessitate an appropriate
increase.
E. Data communication costs are subject to periodic tariff adjustments
as dictated by various ongoing changes in communication facilities and local
and national communication providers.
F. M&I will order and install the following, as necessary (subject to
Customer's approval). Cost to be responsibility of Customer.
1. Backbone Memotec diagnostic modems.
2. Data compression devices.
3. Tail-circuit Memotec diagnostic modems.
4. Splitters.
5. Maintenance (modems, splitters, compression, etc.). 6. All
installation costs, lines, and equipment.
Estimated initial costs for equipment and data lines is attached
hereto as Schedule 1 to Exhibit C. Final due diligence and data line
configuration may alter the attached cost estimates.
III. TRUST SERVICES OPTIONS.
Customer shall pay for the Trust Services according to the following
schedule, but in no event less than twenty thousand dollars ($20,000) per year.
Trust System Training
$15,000 (At M&I, travel and installation costs during conversion
to be invoiced at actual cost.)
Trust Accounts as Defined in Exhibit A
Annual Fee = $95 per account per year
Miscellaneous Low-activity Accounts (Funeral Trusts, Land
Trusts, etc., no more than 10 percent of low-activity accounts
can receive quarterly statements.)
Annual Fee = $24 per account per year
A. The number of open accounts processed will be determined at year
end, and the appropriate cost will be used for the subsequent year. Any growth
due to merger, acquisition, or transfer from a similar system will result in an
immediate recount with the appropriate higher costs being passed to Customer on
the next billing cycle. Ile annual fee will be billed in equal monthly
installments.
B. M&I Data Services, Inc., reserves the right to charge separately
for new services added to the trust product after their conversion date. After
conversion, if Customer elects to use these features, they would be charged
based on the current standard price schedule for those services.
<PAGE> 13
C. Any future outside (e.g., pricing services, communication charges,
not controlled by M&I) vendor costs which are passed through to M&I will be
passed to Customer and result in an offsetting price increase.
D. M&I Data Services, Inc., offers services not included in the annual
fee to Customer. Not included are: Performance Measurement, Extended History
(24 months), Extended Investment Review, Client Terminal Access, Custom
Programming, Additional On-site Training (after conversion), Documentation
(other than two original copies), M&I Workshops, ACH Processing Charges, Day
Vest, Deconversion Charges, Hardware/Software Consulting, Call Bond
Pass-through Charges, Corporate Action Pass-through Charges, Communication
Costs, Courier Costs, and Forms Costs. Exhibit B-2 included for reference.
E. Additional considerations of the M&I proposal:
TrustDesk TM Software three (3) copies are included at no additional
charge (standard monthly software maintenance of thirty-five dollars ($35) per
copy per month does apply).
<PAGE> 14
EXHIBIT B-2
TRUST SYSTEM
1992 PRICE SCHEDULE
M&I reserves the right to charge separately for new services added to their
Trust Services after the Customer's conversion date of October 1, 1993. A
Customer's total charges consist of a base fee, usage charges, miscellaneous
charges, and vendor pass-through charges which are more fully described below.
A. Base Charge
1. Principal Holding Company Bank $765/month
2. Affiliate Bank(s) $200/month
B. Usage Charges
1. Account-related charges based on the number of accounts using the
feature listed:
a. Performance Measurement
1-30 accounts $130/month
31-60 accounts $250/month
61+ accounts $375/month
b. Record Storage (all customer data stored on M&I's computers).
1. Standard $.245/account/month
2. Extended History to 24 months $.06/account/month
3. Extended Investment Review
beyond 3 months $.005/account/month for each
month retained
c. 5500 Reporting $.28/account/month
2. Volume-related charges based on the amount of activity produced by
the customer.
a. Report Generation (any standard system report, identified in M&I
User Documentation Trust Report manuals, produced by the
customer for reporting, on-line viewing, or microfiche).
$2.45/1,000 lines generated
b. On-line Use (any access of an on-line screen for inquiry or
update of information).
$.020/access
<PAGE> 15
c. On-line Statements (creation of an asset/transaction statement
or investment review for immediate printing at the customer
site).
$.90/statement
d. Microfiche (produced by M&I for the customer).
$130/original $.25/copy
e. E-mail (any letter created by a user and sent to another user).
$.15/letter created
(Any letter received and stored for later reference by a user.)
$.15/letter per day stored
f. Automated Trades (any trade processed by the customer
"Institutional Delivery" system).
$.23 per trade
g. Custody Processing*
1. Direct DTC participants only
a. Eligible trade processing $.06 per a-ado
b. PDQ settlement and DOs $.06 per trade
C. Confirm/Affirm processing - $.06 per a-ado
2. Piggyback participants only
a. Confirm processing $.06 per trade
h. Report Writer (is based on both the total number of accounts
processed by the Trust Department and the type of "report view"
selected). The charges shown are for each report produced.
<TABLE>
<CAPTION>
HISTORY,
NAME/ ACTIVITY ACCOUNT SECURITY
ADDRESS FEE HOLDINGS OR HOLDERS
BROKER OF OR SECURITY SECURITY NAME/
NUMBER INFO ACCOUNT MEMO INFO HOLDERS ADDRESS
OF ACCOUNTS VIEW VIEW VIEW VIEW VIEW VIEW
----------- ---- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
0 to 1,000 $ 1 $ 2 $ 2 $ 3 $ 5 $ 20
1.001 to 2,000 $ 2 $ 3 $ 4 $ 6 $ 10 $ 40
2,001 to 5.000 $ 3 $ 4 $ 6 $ 10 $ 15 $ 60
5.001 to 10.000 $ 4 $ 5 $ 8 $ 15 $ 20 $ 80
10.001 to 50.000 $ 5 $ 6 $ 10 $ 20 $ 25 $100
</TABLE>
<PAGE> 16
i. Tape handling (any tape created for the customer by M&I or
processed from an outside source for the customer, e.g., mutual
funds, IRS tapes, custody reconcilement, fiduciary tax services,
payroll tapes).
$37.50 per tape
j. Client terminal access (allows outside trust customers to have
limited direct access to their information on the M&I Trust
System).
Setup charge $90 each
Monthly access
$65/terminal/month
k. Estimated tax payment tape filing with the IRS.
$450.00/quarter
C Miscellaneous Charges
These apply only if requested and used by the Customer.
1. Programming (for any custom programming to the M&I Trust
System).
Based on quote
2. Training (for any on-sift training/support. requested by the
Customer).
$60 per hour plus travel
and living expenses.
3. Documentation (M&I Trust Services user manuals).
$60 each volume $300 per
set
4. M&I workshops (classes offered at M&I's location).
$60 per attendee/per class
5. ACH $.055 per transaction
$25 per run
6. Loan System Interface (an automated daily bridge to the M&I
Loan System).
$150/per month " plus $.717
per loan per month
<PAGE> 17
7. DayVest (daily on-line valuation of Common Trust funds).
$135/per month
8. Deconversion Charges for tapes provided in M&I format.
$ 1,000 per tape
9. Hardware/Software Consulting Services. Ile Customer is
responsible for obtaining, installing, and maintaining their
own equipment necessary to use the M&I Trust Service. This
includes but is not limited to controllers, terminals,
printers, PCs, and any software necessary to support said
equipment. Any time spent by M&I personnel in supporting the
customers hardware requirements will be billed at M&I
then-current programming rates plus expenses if any.
D. Vendor Pass-Through Charges
M&I currently uses several outside vendors to provide their trust
services. Any future outside vendor costs for now or existing services
passed through to M&I will be passed through to the customer.
1. Called Bond Notification
$.15/account/month $350
maximum per month (charged
quarterly)
2. Corporate Action Notification
$1.90/account per year
$6,600 maximum per year
(charged annually)
3. Communication Costs Une Charge Based on type of services
Modem Charge requested and the cost to Installation Charge
M&I for providing trust TYMNET Charges if applicable
services. COMDISCO Network Charge
4. Courier costs (for any delivery of printed materials or tapes
from M&I to the customer).
At cost
5. Forms costs (for any forms provided by M&I for the customer).
Vendor forms cost + 15
percent
<PAGE> 18
IN WITNESS THERE0F, the parties have caused this Agreement to be executed in
their names as of the date first above written.
M&I DATA SERVICES, INC. ("M&I") 770 North Water Street
Milwaukee, WI 53202
By: /s/ Joseph L Delgadillo
Name: Joseph L Delgadillo
Title: Senior Vice President
M&I DATA SERVICES, INC. ("M&I") 770 North Water Street
Milwaukee, WI 53202
By: /s/ Michael V. Ruane
Name: Michael V. Ruane
Title: Vice President
TEAMBANC, INC. ("Customer")
1 South Pearl
Paola, KS 66071
By: /s/ Michael L. Gibson
Name: Michael L. Gibson
Title: President
MIAMI COUNTY NATIONAL BANK ("Customer")
1 South Pearl
Paola, KS 66071
By: /s/ Robert J. Weatherbie
Name: Robert J. Weatherbie
Title: President
IOLA BANK AND TRUST COMPANY ("Customer")
119 East Madison
Iola, KS 166749
By: /s/ James S. Gilpin
Name: James S. Gilpin
Title: President
<PAGE> 19
AUTHORIZATION AGREEMENT
The undersigned ("Customer") hereby authorizes M&I Data Services, Inc., ("M&I")
to initiate debit entries and to initiate, if necessary, credit entries and
adjustments for any excess debit entries or debit entries made in error, to
customer's account indicated below and the depository named below, to debit
and/or credit the same such account.
This authority is to remain in full force and effect for the period coinciding
with the term (and any renewals thereof) of the Data Processing Services
Agreement made the 22nd day of December 1992. and any addenda thereto (the
"Agreement"), pursuant to the terms and conditions specified in the Agreement
dated December 22, 1992.
DEPOSITORY NAME:
ADDRESS:
CITY/STATE/ZIP:
TELEPHONE NUMBER:
ROUTING TRANSIT NUMBER:
ACCOUNT NUMBER:
M&I DATA SERVICES, INC. ("M&III)
770 North Water Street
Milwaukee, W1 53202
By: /s/ Joseph L. Delgadillo
Name: Joseph L. Delgadillo
Title: Senior Vice President
M&I DATA SERVICES., INC. ("M&I")
770 North Water St
Milwaukee, WI 53202
By: /s/ Michael V. Ruane
Name: Michael V. Ruane
Title: Vice President
TEAMBANC, INC. ("Customer")
1 South Pearl
Paola, KS 66071
By: /s/ Michael L. Gibson
Name: Michael L. Gibson
Title: President
<PAGE> 20
ATTORNEY-IN-FACT APPOINTMENT
Customer hereby appoints M&I Data Services, Inc. ("M&I") as customer's
attorney-in-fact and empowers M&I to authorize the Internal Revenue Service
(IRS) to release informational documents supplied to the IRS by M&I to states
which participate in the "Combined Federal/State Program." Customer agrees to
hold M&I harmless from any liabilities, claims, expenses, penalties, or damages
(including attorneys' fees) which may be assessed or incurred as a result of
the release of information.
TEAMMANC, INC. ("Customer")
By: /s/ Michael L. Gibson
<PAGE> 21
ATTORNEY-IN-FACT APPOINTMENT
Customer hereby appoints M&I Data Services, Inc. ("M&I") as customer's
attorney-in-fact and empowers M&I to authorize the Internal Revenue Service
(IRS) to release informational documents supplied to the IRS by M&I to states
which participate in the "Combined Federal/State Program." Customer agrees to
hold M&I harmless from any liabilities, claims, expenses, penalties, or damages
(including attorneys' fees) which may be assessed or incurred as a result of
the release of information.
MIAMI COUNTY NATIONAL BANK ("Customer")
By: /s/ Robert J. Weatherbie
<PAGE> 22
ATTORNEY-IN-FACT APPOINTMENT
Customer hereby appoints M&I Data Services, Inc. ("M&I") as customer's
attorney-in-fact and empowers M&I to authorize the Internal Revenue Service
(IRS) to release informational documents supplied to the IRS by M&I to states
which participate in the "Combined Federal/State Program." Customer agrees to
hold M&I harmless from any liabilities, claims, expenses, penalties, or damages
(including attorneys' fees) which may be assessed or incurred as a result of
the release of information.
IOLA BANK AND TRUST COMPANY
("Customer")
By: /s/ James S. Gilpin
<PAGE> 23
AFFIDAVIT
STATE OF Kansas )
)
COUNTY OF Miami ) SS.
I, Michael L. Gibson being first duly sworn, on oath, depose Customer's
Representative and say:
1. I am an employee of TeamBanc, Inc. I have personal knowledge of my
employees practices with regard to procuring and reporting tax identification
numbers (TINs) and authority to execute this Affidavit on my employer's behalf.
2. TeamBanc, Inc., has complied with all laws, regulations, procedures, and
requirements in attempting to secure correct TINs for its payees. This
compliance has been pursued with due diligence, and any failure to secure
correct TINs is due to reasonable cause.
/s/ Michael L. Gibson
Customer's Representative
Subscribed and sworn to before me this day 22nd of December 1992.
/s/ Clarene B. Prothe
Clarene B. Prothe
Notary Public
My Commission expires: 11/25/93
<PAGE> 24
AFFIDAVIT
STATE OF Kansas )
)
COUNTY OF Miami ) SS.
I, Michael L. Gibson being first duly sworn, on oath, depose Customer's
Representative and say:
1. I am an employee of Miami County National Bank. I have personal
knowledge of my employees practices with regard to procuring and reporting tax
identification numbers (TINs) and authority to execute this Affidavit on my
employer's behalf.
2. Miami County National Bank has complied with all laws, regulations,
procedures, and requirements in attempting to secure correct TINs for its
payees. This compliance has been pursued with due diligence, and any failure to
secure correct TINs is due to reasonable cause.
/s/ Robert J. Weatherbie
Customer's Representative
Subscribed and sworn to before me this day 22nd of December 1992.
/s/ Clarene B. Prothe
Clarene B. Prothe
Notary Public
My Commission expires: 11/25/93
<PAGE> 25
AFFIDAVIT
STATE OF Kansas )
)
COUNTY OF Allen ) SS.
I, James S. Gilpin being first duly sworn, on oath, depose Customer's
Representative and say:
1. I am an employee of Iola Bank and Trust Company. I have personal
knowledge of my employees practices with regard to procuring and reporting tax
identification numbers (TINs) and authority to execute this Affidavit on my
employer's behalf.
2. Iola Bank and Trust Company has complied with all laws, regulations,
procedures, and requirements in attempting to secure correct TINs for its
payees. This compliance has been pursued with due diligence, and any failure to
secure correct TINs is due to reasonable cause.
/s/ James S. Gilpin
Customer's Representative
Subscribed and sworn to before me this day 22nd of December 1992.
/s/ Anita R. Lassman
Anita R. Lassman
Notary Public
My Commission expires: 3/27/93
<PAGE> 26
SCHEDULE
M&I ON-LINE AVAILABILITY
The following is a list of standard hours of availability by each on-line
service. All times are CST/CDT.
<TABLE>
<S> <C>
(Cardholder (CRT Maintenance)
Monday - Thursday 7:00 a.m. - 6:45 p.m.
Friday 7:00 a.m. - 9:30 p.m.
Saturday 7:00 a.m. - 4:30 p.m.
CIS & Deposit System
(Maintenance and Dollar Transactions)
Monday - Thursday 7:00 a.m. - 6:45 p.m.*
Friday 7:00 a.m. - 9:30 p.m.*
Saturday 7:00 a.m. - 4:30 p.m.
Data Entry
(Account Reconciliation System)
Monday - Friday 7:00 a.m. - 10:00 p.m.
Data Entry
(Financial Control)
Monday - Thursday 7:00 a.m. - 11:00 p.m.
Friday 7:00 a.m. - 12:00 Midnight
Saturday 7:00 a.m. - 4:30 p.m.
Decision Management System
Monday-Thursday 7:00 a.m. - 6:45 p.m.
Friday 7:00 a.m. - 9:30 p.m.
Saturday 7:00 a.m. - 4:30 p.m.
Data Entry
Monday-Friday 7:00 a.m. - 5:00 p.m.
Financial Control On-line
Monday-Friday 7:00 a.m. - 8:00 p.m.
Saturday 7:00 a.m. - 4:30 p.m.
Loan System
(CRT Maintenance)
Monday-Thursday 7:00 a.m. - 6:15 p.m.
Friday 7 00 a.m. - 8:30 p.m.
Saturday 7:00 a.m. - 4:30 p.m.
</TABLE>
<PAGE> 27
<TABLE>
<S> <C>
o Management Information Service
Monday-Thursday 7:00 a.m. - 6:45 p.m.
Friday 7:00 a.m. - 9:30 p.m.
Saturday 7:00 a.m. - 4:30 p.m.
(Except Money Market Info.)
o Teller Terminals
Monday-Thursday 7:00 a.m. - 7:00 p.m.
Friday 7:00 a.m. - 9:30 p.m.
Saturday 7:00 a.m. - 4:30 p.m.
</TABLE>
*CIS access to loan data is based on Loan System hours of availability.
West Coast availability for CIS, Loans, and Deposits for Monday-Friday is 8:00
a.m.-10:00 p.m., CST/CDT.
<PAGE> 28
EXHIBIT A
TEAMBANC, INC.
MIAMI COUNTY NATIONAL BANK
IOLA BANK AND TRUST COMPANY
Products and Services Included in Fixed Monthly Fee
Deposit Services
Base Fee
Demand Accounts
Money Market Accounts
NOW Accounts
Savings Accounts
Time Deposit Accounts
Transaction Processing
ACH Origination and Receiving
Employee Security Processing
Exception Processing
Kiting Suspect Detection
Retirement Account Reporting
Overdraft Checking (PRA)/Line of Credit
Retention of Transactions
- Regular Demand Current Cycle Plus One
- Savings Current Cycle Plus One
- CDs Annually
Closed Account Up to 30 Days
Sweep Account Processing
LOAN SYSTEM
Base Fee
Account Processing
Commercial Loans/Note
Installment Loans/Note
Mortgage Loans/Note
Purchased Loans
Revolving Credit
Commitments
Escrows
Fee Processing
Participations
Reserves (Dealer, Insurance)
ACH Originating
Charge-offs
Collateral Processing
On-line Collections
Coupons
Escrow Analysis
Investor Reporting
Loan Origination and Tracking
TICKLER SYSTEM
SAFE DEPOSITS
Base Fee
Boxes
<PAGE> 29
Platform and Teller Services
M&I PCTeller (20 copies)
Salespartner (26 copies) (Monthly maintenance fee of $35 per copy for
26 copies is included in initial Fixed Fee. Additional copies will
increase monthly Fixed Fee.)
On-line Teller
On-line Dollar
Sunday On-line Availability
Large Currency Transaction Reporting
Tellerlink
Financial Control System
Basic Features
Interface to Core Systems
On-line Inquiry and Maintenance
Standard Descriptions (MICR Capture)
Historical Data Storage
Customer Information System
Basic Features Additional CIS Services Marketing Analysis Combined
Statements Deposit Plus CSF Statements Base Fee
AUTOMATED FUNDS TRANSFER
INTEGRATED FUNDS MANAGEMENT SYSTEM
PROFITABILITY AND MANAGEMENT SUPPORT
Account Analysis
ACH RECEIVING AND ORIGINATION
IRS REPORTING
All Inclusive Reports
Year-end Notices 1099 (printed in Milwaukee and per current fee
schedule in effect)
EFT SERVICES
Basic Features
Network Administration Fee
Ongoing Monthly Support for three (3) ATMs (additional ATMs per
current fee schedule)
Cardbase Management
Base Fee
Cardholders
Transaction Authorization (On-us ATM Transactions)
Switching of Foreign Transactions Per Current Fee Schedule in Effect
Ongoing issuing costs of cards, PINs, postage, stuffing, and mailing
will remain a customer cost. Interegional switching and settlement
charges will continue to be a customer-borne cost.
MCIF (Marketing Central Information File
Base fee for up to 30,000 MCIF accounts is included
<PAGE> 30
INFO CENTER
Base Fee
Application Extracts
Deposit Systems
Financial Control - Daily
Loan System
CIS Customer Files
Usage Fee*
RAMIS/CIS Marketing Analysis System
Call Reporter Download (1)
ALM Download (1)
Data Transfer Facility (DTF) (1)
RAMIS Download Facility (1)
RAMIS Standard/Canned Reports
(1) (All downloads and transfers are per M&I standards and to various M&I
certified third-party software products and vendors.
Training/educational fee(s) and/or class fees are not included.)
OUTPUT
Daily Microfiche (Original plus one copy.) Statements (Transmission of
the statements file to customer's site.) Daily/Monthly Reports Transmitted and
Printed at Customer Site (All reports, notices, checks, etc., printed at an M&I
site are per the current fee schedule in effect at the time of use.)
ORV ON-LINE REPORT VIEWING*
E-MAIL/(OCCID
M&I Office Communication H (Electronic Mail)
EXECUVISION TM
Monthly maintenance of $90 for one copy is included in the initial
Fixed Fee.
*On-line Report Viewing (ORV), and RAMIS Report Writer, total usage will be
included in the fixed fee for the first year. During this period, the
average monthly usage will be established. Ibis amount will then be
included in the ongoing fixed monthly fee. Usage above this first year
average will adjust the monthly fixed fee. Additional banks that are
acquired will also have an unlimited use of ORV and RAMIS for one year to
establish their respective usage to be included in the fixed fee.
<PAGE> 31
The services described herein refer only to the processing and reporting
services for Estates, Trust Under Will, Court Accounts, Trusts Under Agreement,
Insurance Trusts, Agencies, Custodian/ Safekeeping, Corporate Trusts,
Pension/Profit Sharing accounts and Internal accounts including Common Trust
Funds (CTF) and Collective Investment Funds (CIF). In the event Customer does
contract for Trust Services option:
I M&I shall provide complete processing services for the Customer as
more fully described in the Trust System Documentation manuals.
a. User Manual Volume 1
b. User Manual Volume 2
c. Reports Usage Manual 1
d. Reports Usage Manual 2
e. Appendix
f. Special Processing Volume 1
g. Special Processing Volume 2
h. Special Processing Volume 3
i. Special Processing Volume 4
M&I will provide Customer with two complete sets of user documentation
manuals at no charge.
2. M&I shall maintain a customer support center as part of their services
to the Customer. The support center will maintain a toll free (800)
number and be staffed from 8 am. to 5 p.m., CST, CDT Monday through
Friday excluding national holidays.
3. M&I shall perform training as defined in the M&I Conversion Manual,
and training will be completed at M&I's location as further outlined
in said manual.
<PAGE> 32
EXHIBIT B
M&I Data Services, Inc.
770 North Water Street, Milwaukee, WI 53202-3522 Tel 1-800-236-3282
M&I
DATA SERVICES, INC.
CUSTOMER PRICE LIST
(Effective March 1, 1992)
This list is intended for the use of M&I Data Services, Inc., and its customers
only. No other distribution or usage is permitted.
NOTE: Except where noted, all rates are assumed to be monthly.
<PAGE> 33
1992
PRICE LIST
Table of Contents
<TABLE>
<CAPTION>
SERVICE PAGE
<S> <C>
Deposit Services 1-2
Loan Services 3-4
Teller/Platform Services 5
Customer Information System (CIS) 6
Financial Control (General Ledger) 7
EFT Services 8
INFO Center 9-11
INFO Center/ExecuVision
Item Processing
Bulk Filing 12
Proof of Deposit (POD) 12
Remote Site Support 12
Other Services
Audit Services 13
Automated Clearing House (ACH)- Receiving 13
Automated Funds Transfer (AFT) 13
Disaster Recovery 13
Discount Brokerage 13
Custom Statement Formatter 13
IRS Reporting 14
Maintenance/Support 14
Management Information Service 14
Profitability and Management Support 14
Safe Deposit 14
Six-Day Processing 14
Tickler System 15
User-Defined Security 15
Output 16
MICARD, Services
Cardholder Services 17
Cardholder Supplies 17
Merchant Services 18
Merchant Supplies 18
Debit Card Price List 19
Cardholder Services 19
Cardholder Supplies 19
MICASH TM Corporate Cash Management Services
Account Reconciliation 20
Auto Check Pay 21
Automated Clearinghouse (ACE) Originating 21
Controlled Disbursement 21
EDI Receiving 22
Management Information Link 22
MICASH Control System 22
TYMNET Communications Network 23
Additional Services 24
Late Fees 24
Interim Processing Service 24
</TABLE>
<PAGE> 34
<TABLE>
<CAPTION>
DEPOSIT SERVICES:
Units Rate
<S> <C> <C>
Base Fee per institution $ 150.00
Demand, Money Market, Savings. 14OW per open account .205
Time Deposit (Levels 1-4) Accounts per open account .150
Deposits per deposit .105
Expedited Funds Availability per float transaction .005
Reject Items per Item .075
Transaction Processing
1 - 250,000 per transaction .032
250,001 - 500,000 per transaction .029
500,001 - 750,000 per transaction .026
750,001 - 1,000,000 per transaction .025
Over 1,000,000 per transaction .023
Remote Site Credit(l) per transaction (.0105)
Additional Deposit Services
ACE Originating per transaction .07
Automated Product Conversion per keyword .06
Automatic Branch Change per keyword .06
Employee Security Processing per institution 100.00
Exception Processing
Base Fee per institution 50.00
On-line Exceptions per transaction .023
Criteria Posting per item .0555
Kiting Suspect Detection(2) per account analyzed .001
Minimum Fee 25.00
Money Talks per transaction/inquiry .016
Retirement Account Reporting
Base Fee per institution 40.00
1 - 20,000 per IRA account .42
20,001 - 40,000 per IRA account .37
Over 40,000 per IRA account .32
Overdraft Checking(PRA)/Line-of-Credit per active account .48
Retention
Closed Account per account .04
Cycle - 12 months (includes History
Analysis Report R-2830) per account .07
Minimum Fee per institution 25.00
Transaction Retention per 1,000 transactions/day .045
Sweep Account Processing
Base Fee per institution 45.00
Accounts per account .08
Relationship Service Charging per account .06
</TABLE>
(1) Credit received on items captured at the customer site. Credit does not
apply to live log transactions.
(2) $25.00 minimum per institution.
Page 1
<PAGE> 35
LOAN SERVICES
<TABLE>
<CAPTION>
Units Rate
<S> <C> <C>
Base Fee per institution $ 150.00
Accounts
I - 30,000 per account .157
Over 30,000 per account .152
Notes
Loans (Commercial, Installment, per note .52
Mortgage, Purchased Loans, Student Loans)
Floor Plan per note .67
Revolving Credit per note .55
Revolving Credit Statement per statement .05
Commitments per commitment .105
Escrows per escrow .065
Fee Processing per fee segment .055
Participations per participation .12
Reserves (Dealer, Insurance) per reserve .04
Additional Loan Services
ACH Originating per transaction .07
Charge-Offs per charge-off .28
Collateral Processing
Base Fee per institution 170.00
Items per collateral item .17
Coupons per coupon book ordered .05
Escrow Analysis
Base Fee per final run 20.00
Analysis Test per note analyzed .10
Analysis Final per note analyzed .20
Escrow Disbursement
Base Fee per mass disbursement 20.00
Transaction per transaction .03
Automated Tax/Insurance Tapes(l) per tape 50.00
per account .03
Investor Reporting (Laser, MIDANET) per institution/ 250.00
(Standard, Stand-alone) per program
Investor Reporting (Expanded)(2)
Payment Level 1 (actual principal per participation .17
and interest)
Payment Level 2 (scheduled interest per participation .19
and actual principal)
Payment Level 3 (scheduled principal per participation .21
and interest)
Payment Level 4 (GNMA) per participation .23
FHLB Processing per tape 75.00
Loan Origination & Secondary Marketing per transaction Contact Account
Manager
Purchased Loans per segment .12
Credit Bureau Tapes per credit bureau 39.00
Insurance Tapes per company 39.00
</TABLE>
(1) Setup fee $250 for existing reporting-per municipality or company; time and
materials for new reporting.
(2) Refer to Output Section for investor check charges.
Page 3
<PAGE> 36
TELLER/PLATFORM SERVICES
<TABLE>
<CAPTION>
Units Rate
<S> <C> <C>
On-line Teller
Base Fee(l) per institution 65.00
Accounts(2) per account .05
Live Log Transactions per transaction .021
Outstanding No-book Transactions(3) per transaction .0025
On-line Dollar
Base Fee per institution 40.00
Accounts(2) per account .025
Live Log Transactions per transaction .021
Sunday On-line Availability(2) per account .01
Teller Platform System (4)
Base Fee Per Controller
Vboss per institution 100.00
Other (IBM, ISC) per institution 50.00
Salespartner Maintenance Fee (PC-based) per PC 35.00
Large Currency Transaction Reporting per institution 50.00
Tellerlink per institution 100.00
Teller Trial Balance (R-0200) per report 25.00
</TABLE>
(1) Fee includes logical end-of-day and on-line dollar.
(2) Includes Demand, Line of Credit, Money Market, NOW, Savings, and Time
Deposit (Level 1-3) accounts.
(3) Produces monthly report at no charge. Additional No-Book Reports (R-0202)
produced at a cost of $15.00 per report.
(4) Refer to your account manager for start-up fee.
Page 5
<PAGE> 37
FINANCIAL CONTROL
<TABLE>
<CAPTION>
Units Rate
<S> <C> <C>
Base Fee per institution $ 100.00
Detail Accounts per account .5350
Transactions per transaction .0385
Additional FC Services
Cost Accounting
Base Fee per run 50.00
Allocations per allocation .05
Generalized Interface
Base Fee per institution 140.00
Control Totals per parameter .026
Consolidated Transactions per transaction .033
Historical Data Storage(l) per additional year 100.00
On-line Inquiry and Maintenance
On-line Account Inquiry per detail account .036
On-line Report Inquiry(2) per institution 100.00
On-line Transaction History
($25.00 minimum) per transaction .012
Standard Descriptions (MICR Capture) per institution 30.00
Reports (Refer to Output Section)
Budget Spread - GLR 512 per report 25.00
PC Budget Upload per upload 125.00
Diskette Fee per preformatted diskette 25.00
Charts of Accounts
Account Header and Detail List -
GLR 960(3) per report 25.00
Indented Chart of Accounts - GLR 962 per report 25.00
Center Sequence (All Accounts) -
Chart Comparison (FINO10) per report .50.00
Consolidation Report - GLR 321-325 per set of reports 100.00
Detail Account Analysis - GLR 370
Weekly per account 15.00
Month-to-Date per additional report 50.00
Year-to-Date per report 100.00
Annual per report 150.00
Additional Copies per copy 75.00
Detail Quarterly Analysis - GLR 970 per report 50.00
Consolidated Quarterly Analysis - GLR 975 per report 100.00
Financial Statements (Monthly)
GLR 303, 310-312 per additional request 25.00
Full Print of Master Records GLR 950 per report 25.00
Individual Cost Center
Monthly GLR 380 per month No Charge
Daily per cost center 25.00
</TABLE>
(1) Current and prior two years provided at no charge. Two additional years
provided at $100.00 per mouth for each year retained.
(2) Cost includes all financial control reports with the exception of GLR 220,
GLR 240, and GLR 250. These reports are available at a cost of $.Ol per
detail account.
(3) One copy provided at no charge on a quarterly basis.
Page 7
<PAGE> 38
INFO CENTER
<TABLE>
<CAPTION>
RAMIS Units Rate
<S> <C> <C>
Base Fee(l) per contact person $ 50.00
Application Extracts(2)
Deposit System(3)
1 - 25,000 accounts per account .0124
25,001 - 50,000 accounts per account .0103
50,001 - 100,000 accounts per account .0085
100,001 - 200,000 accounts per account .0069
Over 200,000 accounts per account .0055
Financial Control - Daily
1 - 1,000 accounts per account/cost center .080
1,001 - 3,000 accounts per account/cost center .065
3,001 - 5,000 accounts per account/cost center .050
Over 5,000 accounts per account/cost center .033
Financial Control - Monthly
1 - 1,000 accounts per account/cost center .038
1,001 - 2,000 accounts per account/cost center .026
2,001 - 5,000 accounts per account/cost center .016
Over 5,000 accounts per account/cost center .010
Loan System(3)
1 - 2,500 accounts per account .0297
2,501 - 5,000 accounts per account .0259
5,001 - 10,000 accounts per account .0221
10,001 - 20,000 accounts per account .0183
Over 20,000 accounts per account .0145
CIS Customer Files(3)
1 - 25,000 customers per customer .0069
25,001 - 50,000 customers per customer .0065
50,001 - 100,000 customers per customer .0061
100,001 - 200,000 customers per customer .0057
Over 200,000 customers per customer .0053
Cardbase Management - Daily per account
1 - 15,000 accounts per account .0070
15,001 - 30,000 accounts per account .0066
30,001 - 50,000 accounts per account .0062
Over 50,000 accounts per account .0058
Secondary Marketing - Daily per account .018
RAMIS/CIS Marketing Analysis System(4)
Setup and Customization, Fee one time 375.00
Base Fee per run 125.00
MAS Report Package per customer/per run .0047
RAMIS/CIS 14AS File per customer/per mouth .0009
</TABLE>
(1) Includes the INFO Center newsletter, one hour of hotline support, product
updates, and user conferences. Required for RAMIS users.
(2) Based on total accounts or customers on file for the application. A
reconversion fee of $350 will be assessed on institutions which have
deconverted from RAMIS or a RAMIS Application Extract and request the
service again.
(3) Extracts occur twice per mouth. More frequent extracts are available.
Contact the INFO Center for price information.
(4) MAS Report Package can be produced monthly, quarterly, semiannually, or
annually. The HAS file is updated with each run of the Report Package and
is always available. The rates charged for the MAS Report Package are
charged when run. The HAS file fee is charged monthly.
Page 9
<PAGE> 39
INFO CENTER/EXECUVISION TM
<TABLE>
<CAPTION>
Unit Rate
Software License
<S> <C> <C>
1 copy per copy 5,995.00
2-10 copies per copy 4,795.00
11-20 copies per copy 4,195.00
20+ copies per copy 3,595.00
Mainframe Setup (required) per connection 800.00
Monthly Maintenance 1.5% of first license price per copy
</TABLE>
Page
<PAGE> 40
OTHER SERVICES
<TABLE>
<CAPTION>
Audit Services Units Rate
<S> <C> <C>
Account Verification
Base Fee per account category $ 90.00
Positive or Negative Verification per account .28
Trial Balance per report 25.00
File Footings and History per application 25.00
Computer Assisted Audit Techniques
System Stratification Reports
Deposit System per request 100.00
Loan System per request 100.00
Financial Control per request 50.00
System Selection Reports
Deposit System per request 150.00
Loan System per request 150.00
Financial Control per request 150.00
IMS Security per request 25.00
Tapes per request 150.00
Blank Verification Forms
Negative 4074 per form .05
Positive 4075 per form .05
Letter 4090 per form .05
Consulting/Custom Programming per hour (1 hr. minimum) 100.00
Automated Clearing House (ACE) Receiving
Base Fee per institution 42.50
Records Stored per record .09
Transactions
1 - 3,000 per item .036
3,001 - 7,000 per item .033
7,001 - 12,000 per item .031
Over 12,000 per item .029
Automated Check Charge Processing
Base Fee per institution 10.00
Transaction Premium per transaction .025
Corporate Trade Payment
Dollar Item Record per item .04
Addenda Record per record .02
File Adjustments per correction 3.25
Incoming File Report per report 10.00
Automated Funds Transfer (AFT)
Base Fee' per institution 45.00
Accounts per account .077
Disaster Recovery
Base Fee per institution 30.00
Discount Brokerage
Base Fee per institution 40.00
Transaction Fee per transaction .22
</TABLE>
Page 13
<PAGE> 41
OTHER SERVICES
<TABLE>
<CAPTION>
Units Rate
<S> <C> <C>
Account Analysis System (new-"AAS")(1)
Base Fee per institution 90.00
Statement Fee per statement .33
Account Fee per account .14
Customer Profitability System(2)
Base Fee per institution 75.00
Account per account .15
Customer per customer .31
Reanalysis per customer .31
Safe Deposit
Base Fee per institution 25.00
Boxes per box .07
Six-Day Processing (Deposit, Loan, FC)
Deposit(3) per account .047
Loan per note .068
Financial Control per detail account .105
Tickler System
Base Fee per institution 30.00
Items per item .055
User-Defined Security
Base Fee per institution 25.00
Application per screen 1.00
</TABLE>
(1) Consult with account manager for conversion costs.
(2) Requires bank to be using the Customer Information System (CIS).
(3) Includes Demand, Savings, NOW, Money Market, Time Deposit (Level 1-4), and
Line of Credit accounts.
Page 15
<PAGE> 42
MICARD SERVICES - CARDHOLDER
<TABLE>
<CAPTION>
Cardholder Services Units Rate
<S> <C> <C>
Base Fee per institution $ 95.00
Account Support Fee per account 1.57
Statements(l) per statement .65
Lockbox Service per payment .054
Payment Entry per payment .135
Transaction Processing per transaction .044
Authorizations per request .17
Card Issuance - First(l) per card .775
Card Issuance - Additional Cards per card .25
Temporary Rush Card - Production Fee(3) per card 20.00
Lost/Stolen Cards Reported per card 7.50
Combined Warning Bulletins(2) per listing .65
(single region U.S.)
Letters Printed(l) per letter .515
Compliance Fees percentage of gross sales .000799
(includes franchise) - VISA
Compliance Fees percentage of gross sales .000999
(includes franchise) - MasterCard and cash advances
CIS Interface per institution 45.00
Business Card Reporting(4) per institution 175.00
Cardholder Supplies
Plastics - Regular per card .50
Plastics - Gold per card 1.15
Plastics - Custom per card Per Quote
Hot Stamp Die per die Per Quote
Graphics per design Per Quote
Card Application Holder per holder 1.75
Applications - Regular per application .25
(300 minimum)
Applications - Gold per application .60
(300 minimum)
Gold Brochures per brochure .80
Business Card Features and Benefits per brochure .75
</TABLE>
(1) Includes postage and envelopes.
(2) Multiple listings/foreign-listings available at an additional charge.
(3) Shipping charges for temporary or rush cards will be passed through.
(4) New business card pricing will be announced later this year along with
announcement of expanded product features.
NOTE: Special Assessments, fines, and other fees from MasterCard and/or VISA
will be passed through at cost.
Page 17
<PAGE> 43
MICARD tm SERVICES - DEBIT CARD
<TABLE>
<CAPTION>
Cardholder Services Units Rate
<S> <C> <C>
Base Fee per institution $ 95.00
Account Support Fee per account .49
Balance File Updates per account .12
Transaction Processing per transaction .057
Authorizations per request .17
Card Issuance - First(l) per card .775
Card Issuance - Additional Cards per card .25
Temporary Rush Card Production Fee per card 20.00
Lost/Stolen Cards Reported per card 7.50
Combined Warning Bulletins per listing .65
(single region U.S.)
Compliance Fees percentage of gross sales .000799
(includes-franchise) - VISA
Compliance Fees percentage of gross sales .000999
(includes franchise) - MasterCard and cash advances
Transaction/Balance Transmission per day, per transmission 4.75
Cardholder Supplies
Plastics - Regular per card .50
Plastics - Gold per card 1.15
Plastics - Custom per card Per Quote
Hot Stamp Die per die Per Quote
Graphics per design Per Quote
Agent/Cardholder Setup for Standard Plan 600.00
Minimum Monthly Fee 300.00
</TABLE>
(Minimum monthly fee does not include the following: Base, Compliance,
Authorizations, Interchange, Transmission, Additional. programming,
Equipment, Training, or Special fees.)
(1) Includes postage and envelopes.
NOTE: Special Assessments, fines, and other fees from MasterCard and/or VISA
will be passed through at cost.
Page 19
<PAGE> 44
MICASH tm
CORPORATE CASH MANAGEMENT SERVICES
<TABLE>
<CAPTION>
Automated Clearing House (ACE) Originating Units (per cycle) Rate
<S> <C> <C>
NACHA Format File Input:
Mainframe Transmission per run 16.50
Tape per run 20.00
Transaction Fee
1 - 1,000 per item .036
1,001 - 3,000 per item .033
Over 3,000 .031
PC Entry through PC ACH MICASH tm Control System(l)
Data Entry From Listing
Base Fee per run 45.00
Transaction Fee per item .25
File Corrections per correction 5.00
Manual Settlement Fee per entry 15.00
External Funds Transfer
Base Fee per institution 45.00
Accounts per account .077
TREM (Combination ACH/PAC Processing)
Tape or Transmission per run 34.00
ACH Items per item .036
PAC Items per item .08
Chargeback Reporting
Base Fee per month 25.00
Setups:
Tape: Standard NACHA File per company 125.00
(new sending point)
Nonstandard,File per company Per Quote
(new sending point)
Mainframe Transmission per company Per Quote
Chargeback Reporting per company Per Quote
Automated Balance Reporting
Direct Transmission to Customer(2)
Base Charge per account per day 2.00
Data Reported per field .10
Setup Fee per company Per Quote
To a Third Party
Base Charge per account per day 2.35
Data Reported per field .15
Setup Fee per company Per Quote
Through a Third-Party Network(3)
Base Charge per account per day 3.15
Data Reported per field .15
Setup Fee per company Per Quote
</TABLE>
(1) Fees for PC-based ACH Origination services are outlined under MICASH tm
Control System.
(2) Transmission of a balance file to a customer's PC requires use of the
MICASH tm Control System Gateway software and the TYMNET Network. MICASH
tm Control System Gateway software has a monthly maintenance charge of $10
per copy. Software required to support transmissions to a customer
mainframe is dependent upon the type of mainframe used.
(3) This reporting is done through a third party to another third-party
network.
Page 21
<PAGE> 45
MICASH tm
CORPORATE CASH MANAGEMENT SERVICES
<TABLE>
<CAPTION>
MICASH tm Control System Units (per cycle) Rate
<S> <C> <C>
Setup Fees - Base System
MICASE TM Control System Platform per setup 75.00
Services:
PC ACH per setup 50.00
NACHA File Transfer per setup 100.00
Recon Paid File Transfer per setup 140.00
Recon Issue File Transfer per setup 140.00
Lockbox File Transfer per setup Per Quote
Balance Reporting File Transfer per setup Per Quote
Monthly Fees:
MICASO Control System Platform per copy 10.00
PC ACH per copy 10.00
Other Fees:
Transmission Fees per transmission 5.00
TYMNET Communication Fees
High Density per connect hour 12.00
Low, Medium Density per connect hour 15.00
PC ACH and NACHA File Transfer Fees
Transaction Fee per transaction .10
Fed Charges per transaction Pass Through
Balance Report File Transfer Fees
Per Account Reported per day 2.00
Per Field Reported per day .10
TYMNET Communications Network(l)
Usage Fee
High Density per connect hour 12.00
Low, Medium Density per connect hour 15.00
</TABLE>
(1) The TYMNET Communications Network is available to all customers who either
receive or send data with a PC. It Is required when using the following
PC-based file transfer services:
ACE Origination
Balance File Download
Recon Paid File Download
Page 23
<PAGE> 46
EXHIBIT C
I. The initial "Fixed Monthly Fee" may be increased upon either of the
following events:
A. The initial "Fixed Monthly Fee" of eighteen thousand seventy dollars
($18,070) per month includes processing of up to the aggregate of
thirty-five thousand (35,000) open and closed deposit accounts and loan
notes.
B. The "Fixed Monthly Fee" may be increased each February, with the first
possible increase on February 1, 1995, in accordance with the following:
I. The ongoing "Fixed Monthly Fee" is subject to an annual increase not to
exceed the greater of five percent (5%) or the Consumer Price Index (as
published by United States Department of Labor (all items-U]).
2.In addition to the annual increase described above, the "Fixed
Monthly Fee" will be increased according to the following schedule:
Total Number of Open and Closed Amount of Increase Added to the
Deposit Accounts and Loan Notes Then-current Fixed Monthly
<TABLE>
<S> <C>
0-35,000 $ 0
35,001 -37,000 $1,080
37,001 - 40,000 $1,550
40,001 - 44,000 $2,000
44,001 - 49,000 $2,400
49,001 - 55,000 $2,700
55,001 - 62,000 $2,900
62,001 - 70,000 $3,000
70,001 - 80,000 $3,500
80,001 Plus Per Future Quote
</TABLE>
The total number of open and closed Deposit accounts and Loan notes
will be reviewed each February (after year-end closed accounts have
been purged in January) per the above schedule. Any increase to the
fixed monthly fee as a result of account volume growth will be
effective as of the February invoice. As the account volumes grow, the
amount of increase in the "fixed fee" will be cumulative. For example:
if account volumes increased from 35,000 to 40,000, the amount of
increase added to the Fixed Monthly Fee would be $2,630.
II. Communication Facility--is not included in the "Fixed Monthly Fee."
A. M&I will order and install a digital "point-to-point circuit" between
the M&I Brown Deer facility and the operations center of Customer. M&I
will order and install a digital multidrop tail circuit.
B. All installation costs and ongoing monthly costs are the responsibility
of Customer.
C. M&I will provide "M&I's network management," to include, Network
Control, "NetView," and "NetSpy" for monitoring response time, line
loading, and line utilization. M&I will make recommendations to Customer
when hardware changes and/or line reconfigurations are needed in order to
maintain M&I's and Customer's
<PAGE> 47
SCHEDULE 1 TO EXHIBIT C
TEAMBANC,INC
Preliminary Digital Communications Estimate
December 21, 1992
<TABLE>
Data Communications Equipment
(BackboneCircuit)
<S> <C> <C> <C> <C> <C> <C>
1 Manotec: IDMFT556/19.2AR/DBU468 1 4,770.15 488.25 53.90 0.0053.90
2 Mcmotec: IDMFT556/19.2AS/DBU468 1 4,924.15 551.25 55.00 0.0055.00
3 Mernotec MC504 2 7,007.00 619.50 130.00 0.00 130.00
4 McmoLec: USD4000 1 685.30 42.00 3.96 0.00 3.96
(Extended Network)
5 Mcmotec IDM500S 2 2,148 315 40 30 70
6 Mernotec IDM500S 7 7,519 1,103 140 105 245
7 Memotec USD4000 3 2,055.90 126.00 11.88 0.00 11.88
---------- ---------- ---------- ---------- ----------
8 Subtotal 29,10985 3,244.50 434.74 135.00 569.74
Data Communication Circuits
9 AT&T 56KB (ASDS) Backbone Circuit 1 0.00 1.224.30 804.10 0.00 804.10
10 AT&T Digital Extended Multipoint Circuits 2 0.00 7,873.95 2,817.00 0.00 2,817.10
11 Switched circuits for Dial-Backup 2 0.00 315.00 66.00 0.00 66.00
---------- ---------- ---------- ---------- ----------
12 Subtotal 0.00 9,413.25 3,687.20 0.00 3,687.20
13 Total Communication Costs $29,109.86 $12,657.75 $ 4,256.94
</TABLE>
<PAGE> 48
M&I DATA SERVICES, INC.
COMMUNICATION PRICE LIST
NEW EQUIPMENT
(Equipment price list as of 4/1/92)
<TABLE>
<CAPTION>
PURCHASE MONTHLY NETWORK
EQUIPMENT PRICE SUPPORT FEE
W/O TAX(1) Main. Support TOTAL
<S> <C> <C> <C> <C>
STANDALONE
9600 $2,196 $ 25 $ 35 $ 60
9600 DBU 2,554 25 35 60
9600 MUX 3,516 25 35 60
9600 MUX DBU 3,874 25 35 60
RACK MOUNTED
9600 1,881 25 35 60
9600 DBU 2,239 25 35 60
9600 MUX 3,428 25 35 60
9600 MUX DBU 3,786 25 35 60
STAND ALONE
14400 2,548 40 50 90
14400 DBU 2,908 40 50 90
14400 MUX 3,868 40 50 90
14400 MUX DBU 4,226 40 50 90
RACK MOUNTED
14400 2,460 40 50 90
14400 DBU 2,818 40 50 90
14400 MUX 3,780 40 50 90
14400 MUX DBU 4,138 40 50 90
STAND ALONE
19200 3,516 40 50 90
19200 DBU 3,874 40 50 90
19200 MUX 5,891 40 50 90
19200 MUX DBU 6,248 40 50 90
RACK MOUNTED
19200 3,428 40 50 90
19200 DBU 3,786 40 50 90
19200 MUX 5,803 40 50 90
19200 MUX DBU 6,160 40 50 90
IDM 500-STAND ALONE 1,228 20 15 35
RACK MOUNTED 1,074 20 15 35
IDM 556 STAND ALONE 1.316 20 15 35
RACK MOUNTED 1,228 20 15 35
4000 SPLITTER 783 0 0 0
MC 504 DATA COMP 4,004 65 0 65
MCS08 DATA COMP 7,040 133 0 133
</TABLE>
(1) EXCLUDES ANY APPLICABLE STATE. COUNTY, OR CITY SALES TAX
<PAGE> 49
ADDENDUM, TO DATA PROCESSING SERVICES AGREEMENT
THIS ADDENDUM, Entered into on the same day as the Data Processing Services
Agreement (the "Agreement") by and between the undersigned parties, does hereby
alter, amend, and modify the Agreement and supersedes and takes precedence over
any conflicting provisions contained in the Agreement.
FOR GOOD AND VALUABLE CONSIDERATION, The receipt and sufficiency of which
are hereby acknowledged, the undersigned parties agree as follows:
1 . M&I will accept a "prime contractor/advisor" responsibility in
coordination with TeamBanc, Inc., to select and establish:
a. Operations site.
b. Hardware/software vendor for MICR items capture. c. Print solution.
d. Staffing levels.
e. Training.
f. Environment (air, electrical, misc.).
All costs to be the responsibility of Customer.
2.John Schmitt will both review the entire proposal and plan and advise
both M&I and Customer throughout the contract signing and conversion process.
3. M&I will establish and implement a conversion plan to include:
a. Preconversion planning.
b. All training and preconversion meetings will be at M&I Milwaukee
training facility.
c. Conversion week.
d. An extended conversion assistance program that will ensure a smooth
transfer from conversion week through an effective day-to-day usage
of the system.
e. The M&I Support Center will support and enhance the transition
process by establishing a "daily call program" on a prearranged
time schedule, for a minimum of sixty (60) days following the
conversion.
f. Both the M&I project conversion manager and the Customer's
appointed conversion coordinator will jointly agree on the
conversion plan, postconversion "daily call program"
representatives, and related costs to be borne by the Customer.
g. All Customer/M&I meetings identifying and exchanging "to-from" data
will be held in Milwaukee.
h. All test reports, training, and workflow analysis will be conducted
and reviewed in Milwaukee.
<PAGE> 50
i. M&I product support representatives will be on-premise at the
customer site during conversion week.
j. All additional product support trips to the Customer sites are
billable at M&I's hourly internal cost rate plus travel expenses.
4. M&I will conduct an operations review and study of the Customer's
operations area at each bank during the first year at no cost. The intent and
focus of the operations review is to evaluate:
o M&I IBS System feature utilization.
o Efficiency of operations.
o Staff proficiency.
o Progression and transition since conversion.
o General observations.
A summary report of all observations and recommendations will be
submitted to Customer.
5. Should Customer acquire additional banks, programming and product
support costs will be invoiced at M&I's then-current internal rate (M&Is 1992
internal programming and product support rates per hour are: $43.68 and $39.15
respectively; M&I's 1992 external programming and product support rates per
hour are: $100.00 and $55.00, respectively. These rates are subject to annual
adjustment.). Travel, lodging, and meal expense will be invoiced at actual cost
incurred.
6. In receipt of a signed contract prior to December 23, 1992, Customer
will receive a credit against future processing changes in the amount of
eighteen thousand seventy dollars ($18,070) after January 1994. The credit may
be used at any time during the term of the Agreement by notifying M&I at least
sixty (60) days in advance.
7. Estimated conversion expenses shall be paid in full by Customer prior to
the commencement of any conversion activities. Estimated conversion expenses
are as follows:
<TABLE>
<S> <C>
a. Estimated conversion travel; meals, $ 6,736
transportation, lodging, and rental car expense
for M&I personnel during conversion week
only. Any additional trips required will be
invoiced to customer as incurred.
b. Data communications installation; Milwaukee to 6,623
main bank circuit and tail circuits.
c. Purchase of modems, data compression 36,732
devices, and modem splitters.
d. Modem and related data communication 3,434
equipment installation.
e. CIS conversion ISI merge. 7,138
f. Conversion programming. 56,398
g. Conversion product support. 93,684
</TABLE>
<PAGE> 51
<TABLE>
<S> <C>
h. Loan Origination/tracking program. 25,000
EFS laser printer software (per printer) 3,000
VMP laser document overlays (per printer) 800
i. M&I EFT programming costs to interface and 9,300 test
with Bankmate and Via Bank IV.
j. M&I prime contractor/consultant responsibility
in operations center.
k. PC remote print software and installation. PC 9,900
hardware and travel cost not included. (Per
location - $4,950)*
1. M&I PCTeller license (cost for 20 copies).* 13,090
m. M&I Salespartner license (26 copies).* 61,730
n. M&I ExecuVision tm (1 copy)* 5,995
Installation 800
o. MCIF EASE-software license, installation, 8,500
and training.*
p. IPS micro software for ALM 11,000
Total of estimated conversion expenses $359,860
</TABLE>
*Software licenses for these products must also be executed. If required,
hardware and technical installation services through M&I to be determined at a
later date.
IN WITNESS WHEREOF, the undersigned parties have duly executed this
Addendum in a manner appropriate to each.
M&I DATA SERVICES, INC, ("M&I")
770 North Water Street
Milwaukee, WI 53202
BY: /s/ JOSEPH L. DELGADILLO
NAME: Joseph L. Delgadillo
TITLE: Senior Vice President
<PAGE> 52
By:
M&I DATA SERVICES, INC. ("M&I)
770 North Water Street
Milwaukee, WI 53202
By: /s/ Michael V. Ruane
Name: Michael V. Ruane
Title: Vice President
TEAMBANC, INC. ("Customer")
1 South Pearl
Paola, KS 66071
By: /s/ Michael L. Gibson
Name: Michael L. Gibson
Title: President
MIAMI COUNTY NATIONAL BANK ("Customer")
1 South Pearl
Paola, KS 66071
By: /s/ Robert J. Weatherbie
Name: Robert J. Weatherbie
Title: President
IOLA BANK AND TRUST COMPANY
("Customer") 119 East
Madison Iola, KS 66749
By: /s/ James S. Gilpin
Name: James S. Gilpin
Title: President
<PAGE> 53
M&I DATA SERVICES, INC.
SALESPARTNER, PCTELLER, AND EXECUVISION
SOFTWARE LICENSE AGREEMENT
THIS AGREEMENT is entered into this ___ day of ______________ 1993, by
and between M&I Data Services, Inc. ("M&I"), a Wisconsin corporation located at
770 North Water Street, Milwaukee, Wisconsin 53202 and TeamBanc, Inc., located
at 1 South Pearl, Paola, Kansas 66071 (the "Customer").
RECITALS
WHEREAS, M&I has developed branch automation, teller, and information
delivery software for use with personal computers; and
WHEREAS, Customer wishes to obtain a license to use such software for
its own internal purposes.
NOW, THEREFORE, for and in consideration of the mutual agreements
contained herein, M&I hereby grants Customer the right and license to use the
Salespartner, PCTeller, and ExecuVision Software (as described herein) subject
to the ongoing satisfaction by Customer of the following terms and conditions:
1. Salespartner. PCTeller. and ExecuVision Software. For purposes of
this Agreement, the term Salespartner, PCTeller, and ExecuVision Software
(together referred to as the "Software") shall mean branch automation, teller,
information delivery, and EASEL/2 Runtime software systems delivered to the
Customer in machine-readable code (object code) only, together with related
user documentation provided by M&I and identified in Exhibit A. T"he
ExecuVision Software developed by M&I incorporates EASEL/2 Runtime System
developed by Easel Corporation located at 25 Corporate Drive, Burlington,
Massachusetts 01803.
2. Scope of License. Subject to the terms and conditions of this
Agreement, M&I hereby grants to Customer a nonexclusive, nontransferable, and
perpetual license to use the Software for its own internal business purposes
and solely accessible by the personal computers listed in Exhibit A. Customer
acknowledges and agrees that the Software is licensed for use with the version
of the bank system software made available from time to time by M&I through the
M&I Service Bureau (the "Service Bureau Software"). Customer further
acknowledges and agrees that the interfacing of the Software to other mainframe
banking applications and providing ongoing maintenance for such interface, if
any, is not provided under this Agreement. M&I acknowledges and agrees that the
license granted herein shall continue in full force and effect in the event
that the Customer no longer utilizes the Service Bureau Software, provided that
Customer complies at all times with the terms and conditions of this Agreement.
Customer understands that this License does not include the operating system
which is necessary to utilize the Software.
3. License Fee. Customer shall pay to M&I a one-time License Fee as
set forth in Exhibit A. Such fee shall be based upon the number of personal
computer workstations that are authorized to access the Software, as listed in
Exhibit A. The License Fee shall include Training and Conversion Support as
described in Section 5. M&I agrees that Customer may install and use the
Software, under the license granted hereby, on additional personal
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computer workstations or equipment other than those listed in Exhibit A
("Additional Computers") and authorizes such Additional Computers to access the
Software provided that Customer notifies M&I prior to usage and Customer pays
an additional License Fee(s), based upon increased access computed in
accordance with M&I's then-current price schedule, within thirty (30) days
after Customer's receipt of an invoice from M&I for such fees. Customer agrees
that if it installs or uses the Software on additional personal computer
workstations or equipment, other than those listed in Exhibit A, without
notifying M&I prior to usage and paying such additional License Fee(s), M&I
shall, in addition to any other remedies it may have, have the right to
terminate the license granted herein, or for increased PCTeller Software
access, charge an additional PCTeller License Fee, or for increased
Salespartner Software or ExecuVision Software access, charge an additional
Salespartner License Fee or ExecuVision License Fee, as applicable, and
maintenance fees commencing from Salespartner Delivery Date or ExecuVision
Delivery Date, as described in Section 4; such fees to be based upon the
increased access computed in accordance with M&I's then-current price schedule.
Customer shall also pay all applicable taxes, duties, and charges (including,
but not limited to, sales, use, excise, and personal property taxes imposed on
customer) now or hereafter levied, assessed, or charged against the Software
while licensed to Customer as a consequence of this Agreement, except where
such taxes, duties, or charges are based upon the income of M&I.
4. Delivery.
(a) PCTeller Delivery. M&I shall deliver on magnetic diskette to
Customer, at the time of conversion to PCTeller, one machine-readable copy of
the PCTeller Software. Delivery shall be deemed to have occurred upon
Customer's receipt of the PCTeller Software at the time of conversion
("PCTeller Delivery Date").
(b) Sales Partner Delivery. M&I shall deliver on magnetic diskette to
Customer, at the beginning of Salespartner training session as described in
Section 5, one machine-readable copy of the Salespartner Software. Delivery
shall be deemed to have occurred upon Customer's receipt of the Salespartner
Software at the beginning of the Salespartner training session ("Salespartner
Delivery Date").
(c) ExecuVision Delivery. M&I shall deliver on magnetic diskette to
Customer, at the beginning of ExecuVision training session as described in
Section 5, one machine-readable copy of the ExecuVision Software. Delivery
shall be deemed to have occurred upon Customer's receipt of the ExecuVision
Software at the beginning of the ExecuVision training session ("ExecuVision
Delivery Date").
5. Training and Conversion Support.
(a) PCTeller Support. M&I shall provide a two-day teller analysis
session to determine teller transaction requirements and a three-day teller
training class to familiarize the Customer's trainers with the features and
functions of the PCTeller Software. The sessions shall be held at the M&I
Datacenter located in Brown Deer, Wisconsin, at dates and times established by
M&I. M&I shall also be on-site at the time of conversion as defined in the Data
Processing Services Agreement by and between Customer and M&I (the "Data
Processing Services Agreement"), to assist with the conversion to the PCTeller
Software. M&I will also provide to Customer, in conjunction with its conversion
to PCTeller, an upgrade to the Tellerlink host software. M&I reserves the right
to change the content and duration of the analysis and training sessions and
the duration of on-site support, provided that any changes which materially
diminish the duration of the analysis sessions, training sessions, or on-site
support shall require Customer's consent. Customer shall be responsible for all
travel, lodging, and related costs and expenses incurred by attendees. Customer
agrees to reimburse M&I for reasonable travel and lodging expenses for Training
and Conversion Support rendered
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to Customer outside of M&I offices, according to the terms of the Data
Processing Services Agreement.
(b) Salespartner Support. M&I shall provide a five-day class for a
maximum of six employees of Customer to familiarize Customer's employees with
the features and functions of the Salespartner Software. The training session
shall be held at the M&I Datacenter, located in Brown Deer, Wisconsin, at dates
and times established by M&I. Customer shall be responsible for all travel,
lodging, and related costs and expenses incurred by attendees. Attendance by
Customer's employees is subject to the availability of space in a particular
session, and M&I reserves the right to change the session's content or its
duration.
(c) ExecuVision Support. M&I shall provide a two-day class for a
maximum of two employees of Customer to familiarize Customer's employees with
the features and functions of the ExecuVision Software. The training session
shall be held at the M&I Datacenter, located in Brown Deer, Wisconsin, at dates
and times established by M&I. Customer shall be responsible for all travel,
lodging, and related costs and expenses incurred by attendees. Attendance by
Customer's employees is subject to the availability of space in a particular
session, and M&I reserves the right to change the session's content or its
duration.
6. Installation. M&I shall have no obligation to install the Software
on Customer's Personal Computer(s), and Customer agrees to install and maintain
all Software on their Personal Computer(s) unless Customer purchases Bundled
Hardware and Support Services, in which case installation services shall be
defined and attached to this Agreement.
7. Acceptance. This Agreement shall be deemed to have been accepted by
the Customer as of the date when M&I and Customer have both executed this
Agreement. The Software shall be deemed to have been accepted by Customer upon
delivery by M&I.
8. Documentation. Customer shall receive, at no additional charge,
user documentation as defined in Exhibit A, as part of the Software. Additional
sets of documentation requested by the Customer will be billed to Customer at
M&I's then-current price for such documentation.
9. Maintenance and Enhancements for PCTeller.
(a) Maintenance Services and Enhancements. For so long as the Customer
is receiving services under the Data Processing Services Agreement, M&I agrees
to provide to Customer maintenance services and enhancements for the PCYeller
Software as described below ("PCTeller Maintenance Services"). PCTeller
Maintenance Services shall be provided to Customer's primary location only, as
designated in Exhibit A. The PCTeller Maintenance Services are the following:
(i) M&I shall correct all PCTeller Software errors which cause
the PCTeller Software not to be in substantial compliance
with its user documentation and shall use its best efforts to
correct all other PCTeller Software errors upon discovery and
proper notification by the Customer of the existence of any
error; proper notification being deemed given only if the
Customer substantially complies with M&I's error notification
procedures in effect at that time. If, after investigation of
the reported error, it is determined that the error is beyond
M&I's responsibility, including, but not limited to, errors
resulting from modifications made by the Customer, the
Customer agrees to pay for M&I's efforts in investigating
and/or resolving the error at M&I's then-current rates for
such services, plus reasonable expenses incurred by M&I.
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(ii) M&I shall provide phone support with regard to the use and
operation of the PCTeller Software during M&I's regular
business hours and, at all other times, an emergency phone
number to be used at the Customer's discretion to secure
necessary phone support with regard to emergency situations.
(iii) M&I shall use its best efforts in developing future releases
and upgrades of the PCTeller Software and accompanying
documentation. M&I shall deliver to Customer one copy of any
future releases and upgrades (with Customer having the right
to make and use additional copies pursuant to Section 15 of
this Agreement) and shall deliver accompanying documentation,
if any, in a quantity specified in Exhibit A. If M&I does
develop future releases and upgrades which replace or
supersede any other version of the PCTeller Software then in
use by Customer, M&I agrees to provide maintenance services
as set forth above for the new updated version, as well as
the next most previous version.
(b) Maintenance Fee. The fee for PCTeller Maintenance Services shall
be incorporated in the On-line Teller rates published in the M&I Customer price
list and paid by Customer pursuant to the Data Processing Services Agreement.
Such fees will be included in the Customer's monthly data processing invoice.
On-line Teller rates may be adjusted by M&I in accordance with the Data
Processing Services Agreement. Customer agrees to reimburse M&I for
time-and-material expenses, including reasonable travel and lodging expenses,
for PCTeller Maintenance Services rendered to Customer outside of M&I's offices
at Customer's request when such PCTeller Maintenance Services could have been
performed at M&I's offices, as determined solely by M&I.
(c) Termination of Maintenance. If Customer discontinues receiving
services under the Data Processing Services Agreement, then the PCTeller
Maintenance Services shall also terminate on the date of such discontinuance;
provided, however, Customer shall have the right to continue to use the
PCTeller Software pursuant to the terms and conditions of this Agreement.
10. Maintenance and Enhancements for Salespartner.
(a) Maintenance Services and Enhancements. WhUe maintenance services
are available for Salespartner Software to M&I licensees, M&I agrees to provide
to Customer maintenance services and enhancements for the Salespartner Software
as described below ("Salespartner Maintenance Services"). Salespartner
Maintenance Services shall be provided to Customer's primary location only, as
designated in Exhibit A. Salespartner Maintenance Services are the following:
(i) M&I shall correct all Salespartner Software errors which
cause the Salespartner Software not to be in substantial
compliance with its user documentation and shall use its best
efforts to correct all other Salespartner Software errors
upon discovery and proper notification by the Customer of the
existence of any error; proper notification being deemed
given only if the Customer substantially complies with M&I's
error notification procedures in effect at that time. If,
after investigation of the reported error, it is determined
that the error is beyond M&I's responsibility, including but
not limited to, errors resulting from modifications made by
the Customer, the Customer agrees to pay for M&I's efforts in
investigating and/or resolving the
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error at M&I's then-current rates for such services, plus
reasonable expenses incurred by M&I.
(ii) M&I shall provide phone support with regard to the use and
operation of the Salespartner Software during M&I's regular
business hours and, at all other times, an emergency phone
number to be used at the Customer's discretion to secure
necessary phone support with regard to emergency situations.
(iii) M&I shall use its best efforts in developing future releases
and upgrades of the Salespartner Software and accompanying
documentation. M&I shall deliver to Customer one copy of any
future releases and upgrades (with Customer having the right
to make and use additional copies pursuant to Section 15 of
this Agreement) and shall deliver accompanying documentation,
if any, in the quantity specified in Exhibit A; provided that
the Customer has continuously paid the monthly maintenance
fee included on the Customer's monthly data processing
invoice. If M&I does develop future releases and upgrades
which replace or supersede any other version of the
Salespartner Software then in use by the Customer, M&I agrees
to provide maintenance services as set forth above for the
new updated version, as well as the next most previous
version.
(b) Maintenance Fee. Customer shall pay to M&I, beginning ninety (90)
days following the Salespartner Delivery Date, a monthly maintenance fee listed
in Exhibit A for the Salespartner Maintenance Services, such fee to be based
upon the number of personal computer workstations authorized to access the
Salespartner Software (as listed in Exhibit A) and M&I's then-current price
schedule. The Salespartner monthly maintenance fee will be included on the
Customer's monthly data processing invoice, and Customer agrees to pay the
invoice according to the payment terms of the current Data Processing Services
Agreement with M&I. The Salespartner monthly maintenance fee may be adjusted by
M&I in accordance with the terms of the Data Processing Services Agreement.
Customer agrees to reimburse M&I for time-and material expenses, including
reasonable travel and lodging expenses, for Salespartner Maintenance Services'
rendered to Customer outside of M&I offices at Customer's request when such
Salespartner Maintenance Services could have been performed at M&I's offices,
as determined solely by M&I.
(c)Termination of Maintenance. Salespartner Maintenance Services shall
remain in full force and effect unless terminated in accordance with the
following provisions:
(i) The Customer may terminate Salespartner Maintenance Services
by providing M&I with written notice of Customer's intent to
terminate such services not less than sixty (60) days prior
to the desired date of termination. Salespartner Maintenance
Services shall then terminate at the end of the month in
which the requested date of termination falls.
(ii) The Customer may request reinstatement of Salespartner
Maintenance Services by notifying M&I of the Customer's
desire to reinstate. M&I may consent to reinstatement, which
consent shall not be unreasonably withheld, provided that
Customer has paid to M&I the Salespartner monthly maintenance
fee for all months in the intervening time between the
month-ending date of termination and the first of the month
of reinstatement, in which case Salespartner Maintenance
Services shall again be and remain in full force and effect .
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(iii) If the Customer fails to pay M&I the Salespartner monthly
maintenance fee for two consecutive months or if Customer no
longer utilizes the Service Bureau Software, M&I may
terminate the Salespartner Maintenance Services. Termination
of the Salespartner Maintenance Services by M&I shall not
preclude any other legal remedy M&I may have against the
Customer.
11. Maintenance and Enhancements for ExecuVision.
(a) Maintenance Services and Enhancements. While maintenance services
are available for ExecuVision Software to M&I licensees, M&I agrees to provide
to Customer maintenance services and enhancements for the ExecuVision Software
as described below ("ExecuVision Maintenance Services"). ExecuVision
Maintenance Services shall be provided to Customer's primary location only, as
designated in Exhibit A. ExecuVision Maintenance Services are the following:
(i) M&I shall correct all ExecuVision Software errors which cause
the ExecuVision Software not to be in substantial compliance
with its user documentation and shall use its best efforts to
correct all other ExecuVision Software errors upon discovery
and proper notification by the Customer of the existence of
any error; proper notification being deemed given only if the
Customer substantially complies with M&Is error notification
procedures in effect at that time. If, after investigation of
the reported error, it is determined that the error is beyond
M&I's responsibility, including but not limited to, errors
resulting from modifications made by the Customer, the
Customer agrees to pay for M&I's efforts in investigating
and/or resolving the error at M&I's then-current rates for
such services, plus reasonable expenses incurred by M&I.
(ii) M&I shall provide phone support with regard to the use and
operation of the ExecuVision Software during M&I's regular
business hours and, at all other times, an emergency phone
number to be used at the Customer's discretion to secure
necessary phone support with regard to emergency situations.
(iii) M&I shall use its best efforts in developing future releases
and upgrades of the ExecuVision Software and accompanying
documentation. M&I shall deliver to Customer one copy of any
future releases and upgrades (with Customer having the right
to make and use additional copies pursuant to Section 15 of
this Agreement) and shall deliver accompanying documentation,
if any, in the quantity specified in Exhibit A; provided that
the Customer has continuously paid the monthly maintenance
fee included on the Customer's monthly data processing
invoice. If M&I does develop future releases and upgrades
which replace or supersede any other version of the
ExecuVision Software then in use by the Customer, M&I agrees
to provide maintenance services as set forth above for the
new updated version, as well as the next most previous
version.
(b) Maintenance Fee. Customer shall pay to M&I, beginning ninety (90)
days following the ExecuVision Delivery Date, a monthly maintenance fee listed
in Exhibit A for the ExecuVision Maintenance Services, such fee to be based
upon the number of personal
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computer workstations authorized to access the ExecuVision Software (as listed
in Exhibit A) and M&Is then-current price schedule. Ile ExecuVision monthly
maintenance fee will be included on the Customer's monthly data processing
invoice, and Customer agrees to pay the invoice according to the payment terms
of the current Data Processing Services Agreement with M&I. Ile ExecuVision
monthly maintenance fee may be adjusted by M&I in accordance with the terms of
the Data Processing Services Agreement. Customer agrees to reimburse M&I for
time-and-material expenses, including reasonable travel and lodging expenses,
for ExecuVision Maintenance Services rendered to Customer outside of M&I
offices at Customer's request when such ExecuVision Maintenance Services could
have been per-formed at M&I's offices, as determined solely by M&I.
(c) Termination of Maintenance. ExecuVision Maintenance Services shall
remain in full force and effect unless terminated in accordance with the
following provisions:
(i) The Customer may terminate ExecuVision Maintenance Services
by providing M&I with written notice of Customer's intent to
terminate such services not less than sixty (60) days prior
to the desired date of termination. ExecuVision Maintenance
Services shall then terminate at the end of the month in
which the requested date of termination falls.
(ii) The Customer may request reinstatement of ExecuVision
Maintenance Services by notifying M&I of the Customer's
desire to reinstate. M&I may consent to reinstatement, which
consent shall not be unreasonably withheld, provided that
Customer has paid to M&I the ExecuVision monthly maintenance
fee for all months in the intervening time between the
month-ending date of termination and the first of the month
of reinstatement, in which case ExecuVision Maintenance
Services shall again be and remain in full force and effect .
(iii) If the Customer fails to pay M&I the ExecuVision monthly
maintenance fee for two consecutive months or if Customer no
longer utilizes the Service Bureau Software, M&I may
terminate the ExecuVision Maintenance Services. Termination
of the ExecuVision Maintenance Services by M&I shall not
preclude any other legal remedy M&I may have against the
Customer.
12. Use Rights. Customer represents and warrants that it will use the
Software solely on those computer(s) described in Exhibit A, except as provided
for in Section 15, and that it will only process information and data for
itself, its subsidiaries, parent corporation, and subsidiaries of its parent
corporation, and that it will not directly or indirectly permit any other
person or entity to have access to or use of the Software, and that it will not
use the Software to provide data processing services on a shared resource or
service bureau basis to any other person, company, or financial.institution.
13. Notification of Unauthorized Us . Customer agrees to notify M&I
promptly of any circumstances known to Customer surrounding any unauthorized
possession or use of any part of the Software, or any other information or
documentation made available pursuant to this Agreement to anyone other than
persons properly authorized by Customer to have such possession or use.
14. Ownership and Confidentiality. Customer acknowledges and agrees
that the Software, including all authorized and unauthorized copies, are
proprietary to and valuable trade secrets of M&I or Easel Corporation, as the
case may be, and Customer shall maintain their confidential nature. Customer
agrees that the Software shall be used only in accordance
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with this Agreement, and Customer shall not assign (except as provided for in
Section 21), sell, lease, market, transfer, or reproduce (except as provided in
Section 15) the Software or any modification thereto to or for others. Customer
shall limit access to the Software to Customer's employees or third parties,
when such persons (1) are performing services for the Customer, related to the
Customer's authorized use of the Software; and (2) have a valid need to know or
use the Software; provided that Customer shall advise such persons of the
Customer's confidentiality obligations and establish procedures designed to
prevent unauthorized use and access. Customer shall exercise all reasonable
precautions to prevent access to the Software by persons not authorized by
terms of this Agreement. Customer shall store the Software in a secure place at
all times it is not being used. In addition, Customer shall take reasonable and
appropriate measures to prevent copying, distribution, reverse engineering, and
reverse compiling of the Software. Customer recognizes that the Software may be
patented, copyrighted, trademarked, or otherwise protected by M&I or Easel
Corporation, as the case may be, and Customer will not undertake to patent,
copyright, trademark, or otherwise apply for a proprietary grant or right with
respect to the Software.
15. Reproduction. Customer shall have the right to install and use the
Software on each personal computer that is included in the License Fee and
appears on Exhibit A, and in case of a disaster rendering the personal computer
workstations or equipment unusable, on an equal number of personal computer
workstations or equipment. Customer shall also have the right from time to time
to install and use additional copies of the Software as required to perform
disaster recovery testing. All additional copies, whether for recovering from a
disaster or performing disaster recovery testing, are subject to the terms and
conditions of this Agreement. Customer may also reproduce the Software for
backup or archival purposes only; provided, however, such reproduction shall
(1) be solely for the use of the Customer, (2) conspicuously display the
information shown in Exhibit B, and (3) be subject to the restrictions set
forth in this Agreement.
16. Modifications. Customer acknowledges and agrees that it shall not
make any modifications to the Software object code. M&I shall not be liable to
the Customer in warranty or otherwise for modifications made to the Software
object code by someone other than M&I. Under no circumstances shall Customer
sell, distribute, or license modifications of the Software. Nothing herein will
prevent M&I from developing and distributing its own modifications to the
Software. Customer shall have the right to modify the Software as described in
the user documentation provided with the Software.
17. Warranty. THE FOLLOWING LIMITED WARRANTIES ARE IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING BUT NOT
LIMITED TO, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
(a) M&I warrants that it or Easel Corporation, as the case may be, is
the exclusive owner of the copyrights and all other rights in the Software and
that it has all the rights necessary in order to grant the licenses specified
under this Agreement. In the event of any claim by any third party with respect
to any of the Software or documentation that such Software or documentation
violates or infringes any United States copyright or patent, M&I shall defend
Customer against such claim and shall pay all court awarded damages, losses,
liabilities, claims, and expenses (including reasonable attorneys' fees)
incurred by Customer in such actions which are attributable to such claim;
provided however, that notice of a claim by the Customer under this Section is
received by M&I within two (2) years of the later of termination of PCTeller
Maintenance Services, Salespartner Maintenance Services, or ExecuVision
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Maintenance Services that M&I is notified within ten (10) calendar days in
writing of any suit or claim against the Customer, that the Customer permits
M&I to defend said claim of infringement and gives M&I all reasonable and
available information, assistance, and authority to enable M&I to do so, and
provided further that Customer fully observes all the terms and conditions of
this Agreement. M&I shall not be responsible for any compromise made without
its consent. Following notice of a claim or of a threatened claim, M&I may,
without obligation to do so, procure for the Customer the right to continue to
use the Software within the terms of this Agreement, or, without obligation to
do so, may modify the Software in a manner that does not materially and
adversely impact on their functionality so that further use becomes
noninfringing, or, without obligation to do so, pay Customer an amount equal to
the License Fee minus 1/60 of such License Fee times the number of months the
Customer has used the Software under the Agreement. In the event that the
Customer's use of the Software within the terms of this Agreement is held by a
court of last resort to constitute an infringement of a United States patent or
copyright and such further use or distribution is enjoined, M&I shall, at its
option and expense, (i) procure for the Customer the right to continue using
the Software within the terms of this Agreement, or (ii) modify the Software in
a manner that does not materially impact on their functionality so that further
use becomes noninfringing; provided that M&I shall have no obligation to incur
direct costs in connection with exercising either or both of the foregoing
options in excess of the limitation of liability under Section 18 of this
Agreement. Additionally, M&I shall have no obligation with respect to any such
infringement where the infringement would have been avoided but for
modifications made to the Software by the Customer. The foregoing states M&I's
entire obligation, and the Customer's exclusive remedy, with respect to
infringement.
(b) M&I warrants that the Software, when run in the operating
environment specified in the user documentation provided with the Software,
shall operate in substantial compliance with such user documentation. Customer
acknowledges and agrees that its sole remedy under this warranty is for M&I to
correct all PCTeller Software errors which cause the PCTeller Software not to
be in substantial compliance with its related user documentation and to use its
best efforts to correct all other PCTeller Software errors that are brought to
its attention by the Customer during the term of this Agreement and the Data
Processing Agreement; to correct all Salespartner Software errors which cause
the Salespartner Software not to be in substantial compliance with its related
user documentation and to use its best efforts to correct all other
Salespartner Software errors that are brought to its attention by the Customer
during the ninety (90) days following the Salespartner Delivery Date, and
thereafter while Customer subscribes for Salespartner Maintenance Services as
described in Section 10; and to correct all ExecuVision Software errors which
cause the ExecuVision Software not to be in substantial compliance with its
related user documentation and to use its best efforts to correct all other
ExecuVision Software errors that are brought to its attention by the Customer
during the ninety (90) days following the ExecuVision Delivery Date, and
thereafter while Customer subscribes for ExecuVision Maintenance Services as
described in Section 11. Customer hereby acknowledges that, except for those
limited
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warranties specified in this Section, the Software is provided in an "AS IS"
condition and is without warranty of any kind, either express or implied,
written or oral.
18. Limitation of Liability. M&I's liability for damages to Customer
for any cause whatsoever, whether in contract or in tort, including negligence
(but other than pursuant to Section 17 (a) of this Agreement with respect to
court-awarded damages and defense costs and expenses as a result of an
infringement action which shall not be subject to any limit), shall be limited
to the License Fee paid for the Software. In no event shall either party be
liable for damages caused by the other party's failure to perform its
obligations under this Agreement or for any lost profits, lost savings or
incidental or consequential damages, even if the nonperforming party has
been.advised of the possibility of such damages.
19. Authorization. Customer agrees and represents that it has obtained
all necessary corporate approvals to enter into this Agreement, that the
performance of this Agreement by the Customer will not affect the safety or
soundness of the Customer or any of its affiliates, and that this Agreement and
the obligations evidenced hereby will be properly reflected on the books and
records of the Customer.
20. Termination. In the event that either party fails in any material
respect, to perform its material obligations under this Agreement and receives
written notice from the other party informing it of the breach and requiring it
to cure such breach; then, should the defaulting party fail to cure its breach
within a 30-day period following the written notice (or such reasonable period
if this breach, by its nature, cannot be cured within 30 days), the other party
shall have the right to terminate this Agreement. Upon termination of this
Agreement, Customer shall (1) immediately cease using the Software; (2) erase
the same from the storage in each computer in which it has been installed; (3)
certify to M&I in writing that Customer has taken the action described in
clauses (1) and (2) above; and (4) at the option of M&I, either return to M&I
or destroy all physical embodiments of the Software and backup copies made
thereof.
21. Assignment . Except for the use rights granted in Section 12,
neither party may assign, sublicense, or otherwise transfer any or all of its
rights and obligations under this Agreement without the other party's prior
written consent, which shall not be unreasonably withheld, and any assignment
without such prior written consent shall be void and of no effect.
Notwithstanding the foregoing, either party may assign this Agreement to any
company that is: (1) directly or indirectly in control of such party, (2) under
the control of such party, or (3) under common control with such party.
22. Notices. Notices to be given or submitted by either party to the
other under the terms of this Agreement shall be sufficiently given if made in
writing and hand-delivered or sent by certified or registered mail, postage
prepaid and addressed to the president of the notified party, to the address
shown above or to such other address as the notified party shall so designate
in writing to the other party at least twenty (20) days prior to notification.
23. Entire Agreement. This Agreement, the Exhibits, and the Addendum
(if any) attached hereto supersede all previous agreements and understandings
of any nature whatsoever, verbal or written, and constitute the entire
understanding between the parties with respect to the subject matter hereof.
All oral or written representations, warranties, agreements, and other
inducements relating to this Agreement and its subject matter made prior to the
execution and delivery hereof have been included herein or, to the extent not
included herein, shall be deemed to have been fully performed and discharged or
deliberately omitted. No provision of this Agreement may be waived, modified,
or superseded as against M&I or Customer, except by written instrument signed
by an authorized officer of each party, expressly stating that it is intended
to operate as such.
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24. Governing Law. This Agreement shall be governed, interpreted,
construed, and enforced in accordance with the internal laws of the State of
Wisconsin, United States of America.
25. Severability. If any provision, clause, part, or the application
of this Agreement is held invalid, the remainder of this Agreement or the
application of such provision, clause, or part under other circumstances shall
not be affected.
26. Miscellaneous. Tune is of the essence. No claim, regardless of
form, arising out of this Agreement may be brought by Customer more than two
(2) years after the events giving rise to the claim for relief occurred. Ile
obligations of confidentiality and non-use after termination shall survive
termination.
THE PARTIES HERETO ACKNOWLEDGE THAT EACH HAS READ THIS AGREEMENT,
UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS TERMS AND CONDITIONS, AS STATED
HEREIN.
IN WITNESS WHEREOF, the parties hereto through their duly authorized
officers and agents have hereby executed this Agreement on the date before
written.
TEAMBANC, INC. M&I DATA SERVICES, INC.
(CUSTOMER) (M&I)
By: /s/ Michael L., Gibson By:
Name: Michael L. Gibson Name:
Title: President Title:
Attest: Attest:
By: By:
Name: Name:
Title: Title:
-11-
<PAGE> 64
EXHIBIT A
SALESPARTNER, PCTELLER, AND EXECUVISION
SOFTWARE LICENSE AGREEMENT
M&I DATA SERVICES, INC.
Milwaukee, Wisconsin 53202
Customer Name: TeamBanc, Inc.
Address: 1 South Pearl
Paola, Kansas 66071
Description and Number of Licensed Computer(s)/Workstation(s)/Equipment
PCTeller - 29 workstations to be defined by the Customer
Salespartner - 35 workstations to be defined by the Customer ExecuVision - 1
workstation to be defined by the Customer
Customer's Primary Location Designation:
<TABLE>
<S> <C> <C>
Miami County National Bank Iola Bank & Trust Company The First National Bank & Trust Company
I South Pearl 119 East Madison 1900 Main Street
Paola, Kansas 66071 Iola, Kansas 66749 Parsons, Kansas 67357
</TABLE>
User Documentation:
PCTeller User Guide - 3 copies
PCTeller Training Guide - 3 copies
Salespartner Coordinator Maintenance Manual - 3 copies
Salespartner User Guide - 35 copies
ExecuVision User Guide - I copy
<TABLE>
<CAPTION>
License Fee:
<S> <C>
PCTeller Software $ 17,255.00
Salespartner Software 88,200.00
ExecuVision Software 5,995.00
Data Warehouse Interface Setup Fee 800.00
---------------
$ 112,250.00
Combined License Discount (6,795,00)
---------------
$ 105,455.00
Sales Tax (4.9%) 5,167.30
---------------
TOTAL $ 110,622.30
</TABLE>
Total License Fee including sales tax, due upon execution of this Agreement.
<PAGE> 65
EXHIBIT B
SALESPARTNER, PCTELLER, AND EXECUVISION
SOFTWARE LICENSE AGREEMENT
M&I DATA SERVICES, INC.
Milwaukee, Wisconsin 53202
Customer shall prepare labels containing the following information and affix a
label to each diskette copy of the Salespartner Software, PCTeller Software,
and ExecuVision Software reproduced by the Customer:
1. Salespartner, PCTeller, or ExecuVision Software as applicable.
2. Diskette______ of _________.
3. Licensed material - property of and copyrighted by M&I Data
Services, Inc.
4. This copy was made under M&I Salespartner, PCTeller, and
ExecuVision Software License Agreement dated______________ and may
be used only on the computer(s) listed in that Agreement. It may
not be transferred to a third party.
<PAGE> 1
EXHIBIT 10.6
NATIONWIDE
INSURANCE
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE COLUMBUS, OHIO
(HEREINAFTER CALLED THE COMPANY)
In consideration of the Application for this Contract made by
TRUSTEE(S) OF THE
TEAM FINANCIAL, INC. 401(k) PLAN TRUST
(The Contractholder)
and of the payment of Deposits as provided, the Company agrees to pay,
in accordance with and subject to the terms and conditions of this
Contract, the benefits set forth with respect to each Participant.
Effective Date of Contract: January 01, 1999
Issue Date of Contract: February 08, 1999
Jurisdiction: Kansas
In witness whereof the Company has caused this Contract to be executed
and duly attested on the issue Date shown above.
/s/ Joseph J. Gasper
President
/s/ Dennis W. Click
Secretary
Attest: /s/ Kelly A. Graham
ALL CONTRACTUAL VALUES BASED ON THE INVESTMENT RESULTS OF A SEPARATE
ACCOUNT INCLUDED IN THIS CONTRACT ARE VARIABLE (MAY INCREASE OR
DECREASE) AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
GROUP SEPARATE ACCOUNT ANNUITY CONTRACT NO. GA-P AM29 FIXED DOLLAR
ANNUITIES ONLY
NON-PARTICIPATING
ANNUAL APPLICATION OF EXPERIENCE RATING PLAN
APO-2243 VARIABLE
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C> <C>
CONTRACT SUMMARY PAGE .......................................................................... 1
I. DEFINITIONS .................................................................................... 4
II. VARIABLE FUND
2.1 Variable Fund ....................................................................... 6
2.2 Amount Of Variable Fund ............................................................. 6
2.3 Units ............................................................................... 6
2.4 Unit Value .......................................................................... 6
2.5 Valuation Factor .................................................................... 6
III. DEPOSITS
3.1 Deposits ............................................................................ 8
3.2 Crediting Of Deposits ............................................................... 8
IV. EXCHANGES
4.1 Exchange To A Companion Contract Or A Fund .......................................... 9
4.2 Exchanges From A Companion Contract ................................................. 9
V. PAYMENT OF BENEFITS
5.1 Benefit Payments ................................................................... 10
5.2 Purchase And Amount Of Annuity ..................................................... 11
5.3 Small Annuities .................................................................... 11
5.4 Facility Of Payment ................................................................ 12
5.5 Misstatements And Adjustments ...................................................... 12
5.6 Cash Payments Or Loans ............................................................. 12
VI. CHARGES
6.1 Administration Charge .............................................................. 14
6.2 Contract Charge .................................................................... 14
6.3 Asset Management Charge ............................................................ 14
6.4 Contingent Deferred Sales Charge ................................................... 14
6.5 Other Expense Charges .............................................................. 15
6.6 Other Expense Withdrawals .......................................................... 15
6.7 Payment Of Charges ................................................................. 15
[6.8 Premium Tax......................................................................... 15]
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C> <C>
VII. PAYMENTS UPON TERMINATION OF PLAN - CONTRACT OR REDUCTION
IN NUMBER OF PARTICIPANTS
7.1 Payments Upon Termination Of Plan Or
Reduction In Number Of Participants ................................................. 16
7.2 Termination Of Contract ............................................................. 16
VIII. TRANSFERS
8.1 Notice Of Transfer And Transfer Payments ............................................ 17
8.2 Variable Fund Unit Cancellations And Transfer Payments .............................. 17
IX. GENERAL PROVISIONS
9.1 Guarantees And Change Of Contract ................................................... 18
9.2 Contractholder ...................................................................... 19
9.3 Communication And Notification ...................................................... 19
9.4 Place Of Payment-Currency ........................................................... 20
9.5 Certificates ........................................................................ 20
9.6 Beneficiary-Settlement Options ...................................................... 20
[9.7 Experience Rate Credits ............................................................. 21]
9.8 Assignment .......................................................................... 21
9.9 Information-Records ................................................................. 21
9.10 Entire Contract-Construction ........................................................ 21
</TABLE>
APPLICATION FOR AND ACCEPTANCE OF GROUP ANNUITY CONTRACT
<PAGE> 4
CONTRACT SUMMARY PAGE
GA-P AM29
Administration Charge: None.
Asset Management Charge: 0.60% for Funds selected by the
Contractholder from Primary Funds on the
Application. This represents a 0.25%
reduction in the standard Asset Management
Charge of 0.85%. 0.60% for Funds selected
by the Contractholder from Optional Funds
on the Application. This represents a
0.25% reduction in the standard Asset
Management Charge of 0.85%. The Asset
Management Charge will be reviewed, and
changed if appropriate, on the first
Contract Anniversary occurring no earlier
than six months from the Effective Date,
and on each subsequent Contract
Anniversary. The sum of amounts in this
Contract and the Companion Contract(s),
calculated by averaging the beginning
balances for such contracts for the two
month period prior to the month of the
Contract Anniversary Date, will determine
whether or not a change in the Asset
Management Charge applies, per the
following schedule:
<TABLE>
<CAPTION>
Reduction in the Reduction in the
Sum of Amounts in Standard Asset Standard Asset
this Contract and the Management Management
Companion Contract(s) Charge for Primary Charge for Optional
-------------------------------- ------------------- -------------------
<S> <C> <C>
$ 750,000 - $ 999,999 0.35% 0.30%
$ 1,000,000 - $ 1,499,999 0.40% 0.30%
$ 1,500,000 - $ 1,999,999 0.45% 0.30%
$ 2,000,000 - $ 2,249,999 0.51% 0.31%
$ 2,250,000 - $ 2,499,999 0.53% 0.33%
$ 2,500,000 - $ 2,749,999 0.55% 0.35%
$ 2,750,000 - $ 3,124,999 0.57% 0.37%
$ 3,125,000 - $ 3,499,999 0.59% 0.39%
$ 3,500,000 - $ 4,124,999 0.61% 0.41%
$ 4,125,000 - $ 4,874,999 0.63% 0.43%
$ 4,875,000 - $ 5,749,999 0.65% 0.45%
$ 5,750,000 - $ 6,999,999 0.67% 0.47%
$ 7,000,000 - $ 8,499,999 0.69% 0.49%
</TABLE>
-1- VARIABLE
<PAGE> 5
CONTRACT SUMMARY PAGE
GA-P AM29
<TABLE>
<CAPTION>
Reduction in the Reduction in the
Sum of Amounts in Standard Asset Standard Asset
this Contract and the Management Management
Companion Contract(s) Charge for Primary Charge for Optional
-------------------------------- ------------------- -------------------
<S> <C> <C>
$ 8,500,000 - $ 9,999,999 0.71% 0.51%
$ 10,000,000 - $ 11,499,999 0.73% 0.53%
$ 11,500,000 - $ 12,999,999 0.75% 0.55%
$ 13,000,000 - $ 14,999,999 0.77% 0.57%
$ 15,000,000 - $ 16,999,999 0.79% 0.59%
$ 17,000,000 - $ 18,999,999 0.80% 0.60%
$ 19,000,000 - $ 21,999,999 0.81% 0.61%
$ 22,000,000 - $ 24,999,999 0.82% 0.62%
$ 25,000,000 - $ 29,999,999 0.83% 0.63%
</TABLE>
If the sum of the amounts in this Contract and the Companion Contract(s)
decreases to less than $750,000 during any Contract Year, the Asset
Management Charge will be determined in accordance with uniform procedures
applicable to all contracts of this class. Any change in the Asset
Management Charge will be effective on the next Contract Anniversary.
Companion Contract(s): None.
Contingent Deferred
Sales Charge:
<TABLE>
<CAPTION>
Deferred Sales
Contract Year Charge Percentage
<S> <C>
1 0.00%
2 0.00%
3 0.00%
4 0.00%
5 0.00%
6 0.00%
7 0.00%
8 0.00%
9 0.00%
Thereafter 0.00%
</TABLE>
The Contingent Deferred Sales Charge Percentage shall be
applied to the dollar value of units canceled as provided in
this Contract.
Contract Anniversary: January 01, 2000, and each January 01 thereafter.
Contract Charge: None.
-2- VARIABLE
<PAGE> 6
CONTRACT SUMMARY PAGE
GA-P AM29
Creditable Percentage: 100%
Crediting Deposits: Each Deposit, as described in Article 111, will
be credited to the applicable Fund or Funds no
later than the third Business Day following its
receipt.
Plan: Team Financial, Inc. 401(k) Plan.
Processing Exchanges: Exchanges, as described in Article IV, will be
made within three Business Days following receipt
of the Contractholder's written request.
Processing Annuity Purchases: Annuity Purchases, as described in Article V,
will be made within 15 Business Days following
receipt of the Contractholder's written request.
Processing Cash Payments: Cash Payments, as described in Article V will be
made within five Business Days following receipt
of the Contractholder's written request.
Processing Payments Upon Plan Termination or
Reduction in Number of Participants: Benefit
Payments to each affected Participant, as
described in Article VII, will be made within 30
calendar days following receipt of the
Contractholder's written request.
Processing Transfers: Transfers, as described in Article VIII, will be
made within 12 Business Days following receipt of
the Contractholder's written request.
Purchase Rate Basis: 1983 Table A (Male), with Annuitant ages set back
10 years and survivor Annuitant ages set back 5
years; 3.0% interest; and 4.0% loading.
Percentage Reduction in
Number of Participants as
defined in Section 1.13: 15%
-3- VARIABLE
<PAGE> 7
ARTICLE I - DEFINITIONS
1.1 ANNUITANT - a person receiving an Annuity.
1.2 ANNUITY - any benefit in the form of a series of payments due in
accordance with the Plan, payable under this Contract.
1.3 BENEFIT PAYMENT - a distribution that is permitted by the Plan on
behalf of a Participant.
1.4 BUSINESS DAY - each day that the Company's Home Office and the
applicable financial institutions for purposes of processing
financial transactions are open for business. All requests for
transactions that are received after [1:00] p.m. Columbus, Ohio
time will be considered to be received on the next Business Day.
1.5 CASH PAYMENT - a form of Benefit Payment other than an Annuity
purchased under this Contract.
1.6 CONTRACT YEAR - a period beginning on the Effective Date or any
Contract Anniversary and ending on the day immediately preceding
the next following Contract Anniversary.
1.7 EMPLOYER - any organization reported to the Company by the
Contractholder for inclusion under this Contract, some or all of
whose employees are covered under the Plan.
1.8 FUND - a registered investment management company (mutual fund),
specified in the Application, in which assets of a Series will be
invested.
1.9 FUNDING SUCCESSOR - the Plan's and successor plan's trustee and
any financial institution providing an investment option to the
Plan.
1.10 OFFICERS - as defined in Section [416] of the Internal Revenue
Code and Regulations. If an individual is considered to be an
Officer at any time during the term of this Contract, the
individual will always be considered as such for purposes of this
Contract.
1.11 OWNERS - as defined in Section [416] of the Internal Revenue Code
and Regulations. For purposes of this Contract, an Owner is
defined as a [10%] Owner. If an individual is considered to be an
Owner at any time during the term of this Contract, the
individual will always be considered as such for purposes of
this Contract.
1.12 PARTICIPANT - a person for whom benefits are to be provided under
this Contract, in accordance with the Plan, as reported by the
Contractholder.
4
<PAGE> 8
ARTICLE I - DEFINITIONS
(CONTINUED)
1.13 REDUCTION IN NUMBER OF PARTICIPANTS - any reduction of more than
the percentage, as set forth on the Contract Summary Page, of the
number of Participants under the Plan since the Effective Date of
the Contract which is the result of any change in the Plan or
action taken by the Employer.
1.14 SERIES - sub-accounts of the Separate Account to which specific
Fund shares are allocated and for which units are separately
maintained.
1.15 SEPARATE ACCOUNT - the "Nationwide Qualified Plans Variable
Account' is a segregated investment account maintained by the
Company with respect to a portion of its assets in connection
with this Contract and certain other Group Annuity Contracts.
Assets of the Separate Account equivalent to the reserve for this
Contract will be invested in shares of the specific Funds elected
in the Contract Application.
The assets of the Separate Account will be held for the sole
benefit of all contracts which provide for the dollar amount of
the contract values to vary to reflect investment results of the
Account.
All income, gains, losses, and expenses, whether or not realized
from assets held in the Separate Account for each Series, shall
be credited to or charged against the Separate Account Series
without regard to the other income, gains, or losses of the
Company. Assets of the Separate Account may not be used by the
Company to satisfy the liabilities of the general account.
5
<PAGE> 9
ARTICLE 11 - VARIABLE FUND
2.1 VARIABLE FUND
The Company shall establish and maintain a Variable Fund. The
Company shall provide to the Contractholder an annual accounting
of all financial transactions occurring with respect to this
Contract.
2.2 AMOUNT OF VARIABLE FUND
The amount of the Variable Fund in Units, as of any date, is
equal to the aggregate of the units credited to each Series in
accordance with Section [2.3], less any Units cancelled in
accordance with Articles [IV, V, VI, VII], and VIII. The amount
of the Variable Fund, in dollars, as of any date, is equal to the
aggregate of the product of the number of units in the Series and
corresponding unit value, as of such date. The dollar value of
the Variable Fund is not guaranteed as to either principal or
rate of investment return.
2.3 UNITS
All deposits made to a Fund, exchanges from a Fund, and exchanges
from a Companion Contract will be applied to credit units. The
number of units credited is equal to the quotient of the amount
applied divided by the applicable Series unit value on the
applicable Business Day.
2.4 UNIT VALUE
The unit value of any Business Day is equal to the dollar value
of one unit for the Business Day.
The unit value for any Business Day is determined as of the end
of the Business Day by multiplying the Fund's Valuation Factor
for the Business Day by the Series' unit value for the
immediately preceding Business Day.
2.5 VALUATION FACTOR
The Valuation Factor represents a means of reflecting, in the
unit value, the effective investment return of a Series in the
Separate Account. In determining the effective investment return,
the Company will take into account the investment income and
market value changes after provision for taxes applicable to
contracts of this class arising from the operation of such
Series.
6
<PAGE> 10
ARTICLE 11 -VARIABLE FUND
(CONTINUED)
2.5 VALUATION FACTOR (CONTINUED)
The Valuation Factor for any Business Day is equal to the quotient
of (a) divided by (b), where:
(a) is the dollar amount at the end of the Business Day
resulting, after provision for the taxes described in the
preceding paragraph and the Asset Management Charge, as set forth
on the Contract Summary Page, from [$1,000] in the Series at the
end of the immediately preceding Business Day, and
(b) is [$1,000].
The aggregate of the amounts by which the Series is reduced each
year for taxes shall be deducted to the extent possible from the
Series investment income, and any balance will be deducted from
the principal of the Account.
7
<PAGE> 11
ARTICLE III - DEPOSITS
3.1 DEPOSITS
The Contractholder may make Deposits to the Company in such
amount as may be determined by the Contractholder.
3.2 CREDITING OF DEPOSITS
The Contractholder shall advise the Company in writing of a Fund
or Funds to which each Deposit is to be credited. The Company
reserves the right to limit the number of Funds selected by the
Contractholder. With Company approval, the Contractholder may add
or delete Funds by submitting written request to the Company.
Each Deposit, multiplied by the Creditable Percentage set forth
on the Contract Summary Page, will be credited to the applicable
Fund or Funds as described in the Crediting Deposits provision
set forth on the Contract Summary Page.
8
<PAGE> 12
ARTICLE IV - EXCHANGES
4.1 EXCHANGE TO A COMPANION CONTRACT OR A FUND
The Contractholder may make an unlimited number of exchanges from
a Fund to a Companion Contract or to another Fund. Exchanges may
be subject to limitations imposed by a Fund or a Companion
Contract, if applicable.
Exchanges shall be made by cancelling a number of Units equal to
the quotient of the amount to be exchanged divided by the Unit
Value on the exchange date and crediting the amount to the
Companion Contract or to a Fund, in accordance with Section
[2.3]. Exchanges shall be completed as described in the
Processing Exchanges provision set forth on the Contract Summary
Page.
4.2 EXCHANGES FROM A COMPANION CONTRACT
The Contractholder may exchange amounts into this Contract from a
Companion Contract. Limitations may be imposed by the Companion
Contract.
Any Exchange to be made in accordance with this section shall be
made by applying the amount received to credit units, in
accordance with Section [2.3], in the designated Fund. Exchanges
shall be completed as described in the Processing Exchanges
provision set forth on the Contract Summary Page.
9
<PAGE> 13
ARTICLE V - PAYMENT OF BENEFITS
5.1 BENEFIT PAYMENTS
Subject to the other provisions of this Contract, upon written
notice from the Contractholder, the Company shall purchase
Annuities or make Cash Payments in such manner and amounts
specified by the Contractholder. The Contractholder may request
any one of the following
Annuity forms on behalf of a Participant:
[(a) Straight Life Form - This form of Annuity provides
payments during the lifetime of the Annuitant. Payments
will end with the last payment made on or preceding the
Annuitant's date of death.]
[(b) Joint and Survivor Form - This form of Annuity provides
periodic payments during the joint lifetime of the
Annuitant and the survivor Annuitant. Periodic payments
to the Annuitant will end with the last periodic payment
made preceding the Annuitant's death. Upon the
Annuitant's death, periodic payments in the amount of
[50]%, [66_]%, [751%, or [100]% (as elected by the
Annuitant) of the periodic payments payable to the
Annuitant, will be continued to the survivor Annuitant,
if living. Periodic payments will terminate with the last
periodic payment made preceding the later of the date of
death of the Annuitant and the survivor Annuitant.]
[(c) Life With Period Certain Form - This form of Annuity
provides payments during the lifetime of the Annuitant.
If the death of the Annuitant occurs before the Annuitant
has received the specified number of payments (as elected
by the Annuitant), the payments remaining will be paid to
a Beneficiary designated by the Annuitant. If no
Beneficiary has been designated or if the death of the
designated Beneficiary occurs before the Annuitant and
Beneficiary have received the total number of payments
due, the commuted value of the payments remaining will
be paid in a single sum. Such payment will be paid to the
estate of the last to die of the Annuitant and the
designated Beneficiary.]
Annuity purchases and Cash Payments may be made on any form
mutually agreeable between the Company and the Contractholder, in
accordance with the provisions of the Plan. The Company will
purchase the Annuity or provide the Cash Payment as described in
the Processing Annuity Purchases and Processing Cash Payments
provisions set forth on the Contract Summary Page.
10
<PAGE> 14
ARTICLE V - PAYMENT OF BENEFITS
(CONTINUED)
5.2 PURCHASE AND AMOUNT OF ANNUITY
The Company will purchase an Annuity by cancelling a number of
units in the designated Fund or Funds equal to the quotient of
the amount to be applied to purchase the Annuity divided by the
applicable unit value on the date of cancellation.
The amount of the Annuity will be determined by dividing the
dollar value of the units cancelled, less the amount of state
premium tax, if any, by the appropriate purchase rate, which may
not be less favorable than the purchase rate determined in
accordance with the Purchase Rate Basis set forth on the Contract
Summary Page.
If the number of units requested to be cancelled plus any
applicable expense charges and taxes exceed the number therein,
the amount of the Annuity will be limited to that which can be
purchased by the amount of the Variable Fund remaining after
withdrawal of any tax or charges specified in Article [VI].
5.3 SMALL ANNUITIES
If the amount to be applied to purchase an Annuity is less than
[$3,500], the Company may, instead of purchasing an Annuity, make
a Cash Payment to the Participant, Beneficiary, or
Contractholder. The Cash Payment will be equal to the amount to
be applied, less any tax or charges specified in Article [VI].
DC
11
<PAGE> 15
ARTICLE V - PAYMENT OF BENEFITS
(CONTINUED)
5.4 FACILITY OF PAYMENT
If any Annuitant is, in the judgment of the Company, legally,
physically, or mentally incapable of personally receiving any
payment due under this Contract, the Company may make payment or
any part thereof to another person, persons, or institutions who,
in the opinion of the Company, are then maintaining or have
custody of the Annuitant, until claim is made by the duly
appointed guardian or other legal representative of the Annuitant.
The payment shall constitute a full discharge of the liability of
the Company to the extent thereof. Upon notice to the Company of
the appointment of a legal guardian or other legal representative,
the Company will pay amounts only to the guardian or other legal
representative.
5.5 MISSTATEMENTS AND ADJUSTMENTS
If the age or any other relevant fact relating to any Annuitant is
found to have been misstated, the amount of Annuity payments
payable by the Company will be adjusted, unless some other
adjustment, satisfactory to the Contractholder and the Company is
made. The amount of the adjustment will be made on the basis of
the corrected information. The adjustment will be made without
changing the date of the first payment. Any adjustment made shall
be conclusive on any person affected by the adjustment. The dollar
amount of any underpayment made by the Company will be paid in
full with the next payment due. The dollar amount of any
overpayment by the Company will be deducted to the extent possible
from the next payment or payments.
5.6 CASH PAYMENTS OR LOANS
The Contractholder may notify the Company in writing that a Cash
Payment or loan has become payable in accordance with the Plan.
The Contractholder must specify the amount payable by the Company
from a Fund or Funds. The Company shall cancel the number of
units equal to the quotient of the amount divided by the
applicable unit value on the date of cancellation, and shall pay
the amount withdrawn to the Participant, Beneficiary, or
Contractholder (if a trust), less taxes and applicable charges,
in accordance with Article [VI]. If the Cash Payment results from
a termination of Plan or Reduction in Number of Participants, the
amount payable to each affected Participant or to the
Contractholder shall be made in accordance with Section [7.1].
This Section shall not apply to any payment made for the purpose
of reinvestment in accordance with the Plan without the approval
of the Company.
12
<PAGE> 16
ARTICLE V - PAYMENT OF BENEFITS
(CONTINUED)
5.6 CASH PAYMENTS OR LOANS (CONTINUED)
If, at any time, the Contractholder has Plan investment
authority, Cash Payments or loans made from this Contract shall
be limited to an amount equal to the amount of the Cash Payment
or loan times the quotient of the value of this Contract and the
amount of total Plan assets. Any Cash Payments or loan amounts
made from this Contract which exceed this limit shall be subject
to the Contingent Deferred Sales Charge, in accordance with
Section [6.4].
If the number of units to be cancelled for the payment of a Cash
Payment or loan exceeds the number of units in the Fund or Funds,
the payment will be limited to the dollar amount in the Fund or
Funds less taxes and applicable charges.
13
<PAGE> 17
ARTICLE VI - CHARGES
6.1 ADMINISTRATION CHARGE
In the event that an Administration Charge is due, as set forth on
the Contract Summary Page, the Company shall cancel units in the
Fund or Funds specified by the Contractholder equal in number to
the quotient of the amount of the charge, divided by the unit
value on the date of cancellation.
6.2 CONTRACT CHARGE
In the event that a Contract Charge is due, as set forth on the
Contract Summary Page, the Company shall cancel the number of
units in the Fund or Funds specified by the Contractholder equal
to the quotient of the Contract Charge amount divided by the unit
value on the date of cancellation.
6.3 ASSET MANAGEMENT CHARGE
The Company shall assess the Asset Management Charge, as set forth
on the Contract Summary Page, in accordance with Section [2.5].
[6.4 CONTINGENT DEFERRED SALES CHARGE
The Contingent Deferred Sales Charge Percentage, set forth on the
Contract Summary Page, will be applied to reduce the following:
dollar amount of a transfer to a Funding Successor;
Cash Payments to Officers and Owners for in-service
withdrawals (except loans, financial hardships taken
at least [12] months prior to separation of service,
and amounts required to be distributed as a result of
compliance with Section [401(a)(9)] of the Internal
Revenue Code), disability payments if such disability
does not meet the Social Security definition, or upon
severance of employment or retirement;
outstanding loan balances of Officers and Owners upon
payment of a Cash Payment on or after severance of
employment;
Cash Payments resulting from a termination of a Plan
or Reduction in Number of Participants; and
Cash Payments or loan amounts which exceed the limit
specified in Section [5.6].]
14
<PAGE> 18
ARTICLE VI - CHARGES
(CONTINUED)
6.5 OTHER EXPENSE CHARGES
For services rendered at the written request of the
Contractholder, the Company shall withdraw from a Fund or Funds
amounts sufficient to reimburse itself for expenses. The amounts
shall be determined by the Company in a manner consistent with
its general practices for contracts of this class for services it
renders with respect to the Plan or Contract.
6.6 OTHER EXPENSE WITHDRAWALS
The Contractholder may notify the Company in writing that the
Plan has incurred an expense and may direct that the amount be
paid from a Fund or Funds. The Company shall cancel Units equal
to the dollar value of the amount and shall pay the amount to the
person or entity specified in the notice.
6.7 PAYMENT OF CHARGES
With the agreement of the Company, the Contractholder may elect
to pay any charge in accordance with Sections [6.1], [6.2], or
[6.5] directly to the Company. In this event, the Company shall
notify the Contractholder of the amount of such charge, as of the
date such charge would otherwise have been withdrawn from a Fund
or Funds. If payment of such charge is not received by the
Company within [thirty-one (31)] days after the date of the
notice, the number of Units equal to the amount of such charge
will be cancelled.
16.8 PREMIUM TAX
The Company shall cancel Units in the Fund or Funds equal to the
amount of any premium tax levied by a state or other government
entity in addition to the taxes referred to in Section [5.2].]
15
<PAGE> 19
ARTICLE VII - PAYMENTS UPON TERMINATION OF PLAN -CONTRACT OR REDUCTION IN
NUMBER OF PARTICIPANTS
7.1 PAYMENTS UPON TERMINATION OF PLAN OR REDUCTION IN NUMBER
OF PARTICIPANTS
In the event that the Contractholder requests a payment from the
Contract due to Plan termination, merger of the Plan, or
Reduction in Number of Participants, the Contractholder shall
give written direction to the Company, in accordance with Section
[9.3], to make payments in one of the following manners:
(a) purchase an Annuity for each affected Participant;
(b) use all or a portion of the Variable Fund to make Cash
Payments to each affected Participant in accordance with Section
[5.6]. In this event, the Company will pay the amounts in
accordance with Article [VIll], less taxes and applicable charges
in accordance with Article [VI];
(c) use all or a portion of the Variable Fund to make payment
to a Funding Successor, in accordance with Section [8.2].
Payments will be made as described in the Processing Payments
Upon Plan Termination or Reduction in Number of Participants
provision set forth on the Contract Summary Page.
If any amount remains in the Variable Fund after all liabilities
of the Plan have been satisfied, the Company will pay the amount
to the Contractholder in accordance with Section [8.2].
Experience Rate Credits which would otherwise be credited after
the Plan is terminated and after the Variable Fund has been
exhausted, will be
paid to the Contractholder in cash.
7.2 TERMINATION OF CONTRACT
This Contract shall terminate on the date coinciding with:
(a) the day each Fund is exhausted by cancellation of Units,
or
(b) the day no further Annuity payments are payable
hereunder, whichever occurs later.
16
<PAGE> 20
ARTICLE VILL - TRANSFERS
8.1 NOTICE OF TRANSFER AND TRANSFER PAYMENTS
The Contractholder may, at any time, give written direction to the
Company to cancel all or part of the units in a Fund to provide
transfer Payments to a Funding Successor.
The unit cancellation will be made as described in the Processing
Transfers provision set forth on the Contract Summary Page.
8.2 VARIABLE FUND UNIT CANCELLATIONS AND TRANSFER PAYMENTS
The Company shall make a Transfer payment to the Funding Successor
equal to the product of the number of units cancelled and the unit
value on the date of cancellation less taxes and applicable
charges in accordance with Article [VI].
The Transfer payment will be made as described in the Processing
Transfers provision set forth on the Contract Summary Page.
17
<PAGE> 21
ARTICLE IX - GENERAL PROVISIONS
9.1 GUARANTEES AND CHANGE OF CONTRACT
The Company guarantees that the Contingent Deferred Sales Charge
Percentage set forth on the Contract Summary Page will not be
changed.
The Company guarantees that no provision of the Contract will be
changed before the fifth Contract Anniversary. The Company
reserves the right to change the provisions of this Contract at
any time thereafter, by giving written notice to the
Contractholder not less than [ninety (90)] days before the
effective date of the change.
Any portion of this Contract added or changed will be guaranteed
by the Company for one year against subsequent change.
Notwithstanding the other provisions of this Section, the Company
may amend the Contract when, in the opinion of the Company, an
amendment is necessary to protect the Company from adverse
financial impact due to any amendment to or modification of the
Plan, changes in the administrative practices adhered to by the
Plan, changes in investment options offered by the Plan, or the
action of any legislative, judiciary, or regulatory body, which
impact the Contract.
If the shares of a Fund should no longer be available for
investment by the Separate Account or if, in the judgment of the
Company, further investment in the shares of a Fund should become
inappropriate in view of the purposes of the Contract, the
Company may substitute shares of another Fund for Fund shares
already purchased or to be purchased in the future.
This Contract may also be changed in any respect, at any time, by
written agreement between the Contractholder and the Company.
No change will adversely affect the rights of any Participant
with respect to an Annuity purchased before the effective date of
the change unless:
(a) the change is required by a governmental agency, or
(b) the consent of each Participant in interest is obtained.
18
<PAGE> 22
ARTICLE IX - GENERAL PROVISIONS
(CONTINUED)
9.1 GUARANTEES AND CHANGE OF CONTRACT (CONTINUED)
No agent or other person except an officer of the Company or
other Home Office official to whom authority has been delegated
has authority to change this Contract, to extend the times for
payment of Deposits, to waive any charges, or to bind the Company
by making any promise, representation or by giving any
information. Any change, extension, waiver, promise, or
representation shall not be construed as authority, or act as a
precedent, for the same or similar act performed by the Company
on another occasion.
9.2 CONTRACTHOLDER
The Contractholder shall be the representative under this
Contract of each Employer. The Contractholder may appoint an
authorized representative. The authorized representative must be
mutually agreeable to both the Company and the Contractholder.
The Company will deal only with the Contractholder or its
authorized representative. The Company shall be entitled to rely
on any action taken or omitted by the Contractholder or its
authorized representative pursuant to the terms of this Contract.
For purposes of this Article, Contractholder shall mean the
Contractholder or its authorized representative.
9.3 COMMUNICATION AND NOTIFICATION
All communications to the Contractholder or to the Company, as
required under this Contract, shall be in writing. The written
communication shall be addressed to the Contractholder at its
principal office or to the Company at its Home Office. The
Contractholder shall notify the Company of the following events
[thirty (30)] days prior to the effective date of the event:
(a) amendment or modification of the Plan;
(b) change in the administrative practices adhered to by the
Plan;
(c) change in the Investment Options offered by the Plan;
(d) Reduction in Number of Participants;
(e) Plan termination; or merger with another Plan for all or a
class of Participants.
The Contractholder shall notify the Company of a merger,
consolidation, or reorganization by the Employer within [thirty
(30)] days after the effective date of the event.
19
<PAGE> 23
ARTICLE IX - GENERAL PROVISIONS
(CONTINUED)
9.4 PLACE OF PAYMENT-CURRENCY
All Deposits and other amounts payable by the Contractholder
shall be payable to the Company at its Home Office. All payments
by the Company under this Contract shall be payable at its Home
Office, except where payment at any other place is required by an
applicable law.
All monies payable under this Contract, whether to or by the
Company, shall be in lawful money of the United States of
America.
9.5 CERTIFICATES
The Company will issue an Annuity certificate to each person for
whom an Annuity is purchased under this Contract, as of the date
the first payment is made. In addition, if any applicable law
requires, the Company will issue a descriptive certificate to the
Contractholder for delivery to each Participant. Each descriptive
certificate will describe the benefits to which the person or
Participant is entitled under this Contract.
9.6 BENEFICIARY-SETTLEMENT OPTIONS
If this Contract provides for payment of any amount or amounts
after the death of an Annuitant to a person other than a survivor
Annuitant, payment shall be made to a Beneficiary designated by
such Annuitant. An Annuitant may change a Beneficiary previously
designated.
Any designation or change shall be made by filing a request with
the Company on a form satisfactory to it, and shall become
effective when entered upon the records of the Company. After any
such designation or change is entered, it shall relate back and
take effect as of the date of the request, but without prejudice
to the Company on account of any payments made by it before
receipt of such request.
The interest of any Beneficiary shall cease upon death, unless
the Annuitant has directed otherwise. If there is no designated
Beneficiary to receive any amount which becomes payable to a
Beneficiary, the amount shall be payable to the estate of the
last to die of the Annuitant and the Beneficiary.
The Company, in determining the existence, ages, or any other
facts relating to any persons designated as Beneficiaries, either
as a class or otherwise, may rely solely on any affidavit or
other evidence deemed satisfactory by it, and each and every
payment made by it in reliance thereon will, to the extent of
such payment, be a valid discharge of its obligation under this
Contract.
20
<PAGE> 24
ARTICLE IX - GENERAL PROVISIONS
(CONTINUED)
9.6 BENEFICIARY-SETTLEMENT OPTIONS (CONTINUED)
If any payments other than a single sum become payable to one or
more Beneficiaries, and if the monthly amount of the payments
payable to any Beneficiary is less than [$20], or if the
Beneficiary is other than a natural person receiving payments in
its own right, the Company may, instead of making the payments,
pay the commuted value thereof in full settlement of its
liability such the payments.
If at any time the amount that would be payable in a single sum
to the Beneficiary, if such Annuitant were to die at that time,
exceeds [$3,500], the Annuitant and the Company may arrange, by
mutual agreement, a mode of settlement other than payment in a
single sum. If no mode of settlement has been arranged before the
death of an Annuitant, the Beneficiary and the Company may then
mutually agree upon a mode of settlement for the benefit of the
Beneficiary other than payment in a single sum.
9.7 EXPERIENCE RATE CREDITS
This Contract will be experience rated each calendar year by
application of the Company's experience rating plan enforce
during such year. Any experience rate credits which may arise
through such application will be credited to the Fund specified
by the Contractholder, except as provided in Section [7. 1
9.8 ASSIGNMENT
Except insofar as may be contrary to any applicable laws, all
Benefit Payments under this Contract are not assignable and are
not subject to the claims of any creditor.
9.9 INFORMATION-RECORDS
The Contractholder shall furnish all information which the
Company may reasonably require for the administration of this
Contract. If the Contractholder cannot furnish this information,
the Company may request the person concerned to furnish such
information. The Company will not be liable for the fulfillment
of any obligations until it receives all requested information in
a form satisfactory to it.
9.10 ENTIRE CONTRACT-CONSTRUCTION
This document, together with the attached Application, constitute
the entire Contract.
This Contract will be construed according to the laws of the
jurisdiction set forth on the cover page of this document.
21
<PAGE> 25
APPLICATION FOR GROUP ANNUITY CONTRACT
MADE TO
NATIONWIDE LIFE INSURANCE COMPANY
(CALLED NATIONWIDE)
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43216
TRUSTEE(S) OF THE TEAM FINANCIAL, INC- 401(k) PLAN TRUST
(EXACT NAME OF APPLICANT, E.G., ABC COMPANY, INC. OR TRUSTEES OF
XYZ COMPANY. INC. RETIREMENT TRUST)
The Applicant applies for Group Annuity Contract Form No. APO-2243. The
Applicant approves and accepts the terms of the Contract. The Applicant
certifies that to the best of its knowledge.,
The Applicant has the authority to enter into the Contract. The Applicants plan
qualifies under Section 401 of the Internal Revenue Code. If not so qualified,
describe type of plan:_______________________________________________________
The Applicant, if a sole proprietorship or partnership: is a financially
sophisticated law, accounting, investment banking, pension consulting, or
investment advisory firm with financial/business knowledge and experience,
capable of adequately representing its interests and those of its employees; or
has obtained the advice of an independent expert financial or business adviser
having no affiliation or material business relationship with Nationwide Life,
and capable of adequately representing the interest of the Applicant and its
employees: and the plan covers only employees of a single employer or employees
of interrelated partnerships. This Contract is a permissible investment under
the Applicants plan.
If Nationwide fails to accept this Application, the value of each Fund will be
refunded.
Raymond James Financial Services is designated to receive any commissions
payable under this Contract.
I hereby represent that I have selected the funds as described on the reverse
side of this application. (Application, number APO-3322)
/s/ John Freeman /s/ Michael L. Gibson
- ------------------------------------------- ----------------------------
Signature of Licensed Agent License Number Applicant Signature
Michael L. Gibson
- ------------------------------------------- ----------------------------
Signature of Licensed Agent License Number Typed or Printed Name
President
---------------------------
Title (Trustee, If
Applicable)
Paola KS 1/21/99
- -------------- ----- ---------------------------
Signed At City State Date
ALL CONTRACT VALUES BASED ON THE INVESTMENT RESULTS OF A VARIABLE FUND ARE
VARIABLE (MAY INCREASE OR DECREASE) AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
APO-3322 Case Number 240-70191 (10/98)
<PAGE> 26
The Contract shall include the following Funds of the Separate Account.
<TABLE>
<CAPTION>
PRIMARY PLUS INVESCO FUNDS: PRIMARY
<S> <C> <C>
Public Funds Public Funds
------------ INVESCO Dynamics Fund ------------
AMERICAN CENTURY: INVESCO Total Return Fund AMERICAN CENTURY:
Income & Growth - Advisor Class LAZARD FUNDS: Benham Short Term Government
Twentieth Century International Lazard Small Cap Open Fund Twentieth Century Growth
Growth - Advisor Class NEUBERGER & BERMAN: Twentieth Century Ultra
DREYFUS: [X] Genesis Trust JANUS FUNDS:
A Bonds Plus, Inc. Guardian Trust Janus Fund
[X] Appreciation Fund, Inc. Partners Trust [X] Janus Twenty Fund
Balanced Fund, Inc. OPPENHEIMER FUNDS: [X] Janus Worldwide Fund
Dreyfus Third Century Fund, Inc. Global Fund NEUBERGER & BERMAN:
FEDERATED: PRESTIGE ADVISOR: Limited Maturity Trust
Federated Bond Fund - Class F Balanced Fund - Class A
[X] Federated High Yield Trust International Fund - Class A
FIDELITY ADVISOR FUNDS: Large Cap Growth Fund - Class A
Balanced Fund - Class A Large Cap Value Fund - Class A
[X] Equity Income Fund - Class A Small Cap Fund - Class A X
Growth Opportunities Fund - Class A STRONG FUNDS:
High Yield Fund - Class T Strong Common Stock Fund
FRANKLIN MUTUAL SERIES: TEMPLETON FUNDS:
Mutual Shares Fund - Class I Templeton Foreign Fund - Class I
NATIONWIDE ADVISORY SERVICES, INC.: WARBURG PINCUS:
Bond Fund - Class D Emerging Growth Fund
Fund - Class D Global Fixed Income Fund
Growth Fund - Class D Insurance Funds
Intermediate U.S. Government Bond NATIONWIDE FUNDS:
Fund - Class D Nationwide Small Company Fund
[X] Money Market Fund
S&P 500 Index Fund R Personal Portfolio Series
</TABLE>
XX Fidelity Puritan Fund -- Optional Fund
XX Fidelity Asset Manager -- Optional Fund
XX S & P 500 Indexed Fund -- Primary Fund
XX Fidelity VIP Contrafund Portfolio -- Optional Fund
APO-3322 Case Number 240-70191 (10/98)
<PAGE> 27
GENERAL PURPOSES AND LIMITATIONS OF THE
KANSAS LIFE AND HEALTH
INSURANCE GUARANTY ASSOCIATION
K.S.A. 40-3001 et. seg.
DISCLAIMER
THE KANSAS LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION MAY NOT PROVIDE
COVERAGE FOR ALL OR A PORTION OF THIS POLICY. IF COVERAGE IS PROVIDED IT MAY
BE SUBJECT TO SUBSTANTIAL LIMITATIONS OR EXCLUSIONS, AND IS DEPENDENT UPON
CONTINUED RESIDENCE IN KANSAS. THEREFORE YOU SHOULD NOT RELY UPON COVERAGE BY
THE KANSAS LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION IN SELECTING AN
INSURANCE COMPANY OR IN SELECTING AN INSURANCE POLICY. INSURANCE COMPANIES AND
THEIR AGENTS ARE PROHIBITED BY LAW FROM USING THE EXISTENCE OF THE KANSAS LIFE
AND HEALTH INSURANCE GUARANTY ASSOCIATION IN SELLING YOU ANY FORM OF AN
INSURANCE POLICY, OR TO INDUCE YOU TO PURCHASE ANY FORM OF AN INSURANCE
POLICY. EITHER THE KANSAS LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION OR
THE KANSAS INSURANCE DEPARTMENT WILL RESPOND TO ANY QUESTIONS YOU MAY HAVE
REGARDING THIS DOCUMENT.
THE KANSAS LIFE AND HEALTH
INSURANCE GUARANTY ASSOCIATION
300 Southwest Eighth Avenue
Topeka, Kansas 66603
THE KANSAS INSURANCE DEPARTMENT
420 Southwest Ninth Street
Topeka, Kansas 66612
This is a summary of the basic provisions of the Kansas Life and Health
Insurance Guaranty Association Act. It is only a summary, and does not provide
an in depth analysis of that act. Nothing in this summary modifies the rights
of persons who are protected by the act, or the rights or duties of the
association.
The purpose of the Kansas Life and Health Insurance Guaranty Association Act
is to protect certain individuals' who purchase life insurance, annuities or
health insurance in Kansas. The act provides for the establishment of a
funding mechanism to pay benefits or provide insurance coverage to individuals
when a life or health insurance company is unable to meet its obligations by
reason of insolvency or financial impairment.
<PAGE> 28
However, not all individuals with a right to recover under life or health
insurance policies are protected by the act. An individual is only provided
protection when:
1. the individual, regardless of where they reside, except for nonresident
certificate holders under group policies or contracts, is the beneficiary,
assignee or payee of a covered policy or contract holder,
2. the individual policy or contractholder is a resident of the State of
Kansas,
3. the individual is not a resident of the State of Kansas, but only with
respect to an annuity contract which has been awarded pursuant to a
judgement or settlement agreement in a medical malpractice liability
action,
4. the individual is not a resident of the State of Kansas, but only under all
of the following conditions:
a. the impaired or insolvent insurer was a Kansas domestic insurer; and
b. the insurer never has a license to do business in the state the
individual resides and
c. the state in which the individual resides has an association similar to
this state's; and
d. the individual is not eligible for coverage by the association of the
state in which the individual resides.
Additionally, the association may not provide coverage for the entire amount the
individual expects to receive from the policy. The association does not provide
coverage for any portion of the policy where the individual has assumed the
risk, for any policy of reinsurance, for interest rates that exceed a specified
average rate, for employers' plans that are self funded, for parts of plans that
provide dividends or credits in connection with the administration of the
policy, for policies sold by companies not authorized to do business in Kansas,
or for any unallocated annuity contract. Also, the association will not provide
coverage where any guaranty protection is provided to the individual under the
laws of the insolvent or impaired insurer's state of domicile.
The act also limits the amount the association is obligated to pay individuals
on various policies. The association does not pay more than the amount of the
contractual obligation of the insurance company. Regardless of the number of
policies or contracts the association is not obligated to pay amounts over
$100,000 in net cash surrender and benefits for life insurance, $100,000 net
cash surrender and benefits for health insurance, $100,000 in the present value
of annuity benefits unless the annuity contract is awarded pursuant to a
judgement or settlement agreement in a medical malpractice liability action.
Finally, the association is never obligated to pay more than $200,000 in the
aggregate for the above coverages as respects any one life.
<PAGE> 29
ENDORSEMENT
Group Separate Account Annuity Contract
(APO-2243, APO-2243-NM, APO-2243-NY, APO-2243-OR,
APO-2243-Wl, APO-2243-MO, APO-2243-WA, APO-2954, AND APO-1472)
Attached to and made a part of this Contract by
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA
COLUMBUS, OH 43215
WHEREAS, the above referenced group annuity contract was issued to Trustee(s) of
the Team Financial, Inc. 401(k) Plan Trust (the "Contractholder") by NATIONWIDE
LIFE INSURANCE COMPANY (the "Company"); and
WHEREAS, the Company and the Contractholder wish to modify this contract
pursuant to Section 9.1.
NOW, THEREFORE, the Company hereby endorses the Contract as follows:
1.The Asset Management Charge on the Contract Summary page is hereby revised to
read as follows:
Asset Management Charge: 0.40% for Funds selected by the Contractholder
from Primary Plus on the Application. This
represents a 0.45% reduction in the standard Asset
Management Charge of 0.85%.
0.60% for Funds selected by the Contractholder
from Primary on the Application. This represents a
0.25% reduction in the standard Asset Management
Charge of 0.85%.
0.60% for Funds selected by the Contractholder
from Optional on the Application. This represents
a 0.25% reduction in the standard Asset Management
Charge of 0.85%.
APO-3220 1 GA-P AM29
<PAGE> 30
The Asset Management Charge will be reviewed, and
changed if appropriate, on the first Contract
Anniversary occurring no earlier than six months
from the Effective Date of this endorsement and on
each Contract Anniversary thereafter. The sum of
amounts in this Contract and the Companion
Contract(s), calculated by averaging the beginning
balances for such contracts for the two month
period prior to the month of the Contract
Anniversary Date, will determine whether or not a
change in the Asset Management Charge applies, per
the following schedule:
<TABLE>
<CAPTION>
Sum of Amounts in this Contract Reduction in the Reduction in the Reduction in the
and the Companion Contract (s) Standard Asset Standard Asset Standard Asset
Management Management Management
Charge for. Primary Charge for Charge for
Plus Primary Optional
<S> <C> <C> <C>
$ 760,000 -.$ 999,999 0.55% 0.35% 0.30%
$ 1,000,000 - $ 1,499,999 0.60% 0.40% 0.30%
$ 1,500,000 - $ 1,999.999 0.65% 0.45% 0.30%
$ 2,000,000 - $ 2,249,999 0.71% 0.51% 0.31%
$ 2,250,000 - $ 2,499,999 0.73% 0.53% 0.33%
$ 2,500,000 - $ 2,749,999 0.75% 0.55% 0.35%
$ 2,750,000 - $ 3,124,999 077% 0.57% 0.37%
$ 3,125,000 - $ 3,499,999 0.79% 0.59% 0.39%
$ 3,500,000 - $ 4,124,999 0.81% 0.61% 0.41%
$ 4,125,000 - $ 4,874,999 0.83% 0.63% 0.43%
$ 4,875,000 - $ 5,749,999 0.85% 0.65% 0.45%
$ 5,750,000 - $ 6,999,999 0.87% 0.67% 0.47%
$ 7,000,000-. $ 8,499,999 0.89% 0.69% 0.49%
$ 8,500,000 - $ 9,999,999 0.91% 0.71% 0.51%
$10,000,000 - $11,499,999 0.93% 0.73% 0.53%
$11,500,000 - $12,999,999 0.95% 0.75% 0.55%
$13,000,000 - $14,999,999 0.97% 0.77% 0.57%
$15,000,000 - $16,999,999 0.99% 0.79% 0.59%
$17,000,000 - $18,999,999 1.00% 0.80% 0.60%
$19,000,000 - $21,999,999 1.01% 0.81% 0.61%
$22,000,000 - $24,999,999 1.02% 0.82% 0.62%
$25,000,000 - $29,999,999 1.03% 0.83% 0.63%
</TABLE>
2
<PAGE> 31
If the sum of amounts in this Contract and the
Companion Contract(s) decreases to less than
$750,000 during any Contract Year, the Asset
Management Charge will be determined in accordance
with uniform procedures applicable to all
contracts of this class. Any change in the Asset
Management Charge will be effective on the next
Contract Anniversary.
2. The Contract Summary Page is hereby modified to include the following:
Managed Segregated Asset Account Investment Management, and Administrative
Charges:
<TABLE>
<S> <C>
Personal Portfolio Series 6 1.25%
Personal Portfolio Series 5 1.25%
Personal Portfolio Series 4 1.15%
Personal Portfolio Series 3 1.10%
Personal Portfolio Series 2 1.00%
Personal Portfolio Series 1 1.00%
</TABLE>
3. Article 1, DEFINITIONS is hereby modified by deleting Section 1.8 (which is
Section 1.5 in APO-1472) and its respective definition and replacing it in
its entirety. Sections 1.16 and 1.17 (which are Sections 1.12 and 1.13 in
APO-1472) are being added as follows:
(1.5)1.8 FUND - a Mutual Fund or a sub-account of the Managed. Segregated
Asset Account specified in the Application, in which assets of a
Series will be invested.
(1.12)1.16 MANAGED SEGREGATED ASSET ACCOUNT or ("MANAGED ACCOUNT") the
Nationwide Pensions Managed Variable Account which is a
segregated account maintained by the Company with respect to a
portion of its assets in connection with this Contract and
certain other group annuity contracts.
The Managed Account will be divided into sub-accounts each of
which is composed of a portfolio of investments with distinct.
risk and reward characteristics which reflect the investment
preferences of Participants. Each portfolio may consist of
domestic and foreign
3
<PAGE> 32
(1.12)1.16 MANAGED SEGREGATED ASSET ACCOUNT or ("MANAGED ACCOUNT")
continued
company common and preferred stocks; domestic and foreign debt
securities; cash equivalent securities; cash; and any other
investment suitable for a retirement plan qualified under
Section 401 of the Internal Revenue Code.
The assets of the Managed Account will be held for the sole
benefit of all contracts which provide for the dollar amount of
contract values to vary to reflect investment results of the
Managed Account.
All, income, gains, and losses, whether or not realized from
assets allocated to the Managed Account shall be credited to or
charged against the Managed Account without regard to the other
income, gains or losses of the Company. There shall also be
charged against the Managed Account - the amounts that are
determined by the Company to be allocable to the Managed Account
as investment expense and as contributions to any statutory
special contingent reserve fund established for the Managed
Account.
The dollar value of the Managed Account in any Business Day is
equal to the sum of the dollar values of the sub-accounts in
each Business Day.
(1.13)1.17 MUTUAL FUND - a registered investment management company.
4. Article 11, Section 21, Variable Fund is hereby modified as follows:
SECTION 2.1 VARIABLE FUND
The Company shall establish and maintain one or more Variable Funds
reflecting the Contracts' experience in the Separate Account and the Managed
Segregated Asset Account. The Company shall provide to the Contractholder an
annual accounting of all financial transactions occurring with respect to
this Contract.
5. Article 11, Section 2.5, Valuation Factor is hereby deleted in its entirety
and replaced as follows:
4
<PAGE> 33
SECTION 2.5 VALUATION FACTOR
The Valuation Factor for the Separate Account represents 2 means of
reflecting, in the unit value, the effective investment return of a Series in
the Separate Account. In determining the effective investment return, the
Company will take into account the investment income and market value changes
after provision for taxes applicable to contracts of this class arising from
the operation of such Series and after provision for the Asset Management
Charge set forth in the Contract Summary Page. The Valuation Factor for a
Series for any Business Day is equal to the quotient oil (a) divided by (b),
where:
(a) is the dollar amount at the end of the Business Day resulting, after
provision for the taxes described in the preceding paragraph and the
Asset Management Charge, from $1,000 in the Series at the end of the
immediately preceding Business Day, and
(b) is $1,000.
The aggregate of the amounts by which the Series is reduced each year for
taxes, if any, shall be deducted to the extent possible from the Series
investment income, and any balance will be deducted from the principal of the
Separate Account.
The Valuation Factor for the sub-accounts of Managed Segregated Asset Account
represents a means of reflecting, in the unit value, the effective investment
return of a sub-account. In determining the effective investment return, the.
Company will take into account the investment income and market value changes
after provision for the Managed Segregated. Asset Account Investment
Management and Administrative Charges set forth on the Contract Summary Page.
If there is no readily available market as to any portion of the Managed
Segregated Asset Accounts assets, the Company will value that portion at fair
market value in accordance with accepted accounting practices and applicable
laws and regulations.
The Valuation Factor for a sub-account for any Business Day is equal to the
quotient of (a) divided by (b), where:.
5
<PAGE> 34
SECTION 2.5 VALUATION FACTOR continued
(a) is the dollar amount at the end of the Business Day resulting, after
provision for the Managed Segregated Asset Account Investment
Management and Administrative Charges, from $1,000 in the
sub-account at the end of the immediately preceding Business Day,
and
(b) is $1,000.
The aggregate of the amounts by which the sub-account is reduced each year
for taxes, if any, shall be deducted to the extent possible from the
sub-account investment income, and any balance Will be deducted from the
principal of the Managed Account.
6. Article IX - General Provisions, Section 9.1, Guarantees and. change of
Contract is modified as follows:
9.1 GUARANTEES AND CHANGE OF CONTRACT
The second paragraph (the first paragraph in APO-1472) is deleted in its
entirety and replaced with the following:
The Company guarantees that no provision of the Contract except the Managed
Segregated Asset Account investment policy will be changed before the second
Contract Anniversary. The Company reserves the right to change the provisions
of this Contract at any time thereafter, by giving written notice to the
Contractholder not less than ninety (90) days before the effective date of
the change.
/s/ Joseph J. Gasper /S/ Gordan E. McCutcheon
PRESIDENT SECRETARY
6
<PAGE> 1
EXHIBIT 10.7
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT ("Agreement") is made and entered into as of the 21ST
day of August, 1997, by and between TEAM FINANCIAL, INC., f/k/a TeamBanc, Inc.,
a Kansas corporation ("Company") and COMMERCE BANK, N.A., a national banking
association ("Bank");
In consideration of the mutual benefits accruing to each of the parties, the
receipt and sufficiency of which is hereby acknowledged, and in further
consideration of the mutual performance of this Agreement, the parties hereto
agree as follows:
ARTICLE I
Definitions
1.01. Base Rate. The per annum variable rate of interest equal to one
percent (1%.) less than the Prime Rate (hereinafter defined), which when used to
compute the rate of interest hereunder shall change as of the date of any change
in said Prime Rate; no representation is made that the Base Rate is the best,
lowest or favored rate of interest.
1.02. Code. The Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder. It is understood that any reference to the
Bank's federal income tax means the Bank or any entity that files a consolidated
federal income tax return with Bank.
1.03. Determination of Taxability. The final adoption of legislation or
regulations, or the issuance of a statutory notice of deficiency or a ruling by
the Internal Revenue Service (except for any such notice or ruling which is
being contested by Company in good faith), a final decision of a court of
competent jurisdiction, or a determination by Bank communicated in writing to
Company together with an opinion of nationally recognized counsel approved by
Bank and selected by Company at the request of Bank, to the effect that 5011 of
the interest on the Term Note (hereinafter defined) is not excludible from the
gross income of the holder for federal income tax purposes for any reason
whatsoever.
1.04. Prime Rate. The per annum rate of interest established from time
to time by Bank for its own internal convenience as its "Prime Rate", which when
used to compute the rate of interest hereunder shall change as of the date of
any change in said Prime Rate; no representation is made that the Prime Rate is
the best, lowest or favored rate of interest.
10.7-1
<PAGE> 2
1.05. Qualifying Opinion of Counsel. A written opinion, in form and
substance satisfactory to the holder of the Term Note (hereinafter defined),
from recognized tax counsel selected by Company and satisfactory to the holder
of the Term Note, to the effect that (i) at least 50% of the payment of interest
on the Term Note is excludible from the Term Note holder's Federal gross income
during any applicable period, or (ii) while the issue is not free from doubt, if
a court were presented with the issue, it should hold that a least 50%. of each
payment of interest on the Term Note is excludible from the Term Note holder's
federal gross income during the applicable period.
1.06. Taxable Rate. The Taxable Rate shall equal the Base Rate.
ARTICLE II
Term Loan
2.01. Amount. Subject to the terms of this Agreement, Bank agrees to
lend to Company the sum of $1,199,000 (the "Term Loan").
2.02. Term Note. On the Closing Date (hereinafter defined) Company will
execute and deliver its promissory note to Bank, in the principal amount of
$1,199,000, and in form and substance acceptable to Bank (the "Term Note").
2.03. Interest. The Term Note will bear interest at a variable per
annum rate equal to eighty-three percent (83%) of the Base Rate. Accrued
interest shall be calculated on the actual number of days outstanding based on a
year consisting of 365 days, and shall be payable quarterly, in arrears,
commencing December 31, 1997, and continuing on the last day of each March,
June, September and December thereafter, until and including the due date of the
Term Note. Interest after or during the continuation of any Event of Default
under Section 7.01, shall be at a rate equal to three percent (3%) in excess of
the Prime Rate.
In the event of a Determination of Taxability with respect to the Term Note, the
rate of interest on the Term Note shall be adjusted to the Taxable Rate
retroactive to the date on which the interest on the Term Note becomes fully
includable in the gross income of the holder of the Term Note for federal income
tax purposes, whether before or after maturity, payment or prepayment of the
Term Note.
10.7-2
<PAGE> 3
In addition, if at any time (whether before or after maturity, payment or
prepayment of the Term Note), as a result of the enactment of a new federal tax
law, a change in the Code, or any judicial or administrative interpretation
thereof, (a) any payment of interest or principal or any amount in respect of or
measured in whole or in part by reference to the interest on or principal of, or
any amount of interest on indebtedness attributable or deemed to be attributable
directly or indirectly to the funding or carrying of, the Term Note is, in the
opinion of counsel for the holder of the Term Note, subject to or affected by a
preference tax, an excess profits tax or any other federal tax which changes the
basis of taxation of the payments of interest or principal of the Term Note, or
interest on indebtedness attributable or deemed to be attributable directly or
indirectly to the funding or carrying of the Term Note, to any holder of the
Term Note, or affects any method used or calculation involved in determining any
federal tax, or (b) the deductibility or other tax treatment of any amount
attributable or deemed to be attributable, directly or indirectly, to the
funding or carrying of the Term Note is adversely affected, or (c) the failure
of Bank to receive a Qualifying Opinion of Counsel, requested pursuant to
Section 9.02, then, upon written notice to such effect, that any payment or
amount may have become subject to such preference, excess profits or other
federal tax or such deductibility or other tax treatment shall have been
affected, the Company shall pay to the holder of the Term Note so affected in
immediately available funds an amount which, after reduction by the amount of
all taxes attributable to the inclusion of such amount in the gross income of
the holder of the Term Note under the laws of any federal, state or local
governmental or other taxing authority (computed on the basis that federal taxes
are payable by the holder of the Term Note at the highest marginal tax rate
applicable to business corporations, after taking into account deductions
attributable to the imposition of state and local taxes, and that state and
local taxes are payable by the holder of the Term Note at the highest marginal
statutory rates then applicable to business corporations), shall be equal to the
amount of any such preference, excess profits or other federal taxes and any
interest, penalties, and additions to tax which are payable by the holder of the
Term Note as a consequence of such change (computed on the basis that taxes are
payable by the holder of the Term Note at the highest marginal rate applicable
to business corporations), it being the intent and purpose of the parties hereto
that the profit of the holder of the Term Note with respect to the payment of
interest to it on the Term Note shall not be diminished by any such change in
the Code or any administrative or judicial interpretation thereof (whether
through or as a result of direct or indirect federal
10.7-3
<PAGE> 4
taxation of a greater percentage of the interest on the Term Note, the
disallowance of a deduction or otherwise).
The percentage of the Base Rate shall be subject to adjustment with each
decrease in the current top marginal federal corporate income tax rate so that
the applicable percentage of Prime Rate based rate resulting therefrom shall be
equal to:
2,106 (1-TR)
------------
(2-TR)
where "TR" refers to the top marginal federal corporation income tax rate then
in effect. The initial applicable percentage shall be based on a 35% tax rate
applicable to calendar year taxpayers during 1996, so the initial applicable
percentage shall be 83%. Any such change shall be effective as of the effective
date of any such decrease in the top marginal federal corporate income tax rate
then in effect.
No such adjustment under this Section shall cause the rate to be greater than
the Taxable Rate.
2.04. Repayment. The principal of the Term Note shall be payable in
annual installments of $150,000 commencing December 31, 1997, and continuing on
the last day of each December thereafter, until December 31, 2002, when the
outstanding principal balance, together with accrued interest, shall be due and
payable in full.
2.05. Prepayment. Company may prepay the Term Note in full or in part
at any time without the payment of a prepayment fee. Any partial prepayments
shall be applied to the annual principal payments in the inverse order of their
maturities.
2.06. Purpose. Proceeds of the Term Loan shall be used to fund a loan
by Company to the trustee (the "Trustee") of the TeamBanc, Inc. Employees Stock
Ownership Plan (the "Trust"), as established pursuant to the TeamBanc, Inc.
Employees Stock Ownership Plan dated as of November 6, 1992, as amended from
time to time (the "Plan"), pursuant to the agreement between the Bank, the
Company and the Trustee (the "Lending Agreement") and evidenced by a promissory
note (the "ESOP Note") made by the Trustee to Company.
10.7-4
<PAGE> 5
ARTICLE III
Representations and Warranties
In borrowing hereunder the Company represents and warrants to Bank (which
representations and warranties will survive the delivery of the Term Note and
shall continue so long as any sums remain outstanding under the Term Note or
under this Agreement) that:
3.01. Authorization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Kansas and
is duly qualified as a foreign corporation and is in good standing in every
other jurisdiction where failure to be so qualified and in good standing would
have a material adverse effect on its business; the Company has all requisite
corporate power and authority to own and operate its properties and to carry on
its business as presently being conducted; the Company has the power to enter
into and to carry out the terms of this Agreement and to execute, deliver and
perform its obligations under this Agreement, the Term Note, and any other
instrument referred to or mentioned herein, and said performance by the Company
of its obligations has been duly authorized by appropriate corporate
proceedings, will not contravene any provisions of law, its Articles of
Incorporation, Bylaws, or any indenture, agreement or other instrument binding
upon the Company, and does not require the consent, approval or authorization of
any governmental agency or third party, except as otherwise specifically
provided herein.
3.02. Financial Condition. Except as provided in Schedule 3.02 attached
hereto, the financial statements of Company dated as of December 31, 1996,
copies of which have been furnished to Bank, are complete and correct and fairly
and accurately present the financial condition of Company as at such date and
the results of the operations of Company for the period covered by such
statements, all in accordance with generally accepted accounting principles
consistently applied, and there has been no material adverse change in the
condition (financial or otherwise), business or operations of Company subsequent
thereto.
3.03. Taxes. The Company has filed all required federal, state and
local tax returns and has paid all taxes as shown on said returns to be due
including interest and penalties, or has provided adequate reserves for the
payment thereof. No tax claims have been asserted against Company which remain
unpaid or for which an adequate reserve has not been established.
3.04. Litigation. Other than as set forth in Schedule 3.04 attached
hereto, or as disclosed to Bank in writing prior to the date hereof, the Company
has no actions, suits or proceedings pending or, to its knowledge, threatened
against or affecting it or its properties before any court or governmental
department,
10.7-5
<PAGE> 6
commission, board, bureau, agency or instrumentality, domestic or foreign,
which, if determined adverse to the Company, might have a material adverse
effect on its financial condition, properties or operations.
3.05. Liability. Except as set forth in Schedule 3.05 attached hereto,
the Company has no liabilities, direct or contingent, except those disclosed in
the financial statements described in Section 3.02 hereof, and those incurred
since December 31, 1996 in the ordinary course of the Company's business which
have been disclosed in writing to Bank. Company is not presently in default, and
no event which, but for the lapse of time or service of notice or both, would
constitute a default has occurred and is continuing under any agreement,
indenture, mortgage, security agreement or other instrument under which the
Company is directly or contingently liable or pursuant to which any of the
assets or properties of Company or any shares of its outstanding capital stock
is encumbered or affected in any way. All stock of the Company has been validly
issued and is fully paid and nonassessable.
3.06. Properties. Company has good, valid and marketable title to all
of its properties shown as assets on its balance sheet. All properties are free
and clear of all liens, mortgages, security interests or other encumbrances
except those which have been disclosed to Bank in writing or disclosed on its
balance sheet.
3.07. Guaranties. Company has no guaranties outstanding, except those
which have been disclosed to Bank in writing.
3.08. Other Agreements. Company is not a party to, subject to, or bound
by any contract, agreement, instrument, charter or corporate restriction which
materially adversely affects its ability to perform its obligations under this
Agreement, the Term Note or other documents or instruments provided for herein.
3.09. Margin Stock. Company is not engaged in the business of extending
credit for the purpose of carrying margin stock within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System. If requested by Bank,
Company will furnish to Bank a statement in conformity with the requirements of
Federal Reserve Form U-1 referred to in Regulation U to the foregoing effect.
3.10. Use of Proceeds. The proceeds of the Term Loan shall be loaned by
Company to the Trustee of the Trust within the meaning of Section 4975(d)(3) of
the Code for the acquisition of "employer securities" (within the meaning of
Section 409(l) of the Code), for
10.7-6
<PAGE> 7
the repayment of the Term Loan or for the repayment of a prior loan to the
Trustee of the Trust, the proceeds of which were used by the Trust to acquire
"employer securities", and the terms and conditions of such loan by the Company
to the Trustee of the Trust shall comply with all laws and regulations in
respect thereto, including, to the extent applicable, but not limited to,
Regulation G of the Federal Reserve Board, the Code, the Employee Retirement
Security Act of 1974, as amended ("ERISA"), and regulations promulgated
thereunder.
3.11. Plan Qualifications. The Plan is qualified under Section 401(a)
of the Code, the Trust is exempt from tax under Section 501(a) of the Code, and
the consummation of the transactions under this Agreement and the Lending
Agreement will not constitute a prohibited transaction.
3.12. Stock. Except as set forth in Schedule 3.12 attached hereto,
there are no outstanding stock warrants, options, convertible securities or
other agreements that could cause additional stock to be issued or sold.
3.13. Guarantor. The Guarantor (hereinafter defined) has authority, and
has completed all proceedings and obtained all approvals and consents necessary,
to execute, deliver and perform its obligations under the Guaranty (hereinafter
defined). The Guaranty when executed by the Guarantor and delivered to Bank,
shall constitute the legal, valid and binding obligations of the Guarantor,
enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally. The execution, delivery and performance by the
Guarantor of the Guaranty will not violate any provision of any existing
mortgage, indenture, contract or agreement binding on Guarantor or affecting any
of its properties, and will not result in, or require, the creation or
imposition of any lien on any of its properties or revenues. No litigation,
investigation or proceeding of or before any arbitrator or governmental
authority is pending or threatened by or against the Guarantor or any of its
properties or revenues with respect to the Guaranty, or any of the transactions
contemplated hereby or thereby or which could have a material adverse effect on
the business, operations, assets or financial or other condition of the
Guarantor.
10.7-7
<PAGE> 8
ARTICLE IV
Affirmative Covenants
The Company covenants and agrees that during the term of this Agreement and
until all of the principal amount of and interest due under the Term Note shall
have been paid in full, unless otherwise agreed to by Bank in advance and in
writing to the contrary, the Company will duly perform and observe each and all
of the covenants and agreements hereinafter set forth:
4.01. Maintenance and Compliance with Laws. The Company will maintain
its corporate existence, rights and franchises and comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all government bodies, and maintain and keep its properties in good repair,
working order and operating condition.
Specifically, Company will comply with all laws and regulations respecting
"Securities Acquisition Loans" (as defined in Section 133 of the Code) to
preserve and protect the tax treatment of the Term Note under Section 133 of
the Code.
4.02. Financial Statements. Company will deliver to Bank the following
financial information of Company, Guarantor (hereinafter defined) and Banks
(hereinafter defined):
(a) Within sixty (60) days after the end of each fiscal quarter of
Company and Guarantor, the respective balance sheets, profit and loss statements
and net worth reconciliations of Company and Guarantor for such accounting
period, and the results of operations since the beginning of the fiscal year,
prepared in accordance with generally accepted principles of accounting applied
on a basis consistent with that of the financial statements for the preceding
fiscal year and certified by the chief financial officer or chief executive
officer of Company and Guarantor, respectively, as truly reflecting the
respective financial positions of Company and Guarantor as of the end of the
accounting period;
(b) Within ninety (90) days after the end of each fiscal year of Company
and Guarantor, the respective annual audited financial statements of Company and
Guarantor, prepared by independent certified public accountants selected by
Company and satisfactory to Bank in conformity with generally accepted
accounting principles applied on a basis consistent with that of the financial
statements for the preceding fiscal year; and
(c) From time to time such further information regarding the financial
condition or business of Company, Guarantor and Banks as Bank may reasonably
request.
10.7-8
<PAGE> 9
4.03. Inspection of Operations. Company shall permit such persons
designated by Bank to visit and inspect Company's properties, operations,
corporate books and financial records and to discuss Company's affairs, finances
and accounts with Company's principal officers and independent public
accountants, as may be requested from time to time by Bank.
4.04. Insurance. Company shall maintain, at all times, such insurance
covering such risks as is customary for companies of similar character, in
amounts and with companies acceptable to Bank.
4.05. Payment of Indebtedness. Company shall pay or discharge all
indebtedness heretofore or hereafter incurred as the same shall become due and
payable and shall faithfully perform, observe and discharge all covenants,
conditions and obligations which are imposed on it by any and all indentures and
other agreements securing or evidencing such indebtedness or pursuant to which
such indebtedness is issued.
4.06. Taxes and Other Liens. The Company will pay and discharge promptly
all taxes, assessments, and other governmental charges or levies imposed upon it
or upon its income or upon any of its property, real, personal or mixed, or upon
any part thereof, as well as all claims of any kind (including claims for labor,
materials and supplies) which, if unpaid, might by law become a lien or charge
upon any of its property; except any taxes, assessments or levies being
contested in good faith by appropriate legal proceedings and against which, if
requested by the Bank, the Company will set up reserves satisfactory to the
Bank.
4.07. Notice of Defaults. Company shall notify Bank in writing of any
Event of Default (hereinafter defined) hereunder or of any fact, condition, or
event that, only with the giving of notice or passage of time or both, would
become an Event of Default. Company shall notify Bank in writing of any default
under any other indenture, agreement, contract or other instrument to which
Company is a party and of any acceleration of the maturity of any material
indebtedness of Company which default or acceleration could have a material
adverse effect on Company, and Company shall take all necessary steps to remedy
promptly any such default, to protect against any such adverse claim, to defend
any such proceeding and to resolve all such controversies.
4.08. Data to Verify Compliance. Company shall promptly provide Bank with
such data as Bank shall reasonably request to verify the truth of all warranties
and representations and Company's compliance with all covenants.
10.7-9
<PAGE> 10
4.09. Contributions. Company will make contributions to the Trust
sufficient for the Trust to pay principal and accrued interest on the ESOP Note
in accordance with the schedule of payments set forth therein (such
contributions to be referred to herein as "Scheduled Contributions"). In
addition to the foregoing, and provided that no Event of Default (hereinafter
defined) has occurred or will occur, Company may make contributions to the Trust
in amounts adequate to provide cash to, or to make other payments necessary in
connection with, terminating participants (such contributions to be referred to
herein as "Permitted Contributions"). If Company makes contributions in an
amount in excess of Scheduled Contributions (and Permitted Contributions, if
applicable) ("Excess Contributions"), Company shall cause the Plan Administrator
(as set forth in the Plan) to direct the Trustee to use such Excess
Contributions to prepay the ESOP Note.
4.10. Securities Restrictions. Company shall comply with all restrictions
regarding securities acquired with loan proceeds imposed by the Internal Revenue
Code and United States Treasury Regulations, including, without limitation,
restrictions concerning subjection of the securities to a put, call or other
option or buy-sell or similar arrangement.
4.11. Notification. Company shall notify Bank promptly of any
governmental or judicial action or proceeding that relates directly or
indirectly to the qualification of the Plan under Sections 401(a) or 4975(e)(7)
of the Code, or the participation of the Trust in the transactions contemplated
hereunder.
ARTICLE V
Negative Covenants
Without the prior written consent of Bank, during the term of this Agreement or
until all indebtedness of the Company to Bank has been paid, whichever occurs
last, Company covenants and agrees as follows:
5.01. Liens. Company will not create, incur, assume or suffer to exist
any security interest, mortgage, pledge, lien or other encumbrance upon any of
the Company's properties or assets, whether now owned or hereafter acquired,
except for those granted to Bank and except such purchase money security
interests created or granted by Company in the ordinary course of its business,
consistent with current practices, and except such liens of taxes not in default
or being contested in good faith.
10.7-10
<PAGE> 11
5.02. Fundamental Changes. Company will not amend its Articles of
Incorporation or Bylaws; wind up, liquidate, or dissolve itself; reorganize,
merge or consolidate with or into, or sell, transfer, convey or lease all or any
part of its property, to another person or entity; sell or assign any accounts
receivable; purchase or otherwise acquire all or substantially all of the assets
of any corporation, partnership, or other entity, or any shares or similar
interest in any other corporate entity; or make any material change in the
executive management of the Company.
5.03. Conduct of Business. Company will not materially alter the
character in which Company conducts its business or the location of such
business or the nature of such business conducted at the date hereof.
5.04. Funded Indebtedness. Company shall not incur additional Funded
Indebtedness (direct, indirect, contingent or otherwise) unless such Funded
Indebtedness is subordinated (in writing and in form and substance satisfactory
to Bank) in all respects to the indebtedness of Company to Bank hereunder. For
purposes of this Agreement, "Funded Indebtedness" shall mean all indebtedness of
Company for borrowed money in excess of $250,000 (individually or in the
aggregate) and which has a maturity of one (1) or more years from the date of
origin, plus all Capitalized Leases (defined as any lease which is required to
be capitalized on the balance sheet of Company) and all guarantees of such
Funded Indebtedness of others, but excluding the indebtedness incurred by
Company in the ordinary course of business which includes (i) deposits, (ii)
Banker's Acceptances, (iii) repurchase agreements, (iv) purchases of Federal
Funds, and (v) Federal Reserve or Federal Home Loan Bank borrowings made in the
ordinary course of business, and pledges, liens or encumbrances required to
secure such indebtedness, provided that Company shall have received Bank's prior
written approval of, and with respect to, the specific assets, or general class
of assets, to be pledged or encumbered by such pledges, liens or encumbrances.
5.05. Issuance of Additional Capital Stock. Company will not issue any
additional capital stock or securities convertible into capital stock or any
warrants or rights to purchase capital stock.
5.06. Investments. Company will not acquire for investment purposes,
investments that would not qualify as "customary and prudent investments",
consistent with the current investment practices of Company.
10.7-11
<PAGE> 12
5.07. Loans to Affiliates. Shareholders and the Trust. Company will not
directly or indirectly loan amounts to any affiliate or shareholder of Company,
or to any entity controlled by such an affiliate or shareholder, or to the Trust
(whether or not for the purchase of additional employer securities).
5.08. Debt Payments to Shareholders. Except with respect to
unsubordinated debt permitted under Section 5.04 (b) above, Company will not
directly or indirectly make any payments with respect to any indebtedness owing
to any shareholders.
5.09. Dividends. Except to the extent consistent with past practices,
Company will not pay any cash dividends to shareholders of Company.
5.10. Capital Expenditures. Company will not make any capital
expenditures other than those capital expenditures made in the ordinary course
of business, consistent with past Company practices.
5.11. Plan Amendments. No amendments will be made to the Plan without the
prior written consent of Bank, which consent shall not be unreasonably withheld.
ARTICLE VI
Collateral
The obligations and indebtedness of the Company to Bank hereunder or under any
other instrument shall be secured and supported by the following ("Collateral"):
6.01. ESOP Note and Stock. Company shall pledge and endorse to Bank the
ESOP Note and any stock of Company from time to time pledged as security to the
ESOP Note. Such pledge shall be evidenced by a Collateral Assignment in form and
substance acceptable to Bank.
6.02. Bank Stock. Company shall pledge all stock, whether common or
preferred, of Iola Bank and Trust ("Iola Bank"), First National Bank & Trust Co.
(Parsons, Kansas) ("FNB") and TeamBank, N.A. (Paola, Kansas) ("TeamBank") (said
Iola Bank, FNB and TeamBank, together with TeamBank Nebraska [hereinafter
identified], to be sometimes hereinafter collectively referred to as the
"Banks") now owned or hereafter acquired (together with the stock of TeamBank
Nebraska [hereinafter identified] the "Bank Stock"), which as of the date hereof
is as follows:
10.7-12
<PAGE> 13
<TABLE>
<CAPTION>
Banks Type Shares Ownership Percentage
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Iola Bank Common 70,000 100.00%
FNB Common 18,000 100.00%
TeamBank Common 100,000 100.00%
</TABLE>
Company shall also pledge to Bank all of the outstanding stock, whether common
or preferred, of Team Financial Acquisition Subsidiary, Inc. ("Guarantor"). Such
pledges shall be evidenced by a "Collateral Pledge Agreement", in form and
substance acceptable to Bank, together with stock powers relating thereto.
6.03. Guaranty. There shall be delivered to Bank, as additional support
for the obligations and indebtedness of Company to Bank (as well as all other
obligations owing by Company to Bank, now existing and hereafter arising), the
unconditional, unlimited corporate guarantee of Guarantor. The guaranty shall be
evidenced by a Corporate Guaranty in form and substance acceptable to Bank
("Guaranty"). Guarantor shall pledge all stock, whether common or preferred, of
TeamBank Nebraska (Bellevue, Nebraska) ("TeamBank Nebraska") now owned or
hereafter acquired, which as of the date hereof is as follows:
<TABLE>
<CAPTION>
Banks Type Shares Ownership Percentage
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
TeamBank Nebraska Common 8,000 100.00%
</TABLE>
Such pledge shall be evidenced by a "Collateral Pledge Agreement", in form and
substance acceptable to Bank, together with stock powers relating thereto.
6.04. Other Documents. Company agrees to furnish such information and
to execute such other documents or undertake any other acts as may be reasonably
necessary to perfect and maintain the security interests contemplated by this
Agreement, or as otherwise reasonably requested by Bank from time to time.
ARTICLE VII
Defaults
7.01. Events of Default. The occurrence of one or more of the following
events ("Events of Default" or "Default") shall constitute a Default by the
Company hereunder:
10.7-13
<PAGE> 14
(a) nonpayment of interest or principal hereunder when payment is due
as herein provided; or
(b) any representation or warranty made by the Company or Guarantor
herein or in any writing furnished in connection with or pursuant to
this Agreement shall prove to be false in any material respect as of
the date on which it is made; or
(c) a breach by Company in the performance or observance of any
agreement, term, covenant or condition contained herein (other than in
(a) above), and such breach shall not have been remedied within thirty
(30) days after written notice thereof shall have been given by Bank to
Company; or
(d) any report, certificate, financial statement or other instrument
furnished in connection with this Agreement shall prove to be false or
misleading in any material respect; or
(e) default in the performance of the obligations of the Company or
Guarantor on any other note, agreement (including but not limited to
security agreements), or obligations owed by the Company or Guarantor
to Bank, which default results in the acceleration of such obligation;
or
(f) any default by the Company or Guarantor under any other contract
for borrowed money which entitles the obligee to accelerate the
maturity thereof, or any failure by the Company or Guarantor to pay any
indebtedness when due, whether by acceleration or otherwise; or
(g) commencement by the Company or Guarantor of a voluntary case under
the Bankruptcy Act or similar law, federal or state, whether now or
hereafter existing; or a trustee or receiver shall be appointed for
Company or Guarantor or all or a substantial part of its properties in
any involuntary proceeding, or any court shall have taken any
jurisdiction of all or a substantial part of the properties of the
Company or Guarantor in any involuntary proceeding for the
reorganization, dissolution, liquidation or winding up of the business
of the Company or Guarantor and such trustee or receiver shall not be
discharged or such jurisdiction relinquished or vacated or stayed on
appeal or otherwise within thirty (30) days; or the Company or
Guarantor shall file a petition or answer consenting to or acquiescing
in a petition against it in bankruptcy or under any chapter of the
Bankruptcy Act or any similar law, state or federal, whether now or
hereafter existing, or such petition filed against the
10.7-14
<PAGE> 15
Company or Guarantor shall be approved and not vacated or stayed within
thirty (30) days; or the Company or Guarantor shall become insolvent,
or shall make an assignment for the benefit of creditors or shall admit
in writing its inability to pay its debts generally as they become due,
or shall consent to the appointment of a receiver or trustee or
liquidator of all its properties or a substantial part thereof, or
shall have failed within thirty (30) days to pay a bond or otherwise
discharge any judgment or attachment which is not stayed on appeal or
otherwise being contested in good faith; or
(h) Company or Guarantor suffers any judgment, writ of attachment or
execution or similar process to be issued or levied against all or a
substantial part of its property and which is not released, stayed,
bonded or vacated within thirty (30) days; or
(i) The occurrence of a non-exempt "Prohibited Transaction", as defined
in Section 406 of ERISA or in Section 4975 of the Internal Revenue
Code, between the Plan and any other person or entity; or
(j) The failure of the Trust to maintain its status as a "tax exempt
trust" under Section 501 of the Internal Revenue Code, or the failure
of the Plan to maintain its status as a qualified plan under Section
401 or as an employee stock ownership plan under Section 4975 of the
Code.
7.02. Remedies. Upon an Event of Default, Bank may accelerate the
maturity of the Term Loan, with or without notice, and Bank may resort to any
and all security and to any remedy existing at law or in equity for the
collection of the Term Note according to its tenor and enforcement of the
covenants and provisions hereof, and the Bank's resort to any remedy shall not
prevent the concurrent or subsequent employment of any other remedy. In addition
to the remedies provided herein, in the event the Term Note is due and payable
or upon an Event of Default, the Bank shall have the right of setoff, without
demand or notice to anyone, against the funds of the Company on deposit with it.
Notwithstanding anything contained herein to the contrary, Bank shall have no
right of setoff or any claims to any shares of the common stock of Company which
Bank may be holding as custodian on behalf of the Trust or any funds of the
Trust deposited with Bank except such shares as are pledged to secure the ESOP
Note, but only to the extent permitted by law.
10.7-15
<PAGE> 16
7.03. Expenses of Collection. All costs, expenses and liabilities
incurred by Bank in collecting or attempting to collect on the Term Note,
including costs and expenses incurred in proposing or selling or otherwise
deriving upon any security, and all reasonable attorneys' fees in connection
with such matters, shall constitute a demand obligation of the Company and shall
bear interest from the date of expenditure until paid at the per annum rate of
three percent (3%) in excess of the Prime Rate.
7.04. Waiver. Any waiver of an Event of Default by Bank shall not
extend to or affect any subsequent Event of Default. No failure or delay by Bank
in exercising any right hereunder shall operate as a waiver, nor shall any
single or partial exercise of any right preclude the exercise of any other right
hereunder.
ARTICLE VIII
Closing; Conditions Precedent
8.01. Closing. "Closing" shall take place at Bank's principal offices
at 1000 Walnut Street, Kansas City, Missouri on August 21st, 1997 (the "Closing
Date").
8.02. Conditions Precedent to Closing. As a condition precedent to
Closing, Company shall have delivered to Bank the following documents:
(a) This Agreement and the Term Note, duly executed by the
Company;
(b) The Collateral Assignment, duly executed by the Company;
(c) A fully executed copy of the Lending Agreement;
(d) The Collateral Pledge Agreement, duly executed by the
Company, together with the applicable Bank Stock, and Stock Powers
(executed in blank);
(e) The Guaranty, duly executed by the Guarantor, together with
the applicable Collateral Pledge Agreement, the applicable Bank Stock,
and Stock Powers (executed in blank);
(f) Fully executed copies of all other documents required under
this Agreement and any of the other documents executed in connection
herewith, including, without limitation, the Collateral Assignment;
10.7-16
<PAGE> 17
(g) Certified copies of the Bylaws of the Company and Guarantor,
and of each resolution of the Company's and Guarantor's respective
Boards of Directors duly authorizing the execution and delivery of the
applicable loan documents and the Company's and Guarantor's
performance hereunder and thereunder;
(h) Certificates of Good Standing, dated not more than thirty
(30) days prior to the date of this Agreement, for the Company from the
Kansas Secretary of State, and the Guarantor from the Nebraska
Secretary of State, and, if specifically requested by Bank, from the
Secretary of State for each other jurisdiction where the nature of
Company's or Guarantor's respective businesses requires it to be
qualified as a foreign corporation;
(i) An opinion of counsel for Company dated the Closing Date, in
form and substance satisfactory to Bank, substantially to the effect
that (i) Company is a corporation duly organized and existing and in
good standing under the laws of the State of Kansas; (ii) Company has
adequate corporate power and authority to enter into and perform this
Agreement and the Term Note; (iii) that this Agreement, the Term Note,
the Collateral Assignment and the Collateral Pledge Agreement have been
duly authorized, executed and delivered by Company and are legal, valid
and binding instruments enforceable against the Company in accordance
with their respective terms, except as may be limited by laws of
receivership, insolvency and bankruptcy; (iv) that the Plan complies
with all federal and state laws and regulations, including, without
limitation, the Code and ERISA, and regulations promulgated thereunder;
and (v) the Plan is qualified under Section 401(a) of the Code, the
Trust is exempt from tax under Section 501(a) of the Code, and the
consummation of the transactions under this Agreement and the Lending
Agreement will not constitute a prohibited transaction; and
(j) Any other documents, instruments and reports as Bank shall
reasonably request.
Company shall be solely responsible for all costs incurred by it and/or
Bank in connection with satisfying any of the foregoing requirements.
10.7-17
<PAGE> 18
ARTICLE IX
Miscellaneous
9.01. Payment on Holidays. Whenever any payment to be made pursuant to
this Agreement or the Term Note shall be stated to be due on a public holiday,
Saturday or Sunday, such payment may be made on the next succeeding business day
and such extension of time shall in such case be included in computing interest,
if any, in connection with such payment.
9.02. Request for Qualifying Opinion of Counsel. If the Bank
determines, in good faith after consultation with its counsel, that there is a
substantial likelihood that it might be required to include more than 50% of the
interest on the Term Note in its gross income, the Bank shall be entitled to
request a Qualifying Opinion of Counsel with respect to such interest for a
period commencing with the date of issuance of the Term Note or for any lesser
period specified in the Bank's request.
9.03. Waivers. No omission or delay by the Bank in exercising any
right, power or privilege under this Agreement, the Term Note or any other
documents executed in connection herewith, will impair such right, power or
privilege or be construed to be a waiver of any Event of Default or acquiescence
therein and any single or partial exercise of any right, power or privilege will
not preclude other or further exercise of any other right, power or privilege
and no waiver will be valid unless in writing and signed by Bank and then only
to the extent specified. All remedies herein by law afforded will be cumulative
and will be available to Bank until all indebtedness of Company is paid.
9.04. Binding Effect. This Agreement shall continue until payment in
full of all indebtedness owing hereunder and shall be binding upon Company and
its successors and assigns and shall be binding upon and inure to the benefit of
Bank, its successors and assigns.
9.05. Notices. Any notice, request, authorization, approval or consent
made hereunder shall be in writing and shall be personally delivered or sent by
registered or certified mail, and shall be deemed given when delivered or
postmarked and mailed postage prepaid to the following addresses:
10.7-18
<PAGE> 19
IF TO BANK: Commerce Bank, N.A.
1000 Walnut Street
P.O. Box 419248
Kansas City, Missouri 64141-6248
Attn: Mike Sobba
IF TO COMPANY: Team Financial, Inc.
One South Pearl
P.O. Box 402
Paola, Kansas 66071
Attn: Robert J. Weatherbie
Bank and Company may designate a change of address by notice given in accordance
with the provisions of this Subsection at least five (5) days before such change
is to become effective.
9.06. Amendments. The and Bank may from time to time enter into written
agreements supplemental hereto for the purpose of modifying or adding any
provision to this Agreement or changing the rights and privileges of Bank or
Company hereunder. Any such supplemental agreement shall be binding upon the
Company and the Bank and their respective successors and assigns.
9.07. Headings. Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
9.08. Severability of Provisions. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or enforceability
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provisions in any other jurisdiction.
9.09. Governing Law. This Agreement and all related documents will be
governed by, and construed in accordance with, the laws of the State of
Missouri.
9.10. Counterpart Agreements. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same agreement.
9.11. Statutory Notice. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT
10.7-19
<PAGE> 20
ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING
OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED
IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT
BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
BY SIGNING BELOW, YOU AND WE AGREE THAT THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN US.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
10.7-20
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers on the day and year first above written.
TEAM FINANCIAL, INC.
By: /s/ Michael L. Gibson
------------------------
Title: President
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
------------------------
Title: Senior Vice President
10.7-21
<PAGE> 22
SCHEDULE 3.02
(FINANCIAL CONDITION)
Company has provided supplemental financial information to Bank in the form of
June 1997 "Y" Reports and call reports each subsidiary bank of TFI.
10.7-22
<PAGE> 23
SCHEDULE 3.04
(LITIGATION)
NONE
10.7-23
<PAGE> 24
SCHEDULE 3.05
(LIABILITIES)
Distributions from the TeamBanc, Inc. Employees' Stock Ownership Plan can be
made in the form of stock and, in accordance with the plan document and the
Internal Revenue Code, Team Financial, Inc. has an obligation to repurchase such
securities.
10.7-24
<PAGE> 25
SCHEDULE 3.12
(STOCK)
Company has previously provided documents relating to its Employee Stock
Purchase Plan acceptable to Bank.
10.7-25
<PAGE> 26
AMENDMENT ONE TO TERM LOAN AGREEMENT
THIS AMENDMENT ONE TO TERM LOAN AGREEMENT ("Amendment One") is entered into as
of the 31st day of October, 1997, by and between COMMERCE BANK, N.A. ("Bank")
and TEAM FINANCIAL, INC. "Company").
WITNESSETH:
WHEREAS, pursuant to that certain Term Loan Agreement dated as of August 21,
1997, by and between Bank and Company ("Loan Agreement"), Bank agreed to extend
a Term Loan to Company in the original principal amount of $1,199,000, subject
to certain terms, limitations and conditions contained therein;
WHEREAS, Company has requested that Bank amend one of the Affirmative Covenants
contained in the Loan Agreement; and
WHEREAS, Bank and Company have agreed to amend the Loan Agreement as hereinafter
set forth.
NOW, THEREFORE, for valuable consideration, Bank and Company do hereby mutually
agree as follows:
1. Terms used herein which are defined in the Loan Agreement shall have
the meanings given to them in the Loan Agreement.
2. Section 4.09 of the Loan Agreement is hereby amended to read in its
entirety as follows:
"Contributions. Company will make contributions to the Trust sufficient
for the Trust to pay principal and accrued interest on the ESOP Note in
accordance with the schedule of payments set forth therein (such
contributions to be referred to herein as "Scheduled Contributions").
In addition to the foregoing, and provided that no Event of Default
(hereinafter defined) has occurred or will occur, Company may make
contributions to the Trust (i) in amounts adequate to provide cash to,
or to make other payments necessary in connection with, terminating
participants, and/or (ii) in amounts to be maintained by the Trust "on
deposit" to meet the Trust's distribution and other ordinary course
cash needs, provided such sums "on deposit" shall not exceed $500,000
at any given time (such contributions to be referred to herein as
"Permitted Contributions"). If Company makes contributions in an amount
in excess of Scheduled Contributions (and Permitted Contributions, if
applicable) ("Excess
10.7-26
<PAGE> 27
Contributions"), Company shall cause the Plan Administrator (as set
forth in the Plan) to direct the Trustee to use such Excess
Contributions to prepay the ESOP Note.
3. Except as amended herein, all other terms, provisions, conditions
and obligations imposed under the terms of the Loan Agreement shall remain in
full force and effect and are hereby ratified and certified by Bank and Company.
4. This Amendment One shall be governed by, and construed in accordance
with, the laws of the State of Missouri.
IN WITNESS WHEREOF, Bank and Company have executed this Amendment One as of the
date first above written.
COMMERCE BANK, N.A.
By: /s/ Michael J. S Sobba.
------------------------
Title: Senior Vice President
---------------------
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
---------------------
By: /s/ Carolyn S. Jacobs
------------------------
Title: Treasurer
---------------------
10.7-27
<PAGE> 28
TERM NOTE
$1,199,000 August 21, 1997
Principal and Interest Kansas City, Missouri
FOR VALUE RECEIVED, the undersigned, TEAM FINANCIAL, INC., f/k/a TeamBanc,
Inc., a Kansas corporation ("Borrower") hereby promises to pay to the order
of COMMERCE BANK, N.A. ("Bank") the principal sum of One Million One Hundred
Ninety-Nine Thousand Dollars ($1,199,000), payable in annual principal
installments of $150,000 commencing December 31, 1997, and continuing on the
last day of each December thereafter, until December 31, 2002, when the
outstanding principal balance, together with accrued interest, shall be due
and payable in full. This Term Note shall bear interest at a per annum
variable rate equal to eighty-three percent (83%) of the Base Rate (as that
term is defined in the Term Loan Agreement hereinafter identified), to
change with any change in the Base Rate. Accrued interest shall be payable
quarterly, in arrears, commencing December 31, 1997, and continuing on the
last day of each March, June, September and December thereafter, until and
including the due date of this Term Note. Accrued interest shall be
calculated on the actual number of days outstanding based on a year
consisting of 365 days. Both principal and interest are payable in lawful
money of the United States of America to Bank, at its offices at 1000
Walnut, Kansas City, Missouri, in immediately available funds.
This Term Note is the one referred to in, and is entitled to the benefits
of, the Term Loan Agreement dated the date hereof between the Borrower and
the Bank, which Term Loan Agreement contains, among other things, provisions
for acceleration of the maturity hereof upon the happening of certain stated
events; and for an increase in the interest rate, without limitation, in the
event of a Determination of Taxability or upon the occurrence of an Event of
Default. The defined terms used herein shall have the same meaning as used
in the Term Loan Agreement.
The Borrower shall have the right to prepay the principal of this Term Note,
in whole or in part, prior to maturity without premium or penalty. Any
partial prepayments shall be applied to the principal payments in the
inverse order of their maturities.
The Borrower and all endorsers, sureties, guarantors and other persons
liable hereon or who may become liable for the payment hereof, severally
waive demand, presentment, notice of dishonor or nonpayment, notice of
protest and any and all lack of diligence in the enforcement hereof and
hereby assent to each and any extension or postponement of the time of
payment, at or after maturity, or other indulgence and hereby waive any and
all notice thereof.
This Term Note shall be governed by, and construed in accordance with, the
laws of the State of Missouri.
IN WITNESS WHEREOF, Borrower has executed this Term Note as of the day and
year first herein above written.
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman/CEO
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
10.7-28
<PAGE> 29
COLLATERAL ASSIGNMENT
WHEREAS, TEAM FINANCIAL, INC., f/k/a TeamBanc, Inc. ("Company") and COMMERCE
BANK, N.A. ("Lender") have entered into a Term Loan Agreement (the "Agreement")
of even date herewith;
WHEREAS, the proceeds of the Term Loan to be extended to the Company under the
Agreement will be used by Company to fund a loan by Company to the trustee (the
"Trustee") of the TeamBanc, Inc. Employees Stock Ownership Plan (the "Trust"),
as established pursuant to the TeamBanc, Inc. Employees Stock Ownership Plan
dated as of November 6, 1992, as amended from time to time (the "Plan"),
pursuant to the agreement between the Bank, the Company and the Trustee (the
"Lending Agreement") and evidenced by an ESOP Note (And Pledge Agreement) (the
"ESOP Note") made by the Trustee to Company and secured by a pledge of the
common stock of Company acquired by the Trust; and
WHEREAS, under the terms of the Agreement, Company agreed to pledge to Lender
the ESOP Note, and all common stock of Company from time to time pledged
thereunder, as collateral for its obligations under the Agreement.
NOW, THEREFORE, for valuable consideration, it is agreed as follows:
1. Company hereby pledges, assigns and transfers to Lender all its
right, title and interest in and to the ESOP Note and all common stock of
Company from time to time pledged thereunder.
2. Company agrees that all payments made by the Trust on the ESOP Note
shall be made directly to Lender and applied by Lender to the obligations of the
Trust on the ESOP Note, with a corresponding application to the obligations of
the Company under the Agreement.
3. Lender agrees to be bound by the terms of the ESOP Note with respect
to any required release of the common stock of Company pledged thereunder.
IN WITNESS WHEREOF Company has executed this Collateral Assignment as of the
21st day of August, 1997.
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
Acknowledged this 21St day of August, 1997
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
------------------------
Title: Senior Vice President
---------------------
10.7-29
<PAGE> 30
ESOP NOTE
(AND PLEDGE AGREEMENT)
$1,199,000 August 21st, 1997
Principal and Interest Kansas City, Missouri
The undersigned promises to pay to the order of TEAM FINANCIAL, INC., a
Kansas corporation, the principal sum of One Million one Hundred Ninety-Nine
Thousand Dollars ($1,199,000) payable in annual principal installments of
$150,000 commencing December 31, 1997, and continuing on the last day of
each December thereafter, until December 31, 2002, when the outstanding
principal balance, together with accrued interest, shall be due and payable
in full. This ESOP Note shall bear interest at a per annum variable rate
equal to eighty-three percent (83%) of the Base Rate, as that term is
defined in that certain Term Loan Agreement of even date herewith between
Team Financial, Inc. ("Company") and Commerce Bank, N.A. ("Bank"), and shall
change with any change in the Base Rate. Accrued interest shall be payable
quarterly, in arrears, commencing December 31, 1997, and continuing on the
last day of each March, June, September and December thereafter, until and
including the due date of this ESOP Note. Accrued interest shall be
calculated on the actual number of days outstanding based on a year
consisting of 365 days.
The funds advanced hereunder are proceeds of a loan made to Company by Bank
pursuant to the Term Loan Agreement and all terms contained herein shall
have the same meaning as used in the Term Loan Agreement.
The loan evidenced by this ESOP Note is a refinancing of a securities
acquisition loan as defined in Section 133 of the Code and the proceeds of
such loan shall be used solely by the undersigned to refinance that certain
outstanding loan from UMB Bank Kansas ("UMB"), which loan from UMB was made
for the purpose of enabling Trustee to acquire "qualifying employer
securities" as such term is defined in Section 408(e) of the Employee
Retirement Income Security Act of 1974; as amended, and Section 4975(d)(3)
of the Code.
The holder hereof may arrange, adjust (provided, however, no adjustment to
payment dates shall accelerate such payment dates) and extend the times and
amounts of payments of interest and/or principal under this ESOP Note
without notice to or consent of and without releasing any party liable
hereon. All parties hereto consent and agree to waive presentment for
payment, demand for payment, protest and notice of dishonor and to any
extensions, renewals or revisions hereof, and further consent to the release
of
10.7-30
<PAGE> 31
any party hereto or any collateral or security for the payment of this ESOP
Note without affecting their liability hereunder.
To secure this ESOP Note the undersigned hereby pledges to the holder of
this ESOP Note the common stock of the Company acquired by the undersigned
with the proceeds of the UMB loan which as of the date of this Agreement,
secures the repayment of such prior UMB loan ("Collateral"). Except with
respect to put options described in the ESOP Plan Documents (but limited to
stock released from the suspense account), at no time during the term of
this ESOP Note shall such stock be subject to any put, call, or other option
or any buy-sell or similar agreement.
The loan evidenced by this ESOP Note is without recourse against the
undersigned. Notwithstanding anything herein to the contrary, neither the
Company nor any other holder of this ESOP Note shall have any right to
assets of the Trust other than (a) the Collateral, (b) contributions (other
than contributions of securities of the Company) that are made to the
undersigned under the Trust to meet its obligations under this ESOP Note,
and (c) earnings attributable to the Collateral and the investment of such
contributions. The undersigned is not obligated to make any payment of
interest or principal on the ESOP Note except to the extent of (i)the sum of
all cash contributions theretofore received by it from the Company to meet
the undersigned's obligation on this ESOP Note and the earnings attributable
to the investment of such contributions, less (ii) all payments of principal
and interest theretofore made by the undersigned on this ESOP Note.
Upon and to the extent of any failure by the undersigned to meet the payment
schedule of this ESOP Note, the holder hereof may at its option require
transfer of such of the Collateral as does not exceed the amount of the
payment default.
The fiscal year of the Plan (the "Plan Year") is January 1 through December
31. For each Plan Year during the duration of the loan evidenced by this
ESOP Note, a portion of the pledged employer securities shall be released
from the pledge. The number of employer securities released will equal the
number of encumbered employer securities held immediately before release for
the current Plan Year multiplied by a fraction. The numerator of the
fraction is the amount of principal and interest paid during the Plan Year.
The denominator of the fraction is the sum of the numerator plus the
principal and interest to be paid for all future Plan Years. The
10.7-31
<PAGE> 32
number of Plan Years taken into account hereunder shall be computed without
taking into account any possible extension or renewal periods of the ESOP
Note. For purposes of such calculation, the interest to be paid in future
years shall be computed by using the interest rate applicable as of the end
of the Plan Year. In the event the employer securities are to include more
than one class of securities, the number of securities of each class to be
released for a Plan Year must be determined by applying the same fraction to
each class. At the request of the Trustee, the Company shall execute and
deliver to the Trustee a certificate or certificates representing the number
of pledged shares to be released each Plan Year pursuant to the provisions
of this paragraph.
The undersigned shall have the right to prepay the principal of this ESOP
Note, in whole or in part, prior to maturity without premium or penalty. Any
partial prepayments shall be applied to the monthly principal payments in
the inverse order of their maturities.
This ESOP Note is non-negotiable and it may not be negotiated or assigned by
any holder hereof without the written consent of the undersigned. The
undersigned by execution hereof consents to the negotiation and assignment
of this ESOP Note to the Bank. As used herein, the words "to the order of"
refer only to any subsequent holders for whom such written consent has been
given.
This ESOP Note shall be deemed to have been made and delivered in the State
of Missouri and shall be governed by, and construed in accordance with, the
laws of the State of Missouri. Until advised otherwise by the Bank, this
ESOP Note shall be payable at the offices of Bank at 1000 Walnut, Kansas
City, Missouri.
10.7-32
<PAGE> 33
IN WITNESS WHEREOF, the undersigned has executed this ESOP Note as of the
day and year first herein above written.
TEAM FINANCIAL, INC., AS
TRUSTEE UNDER THE TEAMBANC,
INC. EMPLOYEES STOCK OWNERSHIP
PLAN
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
PAY TO THE ORDER OF
COMMERCE BANK, N.A.
WITH RECOURSE
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman and CEO
---------------------
10.7-33
<PAGE> 34
LENDING AGREEMENT
THIS LENDING A LENDING AGREEMENT ("Agreement") is made and entered into as
of the 21st day of August, 1997, by and among COMMERCE BANK, N.A. ("Lender"),
TEAM FINANCIAL, INC., f/k/a TeamBanc, Inc. ("Company"), and TEAM FINANCIAL,
INC., f/k/a TeamBank, Inc. as Trustee (the "Trustee") under the TeamBanc, Inc.
Employees Stock Ownership Plan, as established pursuant to the TeamBanc, Inc.
Employees Stock Ownership Plan dated as of November 6, 1992 as amended from time
to time (the "Plan").
WITNESSETH:
WHEREAS, Lender has agreed to loan $1,199,000 to Company ("Loan"); and
WHEREAS, the parties hereto wish to restrict the use of the proceeds of the
Loan in the manner set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
promises herein contained, the adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
USE OF PROCEEDS BY COMPANY
Company agrees that the proceeds of the Loan shall be used for the sole
purpose of lending such proceeds to the Trustee, such loan to be evidenced
by that certain ESOP Note (And Pledge Agreement) of even date herewith made
by the Trustee to the Company (the "ESOP Note"), for the sole purpose of
enabling the Trustee to refinance a prior loan for the purchase by the Plan
of "qualifying employer securities", as such term is defined in Section
408(e) of the Employee Retirement Income Security Act of 1974, as amended,
and Section 4975(d)(3) of the Internal Revenue Code of 1986, as amended.
USE OF PROCEEDS BY TRUSTEE
The Trustee agrees to use the amount loaned to the Trustee by Company, which
amount represents the proceeds of the Loan, for the sole purpose of
refinancing that certain outstanding loan from UMB Bank Kansas ("Prior ESOP
Loan", which loan was made for the purpose of enabling Trustee to acquire
"qualifying employer securities" as defined above).
10.7-34
<PAGE> 35
PLEDGE OF SECURITIES
To secure the ESOP Note the Trustee hereby pledges and assigns to Company or
any holder of the ESOP Note all "qualifying employer securities" which, as
of the date of this Agreement, secured the repayment of the Prior ESOP Loan.
The Trustee acknowledges that the ESOP Note and pledged "qualifying employer
securities" will be endorsed and assigned by Company to Lender as collateral
for the Loan.
IN WITNESS WHEREOF, this Agreement has been executed as of the date written
above.
COMMERCE BANK, N.A.
By: /s/ Michael Sobba
------------------------
Title: Senior Vice President
---------------------
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
TEAM FINANCIAL, INC., as
Trustee Under the TeamBanc, Inc.
Employees Stock Ownership Plan
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
10.7-35
<PAGE> 36
CORPORATE GUARANTY
August 21st, 1997
TO: COMMERCE BANK, N.A. ("Bank")
The undersigned hereby requests Bank to give, and continue to give, TEAM
FINANCIAL, INC., a Kansas corporation ("Debtor"), from time to time, as Bank
may see fit, financial accommodations and credit, and in consideration
thereof, whether the same has been heretofore given or may hereafter be
given by Bank to Debtor, the undersigned hereby guarantees and promises and
agrees to make prompt payment to Bank, as they severally mature, of all
overdrafts of Debtor, of all loans made or which may be made by Bank to
Debtor, of all moneys paid by Bank for the use or account of Debtor and of
all notes, acceptances and other paper which have been or may be discounted
for, or at the request of, Debtor, whether made, drawn, accepted, endorsed
or not endorsed by Debtor, and whether endorsed with or without recourse,
and of any and all other obligations, of every kind and character, now due
or which may hereafter become due from Debtor to Bank, howsoever created,
arising or evidenced, and also of any and all renewals or extensions of any
of the foregoing (all herein called ,"Liabilities") regardless of any
collateral now held by Bank, or which Bank may hereafter acquire, as
security for any or all of the Liabilities.
It is understood that extensions of time of payment or modifications or
renewals of any of the Liabilities shall not in any way impair the liability
of the undersigned to Bank and that the undersigned will keep posted as to
all matters pertaining to this Corporate Guaranty without notice from Bank.
When any of the Liabilities shall become and remain due and unpaid, the
undersigned will, upon demand, pay to Bank the amount due thereon.
In the event any property of the undersigned of any kind is now, or at any
time hereafter shall be, pledged to or in the possession of Bank, including,
but without limitation, the property described below (if any) and any
deposit or credit balance or other indebtedness credited by or due from Bank
to the undersigned ("Guaranty Collateral"), the undersigned hereby pledges
to and grants to Bank a security interest in and to all such Guaranty
Collateral.
10.7-36
<PAGE> 37
Upon the failure of the undersigned to pay any of the Liabilities as agreed
and which are hereby guaranteed, Bank shall then have all of the rights and
remedies of a secured party under the Uniform Commercial Code of Missouri,
including without limitation, the right to sell or otherwise dispose of,
from time to time, any or all of the Guaranty Collateral. Unless the
Guaranty Collateral is of a type to decline speedily in value or is of a
type commonly sold on a recognized market, Bank shall send the undersigned
reasonable notice of the time and place of any public sale or of the date
after which any private sale or other disposition is to be made. The
requirement of such notice shall be met if such notice is mailed, postage
prepaid, to the undersigned at the last address for the undersigned shown on
Bank's records, at least five (5) days before the time of sale or other
disposition. After deducting all costs and expenses of every kind, Bank may
apply the residue of the proceeds of any sale or sales of Guaranty
Collateral to pay any Liabilities and/or any amounts owing hereunder in such
order or preference as Bank may determine.
Before proceeding hereunder against the undersigned, resort need not be made
by Bank to any other security for any or all of the Liabilities whether
pledged by Debtor or by any other person in connection with the Liabilities
or the Guaranty Collateral (collectively, the "Collateral"), nor need Bank
exhaust any remedy against Debtor, nor against any other endorser, surety or
guarantor of the Liabilities.
Notice of the making, renewing or extending time of payment of any of the
Liabilities, and of demand, protest, and notice of nonpayment thereof, and
notice of acceptance hereof, are expressly waived. No substitution, release,
surrender or impairment (including but not limited to failure to perfect a
security interest in any Collateral) of any Collateral, nor the
substitution, release or death of any other party liable for the payment of
any Liabilities, shall affect the liability of the undersigned to Bank. The
undersigned waives all errors and omissions in connection with Bank's
administration of the Liabilities and Collateral. A waiver by Bank of any
right or remedy on any one or more occasions shall not be construed as a bar
to or a waiver of any such right or remedy on future occasions. The
undersigned expressly waives notice of any changes in the terms of the
Liabilities, including interest rate and term.
In consideration of Bank acting in reliance hereon, the undersigned agrees
that the obligations herein contained with respect to the undersigned and
the rights herein granted shall continue until a written revocation signed
by the undersigned is personally delivered or sent by certified mail, return
receipt requested, to
10.7-37
<PAGE> 38
Bank's president or any of Bank's vice presidents. Any such revocation shall
not affect the rights of Bank hereunder with respect to any Liabilities
which arose prior to receipt by Bank of such revocation and all extensions,
renewals and modifications of such prerevocation Liabilities whether before
or after receipt of such revocation, and any interest of Bank in and to any
Collateral shall continue until all such Liabilities have been paid in full.
The undersigned will pay on demand all costs of collection, legal expenses,
and attorneys' fees incurred or paid by Bank in collecting and/or enforcing
this Corporate Guaranty and the Guaranty Collateral, unless prohibited by
applicable law.
Upon payment of any Liabilities by the undersigned, the undersigned shall be
surrogated to the rights of Bank against Debtor to the extent of the payment
made; provided, however, the undersigned hereby postpones and subordinates
its right of subrogation until all Liabilities have been paid in full. The
undersigned further agrees that if a voluntary or involuntary petition in
bankruptcy is filed by or against Debtor, and the undersigned is determined
to be an insider of Debtor under applicable bankruptcy law, then in such
event the undersigned forever waives any right of subrogation against Debtor
on account of payment made pursuant to this Corporate Guaranty.
The undersigned agrees that, if at any time all or any part of any payment
previously applied by Bank on any of the Liabilities must be returned by the
Bank for any reason, whether by court order, administrative order, or
settlement, the undersigned shall remain liable for the full amount returned
(except to the extent limited herein) as if such amount had never been
received by Bank, notwithstanding any termination of this Corporate Guaranty
or the cancellation of any agreement evidencing the Liabilities.
The undersigned agrees to provide to Bank, from time to time, such
information regarding the financial position, condition or business of the
undersigned, as the Bank may reasonably request.
This Corporate Guaranty shall remain fully enforceable irrespective of any
defense which the Debtor may assert on the Liabilities, including but not
limited to failure of consideration and statute of frauds.
The undersigned has unconditionally delivered this Corporate Guaranty to
Bank and failure to sign this or any other guaranty by any other person
shall not discharge the liability of the undersigned under this Corporate
Guaranty.
10.7-38
<PAGE> 39
The undersigned acknowledges that it will derive a direct and substantial
benefit from the making of the loan from Bank to Debtor as described herein.
This Corporate Guaranty shall be governed by, and construed in accordance
with, the laws of Missouri, shall inure to the benefit of Bank, its
successors and assigns, and shall be binding upon the undersigned and the
successors and assigns of the undersigned.
TEAM FINANCIAL ACQUISITION
SUBSIDIARY, INC.
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman/CEO
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
10.7-39
<PAGE> 40
COMMERCE BANK
COLLATERAL PLEDGE AGREEMENT
The undersigned and each of the undersigned pledge and grant to Commerce Bank,
N.A. /s/ Commerce Bank, N.A. ("Bank") a security interest in all property of the
undersigned, or either of them, of any kind or description, which now or
hereafter is delivered to Bank or in the possession of Bank or anyone on behalf
of Bank, including, but not limited to, the following property and including any
deposit or credit balance or other indebtedness due from Bank to the undersigned
or either of them "Collateral"):
STOCK
The security interest granted hereunder shall secure all obligations of the
undersigned, or either of them, to Bank howsoever created, evidenced or arising.
whether direct or indirect, absolute or contingent, now existing or hereafter
arising, due or to become due ("Liabilities").
Upon default of any obligation secured hereby, Bank shall have all of the rights
and remedies of a secured party under the Uniform Commercial Code of Missouri.
Any notice required by such law shall be deemed reasonable if such notice is
mailed, postage prepaid, to the undersigned at the last address of undersigned
appearing on the records of Bank at least 10 days prior to the event for which
notice is required. After such deductions as may be authorized by law, the
proceeds of any sale of collateral may be applied to liabilities of the
undersigned in such order or preference as Bank in its sole discretion may
determine.
Prior to default Bank may direct that any sums payable on account of the
collateral be payable to Bank, Bank or its transferee may, at any time, in its
sole discretion compromise, settle or extend the time of payment of any demands
or obligations represented by any of the collateral pledged hereunder. Neither
Bank nor subsequent holder shall be under any liability or obligation to take
any steps whatsoever to fix any liability upon or to collect or enforce payment
of any Obligation pledged as collateral hereunder whether by giving any notice,
presenting, demanding payments, protesting, instituting suit or otherwise.
If Bank should at any time be of the opinion that the Collateral is not
sufficient or has declined or may decline in value or should Bank deem itself
insecure, then Bank may demand additional security satisfactory to Bank, and the
undersigned promises to furnish such additional security satisfactory to Bank
forthwith.
With respect to any liability of the undersigned arising out of endorsement,
guarantee, suretyship, or accommodation, the undersigned
10.7-40
<PAGE> 41
hereby consent to any and all renewals or extensions and whether one or more or
for the same or different term, consent to the release or substitution of any
collateral securing such obligation.
Executed and delivered this 21st day of August, 1997.
PLEDGOR Team Financial, Inc.
By: /s/ Robert J. Weatherbie
----------------------------
/s/ Michael L. Gibson
--------------------------------
Title: Chairman & CEO President
-------------------------
10.7-41
<PAGE> 42
COMMERCE BANK
COLLATERAL PLEDGE AGREEMENT
The undersigned and each of the undersigned pledge and grant to Commerce Bank,
N.A. /s/ Commerce Bank, N.A. a security interest in all property of the
undersigned, or either Of them, of any kind or description, which now or
hereafter is delivered to Bank or in the possession of Bank or anyone on behalf
of Bank, including, but not limited to, the following property and including any
deposit or credit balance or other indebtedness due from Bank to the undersigned
or either of them ("Collateral"):
STOCK
The security interest granted hereunder shall secure all obligations of the
undersigned, or either of them. to Bank howsoever created, evidenced or arising,
whether direct or indirect, absolute or contingent, now existing or hereafter
arising due or to become due ("Liabilities").
Upon default of any obligation secured hereby. Bank shall have all of the rights
and remedies of a secured party under the Uniform Commercial Code of Missouri.
Any notice required by such law shall be deemed reasonable if such notice is
mailed, postage prepaid, to the undersigned at the last address of undersigned
appearing on the records of Bank at least 10 days prior to the event for which
notice is required. After such deductions as may be authorized by law, the
proceeds of any sale of collateral may be applied to liabilities of the
undersigned in such order or preference as Bank in its sole discretion may
determine.
Prior to default Bank may direct that any sums payable on account of the
collateral be payable to Bank, Bank or its transferee may, at any time, in its
sole discretion compromise, settle or extend the time of payment of any demands
or obligations represented by any of the collateral Pledged hereunder. Neither
Bank nor subsequent holder shall be under any liability or obligation to take
any steps whatsoever to fix any liability upon or to collect or enforce payment
of any obligation pledged as collateral hereunder whether by giving any notice,
presenting demanding payments, protesting, instituting suit or otherwise.
If Bank should at any time be of the opinion that the Collateral is not
sufficient or has declined or may decline in value or should Bank deem itself
insecure, then Bank may demand additional security satisfactory to Bank, and the
undersigned promises to furnish such additional security satisfactory to Bank
forthwith.
With respect to any liability of the undersigned arising out of endorsement,
guarantee, suretyship, or accommodation, the undersigned
10.7-42
<PAGE> 43
hereby consent bo any and all renewals or extensions and whether one or more or
for the same or different term, consent to the release or substitution of any
collateral securing such obligation.
Executed and delivered this 21st day of August, 1997.
PLEDGOR Team Acquisition Subsidiary, Inc.
By: /s/ Robert J. Weatherbie
-----------------------------
/s/ Michael L. Gibson
---------------------------------
Title: Chairman & CEO President
--------------------------
10.7-43
<PAGE> 1
EXHIBIT 10.8
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT ("Agreement") is made and entered into as of the
21st day of August, 1997, by and between TEAM FINANCIAL, INC., f/k/a TeamBanc,
Inc., a Kansas corporation ("Company") and COMMERCE BANK, N.A., a national
banking association ("Bank");
In consideration of the mutual benefits accruing to each of the parties,
the receipt and sufficiency of which is hereby acknowledged, and in further
consideration of the mutual performance of this Agreement, the parties hereto
agree as follows:
ARTICLE I
Definitions
1.01. Code. The Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder. It is understood that any reference to
the Bank's federal income tax means the Bank or any entity that files a
consolidated federal income tax return with Bank.
1.02. Prime Rate. The per annum rate of interest established from
time to time by Bank for its own internal convenience as its "Prime Rate",
which when used to compute the rate of interest hereunder shall change as
of the date of any change in said Prime Rate; no representation is made
that the Prime Rate is the best, lowest or favored rate of interest.
ARTICLE II
Term Loan
2.01. Amount. Subject to the terms of this Agreement, Bank agrees to
lend to Company the sum of $247,000 (the "Term Loan").
2.02. Term Note. On the Closing Date (hereinafter defined) Company
will execute and deliver its promissory note to Bank, in the principal
amount of $247,000, and in form and substance acceptable to Bank (the
"Term Note").
2.03. Interest. The Term Note will bear interest at a variable per
annum rate equal to one percent (1%) less than the Prime Rate. Accrued
interest shall be calculated on the actual number of days outstanding
based on a year consisting of 365 days, and shall be payable quarterly, in
arrears, commencing December 31, 1997, and continuing on the last day of
each March, June, September
10.8-1
<PAGE> 2
and December thereafter, until and including the due date of the Term
Note. Interest after or during the continuation of any Event of Default
under Section 7.01, shall be at a rate equal to three percent (311) in
excess of the Prime Rate.
2.04. Repayment. The principal of the Term Note shall be payable in
annual installments of $35,285.71 commencing December 31, 1998, and
continuing on the last day of each December thereafter, until December 31,
2004, when the outstanding principal balance, together with accrued
interest, shall be due and payable in full.
2.05. Prepayment. Company may prepay the Term Note in full or in part
at any time without the payment of a prepayment fee. Any partial
prepayments shall be applied to the annual principal payments in the
inverse order of their maturities.
2.06. Purpose. Proceeds of the Term Loan shall be used to fund a loan
by Company to the trustee (the "Trustee") of the TeamBanc, Inc. Employees
Stock Ownership Plan (the "Trust"), as established pursuant to the
TeamBanc, Inc. Employees Stock Ownership Plan dated as of November 6,
1992, as amended from time to time (the "Plan"), pursuant to the agreement
between the Bank, the Company and the Trustee (the "Lending Agreement")
and evidenced by a promissory note (the "ESOP Note") made by the Trustee
to Company.
ARTICLE III
Representations and Warranties
In borrowing hereunder the Company represents and warrants to Bank which
representations and warranties will survive the delivery of the Term Note and
shall continue so long as any sums remain outstanding under the Term Note or
under this Agreement) that:
3.01. Authorization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Kansas and is duly qualified as a foreign corporation and is in good
standing in every other jurisdiction where failure to be so qualified and
in good standing would have a material adverse effect on its business; the
Company has all requisite corporate power and authority to own and operate
its properties and to carry on its business as presently being conducted;
the Company has the power to enter into and to carry out the terms of this
Agreement and to execute, deliver and perform its obligations under this
Agreement, the Term Note, and any other instrument referred to
10.8-2
<PAGE> 3
or mentioned herein, and said performance by the Company of its
obligations has been duly authorized by appropriate corporate proceedings,
will not contravene any provisions of law, its Articles of Incorporation,
Bylaws, or any indenture, agreement or other instrument binding upon the
Company, and does not require the consent, approval or authorization of
any governmental agency or third party, except as otherwise specifically
provided herein.
3.02. Financial Condition. Except as provided in Schedule 3.02
attached hereto, the financial statements of Company dated as of December
31, 1996, copies of which have been furnished to Bank, are complete and
correct and fairly and accurately present the financial condition of
Company as at such date and the results of the operations of Company for
the period covered by such statements, all in accordance with generally
accepted accounting principles consistently applied, and there has been no
material adverse change in the condition (financial or otherwise),
business or operations of Company subsequent thereto.
3.03. Taxes. The Company has filed all required federal, state and
local tax returns and has paid all taxes as shown on said returns to be
due including interest and penalties, or has provided adequate reserves
for the payment thereof. No tax claims have been asserted against Company
which remain unpaid or for which an adequate reserve has not been
established.
3.04. Litigation. Other than as set forth in Schedule 3.04 attached
hereto, or as disclosed to Bank in writing prior to the date hereof, the
Company has no actions, suits or proceedings pending or, to its knowledge,
threatened against or affecting it or its properties before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which, if determined adverse to the
Company, might have a material adverse effect on its financial condition,
properties or operations.
3.05. Liability. Except as set forth in Schedule 3.05 attached
hereto, the Company has no liabilities, direct or contingent, except those
disclosed in the financial statements described in Section 3.02 hereof,
and those incurred since December 31, 1996 in the ordinary course of the
Company's business which have been disclosed in writing to Bank. Company
is not presently in default, and no event which, but for the lapse of time
or service of notice or both, would constitute a default has occurred and
is continuing under any agreement, indenture, mortgage, security agreement
or other instrument under which the Company is directly or contingently
liable or pursuant to which any of the assets or
10.8-3
<PAGE> 4
properties of Company or any shares of its outstanding capital stock is
encumbered or affected in any way. All stock of the Company has been
validly issued and is fully paid and nonassessable.
3.06. Properties. Company has good, valid and marketable title to all
of its properties shown as assets on its balance sheet. All properties are
free and clear of all liens, mortgages, security interests or other
encumbrances except those which have been disclosed to Bank in writing or
disclosed on its balance sheet.
3.07. Guaranties. Company has no guaranties outstanding, except those
which have been disclosed to Bank in writing.
3.08. Other Agreements. Company is not a party to, subject to, or
bound by any contract, agreement, instrument, charter or corporate
restriction which materially adversely affects its ability to perform its
obligations under this Agreement, the Term Note or other documents or
instruments provided for herein.
3.09. Margin Stock. Company is not engaged in the business of
extending credit for the purpose of carrying margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System. If requested by Bank, Company will furnish to Bank a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to
in Regulation U to the foregoing effect.
3.10. Use of Proceeds. The proceeds of the Term Loan shall be loaned
by Company to the Trustee of the Trust within the meaning of Section
4975(d)(3) of the Code for the acquisition of "employer securities"
(within the meaning of Section 409(l) of the Code), for the repayment of
the Term Loan or for the repayment of a prior loan to the Trustee of the
Trust, the proceeds of which were used by the Trust to acquire "employer
securities", and the terms and conditions of such loan by the Company to
the Trustee of the Trust shall comply with all laws and regulations in
respect thereto, including, to the extent applicable, but not limited to,
Regulation G of the Federal Reserve Board, the Code, the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and
regulations promulgated thereunder.
3.11. Plan Qualifications. The Plan is qualified under Section 401(a)
of the Code, the Trust is exempt from tax under Section 501(a) of the
Code, and the consummation of the
10.8-4
<PAGE> 5
transactions under this Agreement and the Lending Agreement will not
constitute a prohibited transaction.
3.12. Stock. Except as set forth in Schedule 3.12 attached hereto,
there are no outstanding stock warrants, options, convertible securities
or other agreements that could cause additional stock to be issued or
sold.
3.13. Guarantor. The Guarantor (hereinafter defined) has authority,
and has completed all proceedings and obtained all approvals and consents
necessary, to execute, deliver and perform its obligations under the
Guaranty (hereinafter defined). The Guaranty when executed by the
Guarantor and delivered to Bank, shall constitute the legal, valid and
binding obligations of the Guarantor, enforceable in accordance with its
terms, except as limited by bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally. The
execution, delivery and performance by the Guarantor of the Guaranty will
not violate any provision of any existing mortgage, indenture, contract or
agreement binding on Guarantor or affecting any of its properties, and
will not result in, or require, the creation or imposition of any lien on
any of its properties or revenues. No litigation, investigation or
proceeding of or before any arbitrator or governmental authority is
pending or threatened by or against the Guarantor or any of its properties
or revenues with respect to the Guaranty, or any of the transactions
contemplated hereby or thereby or which could have a material adverse
effect on the business, operations, assets or financial or other condition
of the Guarantor.
ARTICLE IV
Affirmative Covenants
The Company covenants and agrees that during the term of this Agreement
and until all of the principal amount of and interest due under the Term
Note shall have been paid in full, unless otherwise agreed to by Bank in
advance and in writing to the contrary, the Company will duly perform and
observe each and all of the covenants and agreements hereinafter set
forth:
4.01. Maintenance and Compliance with Laws. The Company will maintain
its corporate existence, rights and franchises and comply with all
applicable statutes, regulations and orders of, and all applicable
restrictions imposed by, all government bodies, and maintain and keep its
properties in good repair, working order and operating condition.
10.8-5
<PAGE> 6
4.02. Financial Statements. Company will deliver to Bank the
following financial information of Company, Guarantor (hereinafter
defined) and Banks (hereinafter defined):
(a)Within sixty (60) days after the end of each fiscal quarter of
Company and Guarantor, the respective balance sheets, profit and loss
statements and net worth reconciliations of Company and Guarantor for such
accounting period, and the results of operations since the beginning of
the fiscal year, prepared in accordance with generally accepted principles
of accounting applied on a basis consistent with that of the financial
statements for the preceding fiscal year and certified by the chief
financial officer or chief executive officer of Company and Guarantor,
respectively, as truly reflecting the respective financial positions of
Company and Guarantor as of the end of the accounting period;
(b)Within ninety (90) days after the end of each fiscal year of
Company and Guarantor, the respective annual audited financial statements
of Company and Guarantor, prepared by independent certified public
accountants selected by Company and satisfactory to Bank in conformity
with generally accepted accounting principles applied on a basis
consistent with that of the financial statements for the preceding fiscal
year; and
(c)From time to time such further information regarding the financial
condition or business of Company, Guarantor and Banks as Bank may
reasonably request.
4.03. Inspection of Operations. Company shall permit such persons
designated by Bank to visit and inspect Company's properties, operations,
corporate books and financial records and to discuss Company's affairs,
finances and accounts with Company's principal officers and independent
public accountants, as may be requested from time to time by Bank.
4.04. Insurance. Company shall maintain, at all times, such insurance
covering such risks as is customary for companies of similar character, in
amounts and with companies acceptable to Bank.
4.05. Payment of Indebtedness. Company shall pay or discharge all
indebtedness heretofore or hereafter incurred as the same shall become due
and payable and shall faithfully perform, observe and discharge all
covenants, conditions and obligations which are imposed on it by any and
all indentures and other agreements securing or evidencing such
indebtedness or pursuant to which such indebtedness is issued.
10.8-6
<PAGE> 7
4.06. Taxes and Other Liens. The Company will pay and discharge
promptly all taxes, assessments, and other governmental charges or levies
imposed upon it or upon its income or upon any of its property, real,
personal or mixed, or upon any part thereof, as well as all claims of any
kind (including claims for labor, materials and supplies) which, if
unpaid, might by law become a lien or charge upon any of its property;
except any taxes, assessments or levies being contested in good faith by
appropriate legal proceedings and against which, if requested by the Bank,
the Company will set up reserves satisfactory to the Bank.
4.07. Notice of Defaults. Company shall notify Bank in writing of any
Event of Default (hereinafter defined) hereunder or of any fact,
condition, or event that, only with the giving of notice or passage of
time or both, would become an Event of Default. Company shall notify Bank
in writing of any default under any other indenture, agreement, contract
or other instrument to which Company is a party and of any acceleration of
the maturity of any material indebtedness of Company which default or
acceleration could have a material adverse effect on Company, and Company
shall take all necessary steps to remedy promptly any such default, to
protect against any such adverse claim, to defend any such proceeding and
to resolve all such controversies.
4.08. Data to Verify Compliance. Company shall promptly provide Bank
with such data as Bank shall reasonably request to verify the truth of all
warranties and representations and Company's compliance with all
covenants.
4.09. Contributions. Company will make contributions to the Trust
sufficient for the Trust to pay principal and accrued interest on the ESOP
Note in accordance with the schedule of payments set forth therein (such
contributions to be referred to herein as "Scheduled Contributions"). In
addition to the foregoing, and provided that no Event of Default
(hereinafter defined) has occurred or will occur, Company may make
contributions to the Trust in amounts adequate to provide cash to, or to
make other payments necessary in connection with, terminating participants
(such contributions to be referred to herein as "Permitted
Contributions"). If Company makes contributions in an amount in excess of
Scheduled Contributions (and Permitted Contributions, if applicable)
("Excess Contributions"), Company shall cause the Plan Administrator (as
set forth in the Plan) to direct the Trustee to use such Excess
Contributions to prepay the ESOP Note.
4.10. Securities Restrictions. Company shall comply with all
restrictions regarding securities acquired with loan proceeds
10.8-7
<PAGE> 8
imposed by the Internal Revenue Code and United States Treasury
Regulations, including, without limitation, restrictions concerning
subjection of the securities to a put, call or other option or buy-sell or
similar arrangement.
4.11. Notification. Company shall notify Bank promptly of any
governmental or judicial action or proceeding that relates directly or
indirectly to the qualification of the Plan under Sections 401(a) or
4975(e)(7) of the Code, or the participation of the Trust in the
transactions contemplated hereunder.
ARTICLE V
Negative Covenants
Without the prior written consent of Bank, during the term of this
Agreement or until all indebtedness of the Company to Bank has been paid,
whichever occurs last, Company covenants and agrees as follows:
5.01. Liens. Company will not create, incur, assume or suffer to
exist any security interest, mortgage, pledge, lien or other encumbrance
upon any of the Company's properties or assets, whether now owned or
hereafter acquired, except for those granted to Bank and except such
purchase money security interests created or granted by Company in the
ordinary course of its business, consistent with current practices, and
except such liens of taxes not in default or being contested in good
faith.
5.02. Fundamental Changes. Company will not amend its Articles of
Incorporation or Bylaws; wind up, liquidate, or dissolve itself;
reorganize, merge or consolidate with or into, or sell, transfer, convey
or lease all or any part of its property, to another person or entity;
sell or assign any accounts receivable; purchase or otherwise acquire all
or substantially all of the assets of any corporation, partnership, or
other entity, or any shares or similar interest in any other corporate
entity; or make any material change in the executive management of the
Company.
5.03. Conduct of Business. Company will not materially alter the
character in which Company conducts its business or the location of such
business or the nature of such business conducted at the date hereof.
5.04. Funded Indebtedness. Company shall not incur additional Funded
Indebtedness (direct, indirect, contingent or otherwise) unless such
Funded Indebtedness is subordinated (in writing and in form and substance
satisfactory to Bank) in all
10.8-8
<PAGE> 9
respects to the indebtedness of Company to Bank hereunder. For purposes of
this Agreement, "Funded Indebtedness" shall mean all indebtedness of
Company for borrowed money in excess of $250,000 (individually or in the
aggregate) and which has a maturity of one (1) or more years from the date
of origin, plus all Capitalized Leases (defined as any lease which is
required to be capitalized on the balance sheet of Company) and all
guarantees of such Funded Indebtedness of others, but excluding the
indebtedness incurred by Company in the ordinary course of business which
includes (i) deposits, (ii) Banker's Acceptances, (iii) repurchase
agreements, (iv) purchases of Federal Funds, and M Federal Reserve or
Federal Home Loan Bank borrowings made in the ordinary course of business,
and pledges, liens or encumbrances required to secure such indebtedness,
provided that Company shall have received Bank's prior written approval
of, and with respect to, the specific assets, or general class of assets,
to be pledged or encumbered by such pledges, liens or encumbrances.
5.05. Issuance of Additional Capital Stock. Company will not issue
any additional capital stock or securities convertible into capital stock
or any warrants or rights to purchase capital stock.
5.06. Investments. Company will not acquire for investment purposes,
investments that would not qualify as "customary and prudent investments",
consistent with the current investment practices of Company.
5.07. Loans to Affiliates, Shareholders and the Trust. Company will
not directly or indirectly loan amounts to any affiliate or shareholder of
Company, or to any entity controlled by such an affiliate or shareholder,
or to the Trust (whether or not for the purchase of additional employer
securities).
5.08. Debt Payments to Shareholders. Except with respect to
unsubordinated debt permitted under Section 5.04 (b) above, Company will
not directly or indirectly make any payments with respect to any
indebtedness owing to any shareholders.
5.09. Dividends. Except to the extent consistent with past practices,
Company will not pay any cash dividends to shareholders of Company.
5.10. Capital Expenditures. Company will not make any capital
expenditures other than those capital expenditures made in the ordinary
course of business, consistent with past Company practices.
10.8-9
<PAGE> 10
5.11. Plan Amendments. No amendments will be made to the Plan without
the prior written consent of Bank, which consent shall not be unreasonably
withheld.
ARTICLE VI
Collateral
The obligations and indebtedness of the Company to Bank hereunder or under
any other instrument shall be secured and supported by the following
("Collateral"):
6.01. ESOP Note and Stock. Company shall pledge and endorse to Bank
the ESOP Note and any stock of Company from time to time pledged as
security to the ESOP Note. Such pledge shall be evidenced by a Collateral
Assignment in form and substance acceptable to Bank.
6.02. Bank Stock. Company shall pledge all stock, whether common or
preferred, of Iola Bank and Trust ("Iola Bank"), First National Bank &
Trust Co. (Parsons, Kansas) ("FNB") and TeamBank, N.A. (Paola, Kansas)
("TeamBank") (said Iola Bank, FNB and TeamBank, together with TeamBank
Nebraska (hereinafter identified], to be sometimes hereinafter
collectively referred to as the "Banks") now owned or hereafter acquired
(together with the stock of TeamBank Nebraska (hereinafter identified] the
"Bank Stock"), which as of the date hereof is as follows:
<TABLE>
<CAPTION>
Banks Type # of Shares Ownership Percentage
----- ---- ----------- --------------------
<S> <C> <C> <C>
Iola Bank Common 70,000 100.000%
FNB Common 18,000 100.000%
TeamBank Common 100,000 100.00%
</TABLE>
Company shall also pledge to Bank all of the outstanding stock, whether common
or preferred, of Team Financial Acquisition Subsidiary, Inc. ("Guarantor").
Such pledges shall be evidenced by a "Collateral Pledge Agreement", in form and
substance acceptable to Bank, together with stock powers relating thereto.
6.03. Guaranty. There shall be delivered to Bank, as additional
support for the obligations and indebtedness of Company to Bank (as well
as all other obligations owing by Company to Bank, now existing and
hereafter arising), the unconditional, unlimited corporate guarantee of
Guarantor. The guaranty shall be evidenced
10.8-10
<PAGE> 11
by a Corporate Guaranty in form and substance acceptable to Bank
("Guaranty"). Guarantor shall pledge all stock, whether common or
preferred, of TeamBank Nebraska (Bellevue, Nebraska) ("TeamBank Nebraska")
now owned or hereafter acquired, which as of the date hereof is as
follows:
<TABLE>
<CAPTION>
Banks Type # of Shares Ownership Percentage
----- ---- ----------- --------------------
<S> <C> <C> <C>
TeamBank Nebraska Common 8,000 100.00%
</TABLE>
Such pledge shall be evidenced by a "Collateral Pledge Agreement", in form and
substance acceptable to Bank, together with stock powers relating thereto.
6.04. Other Documents. Company agrees to furnish such information and
to execute such other documents or undertake any other acts as may be
reasonably necessary to perfect and maintain the security interests
contemplated by this Agreement, or as otherwise reasonably requested by
Bank from time to time.
ARTICLE VII
Defaults
7.01. Events of-Default. The occurrence of one or more of the
following events ("Events of Default" or "Default") shall constitute a
Default by the Company hereunder:
(a) nonpayment of interest or principal hereunder when payment is due
as herein provided; or
(b) any representation or warranty made by the Company or Guarantor
herein or in any writing furnished in connection with or pursuant to this
Agreement shall prove to be false in any material respect as of the date
on which it is made; or
(c) a breach by Company in the performance or observance of any
agreement, term, covenant or condition contained herein (other than in (a)
above), and such breach shall not have been remedied within thirty (30)
days after written notice thereof shall have been given by Bank to
Company; or
10.8-11
<PAGE> 12
(d) any report, certificate, financial statement or other instrument
furnished in connection with this Agreement shall prove to be false or
misleading in any material respect; or
(e) default in the performance of the obligations of the Company or
Guarantor on any other note, agreement (including but not limited to
security agreements), or obligations owed by the Company or Guarantor to
Bank, which default results in the acceleration of such obligation; or
(f) any default by the Company or Guarantor under any other contract
for borrowed money which entitles the obligee to accelerate the maturity
thereof, or any failure by the Company or Guarantor to pay any
indebtedness when due, whether by acceleration or otherwise; or
(g) commencement by the Company or Guarantor of a voluntary case
under the Bankruptcy Act or similar law, federal or state, whether now or
hereafter existing; or a trustee or receiver shall be appointed for
Company or Guarantor or all or a substantial part of its properties in any
involuntary proceeding, or any court shall have taken any jurisdiction of
all or a substantial part of the properties of the Company or Guarantor in
any involuntary proceeding for the reorganization, dissolution,
liquidation or winding up of the business of the Company or Guarantor and
such trustee or receiver shall not be discharged or such jurisdiction
relinquished or vacated or stayed on appeal or otherwise within thirty
(30) days; or the Company or Guarantor shall file a petition or answer
consenting to or acquiescing in a petition against it in bankruptcy or
under any chapter of the Bankruptcy Act or any similar law, state or
federal, whether now or hereafter existing, or such petition filed against
the Company or Guarantor shall be approved and not vacated or stayed
within thirty (30) days; or the Company or Guarantor shall become
insolvent, or shall make an assignment for the benefit of creditors or
shall admit in writing its inability to pay its debts generally as they
become due, or shall consent to the appointment of a receiver or trustee
or liquidator of all its properties or a substantial part thereof, or
shall have failed within thirty (30) days to pay a bond or otherwise
discharge any judgment or attachment which is not stayed on appeal or
otherwise being contested in good faith; or
10.8-12
<PAGE> 13
(h) Company or Guarantor suffers any judgment, writ of attachment or
execution or similar process to be issued or levied against all or a
substantial part of its property and which is not released, stayed, bonded
or vacated within thirty (30) days; or
(i) The occurrence of a non-exempt "Prohibited Transaction", as
defined in Section 406 of ERISA or in Section 4975 of the Internal Revenue
Code, between the Plan and any other person or entity; or
(j) The failure of the Trust to maintain its status as a "tax exempt
trust" under Section 501 of the Internal Revenue Code, or the failure of
the Plan to maintain its status as a qualified plan under Section 401 or
as an employee stock ownership plan under Section 4975 of the Code.
7.02. Remedies. Upon an Event of Default, Bank may accelerate the
maturity of the Term Loan, with or without notice, and Bank may resort to
any and all security and to any remedy existing at law or in equity for
the collection of the Term Note according to its tenor and enforcement of
the covenants and provisions hereof, and the Bank's resort to any remedy
shall not prevent the concurrent or subsequent employment of any other
remedy. In addition to the remedies provided herein, in the event the Term
Note is due and payable or upon an Event of Default, the Bank shall have
the right of setoff, without demand or notice to anyone, against the funds
of the Company on deposit with it.
Notwithstanding anything contained herein to the contrary, Bank shall have
no right of setoff or any claims to any shares of the common stock of
Company which Bank may be holding as custodian on behalf of the Trust or
any funds of the Trust deposited with Bank except such shares as are
pledged to secure the ESOP Note, but only to the extent permitted by law.
7.03. Expenses of Collection. All costs, expenses and liabilities
incurred by Bank in collecting or attempting to collect on the Term Note,
including costs and expenses incurred in proposing or selling or otherwise
deriving upon any security, and all reasonable attorneys' fees in
connection with such matters, shall constitute a demand obligation of the
Company and shall bear interest from the date of expenditure until paid at
the per annum rate of three percent (3%) in excess of the Prime Rate.
10.8-13
<PAGE> 14
7.04. Waiver. Any waiver of an Event of Default by Bank shall not
extend to or affect any subsequent Event of Default. No failure or delay
by Bank in exercising any right hereunder shall operate as a waiver, nor
shall any single or partial exercise of any right preclude the exercise of
any other right hereunder.
ARTICLE VIII
Closing; Conditions Precedent
8.01. Closing. "Closing" shall take place at Bank's principal offices
at 1000 Walnut Street, Kansas City, Missouri on August 21, 1997 (the
"Closing Date").
8.02. Conditions Precedent to Closing. As a condition precedent to
Closing, Company shall have delivered to Bank the following documents:
(a) This Agreement and the Term Note, duly executed by the Company;
(b) The Collateral Assignment, duly executed by the Company;
(c) A fully executed copy of the Lending Agreement;
(d) The Collateral Pledge Agreement, duly executed by the Company,
together with the applicable Bank Stock, and Stock Powers (executed in
blank);
(e) The Guaranty, duly executed by the Guarantor, together with the
applicable Collateral Pledge Agreement, the applicable Bank Stock, and
Stock Powers (executed in blank);
(f) Fully executed copies of all other documents required under this
Agreement and any of the other documents executed in connection herewith,
including, without limitation, the Collateral Assignment;
(g) Certified copies of the Bylaws of the Company and Guarantor, and
of each resolution of the Company's and Guarantor's respective Boards of
Directors duly authorizing the execution and delivery of the applicable
loan documents and the Company's and Guarantor's performance hereunder and
thereunder;
(h) Certificates of Good Standing, dated not more than thirty (30)
days prior to the date of this Agreement, for the Company from the Kansas
Secretary of State, and the Guarantor from
10.8-14
<PAGE> 15
the Nebraska Secretary of State, and, if specifically requested by Bank,
from the Secretary of State for each other jurisdiction where the nature
of Company's or Guarantor's respective businesses requires it to be
qualified as a foreign corporation;
(i) An opinion of counsel for Company dated the Closing Date, in form
and substance satisfactory to Bank, substantially to the effect that W
Company is a corporation duly organized and existing and in good standing
under the laws of the State of Kansas; (ii) Company has adequate corporate
power and authority to enter into and perform this Agreement and the Term
Note; (iii) that this Agreement, the Term Note, the Collateral Assignment
and the Collateral Pledge Agreement have been duly authorized, executed
and delivered by Company and are legal, valid and binding instruments
enforceable against the Company in accordance with their respective terms,
except as may be limited by laws of receivership, insolvency and
bankruptcy; (iv) that the Plan complies with all federal and state laws
and regulations, including, without limitation, the Code and ERISA, and
regulations promulgated thereunder; and (v) the Plan is qualified under
Section 401(a) of the Code, the Trust is exempt from tax under Section
501(a) of the Code, and the consummation of the transactions under this
Agreement and the Lending Agreement will not constitute a prohibited
transaction; and
(j) Any other documents, instruments and reports as Bank shall
reasonably request.
Company shall be solely responsible for all costs incurred by it and/or Bank in
connection with satisfying any of the foregoing requirements.
ARTICLE IX
Miscellaneous
9.01. Payment on Holidays. Whenever any payment to be made pursuant
to this Agreement or the Term Note shall be stated to be due on a public
holiday, Saturday or Sunday, such payment may be made on the next
succeeding business day and such extension of time shall in such case be
included in computing interest, if any, in connection with such payment.
9.02. Waivers. No omission or delay by the Bank in exercising any
right, power or privilege under this Agreement, the Term Note or any other
documents executed in connection herewith, will impair such right, power
or privilege or be construed to be a waiver of any Event of Default or
acquiescence therein and any single or partial exercise of any right,
power or privilege will
10.8-15
<PAGE> 16
not preclude other or further exercise of any other right, power or
privilege and no waiver will be valid unless in writing and signed by Bank
and then only to the extent specified. All remedies herein by law afforded
will be cumulative and will be available to Bank until all indebtedness of
Company is paid.
9.03. Binding Effect. This Agreement shall continue until payment in
full of all indebtedness owing hereunder and shall be binding upon Company
and its successors and assigns and shall be binding upon and inure to the
benefit of Bank, its successors and assigns.
9.04. Notices. Any notice, request, authorization, approval or
consent made hereunder shall be in writing and shall be personally
delivered or sent by registered or certified mail, and shall be deemed
given when delivered or postmarked and mailed postage prepaid to the
following addresses:
IF TO BANK: Commerce Bank, N.A.
1000 Walnut Street
P.O. Box 419248
Kansas City, Missouri 64141-6248
Attn: Mike Sobba
IF TO COMPANY: Team Financial, Inc.
One South Pearl
P.O. Box 402
Paola, Kansas 66071
Attn: Robert J. Weatherbie
Bank and Company may designate a change of address by notice given in
accordance with the provisions of this Subsection at least five (5) days before
such change is to become effective.
9.05. Amendments. The Company and Bank may from time to enter into
written agreements supplemental hereto for the purpose of modifying or
adding any provision to this Agreement or changing the rights and
privileges of Bank or Company hereunder. Any such supplemental agreement
shall be binding upon the Company and the Bank and their respective
successors and assigns.
9.06. Headings. Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute
a part of this Agreement for any other purpose.
10.8-16
<PAGE> 17
9.07. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
enforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction.
9.08. Governing Law. This Agreement and all related documents will be
governed by, and construed in accordance with, the laws of the State of
Missouri.
9.09. Counterpart Agreements. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same agreement.
9.10. Statutory Notice. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU
(BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING,
WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US,
EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
BY SIGNING BELOW, YOU AND WE AGREE THAT THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN US.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
10.8-17
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first above written.
TEAM FINANCIAL, INC.
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
---------------------
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
------------------------
Title: Senior Vice President
---------------------
10.8-18
<PAGE> 19
SCHEDULE 3.02
(FINANCIAL CONDITION)
Company has provided supplemental financial information to Bank in the
form of June 1997 "Y" Reports and call reports each subsidiary bank of
TFI.
10.8-19
<PAGE> 20
SCHEDULE 3.04
(LITIGATION)
NONE
10.8-20
<PAGE> 21
SCHEDULE 3.05
(LIABILITIES)
Distributions from the TeamBanc, Inc. Employees' Stock Ownership Plan can
be made in the form of stock and, in accordance with the plan document and
the Internal Revenue Code, Team Financial, Inc. has an obligation to
repurchase such securities.
10.8-21
<PAGE> 22
SCHEDULE 3.12
(STOCK)
Company has previously provided documents relating to its Employee Stock
Purchase Plan acceptable to Bank.
10.8-22
<PAGE> 23
AMENDMENT ONE TO TERM LOAN AGREEMENT
THIS AMENDMENT ONE TO TERM LOAN AGREEMENT ("Amendment One") is entered
into as of the 31st day of October, 1997, by and between COMMERCE BANK,
N.A. ("Bank") and TEAM FINANCIAL, INC. "Company").
WITNESSETH:
WHEREAS, pursuant to that certain Term Loan Agreement dated as of August
21, 1997, by and between Bank and Company ("Loan Agreement"), Bank agreed
to extend a Term Loan to Company in the original principal amount of
$247,000, subject to certain terms, limitations and conditions contained
therein;
WHEREAS, Company has requested that Bank amend one of the Affirmative
Covenants contained in the Loan Agreement; and
WHEREAS, Bank and Company have agreed to amend the Loan Agreement as
hereinafter set forth.
NOW, THEREFORE, for valuable consideration, Bank and Company do hereby
mutually agree as follows:
1.Terms used herein which are defined in the Loan Agreement shall
have the meanings given to them in the Loan Agreement.
2.Section 4.09 of the Loan Agreement is hereby amended to read in its
entirety as follows:
"Contributions. Company will make contributions to the Trust
sufficient for the Trust to pay principal and accrued interest on the
ESOP Note in accordance with the schedule of payments set forth
therein (such contributions to be referred to herein as "Scheduled
Contributions"). In addition to the foregoing, and provided that no
Event of Default (hereinafter defined) has occurred or will occur,
Company may make contributions to the Trust (i) in amounts adequate
to provide cash to, or to make other payments necessary in connection
with, terminating participants, and/or (ii)
10.8-23
<PAGE> 24
in amounts to be maintained by the Trust "on deposit" to meet the
Trust's distribution and other ordinary course cash needs, provided
such sums "on deposit" shall not exceed $500,000 at any given time
(such contributions to be referred to herein as "Permitted
Contributions"). If Company makes contributions in an amount in
excess of Scheduled Contributions (and Permitted Contributions, if
applicable) ("Excess Contributions"), Company shall cause the Plan
Administrator (as set forth in the Plan) to direct the Trustee to use
such Excess Contributions to prepay the ESOP Note.
3.Except as amended herein, all other terms, provisions, conditions
and obligations imposed under the terms of the Loan Agreement shall remain in
full force and effect and are hereby ratified and certified by Bank and Company.
4.This Amendment One shall be governed by, and construed in
accordance with, the laws of the State of Missouri.
IN WITNESS WHEREOF, Bank and Company have executed this Amendment One as
of the date first above written.
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
------------------------
Title: Senior Vice President
----------------------
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
---------------------
By: /s/ Carolyn S. Jacobs
------------------------
Title: Treasurer
---------------------
10.8-24
<PAGE> 25
TERM NOTE
$247,000 August 21, 1997
Principal and Interest Kansas City, Missouri
FOR VALUE RECEIVED, the undersigned, TEAM FINANCIAL, INC., f/k/a TeamBanc,
Inc., a Kansas corporation ("Borrower") hereby promises to pay to the
order of COMMERCE BANK, N.A. ("Bank") the principal sum of Two Hundred
Forty-Seven Thousand Dollars ($247,000), payable in annual principal
installments of $35,285.71 commencing December 31, 1998, and continuing on
the last day of each December thereafter, until December 31, 2004, when
the outstanding principal balance, together with accrued interest, shall
be due and payable in full. This Term Note shall bear interest at a per
annum variable rate equal to one percent (1%) less than the Prime Rate (as
that term is defined in the Term Loan Agreement hereinafter identified),
to change with any change in the Prime Rate. Accrued interest shall be
payable quarterly, in arrears, commencing December 31, 1997, and
continuing on the last day of each March, June, September and December
thereafter, until and including the due date of this Term Note. Accrued
interest shall be calculated on the actual number of days outstanding
based on a year consisting of 365 days. Both principal and interest are
payable in lawful money of the United States of America to Bank, at its
offices at 1000 Walnut, Kansas City, Missouri, in immediately available
funds.
This Term Note is the one referred to in, and is entitled to the benefits
of, the Term Loan Agreement dated the date hereof between the Borrower and
the Bank, which Term Loan Agreement contains, among other things,
provisions for acceleration of the maturity hereof upon the happening of
certain stated events and for an increase in the interest rate upon the
occurrence of an Event of Default. The defined terms used herein shall
have the same meaning as used in the Term Loan Agreement.
The Borrower shall have the right to prepay the principal of this Term
Note, in whole or in part, prior to maturity without premium or penalty.
Any partial prepayments shall be applied to the principal payments in the
inverse order of their maturities.
The Borrower and all endorsers, sureties, guarantors and other persons
liable hereon or who may become liable for the payment hereof, severally
waive demand, presentment, notice of dishonor or nonpayment, notice of
protest and any and all lack of diligence in the enforcement hereof and
hereby assent to each and any extension or postponement of the time of
payment, at or after
10.8-25
<PAGE> 26
maturity, or other indulgence and hereby waive any and all notice thereof.
This Term Note shall be governed by, and construed in accordance with, the
laws of the State of Missouri.
IN WITNESS WHEREOF, Borrower has executed this Term Note as of the day and
year first hereinabove written.
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman/CE0
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
10.8-26
<PAGE> 27
COLLATERAL ASSIGNMENT
WHEREAS, TEAM FINANCIAL, INC., f/k/a TeamBanc, Inc. ("Company") and
COMMERCE BANK, N.A. ("Lender") have entered into a Term Loan Agreement
(the "Agreement") of even date herewith;
WHEREAS, the proceeds of the Term Loan to be extended to the Company under
the Agreement will be used by Company to fund a loan by Company to the
trustee (the "Trustee") of the TeamBanc, Inc. Employees Stock Ownership
Plan (the "Trust"), as established pursuant to the TeamBanc, Inc.
Employees Stock Ownership Plan dated as of November 6, 1992, as amended
from time to time (the "Plan"), pursuant to the agreement between the
Bank, the Company and the Trustee (the "Lending Agreement") and evidenced
by an ESOP Note (And Pledge Agreement) (the IIESOP Note") made by the
Trustee to Company and secured by a pledge of the common stock of Company
acquired by the Trust; and
WHEREAS, under the terms of the Agreement, Company agreed to pledge to
Lender the ESOP Note, and all common stock of Company from time to time
pledged thereunder, as collateral for its obligations under the Agreement.
NOW, THEREFORE, for valuable consideration, it is agreed as follows:
1. Company hereby pledges, assigns and transfers to Lender all its
right, title and interest in and to the ESOP Note and all common stock of
Company from time to time pledged thereunder.
2. Company agrees that all payments made by the Trust on the ESOP
Note shall be made directly to Lender and applied by Lender to the
obligations of the Trust on the ESOP Note, with a corresponding
application to the obligations of the Company under the Agreement.
3. Lender agrees to be bound by the terms of the ESOP Note with
respect to any required release of the common stock of Company pledged
thereunder.
10.8-27
<PAGE> 28
IN WITNESS WHEREOF, Company has executed this Collateral Assignment as of
the 21st day of August, 1997.
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
-------------------------
Title: Chairman & CEO
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
Acknowledged this 21st day of August, 1997
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
------------------------
Title: Senior Vice President
---------------------
10.8-28
<PAGE> 29
ESOP NOTE
(AND PLEDGE AGREEMENT)
$247,000 August 21, 1997
Principal and Interest Kansas City, Missouri
The undersigned promises to pay to the order of TEAM FINANCIAL, INC., a
Kansas corporation, the principal sum of Two Hundred Forty-Seven Thousand
Dollars ($247,000) payable in annual principal installments of $35,285.71
commencing December 31, 1998, and continuing on the last day of each
December thereafter, until December 31, 2004, when the outstanding
principal balance, together with accrued interest, shall be due and
payable in full. This ESOP Note shall bear interest at a per annum
variable rate equal to one percent (10-.) less than the Prime Rate, as
that term is defined in that certain Term Loan Agreement of even date
herewith between Team Financial, Inc. ("Company") and Commerce Bank, N.A.
("Bank"), and shall change with any change in the Prime Rate. Accrued
interest shall be payable quarterly, in arrears, commencing December 31,
1997, and continuing on the last day of each March, June, September and
December thereafter, until and including the due date of this ESOP Note.
Accrued interest shall be calculated on the actual number of days
outstanding based on a year consisting of 365 days.
The funds advanced hereunder are proceeds of a loan made to Company by
Bank pursuant to the Term Loan Agreement and all terms contained herein
shall have the same meaning as used in the Term Loan Agreement.
The loan evidenced by this ESOP Note is a refinancing of that certain
outstanding loan from UMB Bank Kansas "UMB"), which loan from UMB was made
for the purpose of enabling Trustee to acquire "qualifying employer
securities" as such term is defined in Section 408(e) of the Employee
Retirement Income Security Act of 1974, as amended, and Section 4975(d)(3)
of the Code.
The holder hereof may arrange, adjust (provided, however, no adjustment to
payment dates shall accelerate such payment dates) and extend the times
and amounts of payments of interest and/or principal under this ESOP Note
without notice to or consent of and without releasing any party liable
hereon. All parties hereto consent and agree to waive presentment for
payment, demand for payment, protest and notice of dishonor and to any
extensions, renewals or revisions hereof, and further consent to the
release of any party hereto or any collateral or security for the payment
of this ESOP Note without affecting their liability hereunder.
10.8-29
<PAGE> 30
To secure this ESOP Note the undersigned hereby pledges to the holder of
this ESOP Note the common stock of the Company acquired by the undersigned
with the proceeds of the UMB loan which, as of the date of this Agreement,
secures the repayment of such prior UMB loan ("Collateral"). Except with
respect to put options described in the ESOP Plan Documents (but limited
to stock released from the suspense account), at no time during the term
of this ESOP Note shall such stock be subject to any put, call, or other
option or any buy-sell or similar agreement.
The loan evidenced by this ESOP Note is without recourse against the
undersigned. Notwithstanding anything herein to the contrary, neither the
Company nor any other holder of this ESOP Note shall have any right to
assets of the Trust other than (a) the Collateral, (b) contributions
(other than contributions of securities of the Company) that are made to
the undersigned under the Trust to meet its obligations under this ESOP
Note, and (c) earnings attributable to the Collateral and the investment
of such contributions. The undersigned is not obligated to make any
payment of interest or principal on the ESOP Note except to the extent of
(i) the sum of all cash contributions theretofore received by it from the
Company to meet the undersigned's obligation on this ESOP Note and the
earnings attributable to the investment of such contributions, less (ii)
all payments of principal and interest theretofore made by the undersigned
on this ESOP Note.
Upon and to the extent of any failure by the undersigned to meet the
payment schedule of this ESOP Note, the holder hereof may at its option
require transfer of such of the Collateral as does not exceed the amount
of the payment default.
The fiscal year of the Plan (the "Plan Year") is January 1 through
December 31. For each Plan Year during the duration of the loan evidenced
by this ESOP Note, a portion of the pledged employer securities shall be
released from the pledge. The number of employer securities released will
equal the number of encumbered employer securities held immediately before
release for the current Plan Year multiplied by a fraction. The numerator
of the fraction is the amount of principal and interest paid during the
Plan Year. The denominator of the fraction is the sum of the numerator
plus the principal and interest to be paid for all future Plan Years. The
number of Plan Years taken into account hereunder shall be computed
without taking into account any possible extension or renewal periods of
the ESOP Note. For purposes of such calculation, the interest to be paid
in future years shall be computed by using the interest rate applicable as
10.8-30
<PAGE> 31
of the end of the Plan Year. In the event the employer securities are to
include more than one class of securities, the number of securities of
each class to be released for a Plan Year must be determined by applying
the same fraction to each class. At the request of the Trustee, the
Company shall execute and deliver to the Trustee a certificate or
certificates representing the number of pledged shares to be released each
Plan Year pursuant to the provisions of this paragraph.
The undersigned shall have the right to prepay the principal of this ESOP
Note, in whole or in part, prior to maturity without premium or penalty.
Any partial prepayments shall be applied to the monthly principal payments
in the inverse order of their maturities.
This ESOP Note is non-negotiable and it may not be negotiated or assigned
by any holder hereof without the written consent of the undersigned. The
undersigned by execution hereof consents to the negotiation and assignment
of this ESOP Note to the Bank. As used herein, the words "to the order of"
refer only to any subsequent holders for whom such written consent has
been given.
This ESOP Note shall be deemed to have been made and delivered in the
State of Missouri and shall be governed by, and construed in accordance
with, the laws of the State of Missouri. Until advised otherwise by the
Bank, this ESOP Note shall be payable at the offices of Bank at 1000
Walnut, Kansas City, Missouri.
10.8-31
<PAGE> 32
IN WITNESS WHEREOF, the undersigned has executed this ESOP Note as of the
day and year first hereinabove written.
TEAM FINANCIAL, INC., AS
TRUSTEE UNDER THE TEAMBANC, INC.
EMPLOYEES STOCK OWNERSHIP PLAN
By: /s/ Carolyn S. Jacobs
-------------------------
Title: Treasurer
----------------------
PAY TO THE ORDER OF
COMMERCE BANK, N.A.
WITH RECOURSE
TEAM FINANCIAL, INC.
By: /s/ Robert I Weatherbie
-----------------------
Title: Chairman & CEO
--------------------
10.8-32
<PAGE> 33
LENDING AGREEMENT
THIS LENDING AGREEMENT ("Agreement") is made and entered into as of
the 21st day of August, 1997, by and among COMMERCE BANK, N.A. ("Lender"),
TEAM FINANCIAL, INC., f/k/a TeamBanc, Inc. ("Company"), and TEAM
FINANCIAL, INC., f/k/a TeamBanc, Inc., as Trustee (the "Trustee") under
the TeamBanc, Inc. Employees Stock Ownership Plan, as established pursuant
to the TeamBanc, Inc. Employees Stock Ownership Plan dated as of November
6, 1992, as amended from time to time (the "Plan").
WITNESSETH:
WHEREAS, Lender has agreed to loan $247,000 to Company ("Loan"); and
WHEREAS, the parties hereto wish to restrict the use of the proceeds
of the Loan in the manner set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and promises herein contained, the adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
USE OF PROCEEDS BY COMPANY
Company agrees that the proceeds of the Loan shall be used for the
sole purpose of lending such proceeds to the Trustee, such loan to be
evidenced by that certain ESOP Note (And Pledge Agreement) of even
date herewith made by the Trustee to the Company (the "ESOP Note"),
for the sole purpose of enabling the Trustee to refinance a prior
loan for the purchase by the Plan of "qualifying employer
securities", as such term is defined in Section 408(e) of the
Employee Retirement Income Security Act of 1974, as amended, and
Section 4975(d) (3) of the Internal Revenue Code of 1986, as amended.
USE OF PROCEEDS BY TRUSTEE
The Trustee agrees to use the amount loaned to the Trustee by
Company, which amount represents the proceeds of the Loan, for the
sole purpose of refinancing that certain outstanding loan from UMB
Bank Kansas ("Prior ESOP Loan", which loan was made for the purpose
bf enabling Trustee to acquire "qualifying employer securities" as
defined above).
10.8-33
<PAGE> 34
PLEDGE OF SECURITIES
To secure the ESOP Note the Trustee hereby pledges and assigns to
Company or any holder of the ESOP Note all "qualifying employer
securities" which, as of the date of this Agreement, secured the
repayment of the Prior ESOP Loan. The Trustee acknowledges that the
ESOP Note and pledged "qualifying employer securities" will be
endorsed and assigned by Company to Lender as collateral for the Loan.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
written above.
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
------------------------
Title: Senior Vice President
---------------------
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
TEAM FINANCIAL, INC., as
Trustee Under the TeamBanc, Inc.
Employees Stock Ownership Plan
By: /s/ Robert I Weatherbie
------------------------
Title: Chairman & CEO
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
10.8-34
<PAGE> 1
EXHIBIT 10.9
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT ("Agreement") is made and entered into as of
the 30 day of September, 1997, by and between TEAM FINANCIAL, INC., a Kansas
corporation ("Company") and COMMERCE BANK, N.A., a national banking association
("Bank");
In consideration of the mutual benefits accruing to each of the
parties, the receipt and sufficiency of which is hereby acknowledged, and in
further consideration of the mutual performance of this Agreement, the parties
hereto agree as follows:
ARTICLE I
Definitions
1.01. Code. The Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder. It is understood that any
reference to the Bank's federal income tax means the Bank or any entity
that files a consolidated federal income tax return with Bank.
1.02. Prime-Rate. The per annum rate of interest established
from time to time by Bank for its own internal convenience as its
"Prime Rate", which when used to compute the rate of interest hereunder
shall change as of the date of any change in said Prime Rate; no
representation is made that the Prime Rate is the best, lowest or
favored rate of interest.
ARTICLE II
Term Loan
2.01. Amount. Subject to the terms of this Agreement, Bank
agrees to lend to Company the sum of $200,018 (the "Term Loan").
2.02. Term Note. On the Closing Date (hereinafter defined)
Company will execute and deliver its promissory note to Bank, in the
principal amount of $200,018, and in form and substance acceptable to
Bank (the "Term Note").
2.03. Interest. The Term Note will bear interest at a variable
per annum rate equal to one percent (1%) less than the Prime Rate.
Accrued interest shall be calculated on the actual number of days
outstanding based on a year consisting of 365 days, and shall be
payable quarterly, in arrears, commencing December 31, 1997, and
continuing on the last day of each March, June, September
10.09-1
<PAGE> 2
and December thereafter, until and including the due date of the Term
Note. Interest after or during the continuation of any Event of Default
under Section 7.01, shall be at a rate equal to three percent (311) in
excess of the Prime Rate.
2.04. Repayment. The principal of the Term Note shall be
payable in annual installments of $28,574 commencing December 31, 1998,
and continuing on the last day of each December thereafter, until
December 31, 2004, when the outstanding principal balance, together
with accrued interest, shall be due and payable in full.
2.05. Prepayment. Company may prepay the Term Note in full or
in part at any time without the payment of a prepayment fee. Any
partial prepayments shall be applied to the annual principal payments
in the inverse order of their maturities.
2.06. Purpose. Proceeds of the Term Loan shall be used to fund
a loan by Company to the trustee (the "Trustee") of the TeamBanc, Inc.
Employees Stock Ownership Plan (the "Trust"), as established pursuant
to the TeamBanc, Inc. Employees Stock Ownership Plan dated as of
November 6, 1992, as amended from time to time (the "Plan"), pursuant
to the agreement between the Bank, the Company and the Trustee (the
"Lending Agreement") and evidenced by a promissory note (the "ESOP
Note") made by the Trustee to Company.
ARTICLE III
Representations and Warranties
In borrowing hereunder the Company represents and warrants to Bank (which
representations and warranties will survive the delivery of the Term Note and
shall continue so long as any sums remain outstanding under the Term Note or
under this Agreement) that:
3.01. Authorization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Kansas and is duly qualified as a foreign corporation and is
in good standing in every other jurisdiction where failure to be so
qualified and in good standing would have a material adverse effect on
its business; the Company has all requisite corporate power and
authority to own and operate its properties and to carry on its
business as presently being conducted; the Company has the power to
enter into and to carry out the terms of this Agreement and to execute,
deliver and perform its obligations under this Agreement, the Term
Note, and any other instrument referred to or mentioned herein, and
said performance by the Company of its obligations has been duly
authorized by appropriate corporate
10.09-2
<PAGE> 3
proceedings, will not contravene any provisions of law, its Articles of
Incorporation, Bylaws, or any indenture, agreement or other instrument
binding upon the Company, and does not require the consent, approval or
authorization of any governmental agency or third party, except as
otherwise specifically provided herein.
3.02. Financial Condition. Except as provided in Schedule 3.02
attached hereto, the financial statements of Company dated as of
December 31, 1996, copies of which have been furnished to Bank, are
complete and correct and fairly and accurately present the financial
condition of Company as at such date and the results of the operations
of Company for the period covered by such statements, all in accordance
with generally accepted accounting principles consistently applied, and
there has been no material adverse change in the condition (financial
or otherwise), business or operations of Company subsequent thereto.
3.03. Taxes. The Company has filed all required federal, state
and local tax returns and has paid all taxes as shown on said returns
to be due including interest and penalties, or has provided adequate
reserves for the payment thereof. No tax claims have been asserted
against Company which remain unpaid or for which an adequate reserve
has not been established.
3.04. Litigation. Other than as set forth in Schedule 3.04
attached hereto, or as disclosed to Bank in writing prior to the date
hereof, the Company has no actions, suits or proceedings pending or, to
its knowledge, threatened against or affecting it or its properties
before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which, if determined
adverse to the Company, might have a material adverse effect on its
financial condition, properties or operations.
3.05. Liability. Except as set forth in Schedule 3.05 attached
hereto, the Company has no liabilities, direct or contingent, except
those disclosed in the financial statements described in Section 3.02
hereof, and those incurred since December 31, 1996 in the ordinary
course of the Company's business which have been disclosed in writing
to Bank. Company is not presently in default, and no event which, but
for the lapse of time or service of notice or both, would constitute a
default has occurred and is continuing under any agreement, indenture,
mortgage, security agreement or other instrument under which the
Company is directly or contingently liable or pursuant to which any of
the assets or properties of Company or any shares of its outstanding
capital stock
10.09-3
<PAGE> 4
is encumbered or affected in any way. All stock of the Company has
been validly issued and is fully paid and nonassessable.
3.06. Properties. Company has good, valid and marketable title
to all of its properties shown as assets on its balance sheet. All
properties are free and clear of all liens, mortgages, security
interests or other encumbrances except those which have been disclosed
to Bank in writing or disclosed on its balance sheet.
3.07. Guaranties. Company has no guaranties outstanding,
except those which have been disclosed to Bank in writing.
3.08. Other Agreements. Company is not a party to, subject to,
or bound by any contract, agreement, instrument, charter or corporate
restriction which materially adversely affects its ability to perform
its obligations under this Agreement, the Term Note or other documents
or instruments provided for herein.
3.09. Margin Stock. Company is not engaged in the business of
extending credit for the purpose of carrying margin stock within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System. If requested by Bank, Company will furnish to Bank a
statement in conformity with the requirements of Federal Reserve Form
U-1 referred to in Regulation U to the foregoing effect.
3.10 Use of Proceeds. The proceeds of the Term Loan shall be
loaned by Company to the Trustee of the Trust within the meaning of
Section 4975 (d) (3) of the Code for the acquisition of "employer
securities" (within the meaning of Section 409(1) of the code), the
proceeds of which shall be used by the Trust to acquire "employer
securities", and the terms and conditions of such loan by the Company
to the Trustee of the Trust shall comply with all laws and regulations
in respect thereto, including, to the extent applicable, but not
limited to, Regulation G of the Federal Reserve Board, the Code, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and regulations promulgated thereunder.
3.11 Plan Qualifications. The Plan is qualified under Section
401(a) of the Code, the Trust is exempt from tax under Section 501(a)
of the Code, and the consummation of the transactions under this
Agreement and the Lending Agreement will not constitute a prohibited
transaction.
3.12 Stock. Except as set forth in Schedule 3.12 attached
hereto, there are no outstanding stock warrants, options, convertible
securities or other agreements that could cause additional stock to be
issued or sold.
10.09-4
<PAGE> 5
3.13 Guarantor. The Guarantor (hereinafter defined) has
authority, and has completed all proceedings and obtained all approvals
and consents necessary, to execute, deliver and perform its obligations
under the Guaranty (hereinafter defined). The Guaranty when executed by
the Guarantor and delivered to Bank, shall constitute the legal, valid
and binding obligations of the Guarantor, enforceable in accordance
with its terms, except as affecting the enforcement of creditors'
rights generally. The Guaranty will not violate any provision of any
existing mortgage, indenture, contract or agreement binding on
Guarantor or affecting any of its properties, and will not result in,
or require, the creation or imposition of any lien on any of its
properties or revenues. No litigation, investigation or proceeding of
or before any arbitrator or governmental authority is pending or
threatened by or against the Guarantor or any of its properties or
revenues with respect to the Guaranty, or any of the transactions
contemplated hereby or thereby or which could have a material adverse
effect on the business, operations, assets or financial or other
condition of the Guarantor.
ARTICLE IV
Affirmative Covenants
The Company covenants and agrees that during the term of this
Agreement and until all of the principal amount of and interest due
under the Term Note shall have been paid in full, unless otherwise
agreed to by Bank in advance and in writing to the contrary, the
Company will duly perform and observe each and all of the covenants
and agreements hereinafter set forth:
4.01. Maintenance and Compliance with Laws. The Company will
maintain its corporate existence, rights and franchises and comply with
all applicable statutes, regulations and orders of, and all applicable
restrictions imposed by, all government bodies, and maintain and keep
its properties in good repair, working order and operating condition.
4.02. Financial Statements. Company will deliver to Bank the
following financial information of Company, Guarantor (hereinafter
defined) and Banks (hereinafter defined):
(a) Within sixty (60) days after the end of each fiscal
quarter of Company and Guarantor, the respective balance
sheets, profit and loss statements and net worth
reconciliations of Company and Guarantor for such accounting
period, and the results of operations since the beginning of
10.09-5
<PAGE> 6
the fiscal year, prepared in accordance with generally
accepted principles of accounting applied on a basis
consistent with that of the financial statements for the
preceding fiscal year and certified by the chief financial
officer or chief executive officer of Company and Guarantor,
respectively, as truly reflecting the respective financial
positions of Company and Guarantor as of the end of the
accounting period;
(b) Within ninety (90) days after the end of each fiscal year
of Company and Guarantor, the respective annual audited financial
statements of Company and Guarantor, prepared by independent certified
public accountants selected by Company and satisfactory to Bank in
conformity with generally accepted accounting principles applied on a
basis consistent with that of the financial statements for the
preceding fiscal year; and
(c) From time to time such further information regarding the
financial condition or business of Company, Guarantor and Banks as Bank
may reasonably request.
4.03. Inspection of Operations. Company shall permit such
persons designated by Bank to visit and inspect Company's properties,
operations, corporate books and financial records and to discuss
Company's affairs, finances and accounts with Company's principal
officers and independent public accountants, as may be requested from
time to time by Bank.
4.04. Insurance. Company shall maintain, at all times, such
insurance covering such risks as is customary for companies of similar
character, in amounts and with companies acceptable to Bank.
4.05. Payment of Indebtedness. Company shall pay or discharge
all indebtedness heretofore or hereafter incurred as the same shall
become due and payable and shall faithfully perform, observe and
discharge all covenants, conditions and obligations which are imposed
on it by any and all indentures and other agreements securing or
evidencing such indebtedness or pursuant to which such indebtedness is
issued.
4.06. Taxes and other Liens. The Company will pay and
discharge promptly all taxes, assessments, and other governmental
charges or levies imposed upon it or upon its income or upon any of its
property, real, personal or mixed, or upon any part thereof, as well as
all claims of any kind (including claims for labor, materials and
supplies) which, if unpaid, might by law become a lien or charge upon
any of its property; except any taxes, assessments or levies being
contested in good faith by appropriate
10.09-6
<PAGE> 7
legal proceedings and against which, if requested by the Bank, the
Company will set up reserves satisfactory to the Bank.
4.07. Notice of Defaults. Company shall notify Bank in writing
of any Event of Default (hereinafter defined) hereunder or of any fact,
condition, or event that, only with the giving of notice or passage of
time or both, would become an Event of Default. Company shall notify
Bank in writing of any default under any other indenture, agreement,
contract or other instrument to which Company is a party and of any
acceleration of the maturity of any material indebtedness of Company
which default or acceleration could have a material adverse effect on
Company, and Company shall take all necessary steps to remedy promptly
any such default, to protect against any such adverse claim, to defend
any such proceeding and to resolve all such controversies.
4.08. Data to Verify Compliance. Company shall promptly
provide Bank with such data as Bank shall reasonably request to verify
the truth of all warranties and representations and Company's
compliance with all covenants.
4.09. Contributions. Company will make contributions to the
Trust sufficient for the Trust to pay principal and accrued interest on
the ESOP Note in accordance with the schedule of payments set forth
therein (such contributions to be referred to herein as "Scheduled
Contributions"). In addition to the foregoing, and provided that no
Event of Default (hereinafter defined) has occurred or will occur,
Company may make contributions to the Trust in amounts adequate to
provide cash to, or to make other payments necessary in connection
with, terminating participants (such contributions to be referred to
herein as "Permitted Contributions"). If Company makes contributions in
an amount in excess of Scheduled Contributions (and Permitted
Contributions, if applicable) ("Excess Contributions"), Company shall
cause the Plan Administrator (as set forth in the Plan) to direct the
Trustee to use such Excess Contributions to prepay the ESOP Note.
4.10. Securities Restrictions. Company shall comply with all
restrictions regarding securities acquired with loan proceeds imposed
by the Internal Revenue Code and United States Treasury Regulations,
including, without limitation, restrictions concerning subjection of
the securities to a put, call or other option or buy-sell or similar
arrangement.
4.11. Notification. Company shall notify Bank promptly of any
governmental or judicial action or proceeding that relates directly or
indirectly to the qualification of the Plan under
10.09-7
<PAGE> 8
Sections 401(a) or 4975(e)(7) of the Code, or the participation of the
Trust in the transactions contemplated hereunder.
ARTICLE V
Negative Covenants
Without the prior written consent of Bank, during the term of this
Agreement or until all indebtedness of the Company to Bank has been
paid, whichever occurs last, Company covenants and agrees as follows:
5.01. Liens. Company will not create, incur, assume or suffer
to exist any security interest, mortgage, pledge, lien or other
encumbrance upon any of the Company's properties or assets, whether now
owned or hereafter acquired, except for those granted to Bank and
except such purchase money security interests created or granted by
Company in the ordinary course of its business, consistent with current
practices, and except such liens of taxes not in default or being
contested in good faith.
5.02. Fundamental Changes. Company will not amend its Articles
of Incorporation or Bylaws; wind up, liquidate, or dissolve itself;
reorganize, merge or consolidate with or into, or sell, transfer,
convey or lease all or any part of its property, to another person or
entity; sell or assign any accounts receivable; purchase or otherwise
acquire all or substantially all of the assets of any corporation,
partnership, or other entity, or any shares or similar interest in any
other corporate entity; or make any material change in the executive
management of the Company.
5.03. Conduct of Business. Company will not materially alter
the character in which Company conducts its business or the location of
such business or the nature of such business conducted at the date
hereof.
5.04. Funded Indebtedness. Company shall not incur additional
Funded Indebtedness (direct, indirect, contingent or otherwise) unless
such Funded Indebtedness is subordinated (in writing and in form and
substance satisfactory to Bank) in all respects to the indebtedness of
Company to Bank hereunder. For purposes of this Agreement, "Funded
Indebtedness" shall mean all indebtedness of Company for borrowed money
in excess of $250,000 (individually or in the aggregate) and which has
a maturity of one (1) or more years from the date of origin, plus all
Capitalized Leases (defined as any lease which is required to be
capitalized on the balance sheet of Company) and all guarantees of such
Funded
10.09-8
<PAGE> 9
Indebtedness of others, but excluding the indebtedness incurred by
Company in the ordinary course of business which includes (i) deposits,
(ii) Banker's Acceptances, (iii) repurchase agreements, (iv) purchases
of Federal Funds, and (v) Federal Reserve or Federal Home Loan Bank
borrowings made in the ordinary course of business, and pledges, liens
or encumbrances required to secure such indebtedness, provided that
Company shall have received Bank's prior written approval of, and with
respect to, the specific assets, or general class of assets, to be
pledged or encumbered by such pledges, liens or encumbrances.
5.05. Issuance of Additional Capital Stock. Company will not
issue any additional capital stock or securities convertible into
capital stock or any warrants or rights to purchase capital stock.
5.06. Investments. Company will not acquire for investment
purposes, investments that would not qualify as "customary and prudent
investments", consistent with the current investment practices of
Company.
5.07. Loans to Affiliates, Shareholders and the Trust. Company
will not directly or indirectly loan amounts to any affiliate or
shareholder of Company, or to any entity controlled by such an
affiliate or shareholder, or to the Trust (whether or not for the
purchase of additional employer securities).
5.08. Debt Payments to Shareholders. Except with respect to
unsubordinated debt permitted under Section 5.04 (b) above, Company
will not directly or indirectly make any payments with respect to any
indebtedness owing to an shareholders.
5.09. Dividends. Except to the extent consistent with past
practices, Company will not pay any cash dividends to shareholders of
Company.
5.10. Capital Expenditures. Company will not make any capital
expenditures other than those capital expenditures made in the ordinary
course of business, consistent with past Company practices.
5.11. Plan Amendments. No amendments will be made to the Plan
without the prior written consent of Bank, which consent shall not be
unreasonably withheld.
10.09-9
<PAGE> 10
ARTICLE VI
Collateral
The obligations and indebtedness of the Company to Bank hereunder or
under any other instrument shall be secured and supported by the
following ("Collateral"):
6.01. ESOP Note and Stock. Company shall pledge and endorse to
Bank the ESOP Note and any stock of Company from time to time pledged
as security to the ESOP Note. Such pledge shall be evidenced by a
Collateral Assignment in form and substance acceptable to Bank.
6.02. Bank Stock. Company shall pledge all stock, whether
common or preferred, of Iola Bank and Trust ("Iola Bank"), First
National Bank & Trust Co. (Parsons, Kansas) ("FNB") and TeamBank, N.A.
(Paola, Kansas) ("TeamBank") (said Iola Bank, FNB and TeamBank,
together with TeamBank Nebraska [hereinafter identified], to be
sometimes hereinafter collectively referred to as the "Banks") now
owned or hereafter acquired (together with the stock of TeamBank
Nebraska [hereinafter identified] the "Bank Stock"), which as of the
date hereof is as follows:
<TABLE>
<CAPTION>
Banks Type # Shares Ownership Percentage
----- ---- -------- --------------------
<S> <C> <C> <C>
Iola Bank Common 70,000 100.00%
FNB Common 18,000 100.00%
TeamBank Common 100,000 100.00%
</TABLE>
Company shall also pledge to Bank all of the outstanding stock, whether common
or preferred, of Team Financial Acquisition Subsidiary, Inc. ("Guarantor"). Such
pledges shall be evidenced by a "Collateral Pledge Agreement", in form and
substance acceptable to Bank, together with stock powers relating thereto.
6.03. Guaranty. There shall be delivered to Bank, as
additional support for the obligations and indebtedness of Company to
Bank (as well as all other obligations owing by Company to Bank, now
existing and hereafter arising), the unconditional, unlimited corporate
guarantee of Guarantor. The guaranty shall be evidenced by a Corporate
Guaranty in form and substance acceptable to Bank ("Guaranty").
Guarantor shall pledge all stock, whether common or preferred, of
TeamBank Nebraska (Bellevue, Nebraska) ("TeamBank Nebraska") now owned
or hereafter acquired, which as of the date hereof is as follows:
10.09-10
<PAGE> 11
<TABLE>
<CAPTION>
Ownership
Bank Type Shares Percentage
---- ---- ------ ----------
<S> <C> <C> <C>
TeamBank Nebraska Common 8,000 100.00%.
</TABLE>
Such pledge shall be evidenced by a "Collateral Pledge Agreement", in form and
substance acceptable to Bank, together with stock powers relating thereto.
6.04. Other Documents. Company agrees to furnish such
information and to execute such other documents or undertake any other
acts as may be reasonably necessary to perfect and maintain the
security interests contemplated by this Agreement, or as otherwise
reasonably requested by Bank from time to time.
ARTICLE VII
Defaults
7.01. Events of Default. The occurrence of one or more of the
following events ("Events of Default" or "Default") shall constitute a
Default by the Company hereunder:
(a) nonpayment of interest or principal hereunder when payment is due
as herein provided; or
(b) any representation or warranty made by the Company or Guarantor
herein or in any writing furnished in connection with or pursuant to
this Agreement shall prove to be false in any material respect as of
the date on which it is made; or
(c) a breach by Company in the performance or observance of any
agreement, term, covenant or condition contained herein (other than in
(a) above), and such breach shall not have been remedied within thirty
(30) days after written notice thereof shall have been given by Bank to
Company; or
(d) any report, certificate, financial statement or other instrument
furnished in connection with this Agreement shall prove to be false or
misleading in any material respect; or
(e) default in the performance of the obligations of the Company or
Guarantor on any other note, agreement (including but not limited to
security agreements), or obligations owed by the Company or Guarantor
to Bank, which default results in the acceleration of such obligation;
or
10.09-11
<PAGE> 12
(f) any default by the Company or Guarantor under any other contract
for borrowed money which entitles the obligee to accelerate the
maturity thereof, or any failure by the Company or Guarantor to/pay any
indebtedness when due, whether by acceleration or otherwise; or
(g) commencement by the Company or Guarantor of a voluntary case under
the Bankruptcy Act or similar law, federal or state, whether now or
hereafter existing; or a trustee or receiver shall be appointed for
Company or Guarantor or all or a substantial part of its properties in
any involuntary proceeding, or any court shall have taken any
jurisdiction of all or a substantial part of the properties of the
Company or Guarantor in any involuntary proceeding for the
reorganization, dissolution, liquidation or winding up of the business
of the Company or Guarantor and such trustee or receiver shall not be
discharged or such jurisdiction relinquished or vacated or stayed on
appeal or otherwise within thirty (30) days; or the Company or
Guarantor shall file a petition or answer consenting to or acquiescing
in a petition against it in bankruptcy or under any chapter of the
Bankruptcy Act or any similar law, state or federal, whether now or
hereafter existing, or such petition filed against the Company or
Guarantor shall be approved and not vacated or stayed within thirty
(30) days; or the Company or Guarantor shall become insolvent, or shall
make an assignment for the benefit of creditors or shall admit in
writing its inability to pay its debts generally as they become due, or
shall consent to the appointment of a receiver or trustee or liquidator
of all its properties or a substantial part thereof, or shall have
failed within thirty (30) days to pay a bond or otherwise discharge any
judgment or attachment which is not stayed on appeal or otherwise being
contested in good faith; or
(h) Company or Guarantor suffers any judgment, writ of attachment or
execution or similar process to be issued or levied against all or a
substantial part of its property and which is not released, stayed,
bonded or vacated within thirty (30) days; or
(i) The occurrence of a non-exempt "Prohibited Transaction", as defined
in Section 406 of ERISA or in Section 4975 of the Internal Revenue
Code, between the Plan and any other person or entity; or
(j) The failure of the Trust to maintain its status as a "tax exempt
trust" under Section 501 of the Internal Revenue Code, or
10.09-12
<PAGE> 13
the failure of the Plan to maintain its status as a qualified plan
under Section 401 or as an employee stock ownership plan under Section
4975 of the Code.
7.02. Remedies. Upon an Event of Default, Bank may accelerate
the maturity of the Term Loan, with or without notice, and Bank may
resort to any and all security and to any remedy existing at law or in
equity for the collection of the Term Note according to its tenor and
enforcement of the covenants and provisions hereof, and the Bank's
resort to any remedy shall not prevent the concurrent or subsequent
employment of any other remedy. In addition to the remedies provided
herein, in the event the Term Note is due and payable or upon an Event
of Default, the Bank shall have the right of setoff, without demand or
notice to anyone, against the funds of the Company on deposit with it.
Notwithstanding anything contained herein to the contrary, Bank shall
have no right of setoff or any claims to any shares of the common stock of
Company which Bank may be holding as custodian on behalf of the Trust or any
funds of the Trust deposited with Bank except such shares as are pledged to
secure the ESOP Note, but only to the extent permitted by law.
7.03. Expenses of Collection. All costs, expenses and
liabilities incurred by Bank in collecting or attempting to collect on
the Term Note, including costs and expenses incurred in proposing or
selling or otherwise deriving upon any security, and all reasonable
attorneys, fees in connection with such matters, shall constitute a
demand obligation of the Company and shall bear interest from the date
of expenditure until paid at the per annum rate of three percent (3%)
in excess of the Prime Rate.
7.04. Waiver. Any waiver of an Event of Default by Bank shall
not extend to or affect any subsequent Event of Default. No failure or
delay by Bank in exercising any right hereunder shall operate as a
waiver, nor shall any single or partial exercise of any right preclude
the exercise of any other right hereunder.
ARTICLE VIII
Closing; Conditions Precedent
8.01. Closing. "Closing" shall take place at Bank's principal
offices at 1000 Walnut Street, Kansas City, Missouri on September 1,
1997 (the "Closing Date").
10.09-13
<PAGE> 14
8.02. Conditions Precedent to Closing. As a condition
precedent to Closing, Company shall have delivered to Bank the
following documents:
(a) This Agreement and the Term Note, duly executed by the
Company;
(b) The Collateral Assignment, duly executed by the Company;
(c) A fully executed copy of the Lending Agreement;
(d) The Collateral Pledge Agreement, duly executed by the
Company, together with the applicable Bank Stock, and Stock Powers
(executed in blank);
(e) The Guaranty, duly executed by the Guarantor, together
with the applicable Collateral Pledge Agreement, the applicable Bank
Stock, and Stock Powers (executed in blank);
(f) Fully executed copies of all other documents required
under this Agreement and any of the other documents executed in
connection herewith, including, without limitation, the Collateral
Assignment;
(g) Certified copies of the Bylaws of the Company and
Guarantor, and of each resolution of the Company's and Guarantor's
respective Boards of Directors duly authorizing the execution and
delivery of the applicable loan documents and the Company's and
Guarantor's performance hereunder and thereunder;
(h) Certificates of Good Standing, dated not more than thirty
(30) days prior to the date of this Agreement, for the Company from the
Kansas Secretary of State, and the Guarantor from the Nebraska
Secretary of State, and, if specifically requested by Bank, from the
Secretary of State for each other jurisdiction where the nature of
Company's or Guarantor's respective businesses requires it to be
qualified as a foreign corporation;
(i) An opinion of counsel for Company dated the Closing Date,
in form and substance satisfactory to Bank, substantially to the effect
that (i) Company is a corporation duly organized and existing and in
good standing under the laws of the State of Kansas; (ii) Company has
adequate corporate power and authority to enter into and perform this
Agreement and the Term Note; (iii) that this Agreement, the Term Note,
the Collateral Assignment and the Collateral Pledge Agreement have been
duly authorized,
10.09-14
<PAGE> 15
executed and delivered by Company and are legal, valid and binding
instruments enforceable against the Company in accordance with their
respective terms, except as may be limited by laws of receivership,
insolvency and bankruptcy; (iv) that the Plan complies with all federal
and state laws and regulations, including, without limitation, the Code
and ERISA, and regulations promulgated thereunder; and (v) the Plan is
qualified under Section 401(a) of the Code, the Trust is exempt from
tax under Section 501(a) of the Code, and the consummation of the
transactions under this Agreement and the Lending Agreement will not
constitute a prohibited transaction; and
(j) Any other documents, instruments and reports as Bank shall
reasonably request.
Company shall be solely responsible for all costs incurred by it and/or Bank in
connection with satisfying any of the foregoing requirements.
ARTICLE IX
Miscellaneous
9.01. Payment on Holidays. Whenever any payment to be made
pursuant to this Agreement or the Term Note shall be stated to be due
on a public holiday, Saturday or Sunday, such payment may be made on
the next succeeding business day and such extension of time shall in
such case be included in computing interest, if any, in connection with
such payment.
9.02. Waivers. No omission or delay by the Bank in exercising
any right, power or privilege under this Agreement, the Term Note or
any other documents executed in connection herewith, will impair such
right, power or privilege or be construed to be a waiver of any Event
of Default or acquiescence therein and any single or partial exercise
of any right, power or privilege will not preclude other or further
exercise of any other right, power or privilege and no waiver will be
valid unless in writing and signed by Bank and then only to the extent
specified. All remedies herein by law afforded will be cumulative and
will be available to Bank until all indebtedness of Company is paid.
9.03. Binding Effect. This Agreement shall continue until
payment in full of all indebtedness owing hereunder and shall be
binding upon Company and its successors and assigns and shall be
10.09-15
<PAGE> 16
binding upon and inure to the benefit of Bank, its successors and
assigns.
9.04. Notices. Any notice, request, authorization, approval or
consent made hereunder shall be in writing and shall be personally
delivered or sent by registered or certified mail, and shall be deemed
given when delivered or postmarked and mailed postage prepaid to the
following addresses:
IF TO BANK: Commerce Bank, N.A.
1000 Walnut Street
P.O. Box 419248
Kansas City, Missouri 64141-6248
Attn: Mike Sobba
IF TO COMPANY: Team Financial, Inc.
One South Pearl
P.O. Box 402
Paola, Kansas 66071
Attn: Robert J. Weatherbie
Bank and Company may designate a change of address by notice given in accordance
with the provisions of this Subsection at least five (5) days before such change
is to become effective.
9.05. Amendments. The Company and Bank may from time to time
enter into written agreements supplemental hereto for the purpose of
modifying or adding any provision to this Agreement or changing the
rights and privileges of Bank or Company hereunder. Any such
supplemental agreement shall be binding upon the Company and the Bank
and their respective successors and assigns.
9.06. Headings. Article and Section headings in this Agreement
are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
9.07.Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or enforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.
10.09-16
<PAGE> 17
9.08. Governing Law. This Agreement and all related documents
will be governed by, and construed in accordance with, the laws of the
State of Missouri.
9.09. Counterpart Agreements. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same
agreement.
9.16. Statutory Notice. ORAL AGREEMENTS OR COMMITMENTS To LOAN
MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO
PROTECT YOU (BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE
CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.
BY SIGNING BELOW, YOU AND WE AGREE THAT THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN US.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
10.09-17
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers on the day and year first above written.
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
-------------------------------------
Title: Chairman & CEO
----------------------------------
By: /s/ Carolyn S. Jacobs
-------------------------------------
Title: Treasurer
----------------------------------
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
-------------------------------------
Title: Senior Vice President
----------------------------------
10.09-18
<PAGE> 19
SCHEDULE 3.02
(FINANCIAL CONDITION)
Company has provided supplemental financial information to Bank in the form of
June, 1997 "Y" Reports and call reports each subsidiary bank of TFI.
10.09-19
<PAGE> 20
SCHEDULE 3.04
(LITIGATION)
NONE
10.09-20
<PAGE> 21
SCHEDULE 3.05
(LIABILITIES)
Distributions from the TeamBanc, Inc. Employees' Stock Ownership Plan can be
made in the form of stock and, in accordance with the plan document and the
Internal Revenue Code, Team Financial, Inc. has an obligation to repurchase such
securities.
10.09-21
<PAGE> 22
SCHEDULE 3.12
(STOCK)
Company has previously provided documents relating to its Employee Stock
Purchase Plan acceptable to Bank.
10.09-22
<PAGE> 23
AMENDMENT ONE TO TERM LOAN AGREEMENT
THIS AGREEMENT ONE TO TERM LOAN AGREEMENT ("Amendment One") is entered
into as of the 31st day of October, 1997, by and between COMMERCE BANK, N.A.
("Bank") and TEAM FINANCIAL, INC. ("Company").
WITNESSETH:
WHEREAS, pursuant to the certain Term Loan Agreement dated as of
September 30, 1997, by and between Bank and Company ("Loan Agreement"), Bank
agreed to extend a Term to Company in the original principal amount of $200,018,
subject to certain terms, limitations and conditions contained therein;
WHEREAS, Company has requested that Bank amend one of the Affirmative
Covenants contained in the Loan Agreement; and
WHEREAS, Bank and Company have agreed to amend the Loan Agreement as
hereinafter set forth.
NOW, THEREFORE, for valuable consideration, Bank and Company do hereby
mutually agree as follows:
1. Terms used herein which are defined in the Loan Agreement shall have
the meanings given to them in the Loan Agreement.
2. Section 4.09 of the Loan Agreement is hereby amended to read in its
entirety as follows:
"Contributions. Company will make contributions to the Trust sufficient for the
Trust to pay principal and accrued interest on the ESOP Note in accordance with
the schedule of payments set forth therein (such contributions to be referred to
herein as "Scheduled Contributions"). In addition to the foregoing, and provided
that no Event of Default (hereinafter defined) has occurred or will occur,
Company may make contributions to the Trust (i) in amounts adequate to provide
cash to, or to make other payments necessary in connection with, terminating
participants, and/or (ii) in amounts to be maintained by the Trust "on deposit"
to meet the Trust's distribution and other ordinary course cash needs, provided
such sums "on deposit" shall not exceed $500,000 at any given time (such
contributions to be referred to herein as "Permitted Contributions"), Company
shall cause the Plan Administrator (as set forth in the Plan) to direct the
Trustee to use such Excess Contributions to prepay the ESOP Note.
3. Except as amended herein, all other terms, provisions, conditions
and obligations imposed under the terms of the Loan
10.09-23
<PAGE> 24
Agreement shall remain in full force and effect and are hereby ratified and
certified by Bank and Company.
4. This Amendment One shall be governed by, and construed in accordance
with, the laws of the State of Missouri.
IN WITNESS WHEREOF, Bank and Company have executed this Amendment One
as of the date first above written.
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
-------------------------------------
Title: Senior Vice President
----------------------------------
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
-------------------------------------
Title: Chairman and CEO
----------------------------------
By: /s/ Carolyn S. Jacobs
-------------------------------------
Title: Treasurer
----------------------------------
10.09-24
<PAGE> 25
TERM NOTE
$200,018 September 30, 1997
Principal and Interest Kansas City, Missouri
FOR VALUE RECEIVED, the undersigned, TEAM FINANCIAL, INC., a Kansas
corporation ("Borrower") hereby promises to pay to the order of COMMERCE BANK,
N.A. ("Bank") the principal sum of Two Hundred Thousand Eighteen Dollars
($200,018), payable in annual principal installments of $28,574 commencing
December 31, 1998, and continuing on the last day of each December thereafter,
until December 31, 2004, when the outstanding principal balance, together with
accrued interest, shall be due and payable in full. This Term Note shall bear
interest at a per annum variable rate equal to one percent (1%) less than the
Prime Rate (as that term is defined in the Term Loan Agreement hereinafter
identified), to change with any change in the Prime Rate. Accrued interest shall
be payable quarterly, in arrears, commencing December 31, 1997, and continuing
on the last day of each March, June, September and December thereafter, until
and including the due date of this Term Note. Accrued interest shall be
calculated on the actual number of days outstanding based on a year consisting
of 365 days. Both principal and interest are payable in lawful money of the
United States of America to Bank, at its offices at 1000 Walnut, Kansas City,
Missouri, in immediately available funds.
This Term Note is the one referred to in, and is entitled to the
benefits of, the Term Loan Agreement dated the date hereof between the Borrower
and the Bank, which Term Loan Agreement contains, among other things, provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and for an increase in the interest rate upon the occurrence of an Event
of Default. The defined terms used herein shall have the same meaning as used in
the Term Loan Agreement.
The Borrower shall have the right to prepay the principal of this Term
Note, in whole or in part, prior to maturity without premium or penalty. Any
partial prepayments shall be applied to the principal payments in the inverse
order of their maturities.
The Borrower and all endorsers, sureties, guarantors and other persons
liable hereon or who may become liable for the payment hereof, severally waive
demand, presentment, notice of dishonor or nonpayment, notice of protest and any
and all lack of diligence in the enforcement hereof and hereby assent to each
and any extension or postponement of the time of payment, at or after maturity,
or other indulgence and hereby waive any and all notice thereof.
10.09-25
<PAGE> 26
This Term Note shall be governed by, and construed in accordance with, the laws
of the State of Missouri.
IN WITNESS WHEREOF, Borrower has executed this Term Note as of the day and year
first hereinabove written.
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
-------------------------------------
Title: Chairman & CEO
----------------------------------
By: /s/ Carolyn S. Jacobs
-------------------------------------
Title: Treasurer
----------------------------------
10.09-26
<PAGE> 27
COLLATERAL ASSIGNMENT
WHEREAS, TEAM FINANCIAL, INC. ("Company") and COMMERCE BANK, N.A.
("Lender") have entered into a Term Loan Agreement (the "Agreement") of even
date herewith;
WHEREAS, the proceeds of the Term Loan to be extended to the Company
under the Agreement will be used by Company to fund a loan by Company to the
trustee (the "Trustee") of the TeamBanc, Inc. Employees Stock Ownership Plan
(the "Trust"), as established pursuant to the TeamBanc, Inc. Employees Stock
Ownership Plan dated as of November 6, 1992, as amended from time to time (the
"Plan"), pursuant to the agreement between the Bank, the Company and the Trustee
(the "Lending Agreement") and evidenced by an ESOP Note (And Pledge Agreement)
(the "ESOP Note") made by the Trustee to Company and secured by a pledge of the
common stock of Company to be acquired by the Trust; and
WHEREAS, under the terms of the Agreement, Company agreed to pledge to
Lender the ESOP Note, and all common stock of Company from time to time pledged
thereunder, as collateral for its obligations under the Agreement.
NOW, THEREFORE, for valuable consideration, it is agreed as follows:
1. Company hereby pledges, assigns and transfers to Lender all its
right, title and interest in and to the ESOP Note and all common stock of
Company from time to time pledged thereunder.
1
2. Company agrees that all payments made by the Trust on the ESOP Note
shall be made directly to Lender and applied by Lender to the obligations of the
Trust on the ESOP Note, with a corresponding application to the obligations of
the Company under the Agreement.
3. Lender agrees to be bound by the terms of the ESOP Note with respect
to any required release of the common stock of Company pledged thereunder.
10.09-27
<PAGE> 28
IN WITNESS WHEREOF, Company has executed this Collateral Assignment as
of the 30 day of September, 1997.
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
-------------------------------------
Title: Chairman & CEO
----------------------------------
By: /S/ Carolyn S. Jacobs
-------------------------------------
Title: Treasurer
----------------------------------
Acknowledged this 30th day of September, 1997.
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
-------------------------------
Title: Senior Vice President
----------------------------
10.09-28
<PAGE> 29
ESOP NOTE
(AND PLEDGE AGREEMENT)
$200,018 September 30, 1997
Principal and Interest Kansas City, Missouri
The undersigned promises to pay to the order of TEAM FINANCIAL, INC., a
Kansas corporation, the principal sum of Two Hundred Thousand Eighteen
Dollars ($200,018) payable in annual principal installments of $28,574
commencing December 31, 1998, and continuing on the last day of each
December thereafter, until December 31, 2004, when the outstanding
principal balance, together with accrued interest, shall be due and
payable in full. This ESOP Note shall bear interest at a per annum
variable rate equal to one percent (1%) less than the Prime Rate, as
chat term is defined in that certain Term Loan Agreement of even date
herewith between Team Financial, Inc. ("Company") and Commerce Bank,
N.A. ("Bank"), and shall change with any change in the Prime Rate.
Accrued interest shall be payable quarterly, in arrears, commencing
December 31, 1997, and continuing on the last day of each March, June,
September and December thereafter, until and including the due date of
this ESOP Note. Accrued interest shall be calculated on the actual
number of days outstanding based on a year consisting of 365 days.
The funds advanced hereunder are proceeds of a loan made to Company by
Bank pursuant to the Term Loan Agreement and all terms contained herein
shall have the same meaning as used in the Term Loan Agreement.
The holder hereof may arrange, adjust (provided, however, no adjustment
to payment dates shall accelerate such payment dates) and extend the
times and amounts of payments of interest and/or principal under this
ESOP Note without notice to or consent of and without releasing any
party liable hereon. All parties hereto consent and agree to waive
presentment for payment, demand for payment, protest and notice of
dishonor and to any extensions, renewals or revisions hereof, and
further consent to the release of any party hereto or any collateral or
security for the payment of this ESOP Note without affecting their
liability hereunder.
10.09-29
<PAGE> 30
To secure this ESOP Note the undersigned hereby pledges to the holder
of this ESOP Note the common stock of the Company acquired by the
undersigned with the proceeds of this ESOP Note ("Collateral"). Except
with respect to put options described in the ESOP Plan Documents (but
limited to stock released from the suspense account), at no time during
the term of this ESOP Note shall such stock be subject to any put,
call, or other option or any buy-sell or similar agreement.
The loan evidenced by this ESOP Note is without recourse against the
undersigned. Notwithstanding anything herein to the contrary, neither
the Company nor any other holder of this ESOP Note shall have any right
to assets of the Trust other than (a) the Collateral, (b) contributions
(other than contributions of securities of the Company) that are made
to the undersigned under the Trust to meet its obligations under this
ESOP Note, and (c) earnings attributable to the Collateral and the
investment of such contributions. The undersigned is not obligated to
make any payment of interest or principal on the ESOP Note except to
the extent of W the sum of all cash contributions theretofore received
by it from the Company to meet the undersigned's obligation on this
ESOP Note and the earnings attributable to the investment of such
contributions, less (ii) all payments of principal and interest
theretofore made by the undersigned on this ESOP Note.
Upon and to the extent of any failure by the undersigned to meet the
payment schedule of this ESOP Note, the holder hereof may at its option
require transfer of such of the Collateral as does not exceed the
amount of the payment default.
The fiscal year of the Plan (the "Plan Year") is January 1 through
December 31. For each Plan Year during the duration of the loan
evidenced by this ESOP Note, a portion of the pledged employer
securities shall be released from the pledge. The number of employer
securities released will equal the number of encumbered employer
securities held immediately before release for the current Plan Year
multiplied by a fraction. The numerator of the fraction is the amount
of principal and interest paid during the Plan Year. The denominator of
the fraction is the sum of the numerator plus the principal and
interest to be paid for all future Plan Years. The number of Plan Years
taken into account hereunder shall be computed without taking into
account any possible extension or renewal periods of the ESOP Note. For
purposes of such calculation, the interest to be paid in future years
shall be computed by using the interest rate applicable as of the end
of the Plan Year. In the event the employer securities
10.09-30
<PAGE> 31
are to include more than one class of securities, the number of
securities of each class to be released for a Plan Year must be
determined by applying the same fraction to each class. At the request
of the Trustee, the Company shall execute and deliver to the Trustee a
certificate or certificates representing the number of pledged shares
to be released each Plan Year pursuant to the provisions of this
paragraph.
The undersigned shall have the right to prepay the principal of this
ESOP Note, in whole or in part, prior to maturity without premium or
penalty. Any partial prepayments shall be applied to the monthly
principal payments in the inverse order of their maturities.
This ESOP Note is non-negotiable and it may not be negotiated or
assigned by any holder hereof without the written consent of the
undersigned. The undersigned by execution hereof consents to the
negotiation and assignment of this ESOP Note to the Bank. As used
herein, the words "to the order of" refer only to any subsequent
holders for whom such written consent has been given.
This ESOP Note shall be deemed to have been made and delivered in the
State of Missouri and shall be governed by, and construed in accordance
with, the laws of the State of Missouri. Until advised otherwise by the
Bank, this ESOP Note shall be payable at the offices of Bank at 1000
Walnut, Kansas City, Missouri.
IN WITNESS WHEREOF, the undersigned has executed this ESOP Note as of the day
and year first hereinabove written.
TEAM FINANCIAL, INC., AS
TRUSTEE UNDER THE TEAMBANC, INC.
EMPLOYEES STOCK OWNERSHIP PLAN
By: /s/ Carolyn S. Jacobs
-------------------------------------
Title: Treasurer
----------------------------------
PAY TO THE ORDER OF
COMMERCE BANK, N.A.
WITH RECOURSE
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
----------------------------
Title: Chairman & CEO
10.09-31
<PAGE> 32
LENDING AGREEMENT
THIS LENDING AGREEMENT ("Agreement") is made and entered into as of the
30 day of September, 1997, by and among COMMERCE BANK, N.A. ("Lender"),
TEAM FINANCIAL, INC. ("Company"), and TEAM FINANCIAL, INC., as Trustee
(the "Trustee") under the TeamBanc, Inc. Employees Stock ownership
Plan, as established pursuant to the TeamBanc, Inc. Employees Stock
Ownership Plan dated as of November 6, 1992, as amended from time to
time (the "Plan").
WITNESSETH:
WHEREAS, Lender has agreed to loan $200,018 to Company ("Loan"); and
WHEREAS, the parties hereto wish to restrict the use of the proceeds of
the Loan in the manner set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and promises herein contained, the adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
USE OF PROCEEDS BY COMPANY
Company agrees that the proceeds of the Loan shall be used for the sole
purpose of lending such proceeds to the Trustee, such loan to be
evidenced by that certain ESOP Note (And Pledge Agreement) of even date
herewith made by the Trustee to the Company (the "ESOP Note"), for the
sole purpose of enabling the Trustee to finance the purchase by the
Plan of "qualifying employer securities", as such term is defined in
Section 408(e) of the Employee Retirement Income Security Act of 1974,
as amended, and Section 4975(d)(3) of the Internal Revenue Code of
1986, as amended.
USE OF PROCEEDS BY TRUSTEE
The Trustee agrees to use the amount loaned to the Trustee by Company,
which amount represents the proceeds of the Loan, for the sole purpose
of enabling Trustee to acquire "qualifying employer securities" as
defined above).
PLEDGE OF SECURITIES
To secure the ESOP Note the Trustee hereby pledges and assigns to
Company or any holder of the ESOP Note all "qualifying employer
securities" the acquisition of which has been financed with the
10.09-32
<PAGE> 33
proceeds of the ESOP Note. The Trustee acknowledges that the ESOP Note
and pledged "qualifying employer securities" will be endorsed and
assigned by Company to Lender as collateral for the Loan.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
written above.
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
-------------------------------------
Title: Senior Vice President
----------------------------------
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
-------------------------------------
Title: Chairman & CEO
----------------------------------
By: /s/ Carolyn S. Jacobs
-------------------------------------
Title: Treasurer
----------------------------------
TEAM FINANCIAL, INC., as
Trustee Under the TeamBanc, Inc.
Employees Stock Ownership Plan
By: /s/ Robert J. Weatherbie
-------------------------------------
Title: Chairman / CEO
----------------------------------
By: /s/ Carolyn S. Jacobs
-------------------------------------
Title: Treasurer
----------------------------------
10.09-33
<PAGE> 1
EXHIBIT 10.10
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of the 9 day of August, 1997, by and
between TEAM FINANCIAL, INC., a Kansas corporation having its principal
place of business at One South Pearl, P.O. Box 402, Paola, Kansas 66071
("Holding Company") and COMMERCE BANK, N.A., a national banking
association having its principal place of business at 1000 Walnut Street,
P.O. Box 419248, Kansas City, Missouri 64141-6248 ("Commerce Bank").
In consideration of the mutual benefits accruing to each of the parties,
the receipt and sufficiency of which are hereby acknowledged, and in
further consideration of the premises, covenants and representations
contained herein, Commerce Bank and Holding Company agree as follows:
ARTICLE I
Definitions
1.1 Defined Terms. The following terms used in this Loan Agreement
shall have the following meanings, unless the context requires otherwise:
"Bank Liabilities" means and includes all present and future liabilities
and obligations owed by Holding Company to Commerce Bank, of every kind or
description, now existing or hereafter created or incurred, matured or
unmatured, direct or indirect, absolute or contingent, joint or several or
joint and several, including any extensions or renewals thereof and
substitutions therefor, whether similar or dissimilar to the Loan (as
hereinafter defined) made hereunder, including but not limited to the
liabilities and obligations of Holding Company under the Note (as
hereinafter defined) and Collateral Pledge Agreement (as hereinafter
defined), and all other liabilities and obligations of Holding Company
hereunder, and all expenses of any kind incurred by Commerce Bank in
connection with the collection of Bank Liabilities.
"Closing Date" means August 9, 1997, at Kansas City, Missouri.
"Loan Documents" means the Note, the Collateral Pledge Agreement(s) (as
hereinafter defined), the Corporate Guaranty (as hereinafter defined) and
any other documents which are required pursuant to the terms of this Loan
Agreement.
10.10-1
<PAGE> 2
"Note" means the Term Note of Holding Company in form and substance
satisfactory to Commerce Bank.
"Prime Rate" means that rate of interest established from time to time by
Commerce Bank for its own internal convenience as its Prime Rate, which
when used to compute the rate of interest hereunder shall change as of the
day of any change in said Prime Rate; no representation is made that the
Prime Rate is the best, lowest or favored rate of interest.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles in effect from time to time.
ARTICLE II
Loan
2.1 General Terms. Subject to the terms of this Loan Agreement,
Commerce Bank will lend Holding Company the maximum principal sum of Nine
Million Three Hundred Thirty-Nine Thousand Dollars ($9,339,000) ("Loan").
The Loan shall be funded in one or more advances, at the option of Holding
Company, provided, however, Commerce Bank shall have no obligation to make
any advances with respect to the Loan on or after the Maturity Date
(hereinafter defined).
2.2 Note. Holding Company agrees to execute and deliver to Commerce
Bank the Note to evidence the Loan. The Note shall be due and payable as
provided in this Loan Agreement and upon the terms provided in the Note.
2.3 Repayment. Principal under the Loan shall be due and payable in
full on June 30, 1998 ("Maturity Date"). Interest shall be due and
payable, in arrears, commencing December 31, 1997, and continuing on the
last day of March thereafter, until and including the Maturity Date. All
payments made hereunder will be applied first to interest and then to
principal.
2.4 Interest. The principal balance of the Loan, from time to time
outstanding, will bear interest at a per annum variable rate equal to one
percent (1%) less than the Prime Rate. Interest shall be calculated on the
actual number of days elapsed on the basis of a 365-day year. The
principal balance of the Loan shall bear interest after the Maturity Date
at the per annum rate of three percent (3%) in excess of the Prime Rate,
but not to exceed the maximum rate allowed by law.
10.10-2
<PAGE> 3
2.5 Prepayment. Holding Company may, at any time, make principal
prepayments on the Note, without penalty. Such prepayments shall be made
in amounts of not less than $50,000.
2.6 Loan Purpose. Proceeds of the Loan shall be used by Holding
Company to refinance its debt currently outstanding with UMB Bank Kansas,
and to finance the purchase and capitalization of Mercantile
Bank/Roosevelt Savings branches located in Lamar and Nevada, Missouri.
ARTICLE III
Collateral
3.1 Collateral. Payment of the Bank Liabilities will be supported by
the following until all Bank Liabilities hereunder are repaid: Holding
Company shall pledge to Commerce Bank all of the outstanding stock,
whether- common or preferred, of Iola Bank and Trust ("Iola Bank"), First
National Bank & Trust Co. (Parsons, Kansas) ("FNB") and TeamBank, N.A.
(Paola, Kansas) ("TeamBank") (said Iola Bank, FNB and TeamBank, together
with TeamBank Nebraska [hereinafter identified], to be sometimes
hereinafter collectively referred to as the "Banks") now owned or
hereafter acquired (together with the stock of TeamBank Nebraska
[hereinafter identified] the "Bank Stock"), which as of the date hereof is
as follows:
<TABLE>
<CAPTION>
Banks Type # Shares Ownership Percentage
--------------------------------------------------------------------
<S> <C> <C> <C>
Iola Bank Common 70,000 100.00%
FNB Common 18,000 100.00%
TeamBank Common 100,000 100.00%
</TABLE>
Holding Company shall also pledge to Commerce Bank all of the outstanding
stock, whether common or preferred, of Team Financial Acquisition Subsidiary,
Inc. ("Guarantor"). Such pledges shall be evidenced by a "Collateral Pledge
Agreement", in form and substance acceptable to Commerce Bank, together with
stock powers relating thereto.
3.2 Corporate Guaranty. The payment of the Bank Liabilities shall be
further supported by the unconditional, unlimited corporate guarantee
Guarantor. The guaranty shall be evidenced by a "Corporate Guaranty" in
form and substance acceptable to Commerce Bank. Guarantor shall pledge all
stock, whether common or preferred, of TeamBank Nebraska (Bellevue,
Nebraska) ("TeamBank Nebraska") now owned or hereafter acquired, which as
of the date hereof is as follows:
10.10-3
<PAGE> 4
<TABLE>
<CAPTION>
Banks Type # Shares Ownership Percentage
--------------------------------------------------------------------
<S> <C> <C> <C>
TeamBank Nebraska Common 8,000 100.00%
</TABLE>
Such pledge shall be evidenced by a "Collateral Pledge Agreement", in
form and substance acceptable to Commerce Bank, together with stock powers
relating thereto.
3.3 Other Documents. Holding Company agrees to furnish such
information and to execute such other documents or undertake any other
acts as may be reasonably necessary to perfect and maintain the security
interests contemplated by this Loan Agreement, or as otherwise reasonably
requested by Commerce Bank from time to time.
ARTICLE IV
Representations and Warranties
4.1 Authorization. Holding Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Kansas, and is duly qualified as a corporation and is in good standing in
every other jurisdiction where failure to be so qualified and in good
standing would have a material adverse effect on its business; Holding
Company has all requisite corporate power and authority to own and operate
its business as is presently being conducted; Holding Company has the
corporate power to enter into and to carry out the terms of this Loan
Agreement and to execute, deliver and perform its obligations under this
Loan Agreement and the applicable Loan Documents, all of which have been
duly authorized by all proper and necessary corporate actions, and when
signed and delivered pursuant hereto for value received, will constitute
valid and legally binding obligations of Holding Company on whose behalf
such Loan Agreement and applicable Loan Documents are executed and will be
enforceable in accordance with their respective terms; and the performance
by Holding Company of the obligations contained in this Loan Agreement and
the applicable Loan Documents will not contravene any provisions of law,
articles of incorporation, bylaws, indentures, agreements or other
instruments binding upon Holding Company.
4.2 Financial Statements. The financial statements of Holding Company
and the Banks heretofore delivered to Commerce Bank are complete, fairly
present their respective financial conditions and the results of their
respective operations as of the dates specified therein and for the
periods then ended, and were prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved except as
10.10-4
<PAGE> 5
otherwise indicated in the notes thereto. There are no liabilities, direct
or indirect, fixed or contingent, of Holding Company or Banks (or any of
them) as of the date of the most current balance sheet included in said
financial statements which are not reflected therein or in the notes
thereto. There has been no material adverse change in the financial
conditions of Holding Company or Banks (or any of them) since the date of
the most current balance sheets. Holding Company and Banks maintain their
respective books on a fiscal year ending on December 31st of each year.
4.3 Taxes. Holding Company and Banks have filed all required federal,
state and local tax returns and have paid all taxes as shown on said
returns to be due. No tax claims have been asserted against Holding
Company or Banks (or any of them) which remain or for which they have not
adequately reserved.
4.4 Litigation. There are no actions, suits or proceedings pending
or, to the knowledge of Holding Company, threatened or affecting Holding
Company or Banks (or any of them) or any of their respective properties
before any court or governmental department, or instrumentality, which, if
determined adversely to Holding Company or Banks (or any of them) could
have a material adverse effect on the financial conditions, properties or
operations of Holding Company or Banks (or any of them), except as
previously set forth in writing to Commerce Bank.
4.5 Liability. Holding Company and Banks have no liabilities, direct
or contingent, except those disclosed in the quarterly prepared financial
statements above mentioned in Section 4.2. Holding Company and Banks are
not in default, nor does there exist an event which, except for the lapse
of time or service of notice or both, would constitute a default under any
agreement, indenture, mortgage, security agreement or other instrument
under which Holding Company or Banks (or any of them) are directly or
contingently liable or pursuant to which any of the assets or properties
of Holding Company or Banks or any shares of their outstanding capital
stock are encumbered or affected in any way.
4.6 Title and Liens. At the time of execution and delivery of this
Loan Agreement, Holding Company and Banks have good, valid and marketable
title of record to all of their respective properties, and all of the
respective properties of Holding Company and Banks are free and clear of
all mortgages, liens, pledges, charges and other security interests except
those granted to Commerce Bank, those disclosed to Commerce Bank in
writing, and/or those permitted under this Loan Agreement.
10.10-5
<PAGE> 6
4.7 Stock. The Bank Stock to be pledged to Commerce Bank pursuant to
Sections 3.1 and 3.2 hereof constitutes all of the authorized, issued and
outstanding shares of capital stock of Banks. The transfer of the Bank
Stock to Commerce Bank as a secured lender hereunder is valid and binding
and such transfer complies with all applicable Federal and State laws and
regulations.
4.8 Other. All statements by Holding Company contained in any
certificate, statement or other instrument of a material nature delivered
by or on behalf of it, at any time pursuant to this Loan Agreement, shall
constitute representations and warranties made by Holding Company as of
the date of delivery.
4.9 Regulation U. No part of the proceeds of any borrowing hereunder
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock or
to reduce or retire any indebtedness incurred for any such purpose. If
requested by Commerce Bank, Holding Company will furnish to Commerce Bank
a statement in conformity with the requirements of Federal Reserve Form
U-1 referred to in Regulation U to the foregoing effect.
4.10 Guarantor. The Guarantor has authority, and has completed all
proceedings and obtained all approvals and consents necessary, to execute,
deliver and perform its obligations under the Corporate Guaranty. The
Corporate Guaranty when executed by the Guarantor and delivered to Bank,
shall constitute the legal, valid and binding obligations of the
Guarantor, enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally. The execution, delivery and
performance by the Guarantor of the Corporate Guaranty will not violate
any provision of any existing mortgage, indenture, contract or agreement
binding on Guarantor or affecting any of its properties, and will not
result in, or require, the creation or imposition of any lien on any of
its properties or revenues. No litigation, investigation or proceeding of
or before any arbitrator or governmental authority is pending or
threatened by or against the Guarantor or any of its properties or
revenues with respect to the Corporate Guaranty, or any of the
transactions contemplated hereby or thereby or which could have a material
adverse effect on the business, operations, assets or financial or other
condition of the Guarantor.
10.10-6
<PAGE> 7
ARTICLE V
Affirmative Covenants
Holding Company covenants and agrees that until all Bank Liabilities
hereunder are paid, Holding Company will duly perform and observe each and
all of the covenants and agreements hereinafter set forth, unless Commerce
Bank shall otherwise consent in writing.
5.1 Payment of Taxes and Claims; Corporate Existence; Compliance with
Laws. Holding Company will:
(a) Pay and discharge prior to delinquency all debts, accounts,
liabilities, assessments, and governmental charges or levies imposed upon
Holding Company or Banks (or any of them), or upon the income or profits
of Holding Company or Banks (or any of them), or upon any properties
belonging to Holding Company and/or Banks (or any of them), or upon any
part thereof as well as all claims of any kind (including claims for
labor, materials and supplies) which, if unpaid, might by law become a
lien or charge upon any property of Holding Company or Banks (or any of
them); provided, however, neither Holding Company or any of the Banks
shall be required to pay any taxes, assessments or governmental charges
being contested in good faith by appropriate legal proceedings diligently
pursued and against which, if requested by Commerce Bank, reserves
satisfactory to Commerce Bank have been made therefor;
(b) Do all things necessary to preserve and keep in full force and
effect the corporate existence, rights, franchises and privileges of
Holding Company, Guarantor and Banks; and
(c) Comply with all applicable statutes, regulations and orders of,
and all applicable restrictions imposed by, any governmental authority,
the noncompliance with which would materially adversely affect its
business or credit, or the business or credit of Banks.
5.2 Financial Records. Holding Company will deliver to Commerce Bank
the following financial information of Holding Company, Guarantor and
Banks:
(a) Within sixty (60) days after the end of the each fiscal quarter of
Holding Company and Guarantor, the respective balance sheets, profit and
loss statements and net worth reconciliations of Holding Company and
Guarantor for such accounting period, and the results of operations since
the beginning of the fiscal year, prepared in accordance with generally
accepted principles of
10.10-7
<PAGE> 8
accounting applied on a basis consistent with that of the financial
statements for the preceding fiscal year and certified by the chief
financial officer or chief executive officer of Holding Company and
Guarantor, respectively, as truly reflecting the respective financial
positions of Holding Company and Guarantor as of the end of the accounting
period;
(b) Within ninety (90) days after the end of each fiscal year of
Holding Company and Guarantor, the respective annual audited financial
statements of Holding Company and Guarantor, prepared by independent
certified public accountants selected by Holding Company and satisfactory
to Commerce Bank in conformity with generally accepted accounting
principles applied on a basis consistent with that of the financial
statements for the preceding fiscal year; and
(c) From time to time such further information regarding the
financial condition or business of Holding Company, Guarantor and Banks as
Commerce Bank may reasonably request.
5.3 Asset and Loan Reviews. Holding Company shall cause Banks to
permit Commerce Bank, by any of its designated representatives, to perform
an asset and loan review of Banks at least on an annual basis and at such
other time or times as Commerce Bank may reasonably request, and Commerce
Bank shall have access to the same materials and information which would
be available to federal and state examiners; upon the written request of
Commerce Bank, Holding Company shall reimburse Commerce Bank for all
expenses reasonably incurred by Commerce Bank in performing such reviews
(not to exceed $5,000 in the aggregate on an annual basis).
5.4 Watch Lists of Problem Loans. Holding Company shall provide to
Commerce Bank, Banks' respective internally generated watch lists of
"problem loans" (loss, doubtful, substandard or special mention) within
thirty (30) days after the end of each calendar year, or more frequently
if requested by Commerce Bank.
5.5 Call Reports. Holding Company shall provide to Commerce Bank
complete Call Reports of Banks within forty-five (45) days after the end
of each calendar quarter, with all exhibits attached, as provided to the
appropriate bank regulators; the first such Call Report required hereunder
shall be due within forty-five (45) days after September 30, 1997.
5.6 F.R.Y-6 Annual Reports. Holding Company shall provide to Commerce
Bank a copy of Holding Company's and Guarantor's respective Form F.R. Y-6
Annual Reports (which is to be submitted
10.10-8
<PAGE> 9
to the Federal Reserve) within three (3) months after the end of each
fiscal year; the first such F.R. Y-6 Annual Report required hereunder
shall be due on or before March 31, 1998.
5.7 Regulatory Requirements. Holding Company shall advise Commerce
Bank promptly of any requirement of any regulatory agency with regard to
any affirmative action required of, or restrictions placed upon, Banks (or
any of them) as the result of examinations, memoranda of understanding or
cease and desist orders, and with respect to such requirements, Holding
Company shall:
(a) Report in writing at least monthly the actions which have been
taken by the applicable Bank(s) to comply with such requirements; and
(b) Report in writing any change in said requirements of any
regulatory agency within ten (10) days after receipt of notice by Holding
Company of said change.
5.8 Change of Control; Executive Officers. Holding Company shall
notify Commerce Bank promptly of any intended transfer of stock of Holding
Company which may involve a "change of control" of Holding Company, as
defined by applicable Federal statutes and regulations, as soon as Holding
Company becomes aware thereof. Holding Company shall notify Commerce Bank
promptly of any change in the chief executive officer and/or chief
financial officer of Holding Company or Banks.
5.9 Properties: Insurance; Bonds: Reserves. Holding Company shall
maintain, and shall cause Banks to maintain, their respective physical
properties in good repair and condition. Holding Company shall cause Banks
to maintain insurance with reputable insurance companies or associations
(i) with limits of liability no less than, (ii) with deductible amounts no
greater than, and (iii) covering at least those risks included within the
scope of coverage of, the insurance policies carried by Banks on the date
hereof; provided, however, Holding Company and/or Banks may change such
insurance coverages subject to Commerce Bank's prior written consent,
which consent shall not be unreasonably withheld or delayed. Holding
Company shall notify Commerce Bank promptly of any change or contemplated
change in the coverage provided by any banker's blanket bond for Banks.
Holding Company shall maintain, and shall cause Banks to maintain,
reserves for real or contingent liabilities in such amounts as may be
deemed proper in accordance with sound banking practices.
10.10-9
<PAGE> 10
5.10 Notification. Holding Company shall notify Commerce Bank
promptly of any material adverse change which has occurred or which is
reasonably anticipated in the business, operations, property or financial
or other conditions of Holding Company or Banks (or any of them). Holding
Company shall notify Commerce Bank as soon as possible (and in any event
within ten (10) days) after the occurrence of each Event of Default (as
hereinafter defined), and each event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default, and Holding
Company shall also provide to Commerce Bank the statement of Holding
Company setting forth the details of such Event of Default or such other
event, and the action which Holding Company proposes to take with respect
thereto. Holding Company shall notify Commerce Bank promptly of any
material default by Holding Company, Guarantor or Banks (or any of them)
under any indenture, agreement, contract or other instrument to which any
of them are a party or by which any of them are bound, or of any
acceleration of maturity of any indebtedness owing by any of them, or of
any adverse claim asserted against any of them, or any litigation or
proceedings involving any of them, any of which might have a material
adverse effect upon Holding Company's or Banks' respective financial
conditions or on Holding Company's ability to make payments on the Note,
and Holding Company shall, and shall cause Banks to, take all such steps
as are necessary or appropriate to promptly remedy any default and to
protect against any such adverse claim and to defend any such litigation
or proceedings and to resolve all controversies on account of any thereof.
5.11 Capital-to-Assets Ratio, Tangible Shareholders, Equity. Holding
Company shall cause Banks to maintain at all times a ratio of total
capital to assets of not less than 6.5%, and tangible shareholders, equity
at or above minimum levels established by federal or state banking
regulators. For purposes hereof, "tangible shareholders, equity" shall
mean the aggregate amount of common and preferred stated capital of the
applicable Bank, retained earnings and all surplus accounts of the
applicable Bank, excluding goodwill created in accounting for acquisitions
and other capital write-ups, as determined in accordance with generally
accepted accounting principles.
5.12 Other Information. Holding Company shall provide to Commerce
Bank such other information respecting the shareholders or the business,
properties, condition or operations of Holding Company, Guarantor and/or
Banks, as Commerce Bank may from time to time reasonably request.
10.10-10
<PAGE> 11
ARTICLE VI
Negative Covenants
Holding Company covenants and agrees that until all Bank Liabilities
hereunder are paid, Holding Company will duly perform and observe each and
all of the covenants and agreements hereinafter set forth, unless Commerce
Bank shall otherwise consent in advance in writing.
6.1 Issuance of Additional Capital Stock. Holding Company shall not
issue any additional capital stock without the prior written consent of
Commerce Bank. Holding Company shall not permit Guarantor or Banks (or any
of them) to issue any additional capital stock or securities convertible
into capital stock or any warrants or rights to purchase capital stock.
6.2 Holding Company Funded Indebtedness. Holding Company shall not
incur additional Funded Indebtedness (direct, indirect, contingent or
otherwise) unless such Funded Indebtedness is subordinated (in writing and
in form and substance satisfactory to Commerce Bank) in all respects to
the indebtedness of Holding Company to Commerce Bank hereunder. For
purposes of this Loan Agreement, "Funded Indebtedness" shall mean all
indebtedness of Holding Company for borrowed money in excess of $250,000
(individually or in the aggregate) and which has a maturity of one (1) or
more years from the date of origin, plus all Capitalized Leases (defined
as any lease which is required to be capitalized on the balance sheet of
Holding Company) and all guarantees of such Funded Indebtedness of others,
but excluding the indebtedness incurred by Holding Company in the ordinary
course of business which includes W deposits, (ii) Banker's Acceptances,
(iii) repurchase agreements, (iv) purchases of Federal Funds, and (v)
Federal Reserve or Federal Home Loan Bank borrowings made in the ordinary
course of business, and pledges, liens or encumbrances required to secure
such indebtedness, provided that Holding Company shall have received
Commerce Bank's prior written approval of, and with respect to, the
specific assets, or general class of assets, to be pledged or encumbered
by such pledges, liens or encumbrances.
6.3 Indebtedness; Liens and Encumbrances. Holding Company shall not
permit Guarantor, Banks or any other subsidiary to incur or be liable for
any indebtedness (direct, indirect, contingent or otherwise) or obligation
for borrowed money, or create or assume any liens or encumbrances upon any
of such party's assets or properties whether currently owned or hereafter
acquired except for W any indebtedness, liens and encumbrances which are
currently
10.10-11
<PAGE> 12
existing and which have been disclosed to Commerce Bank, (ii) any
"Short-Term Indebtedness" [defined as all indebtedness for borrowed money,
or other obligations payable on demand or within one (1) year from the
creation thereof (but excluding renewable debt and current maturities of
Funded Indebtedness)], (iii) any indebtedness for capital expenditures,
provided such indebtedness does not exceed $250,000 (individually or in
the aggregate), (iv) liens or encumbrances required by banking laws or
regulations, and (v) indebtedness incurred in the ordinary course of
business, (other than indebtedness identified in (iii) above).
6.4 Investments. Holding Company shall not, nor shall it permit the
Guarantor or Banks (or any of them) to, acquire for securities investment
portfolio purposes, investments that would not qualify as "traditional and
prudent banking investments".
6.5 Business Assets and Operations. Holding Company shall not, nor
shall it permit the Guarantor or Banks (or any of them) to, discontinue or
materially alter normal operations, merge or consolidate or sell, lease,
transfer or dispose of a material portion of its assets other than in the
ordinary course of business.
6.6 Bank Stock Value. On the date the Loan is to be funded by
Commerce Bank, the aggregate unadjusted book value of the Bank Stock shall
not be less than $29,000,000, and at all times thereafter, the principal
balance on the Note shall not exceed forty percent (40%) of the aggregate
unadjusted book value of the Bank Stock.
6.7 Shareholder Loans. Holding Company shall not, nor shall it permit
the Guarantor or Banks (or any of them) to, directly or indirectly loan
amounts to any shareholder of Holding Company, or to any entity controlled
by such a shareholder, on terms more favorable than those available to
other nonshareholder customers deemed to represent similar credit risks.
10.10-12
<PAGE> 13
6.8 Reliance on Commerce Bank Asset and Loan Reviews. Holding Company
shall not rely, nor shall it permit others to rely, for any reason, upon
any asset and loan reviews of the Banks undertaken by Commerce Bank
pursuant to Section 5.3 of this Loan Agreement.
6.9 Change of Control. Holding Company shall not issue any additional
capital stock which may result in a "change of control" of Holding
Company, as defined by applicable Federal statutes and regulations, nor
shall there occur any sale or transfer of Holding Company voting stock
which individually, or aggregated with prior sales(s) or transfer(s), may
result in a "change of control" of Holding Company, as defined by
applicable Federal statutes and regulations.
ARTICLE VII
Defaults and Remedies
7.1 Events of Default. If any of the following events ("Events of
Default") shall occur or, have occurred and be continuing:
(a) Holding Company shall fail to make payment when due of any
principal or interest hereunder; or
(b) Holding Company, Guarantor or Banks (or any of them) shall fail
to make payment of any installment of principal and/or interest on any
other notes or obligations for borrowed money after the same shall become
payable and the expiration of any applicable grace period; or
(c) Holding Company shall fail to observe or perform any agreement,
term or condition contained herein and such failure shall not be remedied
within thirty (30) days after Commerce Bank gives notice of such failure
to Holding Company, or if Holding Company, Guarantor or Banks (or any of
them) shall fail to observe or perform any obligation under any other
agreement or document executed in connection herewith and such failure
shall not be remedied within thirty (30) days after Commerce Bank gives
notice of such failure to Holding Company, Guarantor or any of the Banks,
as applicable; or
(d) Any representation or warranty made in Article IV hereof or in
any other writing furnished to Commerce Bank by Holding Company, or on its
behalf, in connection with this Loan Agreement, shall prove to be false or
inaccurate in any material respect when made; or
10.10-13
<PAGE> 14
(e) Holding Company, Guarantor or Banks (or any of them) makes an
assignment for the benefit of creditors or admits in writing its inability
to pay its debts, or is adjudicated a bankrupt or insolvent; or
(f) Holding Company, Guarantor or Banks (or any of them) suffers a
receiver or trustee for it or substantially all of its properties to be
appointed and if appointed without its consent not to be discharged within
sixty (60) days; or suffers proceedings under any law relating to
bankruptcy, insolvency or the reorganization or relief of debtors to be
instituted by or against it and, if contested by it, not to be dismissed
or stayed within sixty (60) days; or suffers any judgment, writ of
attachment, execution or similar process to be issued or levied against
all or a substantial part of its property which is not released, stayed,
bonded or vacated within sixty (60) days after its issue or levy;
then, upon the occurrence of an Event of Default, the Note shall become
immediately due and payable together with interest accrued thereon, without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived by Holding Company.
7.2 Remedies. If an Event of Default occurs under Section 7.1,
Commerce Bank shall have and may exercise a right of setoff, without
demand or notice to anyone, against funds on deposit with it and shall
have and may exercise any rights conferred under this Loan Agreement,
under the Loan Documents, or under any applicable laws then existing; and
in doing so, Commerce Bank may resort to any remedy existing at law or in
equity and the enforcement of the covenants and provisions hereof in whole
or in part and the resort to any remedy shall not prevent the concurrent
or subsequent employment of any other appropriate remedy or remedies.
7.3 Expenses of Collection. All costs, expenses and liabilities
incurred by Commerce Bank in collecting or in attempting to collect on the
Note, and all reasonable attorneys, fees incurred in connection with such
matters (to the extent allowed by law) shall constitute a demand
obligation of Holding Company and shall bear interest from the date of
expenditure until paid at the per annum rate of three percent (3%) in
excess of the Prime Rate, but not exceeding the maximum rate allowed by
law; and if not paid monthly, such interest shall be compounded monthly.
10.10-14
<PAGE> 15
ARTICLE VIII
Conditions of Lending
The obligations of Commerce Bank under this Loan Agreement are subject to
the conditions precedent that prior to the making of the Loan, (i)
Commerce Bank shall have received from Holding Company the following
documents (all such documents to be in form and substance satisfactory to
Commerce Bank and its legal counsel) and/or (ii) Holding Company shall
have completed the following required actions (to the reasonable
satisfaction of Commerce Bank and its legal counsel):
8.1 Articles Incorporation and Bylaws. Copies of Holding Company's,
Guarantor's and Banks, respective Articles of Incorporation and Bylaws, as
amended.
8.2 Certificates of Good Standing. Current Certificate of Good
Standing for Holding Company issued by the Secretary of State of Kansas,
and Guarantor issued by the Secretary of State of Nebraska.
8.3 Corporate Resolutions. A copy of the Resolutions adopted by the
Board of Directors of Holding Company which authorize the execution,
delivery and performance of this Loan Agreement, the Note, the applicable
Loan Documents, and all other instruments and documents provided for
herein and therein, certified by the Secretary of Holding Company as
having been duly authorized by its Board of Directors and as being in full
force as of the Closing Date. A copy of the Resolutions adopted by the
Board of Directors of Guarantor which authorize the execution, delivery
and performance of the Corporate Guaranty, and all other instruments and
documents provided for herein and therein, certified by the Secretary of
Guarantor as having been duly authorized by its Board of Directors and as
being in full force as of the Closing Date.
8.4 Holding Company Certification. A certificate executed by the
President or Chief Executive Officer of Holding Company and dated the
Closing Date, certifying that (i) there has been no material adverse
change in the financial conditions of Holding Company, Guarantor or Banks
(or any of them) from the time the documents concerning Holding Company,
Guarantor and Banks, upon which Commerce Bank is reasonably relying, were
prepared, (ii) the representations and warranties (contained in Article IV
of this Loan Agreement are true and correct as of the date of such
certificate, and (iii) no Event of Default as defined in Article VII of
this Loan Agreement exists or is imminent.
10.10-15
<PAGE> 16
ARTICLE IX
Miscellaneous
9.1 Authority of Commerce Bank. Commerce Bank shall have and be
entitled to exercise all such powers hereunder as are specifically
delegated to it by the terms hereof, together with such powers as are
incidental hereto. Commerce Bank may perform any of its duties hereunder
by or through agents or employees and shall be entitled to retain counsel
and to act in reliance upon the advice of such counsel concerning all
matters pertaining to its duties hereunder. Holding Company hereby agrees
to indemnify and hold harmless Commerce Bank, any such agent, and the
directors, officers and employees of Commerce Bank and such agent from and
against any and all liability from suits, claims or other actions
commenced by the directors, officers, employees, and stockholders of
Holding Company and its subsidiaries incurred by any of them hereunder or
in connection herewith, unless such liability shall be due to their
willful misconduct or gross negligence. Furthermore, Holding Company
hereby agrees to indemnify and hold harmless Commerce Bank, any such
agent, and the directors, officers and employees of Commerce Bank and such
agent from and against any and all liability from suits, claims or other
actions commenced by parties other than the directors, officers,
employees, and stockholders of Holding Company and its subsidiaries
incurred by any of them hereunder or in connection herewith, unless such
liability shall be due to their willful misconduct or gross negligence;
provided, however, the indemnity obligations of Holding Company under this
clause shall not exceed $25,000. Nothing herein stated is intended to give
Commerce Bank the power directly or indirectly to direct the business,
management or policies of the Holding Company, Guarantor, Banks, or any of
their respective subsidiaries.
9.2 Further Assurances. Holding Company agrees to execute and deliver
such additional conveyances, assignments, agreements and instruments as
Commerce Bank may at any time reasonably request in connection with the
administration or enforcement of this Loan Agreement or in order better to
assure and confirm unto Commerce Bank the rights, powers and remedies
intended to be conferred upon Commerce Bank hereunder.
9.3 Waivers. Any waiver of an Event of Default by Commerce Bank shall
not extend to or affect any subsequent default, whether it be the same
Event of Default or not, or impair any right consequent thereon. No
omission or delay by Commerce Bank in exercising any right or power under
this Loan Agreement or the Loan
10.10-16
<PAGE> 17
Documents will impair such right or power or be construed to be a waiver
of any default or acquiescence therein, and any single or partial exercise
of any right or power will not preclude other or further exercise of any
other right, and no waiver will be valid unless in writing and signed by
Commerce Bank and then only to the extent specified.
9.4 Binding Effect: Assignment. This Loan Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto, the holder of the Note, and their
respective successors and assigns; provided, however, Holding Company
shall not be permitted to assign this Loan Agreement or any interest
herein or in the Bank Stock, or any part thereof, or otherwise pledge,
encumber, or grant any option with respect to the Bank Stock, or any part
thereof, or any other property held by Commerce Bank as collateral under
this Loan Agreement.
9.5 Notices and Consents. All notices and consents hereunder, unless
otherwise specified herein, shall be made in writing and shall be deemed
given when delivered in person, or on the third day following mailing when
delivered by first-class mail, postage prepaid, or when telecopied;
provided, such notices and consents shall be addressed to any party hereto
at its principal place of business or at any other address of which it
shall have notified the other party in writing.
9.6 Amendments. Holding Company and Commerce Bank may from time to
time enter into written agreements supplemental hereto for the purpose of
modifying or adding provisions to this Loan Agreement or changing the
rights and privileges of Commerce Bank or Holding Company hereunder. Any
such supplemental agreement shall be binding upon Holding Company and
Commerce Bank and their respective successors and assigns.
9.7 Headings. Article and Section headings in this Loan Agreement are
included herein for convenience of reference only and shall not constitute
a part of this Loan Agreement for any other purpose.
9.8 Severability of Provisions. Any provision of this Loan Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction.
10.10-17
<PAGE> 18
9.9 Counterparts. This Loan Agreement may be signed upon any number
of counterparts with the same effect as if the signature thereto and
hereto were upon the same instrument, but all of which together shall
constitute but one and the same instrument.
9.10 Description of Documents. The description or characterization of
this Loan Agreement or any other Loan Document or any other document or
instrument referenced in this Loan Agreement or in any other Loan Document
is solely for the purpose of identification and such description or
characterization shall not be used for the purpose of, and shall not
otherwise affect, the construction or interpretation of this Loan
Agreement or any other Loan Document or other document or instrument so
described or characterized. In the event of any conflict between the terms
of this Loan Agreement and any other Loan Document or other documents or
instrument, the terms of this Loan Agreement shall control.
9.11 Governing Law. This Loan Agreement and all Loan Documents shall
be governed by, and construed in accordance with, the laws of the State of
Missouri.
9.12 Statutory Notice. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT YOU
(BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT,
ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS
WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT
BETWEEN US EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
BY SIGNING BELOW, YOU AND WE AGREE THAT THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN US.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be executed by their respective officers as of the day and year first
herein above written.
TEAM FINANCIAL, INC.
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
---------------------
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
------------------------
Title: Senior Vice President
---------------------
10.10-18
<PAGE> 19
AMENDMENT ONE TO LOAN AGREEMENT
THIS AMENDMENT ONE TO LOAN AGREEMENT ("Amendment One") is entered into as
of the 19th day of March, 1998, by and between COMMERCE BANK, N.A.
("Bank") and TEAM FINANCIAL, INC. ("Company").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement dated August 9, 1997, by
and between Bank and Company (the "Loan Agreement"), Bank agreed to extend
a Term Loan in the maximum principal amount of $9,339,000, subject to
certain terms, limitations and conditions contained therein;
WHEREAS, to evidence the borrowings and the related obligations under the
Term Note, Company has delivered to Bank that certain Term Note dated of
even date with the Loan Agreement (the "Term Note"); and
WHEREAS, Bank and Company have agreed to amend the Loan Agreement as
hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Bank and Company do hereby mutually agree as
follows:
1. Terms used herein which are defined in the Loan Agreement shall have
the meanings given to them in the Loan Agreement.
2. Section 2.1 of the Loan Agreement is hereby amended by increasing the
maximum principal amount available under the Term Loan from "Nine Million
Three Hundred Thirty-Nine Thousand Dollars ($9,339,000)" to "Thirteen
Million Dollars ($13,000,000)". The Term Note shall be amended and
restated, in form and substance satisfactory to Bank, to evidence the Term
Loan as amended hereby; all references in the Loan Agreement to the Term
Note (or Note) shall hereafter apply to the Amended and Restated Term
Note.
3. Except as amended herein, all other terms, provisions, conditions and
obligations imposed under the terms of the Loan Agreement shall remain in
full force and effect and are hereby ratified and certified by Bank and
Company.
4. This Amendment One shall be governed by, and construed in accordance
with, the laws of the State of Missouri.
10.10-19
<PAGE> 20
IN WITNESS WHEREOF, Bank and Company have executed this Amendment One as
of the date first above written.
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
------------------------
Title: Senior Vice President
---------------------
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
Acknowledged:
By the execution hereof, the undersigned hereby acknowledges that its
obligations under the Corporate Guaranty executed by the undersigned, shall
apply to the Term Loan as amended by the terms hereof.
Team Financial Acquisition
Subsidiary, Inc.
By: /s/ Michael L. Gibson
------------------------
Title: Vice President
---------------------
By: /s/ Robert J. Weatherbie
------------------------
Title: President
---------------------
10.10-20
<PAGE> 21
AMENDMENT TWO TO LOAN AGREEMENT
THIS AMENDMENT TWO TO LOAN AGREEMENT ("Amendment Two") is entered into as
of the 29th of June, 1998, by and between COMMERCE BANK, N.A. ("Bank") and
TEAM FINANCIAL, INC. ("Company").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement dated August 9, 1997, by
and between Bank and Company, as amended pursuant to that certain
Amendment One to Loan Agreement dated March 19, 1998, by and between Bank
and Company (as amended, the "Loan Agreement"), Bank agreed to extend a
Term Loan to Company in the maximum principal amount of $13,000,000,
subject to certain terms, limitations and conditions contained therein;
WHEREAS,'to evidence the borrowing and the related obligations under the
Term Loan, Company has delivered to Bank that certain Amended and Restated
Term Note dated March 19, 1998;
WHEREAS, pursuant to the terms of the Loan Agreement, the Term Loan
matures on June 30, 1998, and all sums outstanding on such date shall be
due and payable in full; and
WHEREAS, Bank and Company have agreed to further amend the Loan Agreement
as hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, Bank and Company do hereby mutually agree as
follows:
1. Terms used herein which are defined in the Loan Agreement shall have
the meanings given to them in the Loan Agreement.
2. Section 2.1 of the Loan Agreement is hereby amended by decreasing the
maximum principal amount available under the Term Loan from "Thirteen
Million Dollars ($13,000,000) to "Twelve Million Four Hundred Thousand
Dollars ($12,400,000)". The Term Note shall be amended and restated, in
form and substance satisfactory to Bank, to evidence the Term Loan as
amended hereby; all references in the Loan Agreement to the Term Note (or
Note) shall hereafter apply to the Second Amended and Restated Term Note.
3. Section 2.3 of the Loan Agreement is hereby amended to read in its
entirety as follows: "Principal under the Loan shall be due and payable in
full on June 30, 1999 ("Maturity Date"). Interest shall be due and payable
quarterly, in arrears, on the last day of each
10.10-21
<PAGE> 22
September, December and March, and on the Maturity Date. All payments made
hereunder will be applied first to interest and then to principal."
4. Except as previously amended, or as amended herein, all other terms,
provisions, conditions and obligations imposed under the terms of the Loan
Agreement shall remain in full force and effect and are hereby ratified
and certified by Bank and Company.
5. This Amendment Two shall be governed by, and construed in accordance
with, the laws of the State of Missouri.
IN WITNESS WHEREOF, Bank and Company have executed this Amendment Two as
of the date first above written.
COMMERCE BANK, N.A.
By: /s/ Michael J. Sobba
------------------------
Title: Senior Vice President
---------------------
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
------------------------
Title: Chairman & CEO
---------------------
By: /s/ Michael L. Gibson
------------------------
Title: President
---------------------
10.10-22
<PAGE> 23
SECOND AMENDED AND RESTATED TERM NOTE
$12,400,000 June 29, 1998
and interest Kansas City, Missouri
FOR VALUE RECEIVED, the undersigned, TEAM FINANCIAL, INC., a Kansas
corporation ("Borrower") hereby promises to pay to the order of COMMERCE
BANK, N.A. ("Bank") the principal sum of Twelve Million Four Hundred
Thousand Dollars ($12,400,000) and accrued interest, or so much thereof as
is advanced hereunder (if less than all of the principal amount is
advanced) on June 30, 1999.
The principal balance from time to time outstanding under this Second
Amended and Restated Term Note shall bear interest from the date hereof at
the variable per annum rate set forth in the Loan Agreement by and between
Borrower and Bank and dated August 9, 1997, as amended pursuant to (i)
that certain Amendment One to Loan Agreement by and between Borrower and
Bank and dated March 19, 1998, and (ii) that certain Amendment Two to Loan
Agreement by and between Borrower and Bank and dated the date hereof (as
amended, the "Loan Agreement"), which Loan Agreement is hereby
incorporated herein by this reference. Accrued interest shall be payable
quarterly, in arrears, on the dates set forth in the Loan Agreement.
Accrued interest shall be calculated on the actual number of days elapsed
based on a year consisting of 365 days. Both principal and interest are
payable in lawful money of the United States of America to Bank at its
office at 1000 Walnut Street, Kansas City, Missouri 64106, in immediately
available funds.
This Second Amended and Restated Term Note is the one referred to in, and
is entitled to the benefits of, the Loan Agreement, which Loan Agreement,
among other things, contains provisions for the acceleration of the
maturity hereof and for an increase in the interest rate upon the
happening of certain stated events.
The undersigned and all endorsers, sureties, guarantors and other persons
liable hereon or who may become liable for the payment hereof, severally
waive demand, presentment, notice of dishonor or nonpayment, notice of
protest and any and all lack of diligence in the enforcement hereof and
hereby assent to each and any extension or postponement of the time of
payment, at or after maturity, or other indulgence and hereby waive any
and all notice thereof.
This Second Amended and Restated Term Note shall be governed by, and
construed in accordance with, the laws of the State of Missouri.
10.10-23
<PAGE> 24
IN WITNESS WHEREOF, Team Financial, Inc. has executed this Second Amended
and Restated Term Note as of the day and year first herein above written.
TEAM FINANCIAL, INC.
By: /s/ Robert J. Weatherbie
-------------------------
Title: Chairman/CEO
-------------
By: /s/ Michael L. Gibson
----------------------
Title: President
----------
10.10-24
<PAGE> 25
GUARANTOR ACKNOWLEDGMENT
By the execution hereof, the undersigned hereby acknowledges that its
obligations under the Corporate Guaranty executed by the undersigned, shall
apply to the Term Loan as amended by the terms hereof.
Team Financial Acquisition
Subsidiary, Inc.
BY: /s/ Robert J. Weatherbie
------------------------
Title: Chairman/CEO
By: /s/ Michael L. Gibson
----------------------
Title: President
10.10-25
<PAGE> 26
CORPORATE GUARANTY
August 9, 1997
TO: COMMERCE BANK, N.A. ("Bank")
The undersigned hereby requests Bank to give, and continue to give, TEAM
FINANCIAL, INC., a Kansas corporation ("Debtor"), from time to time, as
Bank may see fit, financial accommodations and credit, and in
consideration thereof, whether the same has been heretofore given or may
hereafter be given by Bank to Debtor, the undersigned hereby guarantees
and promises and agrees to make prompt payment to Bank, as they severally
mature, of all overdrafts of Debtor, of all loans made or which may be
made by Bank to Debtor, of all moneys paid by Bank for the use or account
of Debtor and of all notes, acceptances and other paper which have been or
may be discounted for, or at the request of, Debtor, whether made, drawn,
accepted, endorsed or not endorsed by Debtor, and whether endorsed with or
without recourse, and of any and all other obligations, of every kind and
character, now due or which may hereafter become due from Debtor to Bank,
howsoever created, arising or evidenced, and also of any and all renewals
or extensions of any of the foregoing (all herein called "Liabilities")
regardless of any collateral now held by Bank, or which Bank may hereafter
acquire, as security for any or all of the Liabilities.
It is understood that extensions of time of payment or modifications or
renewals of any of the Liabilities shall not in any way impair the
liability of the undersigned to Bank and that the undersigned will keep
posted as to all matters pertaining to this Corporate Guaranty without
notice from Bank.
When any of the Liabilities shall become and remain due and unpaid, the
undersigned will, upon demand, pay to Bank the amount due thereon.
In the event any property of the undersigned of any kind is now, or at any
time hereafter shall be, pledged to or in the possession of Bank,
including, but without limitation, the property described below (if any)
and any deposit or credit balance or other indebtedness credited by or due
from Bank to the undersigned ("Guaranty Collateral"), the undersigned
hereby pledges to and grants to Bank a security interest in and to all
such Guaranty Collateral.
Upon the failure of the undersigned to pay any of the Liabilities as
agreed and which are hereby guaranteed, Bank shall then have all
10.10-26
<PAGE> 27
of the rights and remedies of a secured party under the Uniform Commercial
Code of Missouri, including without limitation, the right to sell or
otherwise dispose of, from time to time, any or all of the Guaranty
Collateral. Unless the Guaranty Collateral is of a type to decline
speedily in value or is of a type commonly sold on a recognized market,
Bank shall send the undersigned reasonable notice of the time and place of
any public sale or of the date after which any private sale or other
disposition is to be made. The requirement of such notice shall be met if
such notice is mailed, postage prepaid, to the undersigned at the last
address for the undersigned shown on Bank's records, at least five (5)
days before the time of sale or other disposition. After deducting all
costs and expenses of every kind, Bank may apply the residue of the
proceeds of any sale or sales of Guaranty Collateral to pay any
Liabilities and/or any amounts owing hereunder in such order or preference
as Bank may determine.
Before proceeding hereunder against the undersigned, resort need not be
made by Bank to any other security for any or all of the Liabilities
whether pledged by Debtor or by any other person in connection with the
Liabilities or the Guaranty Collateral (collectively, the "Collateral"),
nor need Bank exhaust any remedy against Debtor, nor against any other
endorser, surety or guarantor of the Liabilities.
Notice of the making, renewing or extending time of payment of any of the
Liabilities, and of demand, protest, and notice of nonpayment thereof, and
notice of acceptance hereof, are expressly waived. No substitution,
release, surrender or impairment (including but not limited to failure to
perfect a security interest in any Collateral) of any Collateral, nor the
substitution, release or death of any other party liable for the payment
of any Liabilities, shall affect the liability of the undersigned to Bank.
The undersigned waives all errors and omissions in connection with Bank's
administration of the Liabilities and Collateral. A waiver by Bank of any
right or remedy on any one or more occasions shall not be construed as a
bar to or a waiver of any such right or remedy on future occasions. The
undersigned expressly waives notice of any changes in the terms of the
Liabilities, including interest rate and term.
In consideration of Bank acting in reliance hereon, the undersigned agrees
that the obligations herein contained with respect to the undersigned and
the rights herein granted shall continue until a written revocation signed
by the undersigned is personally delivered or sent by certified mail,
return receipt requested, to Bank's president or any of Bank's vice
presidents. Any such revocation shall not affect the rights of Bank
hereunder with
10.10-27
<PAGE> 28
respect to any Liabilities which arose prior to receipt by Bank of such
revocation and all extensions, renewals and modifications of such
prerevocation Liabilities whether before or after receipt of such
revocation, and any interest of Bank in and to any Collateral shall
continue until all such Liabilities have been paid in full. The
undersigned will pay on demand all costs of collection, legal expenses,
and attorneys, fees incurred or paid by Bank in collecting and/or
enforcing this Corporate Guaranty and the Guaranty Collateral, unless
prohibited by applicable law.
Upon payment of any Liabilities by the undersigned, the undersigned shall
be subrogated to the rights of Bank against Debtor to the extent of the
payment made; provided, however, the undersigned hereby postpones and
subordinates its right of subrogation until all Liabilities have been paid
in full. The undersigned further agrees that if a voluntary or involuntary
petition in bankruptcy is filed by or against Debtor, and the undersigned
is determined to be an insider of Debtor under applicable bankruptcy law,
then in such event the undersigned forever waives any right of subrogation
against Debtor on account of payment made pursuant to this Corporate
Guaranty.
The undersigned agrees that, if at any time all or any part of any payment
previously applied by Bank on any of the Liabilities must be returned by
the Bank for any reason, whether by court order, administrative order, or
settlement, the undersigned shall remain liable for the full amount
returned (except to the extent limited herein) as if such amount had never
been received by Bank, notwithstanding any termination of this Corporate
Guaranty or the cancellation of any agreement evidencing the Liabilities.
The undersigned agrees to provide to Bank, from time to time, such
information regarding the financial position, condition or business of the
undersigned, as the Bank may reasonably request.
This Corporate Guaranty shall remain fully enforceable irrespective of any
defense which the Debtor may assert on the Liabilities, including but not
limited to failure of consideration and statute of frauds.
The undersigned has unconditionally delivered this Corporate Guaranty to
Bank and failure to sign this or any other guaranty by any other person
shall not discharge the liability of the undersigned under this Corporate
Guaranty.
10.10-28
<PAGE> 29
The undersigned acknowledges that it will derive a direct and substantial
benefit from the making of the loan from Bank to Debtor as described
herein.
This Corporate Guaranty shall be governed by, and construed in accordance
with, the laws of Missouri, shall inure to the benefit of Bank, its
successors and assigns, and shall be binding upon the undersigned and the
successors and assigns of the undersigned.
TEAM FINANCIAL ACQUISITION
SUBSIDIARY, INC.
By: /s/ Michael L. Gibson
-------------------------
Title: Vice President
----------------------
By: /s/ Robert J. Weatherbie
-------------------------
Title: President
-----------------------
Address: P.O. Box 402, Paola, Kansas 66071
10.10-29
<PAGE> 1
EXHIBIT 10.11
SUMMARY PLAN DESCRIPTION
FOR THE
TEAM FINANCIAL, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
(1) GENERAL..................................................................................................... 1
(2) IDENTIFICATION OF PLAN...................................................................................... 1
(3) TYPE OF PLAN................................................................................................ 1
(4) PLAN ADMINISTRATOR.......................................................................................... 2
(5) TRUSTEE/TRUST FUND.......................................................................................... 3
(6) HOURS OF SERVICE............................................................................................ 3
(7) ELIGIBILITY TO PARTICIPATE................................................................................. 4
(8) EMPLOYER'S CONTRIBUTIONS.................................................................................... 4
(9) EMPLOYEE CONTRIBUTIONS...................................................................................... 6
(10) VESTING IN EMPLOYER CONTRIBUTIONS.......................................................................... 6
(11) PAYMENT OF BENEFITS AFTER TERMINATION OF EMPLOYMENT........................................................ 8
(12) PAYMENT OF BENEFITS PRIOR TO TERMINATION OF EMPLOYMENT..................................................... 10
(13) DISABILITY BENEFITS........................................................................................ 11
(14) PAYMENT OF BENEFITS UPON DEATH............................................................................. 11
(15) DISQUALIFICATION OF PARTICIPANT STATUS - LOSS OR DENIAL OF BENEFITS........................................ 11
(16) CLAIMS PROCEDURE........................................................................................... 12
(17) RETIRED PARTICIPANT, SEPARATED PARTICIPANT WITH VESTED BENEFIT, BENEFICIARY RECEIVING
BENEFITS............................................................................................... 12
(18) PARTICIPANT'S RIGHTS UNDER ERISA........................................................................... 12
(19) FEDERAL INCOME TAXATION OF BENEFITS PAID................................................................... 13
(20) PARTICIPANT LOANS.......................................................................................... 14
(21) INVESTMENT OF TRUST ASSETS................................................................................ 14
</TABLE>
<PAGE> 3
SUMMARY PLAN DESCRIPTION
(1) GENERAL. The legal name, address and Federal employer identification number
of the Employer are -
TEAM FINANCIAL, INC.
8 West Peoria, Suite 200
P. O. Box 402
Paola, KS 66071
48-1017164
Additional employers have also adopted the Plan. The information on those
employers is listed on Schedule A attached to this summary. Schedule A also
describes the effective date of each employer's participation and any special
provisions relating to the crediting of past service with that employer for Plan
purposes.
The Employer has established a retirement plan ("Plan") to supplement your
income upon retirement. In addition to retirement benefits, the Plan may provide
benefits in the event of your death or disability or in the event of your
termination of employment prior to normal retirement. If after reading this
summary you have any questions, please ask the Plan Administrator. We emphasize
this summary plan description is a highlight of the more important provisions of
the Plan. If there is a conflict between a statement in this summary plan
description and in the Plan, the terms of the Plan control.
(2) IDENTIFICATION OF PLAN. The Plan is known as -
TEAM FINANCIAL, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
The Employer has assigned 001 as the Plan identification number. The plan year
is the period on which the Plan maintains its records: January 1 through
December 31.
(3) TYPE OF PLAN. The Plan is commonly known as an employee stock ownership
plan. Section (8), "Employer's Contributions," explains how you share in the
Employer's annual contributions to the trust fund and the extent to which the
Employer has an obligation to make annual contributions to the trust fund.
Under this Plan, the trust fund is intended to be invested primarily, and
possibly exclusively, in Employer securities, to the extent they can be acquired
by the Plan. There are certain risks inherent in this type of plan because it
will not be as diversified in its investments as certain other types of
retirement plans. There may also be a lack of investment return in the event
that the Employer securities do not yield dividends, interest or other earnings.
However, the Plan is funded completely by Employer contributions and will enable
you to share in any appreciation in the Employer securities to the extent such
Employer securities are vested and allocated to your account. The Plan has been
established with the belief that by having a retirement plan which is based upon
the Employer's growth and success, this will stimulate all employees to work at
their full capacity for the best interests of the Employer.
This Plan contains provisions to allow it to be a leveraged employee stock
ownership plan. The term "leveraged" means that the Plan may borrow money from a
disqualified person or may borrow money from a third party which is guaranteed
by a disqualified person. The term "disqualified person" is defined in the
Internal Revenue Code, and includes, but is not limited to, the Employer, the
Trustee and the Plan Administrator. The proceeds of such a loan may be used by
the plan to buy Employer securities. Any
<PAGE> 4
Employer securities acquired with such a loan are maintained in a suspense
account. Upon the payment of any portion of the loan, the Trustee will release
securities from the suspense account for allocation to participant accounts in
accordance with procedures outlined in Treasury Regulations. Once securities are
unencumbered by debt and withdrawn from the suspense account, they are then
allocated to the accounts of all participants who otherwise share in the
Employer's contribution for the plan year, based upon the relative compensation
of all such participants for such plan year.
"Employer securities" generally means common stock and other qualifying
securities, such as preferred stock readily convertible into common stock,
issued by the Employer or by other corporations in a controlled group of
corporations with the Employer. A controlled group is a group of corporations
where there is a parent-subsidiary relationship (one corporation owns another
corporation) or a brother-sister relationship (a small group of individuals own
a controlling interest in two or more corporations).
Under this Plan, there is no fixed dollar amount of retirement benefits. Your
actual retirement benefit will depend on the amount of your account balance at
the time of retirement. Your account balance will reflect the annual
allocations, the period of time you participate in the Plan and the success of
the Plan in investing and reinvesting the assets of the trust fund. A
governmental agency known as the Pension Benefit Guaranty Corporation (PBGC)
insures the benefits payable under certain plans which provide for fixed and
determinable retirement benefits. The Plan does not provide a fixed and
determinable retirement benefit. Therefore, the PBGC does not include this Plan
within its insurance program.
(4) PLAN ADMINISTRATOR. Team Financial, Inc. is the Plan Administrator. The
Employer's telephone number is (913) 294-9667 or (800) 880-6262. The Employer
has designated Ms. Carolyn Jacobs to assist the Employer with the duties of Plan
Administrator. You may contact Ms. Carolyn Jacobs at the Employer's address. The
Plan Administrator is responsible for providing you and other participants
information regarding your rights and benefits under the Plan. The Plan
Administrator also has the primary authority for filing the various reports,
forms and returns with the Department of Labor and the Internal Revenue Service.
The name of the person designated as agent for service of legal process and the
address where a processor may serve legal process upon the Plan are -
Ms. Carolyn S. Jacobs
TEAM FINANCIAL, INC.
8 West Peoria, Suite 200
P. O. Box 402
Paola, KS 66071
A legal processor may also serve the Trustee of the Plan or the Plan
Administrator.
The Plan permits the Employer to appoint an Advisory Committee to assist in the
administration of the Plan. The Advisory Committee has the responsibility for
making all discretionary determinations under the Plan and for giving
distribution directions to the Trustee. If the Employer does not appoint an
Advisory Committee, the Plan Administrator assumes these responsibilities. The
members of the Advisory Committee may change from time to time. You may obtain
the names of the current members of the Advisory Committee from the Plan
Administrator.
(5) TRUSTEE/TRUST FUND. The Employer has appointed -
2
<PAGE> 5
TEAM FINANCIAL, INC.
8 West Peoria
Paola, KS 66071
to hold the office of Trustee. The Trustee will hold all amounts the Employer
contributes to it in a trust fund. Upon the direction of the Advisory Committee,
the Trustee will make all distribution and benefit payments from the trust fund
to participants and beneficiaries. The Trustee will maintain trust fund records
on a plan year basis.
The Trustee will invest the trust fund primarily in Employer securities, to the
extent they are available. "Primarily" in this context means the authority to
acquire and hold up to 100% of the trust assets in Employer securities. The
Employer may contribute its own stock to the Trustee in years it makes a
contribution to the trust fund. If the Employer contributes cash, the Trust may
purchase stock of the Employer for investment under the trust fund, if it is
available and may be purchased. When you have participated in the Plan for at
least 10 years and have attained age 55, you have the right to diversify your
Employer securities account by (1) requesting a distribution to you of 25% of
the Employer securities allocated to your account [after December 31, 1986], or
(2) requesting a transfer of such amount to another Employer qualified plan, if
one exists, subject to certain conditions. When you qualify for this election,
the Advisory Committee will furnish you more information regarding your
investment right and an investment direction.
Notwithstanding any other provision of the Plan, you will be entitled to direct
the Trustee as to certain matters in which voting rights may be exercised with
respect to the securities allocated to your account.
(6) HOURS OF SERVICE. The Plan and this summary plan description include
references to hours of service. To advance on the vesting schedule or to share
in the allocation of Employer contributions for a plan year, the Plan requires
you to complete a minimum number of hours of service during a specified period,
such as the plan year. The sections covering vesting and employer contributions
explain this aspect of the Plan in the context of those topics. However, hour of
service has the same meaning for all purposes of the Plan.
The Department of Labor, in its regulations, has prescribed various methods
under which the Employer may credit hours of service. The Employer has selected
the "actual" method for crediting hours of service. Under the actual method, you
will receive credit for each hour for which the Employer pays you, directly or
indirectly, or for which you are entitled to payment, for the performance of
your employment duties. You also will receive credit for certain hours during
which you do not work if the Employer pays you for those hours, such as paid
vacation.
If an employee's absence from employment is due to maternity or paternity leave,
the employee will receive credit for unpaid hours of service related to his
leave, not to exceed 501 hours. The Advisory Committee will credit these hours
of service to the first period during which the employee otherwise would incur a
1-year break in service as a result of the unpaid absence.
The Employer is a member of a related group of business organizations. The law
treats all members of this related group as a single employer for purposes of
crediting hours of service. If you work (other hours) for more than one member
of the related group, you will receive hours of service credit under this Plan
to the same extent as if you had worked the other hours for the Employer.
However, for purposes of allocating Employer contributions and forfeitures, the
Plan takes into account only the compensation you receive from the contributing
Employer(s).
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<PAGE> 6
Schedules A and B attached to this Summary Plan Description identify any special
crediting of service with an adopting Employer, or with an entity which the
Employer, or a subsidiary of the Employer, has acquired by a purchase of assets.
(7) ELIGIBILITY TO PARTICIPATE. You do not have to complete any form for entry
into the Plan. You will become a Participant on the January 1 or July 1
immediately following the later of the date 6 months after your first day of
employment or the date you attain age 19. Prior to January 1, 1999, the minimum
age requirement was age 20-1/2.
To become a participant in the Plan, you must wait a minimum of 6 months after
your first day of employment with the Employer. It is not necessary for you to
complete any specified number of hours of service during this period. For
example, if you begin work on February 15, you would satisfy the service
requirement on August 15. Therefore, you would enter the Plan on the January 1
immediately following that August 15, assuming you are employed on that date.
The example in the prior paragraph assumes you are at least age 19 when you
complete the service requirement. If you have not attained age 19 when you
complete the service requirement, then you will become a participant in the Plan
on the January 1 or July 1 immediately following your attainment of age 19.
If you terminate employment after becoming a Participant in the Plan and later
return to employment, you will re-enter the Plan on your re-employment date.
Also, if you terminate employment after satisfying the Plan's eligibility
conditions but before actually becoming a participant in the Plan, you will
become a participant in the Plan on the later of your scheduled entry date or
your reemployment date.
The following employees are not eligible to participate in the plan:
employees working in a classification of employees covered by a
collective bargaining agreement for which retirement plan benefits have
been the subject of collective bargaining.
a nonresident alien who does not receive any earned income from the
Employer which constitutes United States source income.
W. C. Hartley is excluded from participating.
If by reason of this exclusion, you should become ineligible to participate in
the Plan, you may not receive an allocation of the Employer's contribution
during the period of your exclusion, but during this period your account balance
will continue to share in trust fund earnings or losses.
(8) EMPLOYER'S CONTRIBUTIONS. Each plan year, the Employer will contribute to
the Plan the amount determined by the Employer at its discretion. The Employer
may choose not to contribute to the Plan for a particular plan year.
Contributions may be made in cash or Employer securities or both.
The Employer may make a contribution up to 15% of the total compensation paid to
each participating employee during the plan year. Pursuant to certain
limitations set forth in the Internal Revenue Code, the Employer may contribute
additional amounts as follows: (a) up to 10% of the total compensation of all
participants to apply to a principal repayment on a loan incurred for the
purpose of acquiring qualifying Employer securities, and/or (b) an amount
without limitation if it is to be applied to the repayment of interest on a loan
incurred for the purpose of acquiring qualifying Employer securities.
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<PAGE> 7
In general, the law limits the amount of "additions" (other than trust earnings)
which the Plan may allocate to your account under the Plan. With certain
exceptions, your additions may never exceed 25% of your compensation for a
particular plan year, but may be less if 25% of your compensation exceeds a
dollar amount announced by the Internal Revenue Service each year. The Plan may
need to reduce this limitation if you participate (or have participated) in any
other plans maintained by the Employer. The discussion of Plan allocations in
this Section (8) is subject to this limitation.
For each plan year the Employer contributes to the Plan, the Advisory Committee
will allocate this contribution to the separate accounts maintained for
participants. The Advisory Committee will base your allocation upon your
proportionate share of the total compensation paid during that plan year to all
participants in the Plan. For example, if your compensation for that plan year
is 10% of the total compensation for all participants for that particular plan
year, the Advisory Committee will allocate 10% of the total Employer
contribution for the plan year to your separate account.
ALLOCATION OF FORFEITURES. The Plan allocates participant forfeitures as if the
forfeitures were Employer contributions for the plan year in which the
forfeiture occurs.
COMPENSATION. The Plan defines compensation as the employee's total amount of
earnings reportable as W-2 wages for Federal income tax withholding purposes,
including wages, salary, overtime, bonuses, commissions, tips and fees for
professional services. Any salary reduction contributions made to a 401(k) plan
or cafeteria plan maintained by the Employer are also included in determining
compensation for plan purposes.
With limited exceptions, the Plan includes an employee's compensation only for
the part of the plan year in which he actually is a participant.
CONDITIONS FOR ALLOCATION. With limited exceptions, to be entitled to an
allocation of Employer contributions, you must complete 1,000 hours of service
during the plan year and you must be employed by the Employer on the last day of
the plan year.
The contribution allocations described in this Section (8) may vary for certain
employees if the Plan is top heavy. Generally, the Plan is top heavy if more
than 60% of the Plan's assets are allocated to the accounts of key employees
(certain owners and officers). If the Plan is top heavy, any participant who is
not a key employee and who is employed on the last day of the plan year, may not
receive a contribution allocation which is less than a certain minimum. Usually
that minimum is 3%, but if the contribution allocation for the plan year is less
than 3% for all the key employees, the top heavy minimum is the smaller
allocation rate. If you are a participant in the Plan, your allocation described
in this Section (8) in most cases will be equal to or greater than the top heavy
minimum contribution allocation. The Plan also may vary the definition of the
top heavy minimum contribution to take into account another plan maintained by
the Employer.
SPECIAL LIMITATIONS ON ALLOCATIONS. To the extent the Plan acquires Employer
securities in a sale to which Section 1042 of the Code applies, generally, no
portion of the assets of the Plan attributable to (or allocable in lieu of) such
Employer securities may accrue (or be allocated directly or indirectly) under
any plan of the Employer meeting the requirements of Section 401(a) during the
"non-allocation period" for the benefit of:
(i) Any taxpayer who makes an election under Section
1042(a) with respect to Employer securities;
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<PAGE> 8
(ii) Any individual (other than certain lineal
descendants who may under certain circumstances receive
limited allocations) who is related to such a taxpayer (within
the meaning of Section 267[b] of the Code); or
(iii) Any other person who owns (after application of
Section 318[a]) more than 25% of any class of outstanding
stock of the Employer or of any corporation which is a member
of the same controlled group of corporations, or the total
value of any class of any outstanding stock of any such
corporation.
For purposes of this paragraph, the term "non-allocation period" means
the period beginning on the date of the Section 1042 transaction and
ending on the later of the date which is 10 years after such
transaction or the date of the plan allocation attributable to the
final payment of the acquisition indebtedness occurred in connection
therewith.
(9) EMPLOYEE CONTRIBUTIONS. The Plan does not permit nor require you to make
employee contributions to the trust fund. The only source of contributions under
the Plan is the annual Employer contribution.
(10) VESTING IN EMPLOYER CONTRIBUTIONS. Your interest in the contributions the
Employer makes to the Plan for your benefit becomes 100% vested when you attain
normal retirement age (as defined in Section (11)). Prior to normal retirement
age, your interest in the contributions the employer makes on your behalf become
vested in accordance with the following schedule:
NON TOP HEAVY SCHEDULE
<TABLE>
<CAPTION>
PERCENT OF
YEARS OF SERVICE NONFORFEITABLE INTEREST
---------------- -----------------------
<S> <C>
Less than 3 . . . . . . . . . . . . . . . . . . . 0%
3 . . . . . . . . . . . . . . . . . . . . . . 20%
4 . . . . . . . . . . . . . . . . . . . . . . 40%
5 . . . . . . . . . . . . . . . . . . . . . . 60%
6 . . . . . . . . . . . . . . . . . . . . . . 80%
7 or more . . . . . . . . . . . . . . . . . .100%
</TABLE>
TOP HEAVY SCHEDULE
<TABLE>
<CAPTION>
PERCENT OF
YEARS OF SERVICE NONFORFEITABLE INTEREST
---------------- -----------------------
<S> <C>
Less than 2 . . . . . . . . . . . . . . . . . . . 0%
2 . . . . . . . . . . . . . . . . . . . . . . 20%
3 . . . . . . . . . . . . . . . . . . . . . . 40%
4 . . . . . . . . . . . . . . . . . . . . . . 60%
5 . . . . . . . . . . . . . . . . . . . . . . 80%
6 or more . . . . . . . . . . . . . . . . . .100%
</TABLE>
6
<PAGE> 9
SPECIAL VESTING RULE FOR DEATH OR DISABILITY. If you die or become disabled
while still employed by the Employer, your entire Plan interest becomes 100%
vested, even if you otherwise would have a vested interest less than 100%.
MINIMUM VESTING AMOUNT. The Plan includes a minimum vesting amount of $25.00. If
your entire interest (vested and nonvested) in the Plan is larger than $25.00,
your vested interest will not be less than $25.00, even if the vesting schedule
will result in a smaller vested interest. If your entire interest (vested and
nonvested) in the Plan is smaller than $25.00, you are vested in that entire
interest.
TOP HEAVY VESTING RULE. If the Plan becomes top heavy, the above top heavy
vesting schedule applies. In the event that schedule becomes effective, the
Advisory Committee will notify all participants in writing of the new schedule.
YEAR OF SERVICE. To determine your percentage under a vesting schedule, a year
of service means a 12- month vesting service period in which you complete at
least 1,000 hours of service. The Plan measures the vesting service period as
the plan year. If you complete at least 1,000 hours of service during a plan
year, you will receive credit for a year of service even though you are not
employed by the Employer on the last day of that plan year.
You will receive credit for years of service with the Employer prior to the time
the Employer established the Plan and for years of service prior to the time you
became a participant in the Plan. See Schedules A and B for information on
whether service with adopting Employers or other employers is included for
vesting purposes.
The Plan provides two methods of vesting forfeiture which may apply before a
participant becomes 100% vested in his entire interest under the Plan. The
primary method of vesting forfeiture is the "forfeiture break in service" rule.
The secondary method of forfeiture is the "cash out" rule. Also see Section (15)
relating to loss or denial of benefits.
FORFEITURE BREAK IN SERVICE RULE. Termination of employment alone will not
result in forfeiture under the Plan unless you do not return to employment with
the Employer before incurring a "forfeiture break in service." A "forfeiture
break in service" is a period of 5 consecutive vesting service periods in which
you do not work more than 500 hours in each vesting service period comprising
the 5 year period.
EXAMPLE. Assume you are 60% vested in your account balance. After working 400
hours during a particular vesting service period, you terminate employment and
perform no further service for the Employer during the next 4 vesting service
periods. Under this example, you would have a "forfeiture break in service"
during the fourth vesting service period following the vesting service period in
which you terminated employment because you did not work more than 500 hours
during each vesting service period of 5 consecutive vesting service periods.
Consequently, you would forfeit the 40% non-vested portion of your account. If
you had returned to employment with the Employer at any time during the 5
consecutive vesting service periods and worked more than 500 hours during any
vesting service period within that 5- year period, you would not incur a
forfeiture under the "forfeiture break in service" rule.
CASH OUT RULE. The cash out rule applies if you terminate employment and receive
a total distribution of the vested portion of your account balance before you
incur a forfeiture break in service. For example, assume you terminated
employment during a particular vesting service period after completing 800 hours
of service. Assume further the total value of your account balance is $6,000 in
which you have a 60% vested interest. Before you incur a forfeiture break in
service, you receive a distribution of the $3,600
7
<PAGE> 10
vested portion ($6,000 X 60%) of your account balance. Upon payment of the
$3,600 vested portion of your account balance, you would forfeit the $2,400
nonvested portion. If you return to employment before you incur a "forfeiture
break in service," you may have the Plan restore your "cash out" forfeiture by
repaying the amount of the distribution you received attributable to Employer
contributions. This repayment right applies only if you do not incur a
"forfeiture break in service." You must make this repayment no later than the
date 5 years after you return to employment with the Employer. Upon your
reemployment with the Employer, you may request the Advisory Committee to
provide you a full explanation of your rights regarding this repayment option.
If the vested portion of your account balance does not exceed $5,000, the Plan
will distribute that vested portion to you in a lump sum, without your consent.
This involuntary cash-out distribution will result in the forfeiture of your
nonvested account balance, in the same manner as an employee who voluntarily
elects a cash-out distribution. Also, upon reemployment you would have the same
repayment option as an employee who elected a cash-out distribution, if you
return to employment before incurring a "forfeiture break in service."
(11) PAYMENT OF BENEFITS AFTER TERMINATION OF EMPLOYMENT. After you terminate
employment with the Employer, the time at which the Plan will commence
distribution to you and the form of that distribution depends on whether your
vested account balance exceeds $5,000. If you receive a distribution from the
Plan before you attain age 59-1/2, the law imposes a 10% penalty on the amount
of the distribution you receive to the extent you must include the distribution
in your gross income, unless you qualify for an exception from this penalty. You
should consult a tax advisor regarding this 10% penalty. This summary makes
references to your normal retirement age. Normal retirement age under this Plan
is 65.
If your vested account balance does not exceed $5,000, the Plan will distribute
that portion to you, in a lump sum, as soon as administratively practicable
following the close of the plan year in which you terminate your employment with
the Employer. If you already have attained normal retirement age when you
terminate employment, the Plan must make this distribution no later than the
60th day following the close of the plan year in which your employment
terminates, even if the normal distribution date would occur later. The Plan
does not permit you to receive distribution in any form other than a lump sum if
your vested account balance does not exceed $5,000.
Effective January 1, 1999, if your vested account balance exceeds $5,000, the
Plan will commence distribution to you at the time you elect to commence
distribution. The Plan permits you to elect distribution as of any distribution
date but no earlier than the first distribution date of the first plan year
beginning after your termination of employment with the Employer.
A "distribution date" under the Plan means the first day of the third month of
the Plan Year and the first day of each month thereafter. You may not actually
receive your distribution on the distribution date you elect. The Plan provides
the Trustee an administratively reasonable time following a particular
distribution date to make actual distribution to a participant.
No later than 30 days prior to your earliest possible distribution date, the
Advisory Committee will provide you a notice explaining your right to elect
distribution from the Plan and the forms necessary to make your election. If you
do not make a distribution election, the Plan will commence distribution to you
on the 60th day following the close of the plan year in which the latest of
three events occurs: (1) your attainment of normal retirement age; (2) your
attainment of age 62; or (3) your termination of employment with the Employer.
To determine whether your vested account balance exceeds $5,000, the Plan
normally looks to the last valuation of your account prior to the scheduled
distribution date.
8
<PAGE> 11
With limited exceptions, you may not commence distribution of your vested
account balance later than April 1 of the calendar year following the calendar
year in which you attain age 70-1/2, even if you have not terminated employment
with the Employer. This required distribution date overrides any contrary
distribution date described in this summary. If the Employer terminates the Plan
before you receive complete distribution of your vested benefits, the Plan might
make distribution to you before you otherwise would elect distribution. Upon
Plan termination, if your vested account balance exceeds $5,000, you will
receive an explanation of your distribution rights.
FORMS OF BENEFIT PAYMENT. If your vested account balance exceeds $5,000, your
distribution will be paid in "ratable" monthly, quarterly or annual
installments, unless the Employer securities held in the Plan at such time are
readily tradable on an established securities market, in which case,
distributions may also be made in a lump sum. Ratable distributions are
determined as follows:
a) Your distribution for the first year is determined by dividing
the amount of your nonforfeitable accrued benefit (your vested
interest) by five.
b) Your installment distribution for the second year is
determined by dividing the amount of your vested interest by
four.
c) Your installment distribution for the third year is determined
by dividing the amount of your vested interest by three.
d) Your installment distribution for the fourth year is
determined by dividing the amount of your vested interest by
two.
e) The remaining value of your vested interest is distributed in
the fifth year.
Under an installment distribution, the Advisory Committee may direct to have the
Plan segregate the amount owed to you in a separate account apart from other
trust fund assets. Your separate account will continue to draw interest during
the period the Plan is making retirement payments to you. If the Plan does not
segregate the amount owed to you in a separate account, your retirement account
will remain a part of the trust fund and continue to share in trust fund
earnings, gains or losses.
METHOD OF BENEFIT PAYMENT. Generally, you may elect to take your distribution in
cash or in Employer securities. If your distribution is in Employer securities,
the Employer securities will be valued at fair market value at the close of the
plan year immediately before the distribution, or at a more recent valuation of
Employer securities, if it exists. The Trustee will pay in cash any fractional
security share to which you are entitled. If ownership of the Employer's
securities is restricted by its charter or bylaws, the Trustee will make your
distribution in cash.
PUT OPTION. Unless the Employer securities owned by the Plan are readily
tradable on an established securities market, the Employer will provide a "put
option" to you when you receive a distribution of Employer securities. The put
option will permit you to sell the Employer securities to the Employer at any
time during two option periods, at the fair market value last determined by an
independent appraiser. The first put option period will run for a period of at
least 60 days starting on the date of the distribution. The second put option
period will run for a period of at least 60 days after the new determination of
the fair market value of Employer securities by the Plan Administrator and
notice to you of the new fair market
9
<PAGE> 12
value. If you exercise your put option, the Employer or the Plan will purchase
the Employer securities at fair market value as determined under the terms
provided in the Plan.
SPECIAL ESOP DISTRIBUTION RULES. In addition to the normal distribution
provisions explained under Sections (11), (12), (13) and (14), then, unless you
elect a later distribution, the Trustee must commence distribution of your
account balance attributable to Employer securities not later than one year
after the close of the Plan Year in which you separate from service with the
Employer by reason of attaining normal retirement age, death or disability. If
you separate from service with the Employer for any other reason, then, unless
you elect a later date, the Trustee must commence distribution of your account
balance attributable to Employer securities not later than one year after the
close of the fifth Plan Year following the Plan Year in which you separate from
service with the Employer unless by that distribution date you have resumed
employment with the Employer. However, for purposes of this paragraph, Employer
securities do not include any Employer securities acquired with the proceeds of
a loan as described in Section (3) until the end of the plan year in which it is
paid in full.
RESTRICTION ON EMPLOYER SECURITIES. Shares of Employer securities held or
distributed by the Trustee may include such legend restrictions on
transferability as the Employer may reasonably require in order to assure full
compliance with applicable federal and state securities laws. The Employer
securities may be restricted, unless publicly traded. You do not have the right
to sell, assign, give, pledge, encumber, or otherwise transfer any restricted
Employer security without complying with the terms of the Plan. Generally, if
you want to dispose of any restricted Employer securities, you must first offer
the Employer the same securities.
The benefit payment rules described in Sections (11) through (14) reflect the
current Plan provisions. If an Employer amends its Plan to change benefit
payment options, some options may continue for those participants or
beneficiaries who have account balances at the time of the change. If an
eliminated option continues to apply to you, the information you receive from
the Advisory Committee at the time you are first eligible for distribution from
the Plan will include an explanation of that option.
(12) PAYMENT OF BENEFITS PRIOR TO TERMINATION OF EMPLOYMENT. Prior to your
termination of employment with the Employer, you may elect to withdraw all or
any portion of your vested account balance if you continue to work for the
Employer after attaining age 60. Any distributions made prior to your
termination of employment will be made in "ratable" amounts, as described in
Section 11 above.
In addition, see Section 5 for special options available after you have attained
age 55 and participated in the plan for at least 10 years.
The Advisory Committee will provide you a withdrawal election form. Other than
the withdrawal right described in this Section (12) and the post-age 70 1/2
distribution requirement described in Section (11), the Plan does not permit you
to receive payment of any portion of your account balance for any other reason,
unless you terminate employment with the Employer.
(13) DISABILITY BENEFITS. If you terminate employment because of disability, the
Plan will pay your vested account balance to you in the same manner and at the
same time as it would pay your vested account balance for any other termination
of employment. If your vested account balance exceeds $5,000, the disability
distribution rules are subject to any election requirements described in Section
(11). In general, disability under the Plan means because of a physical or
mental disability you are unable to perform the duties of your customary
position of employment for an indefinite period which, in the opinion of the
Advisory Committee, will be of long continued duration. The Advisory Committee
also considers you
10
<PAGE> 13
disabled if you terminate employment because of a permanent loss or loss of use
of a member or function of your body or a permanent disfigurement. The Advisory
Committee may require a physical examination in order to confirm the disability.
(14) PAYMENT OF BENEFITS UPON DEATH. If you die prior to receiving all of your
benefits under the Plan, the Plan will pay the balance of your account to your
beneficiary. If the Employer permits the Trustee to purchase life insurance on
your life with a portion of your account balance, your account balance also will
receive any life insurance proceeds payable by reason of your death.
The Advisory Committee will provide you with an appropriate form for naming a
beneficiary. If you are married, your spouse must consent to the designation of
any nonspouse beneficiary. If your vested account balance payable to your
designated beneficiary does not exceed $5,000, the Plan will pay the benefit, in
a lump sum, to your designated beneficiary as soon as administratively
practicable after your death. If your vested account balance payable to your
designated beneficiary exceeds $5,000, the Plan will pay the benefit to your
designated beneficiary, in the form and at the time elected by the beneficiary,
unless, prior to your death, you specify the timing and form of the
beneficiary's distribution. The benefit payment election generally must complete
distribution of your account balance within five years of your death, unless
distribution commences within one year of your death to your designated
beneficiary or unless benefits had commenced prior to your death under the
mandatory post-age 70 1/2 distribution requirements described in Section (11).
(15) DISQUALIFICATION OF PARTICIPANT STATUS - LOSS OR DENIAL OF BENEFITS. There
are no specific Plan provisions which disqualify you as a participant or which
cause you to lose plan benefits, except as provided in Sections (7) and (10).
However, if you become disabled and do not receive compensation from the
Employer, you will not receive an allocation of the Employer's contribution to
the Plan during the period of disability. In addition, if your Plan benefits
become payable after termination of employment and the Advisory Committee is
unable to locate you at your last address of record, you may forfeit your
benefits under the Plan. Therefore, it is very important that you keep the
Employer apprised of your mailing address even after you have terminated
employment. Finally, if the Employer terminates the Plan, which it has the right
to do, you would receive benefits under the Plan based on your account balance
accumulated to the date of the termination of the Plan. Termination of the Plan
could occur before you attain normal retirement age. If the Employer terminates
the Plan, your account will become 100% vested, if not already 100% vested,
unless you forfeited the nonvested portion prior to the termination date.
The fact that the Employer has established this Plan does not confer any right
to future employment with the Employer. Furthermore, you may not assign your
interest in the Plan to another person or use your Plan interest as collateral
for a loan from a commercial lender.
(16) CLAIMS PROCEDURE. You need not file a formal claim with the Advisory
Committee in order to receive your benefits under the Plan. When an event occurs
which entitles you to a distribution of your benefits under the Plan, the
Advisory Committee automatically will notify you regarding your distribution
rights. However, if you disagree with the Advisory Committee's determination of
the amount of your benefits under the Plan or with respect to any other decision
the Advisory Committee may make regarding your interest in the Plan, the Plan
contains the appeal procedure you should follow. In brief, if the Advisory
Committee of the Plan determines it should deny benefits to you, the Plan
Administrator will give you written notice of the specific reasons for the
denial. The notice will refer you to the pertinent provisions of the Plan
supporting the Advisory Committee's decision. If you disagree with the Advisory
Committee, you, or a duly authorized representative, must appeal the adverse
determination in writing to the Advisory
11
<PAGE> 14
Committee within 75 days after the receipt of the notice of denial of benefits.
If you fail to appeal a denial within the 75-day period, the Advisory
Committee's determination will be final and binding.
If you appeal to the Advisory Committee, you, or your duly authorized
representative, must submit the issues and comments you feel are pertinent to
permit the Advisory Committee to re-examine all facts and make a final
determination with respect to the denial. The Advisory Committee, in most cases,
will make a decision within 60 days of a request on appeal unless special
circumstances would make the rendering of a decision within the 60-day period
unfeasible. In any event, the Advisory Committee must render a decision within
120 days after its receipt of a request for review. The same procedures apply
if, after your death, your beneficiary makes a claim for benefits under the
Plan.
(17) RETIRED PARTICIPANT, SEPARATED PARTICIPANT WITH VESTED BENEFIT, BENEFICIARY
RECEIVING BENEFITS. If you are a retired participant or beneficiary receiving
benefits, the benefits you presently are receiving will continue in the same
amount and for the same period provided in the mode of settlement selected at
retirement. If you are a separated participant with a vested benefit, you may
obtain a statement of the dollar amount of your vested benefit upon request to
the Plan Administrator. There is no Plan provision which reduces, changes,
terminates, forfeits, or suspends the benefits of a retired participant, a
beneficiary receiving benefits or a separated participant's vested benefit
amount, except as provided in Section (15).
(18) PARTICIPANT'S RIGHTS UNDER ERISA. As a participant in this Plan, you are
entitled to certain rights and protections under the Employee Retirement Income
Security Act of 1974 (ERISA). ERISA provides that all Plan participants are
entitled to:
(a) Examine, without charge, at the Plan Administrator's office and at
other specified locations (such as worksites), all Plan documents,
including insurance contracts and copies of all documents filed by the
Plan with the U.S. Department of Labor, such as detailed annual reports
and plan descriptions.
(b) Obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The Plan Administrator may
make a reasonable charge for the copies.
(c) Receive a summary of the Plan's annual financial report. ERISA requires
the Plan Administrator to furnish each participant with a copy of this
summary annual report.
(d) Obtain a statement telling you that you have a right to receive a
retirement benefit at the normal retirement age under the Plan and what
your benefit could be at normal retirement age if you stop working
under the Plan now. If you do not have a right to a retirement benefit,
the statement will advise you of the number of additional years you
must work to receive a retirement benefit. You must request this
statement in writing. The law does not require the Plan Administrator
to give this statement more than once a year. The Plan must provide the
statement free of charge.
In addition to creating rights for Plan participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate this Plan, called "fiduciaries" of the Plan, have a duty
to do so prudently and in the interest of you and other Plan participants and
beneficiaries. No one, including your Employer, your union or any other person
may fire you or otherwise discriminate against you in any way to prevent you
from obtaining a retirement benefit or from exercising your rights under ERISA.
12
<PAGE> 15
If your claim for a retirement benefit is denied in whole or in part, you must
receive a written explanation of the reason for the denial. You have the right
to have the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive the
materials within 30 days, you may file suit in a Federal court. In such a case,
the court may require the Plan Administrator to provide the materials and pay
you up to $100 a day until you receive the materials, unless the material were
not sent because of reasons beyond the control of the Plan Administrator. If you
have a claim for benefits which is denied or ignored, in whole or in part, you
may file suit in a state or Federal court. If it should happen that Plan
fiduciaries misuse the Plan's money, or if you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a Federal court. The court will decide who should
pay court costs and legal fees. If you are successful, the court may order the
person you have sued to pay these costs and fees. If you lose, the court may
order you to pay these costs and fees, for example, if it finds your claim is
frivolous.
If you have any questions about your Plan, you should contact the Plan
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
(19) FEDERAL INCOME TAXATION OF BENEFITS PAID. Existing Federal income tax laws
do not require you to report as income the portion of the annual Employer
contribution allocated to your account. However, when the Plan later distributes
your account balance to you, such as upon your retirement, you must report as
income the Plan distributions you receive. In some instances, if you receive
your benefits in a lump sum distribution in the form of Employer securities, you
may be able to exclude from your gross income the net unrealized appreciation in
such securities. The Federal tax laws may also permit you to report a Plan
distribution under a special averaging provision. Also, it may be possible for
you to defer Federal income taxation of a distribution by making a "rollover"
contribution to your own rollover individual retirement account. Mandatory
income tax withholding rules apply to some distributions you do not rollover
directly to an individual retirement account or to another plan. At the time you
receive a distribution, you also will receive a notice discussing withholding
requirement and the options available to you. We emphasize you should consult
your own tax adviser with respect to the proper method of reporting any
distribution you receive from the Plan.
(20) PARTICIPANT LOANS. This Plan does not make loans to participants and
beneficiaries.
(21) INVESTMENT OF TRUST ASSETS. The Plan does not permit participants to direct
the investment of funds in their accounts. The Advisory Committee will direct
the Trustee as to the investment of all Plan assets except with respect to
purchases and sales of Employer Securities pursuant to the terms of the Plan.
* * * * * * * * * * * * * * *
13
<PAGE> 16
SUMMARY PLAN DESCRIPTION
FOR THE
TEAM FINANCIAL, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
SCHEDULE A
ADDITIONAL ADOPTING EMPLOYERS
1. TEAMBANK, N.A.
(Formerly The Miami County National Bank of Paola, Paola, Kansas)
One South Pearl, P.O. Box 369
Paola, Kansas 66071
Employer Federal Identification Number: 48-0333790
Effective date of participation: January 1, 1981
PAST SERVICE CREDITED FOR ALL PLAN PURPOSES: Since this Plan is a
continuation of the plan originally established by The Miami County
National Bank of Paola, Paola, Kansas, all service with that Employer
is counted for ELIGIBILITY, BENEFIT ACCRUAL AND VESTING purposes.
2. IOLA BANK AND TRUST COMPANY
119 East Madison
Iola, Kansas 66749
Employer Federal Identification Number: 48-0277110
Effective date of participation: January 1, 1991
PAST SERVICE CREDITED FOR ELIGIBILITY PURPOSES: All prior service with
the Iola Bank and Trust Company will be counted in determining an
employee's eligibility to participate in the Plan, as discussed in Item
(7) of this Summary Plan Description. Such prior service shall NOT
count for benefit accrual or vesting purposes under the Plan.
3. ALLEN COUNTY INVESTMENT SERVICES, INC.
119 East Madison Street
Iola, Kansas 66749
Employer Federal Identification Number: 48-1127726
Effective date of participation: February 19, 1993
PAST SERVICE CREDITED FOR ELIGIBILITY PURPOSES: All prior service with
Allen County Investment Services, Inc. will be counted in determining
an employee's eligibility to participate in the Plan, as discussed in
Item (7) of this Summary Plan Description. Such prior service shall NOT
count for benefit accrual or vesting purposes under the Plan.
<PAGE> 17
4. FIRST NATIONAL BANK AND TRUST COMPANY
1900 Main
Parsons, Kansas 67357
Employer Federal Identification Number: 48-0365210
Effective date of participation: December 30, 1992
PAST SERVICE CREDITED FOR ELIGIBILITY PURPOSES: All prior service with
the First National Bank & Trust Company will be counted in determining
an employee's eligibility to participate in the Plan, as discussed in
Item (7) of this Summary Plan Description. Such prior service shall NOT
count for benefit accrual or vesting purposes under the Plan.
5. TEAMBANK NEBRASKA
(Formerly Known As First United Bank)
1902 Harlan Drive
Bellevue, Nebraska 68005
Employer Federal Identification Number: 47-0682135
Effective date of participation: January 1, 1997
PAST SERVICE CREDITED FOR ELIGIBILITY PURPOSES: All prior service with
First United Bank will be counted in determining an employee's
eligibility to participate in the Plan, as discussed in Item (7) of
this Summary Plan Description. Each employee of First United Bank who
has met the minimum age and service provisions will become a
participant as of the applicable plan entry date. Such prior service
shall NOT count for benefit accrual or vesting purposes under the Plan.
<PAGE> 18
SUMMARY PLAN DESCRIPTION
FOR THE
TEAM FINANCIAL, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
SCHEDULE B
SPECIAL SERVICE CREDITING PROVISIONS DUE TO PURCHASE
OF ASSETS BY TEAM FINANCIAL, INC. OR ONE OF ITS SUBSIDIARIES
1. FORMER EMPLOYEES OF AMERICAN STATE BANK: Due to the purchase of assets
of the American State Bank by TeamBank, N.A. (formerly The Miami County
National Bank of Paola, Paola, Kansas), a subsidiary of Team Financial,
Inc., all prior service with American State Bank, Osawatomie, Kansas,
will be counted in determining an employee's eligibility to participate
in the Plan, as discussed in Item (7) of this Summary Plan Description.
Such prior service shall NOT count for benefit accrual or vesting
purposes under the Plan.
2. FORMER EMPLOYEES OF NEVADA BRANCH OF THE MERCANTILE BANK OF WESTERN
MISSOURI: Due to the purchase of assets of the Nevada Branch of the
Mercantile Bank of Western Missouri by TeamBank, N.A., a subsidiary of
Team Financial, Inc., all prior service with the Nevada Branch of the
Mercantile Bank of Western Missouri will be counted in determining an
employee's eligibility to participate in the Plan, as discussed in Item
(7) of this Summary Plan Description. Such prior service shall NOT
count for benefit accrual or vesting purposes under the Plan.
3. FORMER EMPLOYEES OF THE LAMAR BRANCH OF THE ROOSEVELT BANK: Due to the
purchase of assets of the Lamar Branch of the Roosevelt Bank by
TeamBank, N.A., a subsidiary of Team Financial, Inc., all prior service
with the Lamar Branch of the Roosevelt Bank will be counted in
determining an employee's eligibility to participate in the Plan, as
discussed in Item (7) of this Summary Plan Description. Such prior
service shall NOT count for benefit accrual or vesting purposes under
the Plan.
<PAGE> 19
ACKNOWLEDGEMENT OF RECEIPT OF
SUMMARY PLAN DESCRIPTION
FOR THE
TEAM FINANCIAL, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
I hereby acknowledge receipt of a copy of the Summary Plan Description
("SPD") on the above plan. I received a copy of the SPD on the date indicated
below.
Dated:
---------------------------
-------------------------------------------
Participant's Name - Printed
-------------------------------------------
Signature of Participant
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
<TABLE>
<CAPTION>
Percentage
Name of Subsidiary State of Incorporation Ownership by Registrant
- ------------------ ---------------------- -----------------------
<S> <C> <C>
TeamBank, N.A. National Association 100%
Iola Bank & Trust Company Kansas 100%
First National Bank and
Trust Co., Inc. National Association 100%
TeamBank Nebraska Nebraska 100%
</TABLE>
<PAGE> 1
EXHIBIT 23.1
Board of Directors
Team Financial, Inc.:
We consent to the use of our report on the consolidated financial statements
Team Financial, Inc. as of and for the three-year ended December 31, 1998
included herein and to the reference to our firm under the heading "Experts" in
the Registration Statement.
/s/ KPMG LLP
Kansas City, Missouri
April 9, 1999
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0001082484
<NAME> TEAM FINANCIAL, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 27,397
<INT-BEARING-DEPOSITS> 149
<FED-FUNDS-SOLD> 11,310
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 109,296
<INVESTMENTS-CARRYING> 25,742
<INVESTMENTS-MARKET> 13,125
<LOANS> 256,126
<ALLOWANCE> 2,541
<TOTAL-ASSETS> 442,352
<DEPOSITS> 384,347
<SHORT-TERM> 6,273
<LIABILITIES-OTHER> 3,271
<LONG-TERM> 23,060
0
0
<COMMON> 13,980
<OTHER-SE> 11,421
<TOTAL-LIABILITIES-AND-EQUITY> 442,352
<INTEREST-LOAN> 23,183
<INTEREST-INVEST> 8,260
<INTEREST-OTHER> 411
<INTEREST-TOTAL> 31,854
<INTEREST-DEPOSIT> 14,807
<INTEREST-EXPENSE> 1,766
<INTEREST-INCOME-NET> 15,281
<LOAN-LOSSES> 1,486
<SECURITIES-GAINS> 18
<EXPENSE-OTHER> 15,384
<INCOME-PRETAX> 3,017
<INCOME-PRE-EXTRAORDINARY> 2,344
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,344
<EPS-PRIMARY> .85
<EPS-DILUTED> .85
<YIELD-ACTUAL> 0
<LOANS-NON> 2,241
<LOANS-PAST> 3,578
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,629
<CHARGE-OFFS> 723
<RECOVERIES> 149
<ALLOWANCE-CLOSE> 2,541
<ALLOWANCE-DOMESTIC> 2,541
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
