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PROSPECTUS
[LOGO] MAGNA GROUP, INC
1997 DIVIDEND REINVESTMENT
AND STOCK PURCHASE PLAN
600,000 SHARES OF
COMMON STOCK
$2 PAR VALUE
PER SHARE
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Magna Group, Inc., a Delaware corporation ("Magna"), is offering through
its 1997 Dividend Reinvestment and Stock Purchase Plan (the "Plan") a method
of purchasing additional shares of common stock, $2.00 par value, of Magna (the
"Common Stock") through the reinvestment of cash dividends and, at the option
of a participant in the Plan (the "Participant"), through the investment of
optional cash payments from $25 to $5,000 per month. All holders of Common
Stock (collectively referred to as the "Stockholders" and individually
referred to as the "Stockholder") are eligible to join the Plan, including
Stockholders whose shares are held in the name of a broker, bank or other
nominee (i.e. "street name"). The Plan is set forth in this Prospectus.
This Prospectus relates to 600,000 shares of Common Stock available for
issuance under the Plan. This Prospectus should be retained for future
reference.
Common Stock purchased under the Plan will be, at Magna's discretion,
either newly issued shares, shares of treasury stock held by Magna or shares
purchased for Participants in the open market, or a combination of the
foregoing. Newly issued shares and treasury shares will be purchased directly
from Magna. The price to be paid for newly issued shares and treasury shares
will be at an average market price, determined as provided in the Plan.
If Magna elects to utilize outstanding shares of Common Stock, the Common
Stock offered through the Plan that is purchased for Participants in the open
market will be purchased by an agent independent of Magna (the "Agent") on any
securities exchange where the Common Stock is traded, in the over-the-counter
market or through negotiated transactions. The timing of such purchases is at
the discretion of the Agent, subject to applicable requirements of federal
securities laws. In the case of each purchase of Common Stock in the open
market or through negotiated transactions, the price to Participants of shares
of Common Stock will be the average of the actual cost per share of all shares
then being purchased by the Agent for the Plan.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADE-
QUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS ACCOUNTS
OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE DATE OF THIS PROSPECTUS IS MAY 9, 1997.
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AVAILABLE INFORMATION
Magna is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by Magna can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549; Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, New
York, New York 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. In addition, reports and other information
concerning Magna can be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005, on which the Common
Stock is listed.
Magna has filed a Registration Statement (the "Registration Statement")
with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities covered by this Prospectus.
This Prospectus does not contain all of the information set forth in the
Registration Statement. The Registration Statement may be inspected without
charge at the office of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 or obtained from such office upon payment of the fees prescribed by
the Commission. The Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
(including Magna) that file electronically with the Commission. The address of
the Commission's Web site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to applicable
statutes are incorporated herein by reference:
(a) Magna's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(b) Magna's Current Report on Form 8-K dated March 4, 1997 and Current
Report on Form 8-K/A dated May 1, 1997.
(c) The description of Magna Common Stock set forth in Item 1 of
Magna's Registration Statement on Form 8-A, filed November 4, 1996.
(d) The description of Magna Preferred Stock Purchase Rights set forth
in Item 1 of Magna's Registration Statement on Form 8-A, filed November 4,
1996.
All documents filed by Magna pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date hereof, and all amendments or
supplements filed with respect to the documents listed in (a), (b), (c) and (d)
above, shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing of such document. Any statement
contained in this Prospectus or in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Copies of all documents incorporated by reference into this Prospectus,
other than exhibits to such documents (unless the exhibits are specifically
incorporated by reference into such documents), will be provided without charge
to each person to whom this Prospectus is delivered, upon oral or written
request by such person to Gary D. Hemmer, Executive Vice President,
Administration, Magna Group, Inc., One Magna Place, 1401 South Brentwood
Boulevard, St. Louis, Missouri 63144-1401, telephone: (314) 963-2500.
No person has been authorized in connection with this offering to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by Magna or any other person. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to purchase, any
securities other than those to which it relates, nor does it constitute an
offer to sell or a solicitation of an offer to purchase by any person in any
jurisdiction in which it is unlawful for such person to make such an offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create any implication that the
information contained herein is correct as of any time subsequent to the date
hereof.
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MAGNA
Magna was organized in 1974 and is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended. Magna currently owns,
directly or indirectly, all of the capital stock of two national banks, three
Iowa state banks and one federal savings bank that operate from more than 130
community banking locations serving Illinois, Missouri and Iowa. Magna also
owns certain other nonbanking subsidiaries including, a trust company, a
student loan company and brokerage and insurance subsidiaries.
Magna primarily serves consumers and small-to-midsized businesses in its
markets as a "super community bank," a company whose business centers on a
customer-focused community banking orientation, has cost efficiencies that do
not compromise quality and offers a broad product line that permits a
full-service customer relationship. As of March 31, 1997, Magna reported, on a
consolidated basis, total assets of $6.8 billion, deposits of $5.2 billion,
loans of $4.3 billion and stockholders' equity of $594.5 million. Magna had
33,111,546 shares of its Common Stock issued and outstanding as of March 31,
1997.
The principal executive offices of Magna are located at One Magna Place,
1401 South Brentwood Boulevard, St. Louis, Missouri 63144 (telephone number
(314) 963-2500).
THE PLAN
Stockholders may enhance their investment by participating in the Plan.
Under the Plan, Participants may automatically invest dividends payable on
Common Stock in Common Stock and may make voluntary cash payments for
investment in Common Stock. The following question and answer statements
constitute the provisions of the Plan.
PURPOSE
1. WHAT IS THE PURPOSE OF THE PLAN?
The Plan offers Stockholders a convenient and economical method of
increasing their ownership of Common Stock. Once a Participant is enrolled in
the Plan, cash dividends and any optional cash payments made by the Participant
will be used to purchase additional shares of Common Stock within 30 days of
receipt of the funds except where later investment is necessary to comply with
Rule 10b-6 and Regulation M of the Exchange Act, or other provisions of the
federal securities laws. Full reinvestment of dividend funds is possible under
the Plan because the Plan permits fractions of shares, as well as full shares,
to be credited to Participants' accounts. Dividends on such fractions of, as
well as on full, shares will be credited to Participants' accounts. Under the
Plan, Magna, and not the Participants, will pay brokerage fees, commissions,
service charges or other expenses associated with the purchase of Common Stock
for Participants.
To the extent Common Stock is purchased from Magna, Magna will receive
additional funds to finance the continuing operations of Magna and its
subsidiaries. The Plan offers eligible holders an opportunity to invest
conveniently for the long-term. The Plan is not intended to provide a mechanism
for generating short-term profits or engaging in other strategies involving
rapid turnover of shares or proliferation of accounts. Magna accordingly
reserves the right to refuse to allow participation in the Plan and/or to
modify, suspend or terminate participation by otherwise eligible Stockholders
who engage in, or who Magna believes may engage in, such practices or other
practices deemed by Magna to be inconsistent with the purposes of the Plan or
detrimental to the Plan or other Participants.
ADVANTAGES
2. WHAT ARE THE ADVANTAGES OF THE PLAN?
Participants in the Plan may:
* Reinvest all or any portion of their dividends on shares of Common Stock
automatically.
* Invest additional cash, up to $5,000 per month, in Common Stock. Optional
cash purchases may be made on a transaction-by-transaction basis by check
or money order or on an automatic basis each month by means of
preauthorized electronic fund transfers from a U.S. financial
institution.
* Avoid charges for brokerage commissions, fees, service charges or other
expenses on all investments under the Plan.
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* Invest the full amount of all dividends and optional cash payments
because the Plan allows fractions of a share to be held under the Plan.
* Avoid cumbersome safekeeping requirements through the free custodial
service under the Plan.
* Avoid inconvenience and expense of recordkeeping through the free
reporting provisions of the Plan.
ADMINISTRATION
3. WHO WILL ADMINISTER THE PLAN?
Magna Trust, a division of Magna Bank, National Association (the "Trust
Company"), will serve as administrator of the Plan, performing such functions
as keeping a continuing record of Participants' accounts, directing the Agent
to purchase shares for the Participants, advising Participants of purchases and
performing other duties related to the Plan as they appear herein. Common Stock
purchased for the accounts of Participants will be registered in the name of
the Trust Company or in the name of its nominee or nominees as custodian for
Participants in the Plan. If the Trust Company ceases to serve as custodian,
its successor will be designated by Magna. Information on how to contact the
Trust Company is set forth in the response to Question 29.
Neither the Trust Company nor its nominee or nominees shall have any
responsibility beyond the exercise of ordinary care for any action taken or
omitted pursuant to the Plan nor shall they have any duties, responsibilities
or liabilities except such as are expressly set forth herein or for any good
faith omission to act, including, without limitation, failure to terminate a
Participant's account prior to receipt of written notice of their death or with
respect to the timing or the price of any purchase.
4. HOW IS COMMON STOCK PURCHASED FOR PARTICIPANTS?
If Magna elects to utilize outstanding shares of Common Stock to satisfy
Plan requirements, Magna will timely notify the Trust Company and the Agent of
such decision, and the Agent will purchase shares for all Participants in the
open market. The timing of purchases is at the sole discretion of the Agent,
subject to applicable requirements of federal securities laws. In making
purchases of Common Stock, the funds of a Participant may be commingled with
those of other Participants. Accordingly, the price at which Common Stock will
be purchased for a Participant's account will be the average price of all
Common Stock purchased under the Plan for all Participants at such time. The
Agent will make every effort to invest available funds promptly, and, in no
event, more than thirty (30) days after the Agent's receipt of a dividend or an
optional cash payment, except where postponement is deemed necessary to comply
with applicable provisions of the federal securities laws.
If open market purchases are not made, the shares issued under the Plan
will be original issue shares of Common Stock or treasury stock purchased
directly from Magna.
NO INTEREST WILL BE PAID ON ANY FUNDS HELD PENDING INVESTMENT.
PARTICIPATION
5. WHO IS ELIGIBLE TO PARTICIPATE?
All Stockholders are eligible to participate in the Plan, including all
owners of Common Stock whose shares are registered in a name other than their
own (for example, the name of a broker, bank or other nominee). However, in
order to make optional cash payments, a Participant must be a Stockholder of
record.
6. MUST A STOCKHOLDER AUTOMATICALLY INVEST DIVIDENDS IN ORDER TO PURCHASE
SHARES OF COMMON STOCK WITH VOLUNTARY PAYMENTS PURSUANT TO THE PLAN?
Yes. In order to make voluntary cash payments for investment in Common
Stock, a Stockholder must automatically invest in Common Stock the dividends
payable on Common Stock.
7. MUST A STOCKHOLDER PARTICIPATE IN THE PLAN USING ALL CASH DIVIDENDS PAID ON
ALL COMMON STOCK OWNED OF RECORD?
No. Participants in the Plan may participate with all or some of their cash
dividends paid on Common Stock owned of record by either electing to reinvest
all of their quarterly dividends in Common Stock or specifying a fixed
percentage of their dividends to reinvest in the appropriate place on the
Authorization Card.
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All dividends on all shares held for a Participant's account under the
Plan, whether such shares were acquired by investment of dividends or upon
investment of voluntary payments, will be reinvested in shares of Common Stock.
8. HOW DO ELIGIBLE PERSONS PARTICIPATE?
An eligible Stockholder may join the Plan at any time by completing an
Authorization Card and returning it to the Trust Company. Authorization Cards
may be obtained by written request to the Trust Company or by telephoning the
Trust Company at the appropriate address or telephone number listed in the
response to Question 29.
If shares are registered in the name of a broker, bank or other nominee
(i.e., "street name") on behalf of a beneficial owner (the "Beneficial
Owner"), the Beneficial Owner may participate in the Plan either by having:
(i) the shares of Common Stock registered directly in the name of the
Beneficial Owner and signing and returning an Authorization Card to
the Trust Company; or
(ii) the broker, bank or other nominee participate in the Plan on behalf of
the Beneficial Owner by signing and returning an Authorization Card to
the Trust Company.
An optional cash payment in the form of a check or money order may be sent
to the Trust Company with the Authorization Card when joining the Plan. Checks
and money orders should be made payable to the Trust Company. A Participant
also may authorize automatic monthly optional cash payments by electronic funds
on an Authorization Card when joining the Plan. Optional cash purchases will be
made in accordance with the procedures described in Questions 12, 13, 14, 15
and 16.
9. WHEN MAY AN ELIGIBLE PERSON JOIN THE PLAN?
A Stockholder may join the Plan at any time.
If the Trust Company receives a properly completed Authorization Card at
least two days prior to the record date for the payment of the next cash
dividend, then the dividends paid on such date will be used to purchase
additional shares of Common Stock. If such Authorization Card is not received
at least two days prior to the record date for the next cash dividend, dividend
reinvestments will not start until the payment of the next following cash
dividend.
10. WHAT DOES AN AUTHORIZATION CARD AUTHORIZE?
An Authorization Card authorizes the Trust Company, on behalf of the
Participant, to receive all cash dividends or any specified fixed percentage of
cash dividends on the shares of Common Stock registered in the Participant's
name and on all shares of Common Stock acquired for the Participant in the
Plan, and to use these cash dividends to purchase shares of Common Stock either
from Magna or through the Agent. An Authorization Card also authorizes the
Trust Company to use any timely received optional cash payments to purchase
shares of Common Stock either from Magna or through the Agent for the
Participant in the Plan. Any such authorization shall continue until it is
withdrawn by the Participant.
A Participant shall have no right to direct checks or drafts against their
account or give instructions to the Trust Company with respect to any shares or
cash held therein except as expressly provided herein.
11. MAY A PARTICIPANT CHANGE THEIR METHOD OF PARTICIPATION AFTER ENROLLMENT?
Yes. Participants may change their investment option at any time by signing
a new Authorization Card and returning it to the Trust Company as provided
under Question 29.
If a Participant elects to participate through the reinvestment of all
dividends but later decides to reduce the amount of dividends to be reinvested,
an Authorization Card indicating a change of options must be received by the
Trust Company at least two days prior to a particular dividend record date in
order to stop any unwanted reinvestment of dividends paid on that dividend
payment date. For information on the method for terminating participation in
the Plan, see Question 19.
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PURCHASES
12. HOW MANY SHARES OF COMMON STOCK WILL BE PURCHASED FOR PARTICIPANTS AND WHAT
IS THE SOURCE OF SHARES PURCHASED UNDER THE PLAN?
The number of shares purchased will depend on the amount of a Participant's
cash dividend, optional cash payment and the purchase price of the shares. Each
Participant's account will be credited with that number of shares, including
fractions computed to four decimal places, equal to the total amount invested
divided by the purchase price.
Common Stock purchased under the Plan will be, at Magna's discretion,
either newly issued shares, shares of treasury stock held by Magna or shares
purchased for Participants in the open market, or a combination of the
foregoing. Newly issued shares and treasury shares will be purchased directly
from Magna. The decision to purchase shares for Participants in the open market
will be made by Magna based upon general market conditions, the relationship
between purchase price and book value per share, regulatory requirements and
other factors. In the case of each purchase of Common Stock for Participants,
Magna will timely notify the Trust Company and the Agent of the source from
which Common Stock is to be purchased.
13. WHEN WILL SHARES OF COMMON STOCK BE PURCHASED UNDER THE PLAN?
When Common Stock is purchased from Magna, purchases made with dividend
payments will be made on the dividend payment date with dividends paid on such
date. Purchases of Common Stock made with voluntary payments will be made on
the 1st and 15th days of the month with optional cash payments received at
least two days prior to such dates.
When shares are purchased in the open market, the Agent will use dividends
paid on a dividend payment date to purchase shares in the open market as soon
as practical and within 30 days after that dividend payment date, unless a
longer period is necessary or advisable because of federal securities laws, or
the Agent will use cash received from Participants at least two days prior to
the 1st and 15th days of the month to make purchases within 30 days after such
dates, unless a longer period is necessary or advisable because of federal
securities laws, as the case may be. In either case, open market purchases may
be made on any securities exchange where shares of the Common Stock are traded,
in the over-the-counter market or in negotiated transactions and may be subject
to such terms with respect to price, delivery and other matters as the Agent
may agree to. Neither Magna nor any Participant shall have the authority to
direct the time, price or manner of such open market purchases, or the
selection of the broker or dealer through or from whom purchases are to be
made.
All optional cash payments received by the Trust Company pursuant to an
Authorization Card also are used to purchase additional Common Stock during the
relevant investment period, although the actual transfer to the Trust Company
during the relevant investment period occurs three business days prior to the
first day of the investment period (such transfer day being referred to herein
as the "electronic transfer date").
No dividend will be earned on shares purchased under the Plan until the
dividend payment date following the date of purchase of those shares.
14. WHAT IS THE PRICE OF THE SHARES PURCHASED UNDER THE PLAN?
Newly issued shares and treasury shares of Common Stock purchased under the
Plan from Magna will be purchased at a price per share equal to the average of
the closing sale prices of the Common Stock reported on the New York Stock
Exchange ("NYSE") for the five trading days immediately preceding the date of
such purchase. If there is no trading in the Common Stock on the NYSE (or if
trading is halted or suspended) for a substantial amount of time during any
trading day during the five-day period or if publication of the closing sale
price of the Common Stock on any such trading day does not take place or
contains a reporting error, the purchase price of shares purchased from Magna
shall be determined by Magna on the basis of such market quotations as it shall
deem appropriate. No shares will be purchased from Magna under the Plan at less
than their par value ($2.00 per share).
In the case of each purchase of Common Stock for Participants in the open
market or through negotiated transactions made for Participants, the price at
which the Agent shall be deemed to have acquired shares for an individual
Participant's account shall be the average price of all shares purchased at
that time by it for all Participants in the Plan with their aggregate funds
used for such purchase.
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15. ARE ANY FEES OR EXPENSES INCURRED BY PARTICIPANTS IN THE PLAN?
Magna will pay all administrative costs of the Plan. Participants will pay
no brokerage commissions, fees, expenses or service charges under the Plan in
connection with purchases under the Plan; provided, however, a Beneficial Owner
may be required to pay a fee to a broker, bank or other nominee participating
on behalf of such Beneficial Owner. When shares are sold by the Agent for a
Participant, the Participant will be responsible for any commissions, fees,
expenses, service charges or other expenses incurred pursuant to the sale of
such shares.
No service fees will be charged to Participants making optional cash
purchases through electronic fund transfers. However, Participants will be
charged the Trust Company's prevailing fees for dishonored checks and failed
electronic fund transfers due to insufficient funds.
OPTIONAL CASH PAYMENTS
16. HOW ARE OPTIONAL CASH PAYMENTS MADE?
Participants may make optional cash payments of not less than $25 for any
month and not more than $5,000 for any month by check, money order or
electronic fund transfer. Optional cash payments by means of check or money
order must be payable to the Trust Company and mailed to the Trust Company
together with an Authorization Card. Electronic fund transfers pursuant to an
Authorization Card do not commence until the electronic transfer date that
first follows by at least three business days the Trust Company's receipt of
the properly completed Authorization Card. An "electronic transfer date" is
the date three business days prior to either an investment date (when Plan
purchases are made directly from Magna) or the first day of an investment
period (when Plan purchases of Common Stock are being made on the open market),
and represents the date on which electronic fund transfers authorized by
Authorization Cards are received by the Trust Company on behalf of
Participants.
An Authorization Card permits Participants to make optional cash purchases
of Common Stock on a monthly basis without the need to write a check or money
order for each purchase. On the Authorization Card, a Participant can authorize
a U.S. financial institution holding funds of the Participant to transfer a
designated amount each month from the Participant's account at the financial
institution to the Trust Company for use in purchasing additional Common Stock.
To initiate optional cash purchases through electronic fund transfer, a
Participant must send to the Trust Company, at the address given in Question
29, a properly completed Authorization Card and include as an attachment
thereto a voided blank check for the account the funds are to be transferred
from. Automatic fund transfers authorized by an Authorization Card will
continue until changed or terminated. An Authorization Card may be modified or
terminated only by submitting a new Authorization Card to the Trust Company.
Changes with respect to electronic fund transfers effected by a new
Authorization Card will not take effect until the electronic transfer date that
first follows by at least three business days the Trust Company's receipt of
the properly completed new Authorization Card.
An Authorization Card may be obtained by any one of the means set forth at
Question 8.
Participants are not assessed a service charge for electronic fund
transfers processed by the Trust Company for optional cash purchases. However,
the financial institution designated by a Participant on an Authorization Card
may charge a fee for participating in the electronic fund transfer.
Participants are encouraged to consult with their financial institution.
An Authorization Card will be sent to Participants as a part of their
advice of transactions (see Question 17) following months in which a
Participant has made purchases under the Plan. Additional Authorization Cards
may be requested from the Trust Company at the address and telephone number
listed in Question 29. The same amount of money need not be sent each time,
subject to the minimum and maximum payment levels, and there is no obligation
to make optional cash payments.
REPORTS TO PARTICIPANTS
17. WHAT KIND OF REPORTS WILL BE SENT TO PARTICIPANTS IN THE PLAN?
Following each purchase, the Trust Company will send to each Participant
whose funds have been applied to such purchase an advice of transactions in
their account since the last prior purchase for their account. Such advice of
transactions will show the number of shares purchased and their cost. Each
Participant will receive a statement on a
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quarterly basis showing all transactions during that period of time, including
the balance of the current shares in the account. No reports or statements will
be sent by the Trust Company to Beneficial Owners.
Each Participant, by participating in the Plan, agrees to notify the Trust
Company promptly in writing of any change of address. Notices to a Participant
may be given by letter addressed to the Participant at their last address of
record with the Trust Company.
CERTIFICATES FOR SHARES
18. WILL CERTIFICATES BE ISSUED FOR THE COMMON STOCK PURCHASED FOR THE
PARTICIPANTS IN THE PLAN?
Normally, certificates for Common Stock purchased under the Plan will not
be issued to Participants in their names but will be registered in the name of
the Trust Company or its nominee and credited to Participants' Plan accounts.
However, upon a Participant's written request or withdrawal from the Plan as
provided in Question 19, certificates for any number of whole shares credited
to the Participant's account will be issued in the recordholder's name and
delivered to the Participant. Upon withdrawal from the Plan, a Participant will
receive cash in lieu of any fractional interest at the then current market
value of Common Stock on the day such withdrawal becomes effective, determined
by the closing sale price reported on the NYSE. No certificates for fractional
shares will be issued.
Requests for certificates will be handled without charge to Participants.
After delivery of a certificate, a Participant will continue to participate in
the Plan with shares represented by such certificates until such time as the
shares are sold or otherwise transferred or until the Participant terminates
participation in the Plan. Any fractional or whole shares remaining after such
delivery will continue to be credited to the Participant's Plan account.
WITHDRAWAL
19. HOW DOES A PARTICIPANT WITHDRAW FROM THE PLAN?
Participants may at any time terminate their participation in the Plan by
notifying the Trust Company in writing at the address provided under Question
29.
If a notice of termination is not received at least two days prior to the
record date for the next dividend, that dividend will be reinvested for their
account, but all subsequent dividends on those shares will be paid to the
withdrawing Participant. With respect to optional cash payments, any optional
cash payment received by the Trust Company before it receives a Participant's
notice of termination will be invested for their account unless they
specifically request return of the payment by written request received by the
Trust Company at least 2 days prior to the next purchase date.
Upon termination, a Participant will receive a certificate for all full
shares in their account unless they elect to receive cash. If they elect to
receive cash, the Trust Company will sell such shares and send the proceeds,
minus applicable fees, to the Participant provided the Participant's signature
on the written request is properly guaranteed. Either Magna or the Trust
Company may terminate any Participant's account at any time at its discretion.
In any case, the Participant will receive cash in lieu of any fractional
interest in a share at the market value of Common Stock to be determined by the
closing sale price on the day such withdrawal or termination becomes effective
as reported by the NYSE. If a Participant, under the Plan, disposes of all
shares registered in their name on the books of Magna, the Trust Company will
continue to invest the dividends on the shares in their account, unless
otherwise notified in writing by that Participant.
20. WHEN MAY FORMER PARTICIPANTS REJOIN THE PLAN?
Generally, a former Participant may again become a Participant at any time.
However, Magna and the Trust Company reserve the right to reject any
Authorization Card from a previous Participant on grounds of excessive joining
and termination. Such reservation is intended to minimize unnecessary
administrative expense and to encourage use of the Plan as a long-term
investment service.
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OTHER INFORMATION
21. WHAT HAPPENS TO THE PARTICIPANT'S PLAN ACCOUNT IF MAGNA ISSUES A STOCK
DIVIDEND OR DECLARES A STOCK SPLIT?
Stock splits on Common Stock applicable to shares held for the Participant
under the Plan will be credited to their account. Stock dividends on Common
Stock applicable to shares belonging to a Participant in the Plan, whether held
in their account or in their own name, will be credited to their account.
22. WHAT HAPPENS TO THE PARTICIPANT'S PLAN ACCOUNT IF MAGNA MAKES AVAILABLE TO
HOLDERS OF COMMON STOCK RIGHTS TO PURCHASE ADDITIONAL SECURITIES?
In the event that Magna makes available to its holders of Common Stock
rights to purchase additional shares, debentures or other securities, the Agent
will sell such rights accruing to the shares held for the Participants'
accounts, and the resultant funds will be invested in Common Stock as provided
in the Plan.
23. HOW WILL PARTICIPANTS' COMMON STOCK BE VOTED AT MEETINGS OF STOCKHOLDERS?
For each meeting of Stockholders, Participants will receive proxies that
will enable them to vote shares of Common Stock credited to the Participants'
accounts. If a Participant does not direct the Trust Company as to how they
wish their shares to be voted, the Trust Company will not vote such shares.
24. MAY THE PLAN BE CHANGED OR DISCONTINUED?
Magna reserves the right to supplement, amend or terminate the Plan at any
time by mailing appropriate notice of any such supplementation, amendment or
termination of the Plan at least 30 days prior to the effective date thereof to
each Participant at their last address of record with the Trust Company. The
amendment or supplement shall conclusively be deemed to be accepted by the
Participant unless, prior to the effective date thereof, the Trust Company
receives written notice of termination of the account. Any such amendment may
include the appointment by Magna of a successor administrator or administrators
under this Plan provided such successor is a bank or trust company organized
under the laws of the United States or any state thereof. Magna and the Trust
Company are authorized to pay to such successor administrator for the account
of each Participant in the Plan all dividends and distributions payable on
shares of Common Stock in their name or in their account, and cash payments
will be applied by such successor administrator as provided in this Plan.
Termination of the Plan will have the same effect and be accomplished as to
each Participant in the same manner as if the Participant had completely
withdrawn from participation in the Plan. This Plan is an amendment to the
prior Dividend Reinvestment Plan and Stock Purchase Plan (the "Prior Plan")
and will replace the Prior Plan upon exhaustion of all shares reserved pursuant
to the Prior Plan.
25. WHO INTERPRETS AND REGULATES THE PLAN?
Magna reserves the right to interpret and regulate the Plan as it deems
desirable or necessary. Neither Magna, the Trust Company nor the Agent, in
administering, interpreting or performing their duties under the Plan, will be
liable for any act done or omitted to be done in good faith, including, without
limitation, any act giving rise to a claim of liability arising from (i) the
times and prices at which shares are purchased or sold for a Participant's
account or (ii) fluctuations in the market price of the Common Stock.
A PARTICIPANT SHOULD RECOGNIZE THAT NEITHER MAGNA, THE TRUST COMPANY NOR
THE AGENT CAN ASSURE A PROFIT OR PROTECT AGAINST A LOSS ON THE COMMON STOCK
PURCHASED UNDER THE PLAN.
26. MUST CURRENT PARTICIPANTS IN THE PRIOR PLAN COMPLETE AN AUTHORIZATION CARD
TO PARTICIPATE IN THE PLAN?
No. Participants under the Prior Plan will continue to have dividends
reinvested or optional cash purchases made according to the instructions given
by them under the Prior Plan unless they change their method of investing by
completing and returning a new Authorization Card or terminate their
participation as provided under the Prior Plan. If a Participant in the Prior
Plan fails to terminate their account under the Prior Plan, they shall be
deemed to accept the terms and conditions of the Plan.
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TAX RESPONSIBILITY
27. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN?
Reinvested Dividends. When purchases of Common Stock with reinvested
dividends are made directly from Magna, a Participant should include in gross
income a dividend equal to the number of shares (including fractional shares)
of Common Stock so purchased multiplied by the fair market value (as defined
below) of a share of Common Stock on the investment date. A Participant's basis
in such shares also will equal the fair market value of the shares on the
investment date.
For purposes of this Question 27, the "fair market value" of a share of
Common Stock on the investment date must be determined under the Internal
Revenue Code of 1986, as amended (the "Code"), and applicable Internal Revenue
Service regulations. Under those regulations, if the Common Stock trades on the
investment date, the fair market value of a share of Common Stock is the
average of the high and low sales prices of a share of Common Stock as reported
on the NYSE for that date. If the Common Stock does not trade on that date, the
fair market value of a share of Common Stock is the weighted average of the
mean of the high and low sales prices of a share of Common Stock on the nearest
trading date before and after the investment date. By contrast, the purchase
price per share of Common Stock paid by the Trust Company for Common Stock
purchased from Magna is determined by averaging the high and low sale prices of
a share of Common Stock over the five consecutive trading day period ending on
and including the relevant investment date. As a result, it is possible that
the fair market value of a share of Common Stock (as determined under the Code
and applicable regulations) could exceed the per share price actually paid by
the Trust Company (as determined during the five-day averaging period). If this
occurs, the amount of dividend includible in a Participant's gross income and
reported to the Internal Revenue Service for federal income tax purposes would
exceed the amount of dividend actually paid and reinvested on behalf of the
Participant pursuant to the Plan.
When the Agent purchases shares of Common Stock on the open market with
reinvested dividends, a Participant should include in gross income an amount
equal to the dividend reinvested plus any allocable brokerage commission. A
Participant's basis in shares acquired in the open market also will be the
amount of the dividend reinvested plus any allocable brokerage commission.
Optional Cash Payments. When purchases of Common Stock with optional cash
payments are made directly from Magna, a Participant should include in gross
income a dividend equal to the excess, if any, of the fair market value (as
defined above) of such shares on the investment date over the amount of the
optional cash payment. A Participant's basis in such shares also will equal the
fair market value of the shares on the investment date.
Alternatively, when the Agent purchases shares of Common Stock on the open
market with optional cash payments, a Participant will recognize dividend
income in the amount of any allocable brokerage commission. A Participant's
basis in shares acquired in the open market will be the amount of the optional
cash payment invested plus any allocable brokerage commission.
The dividends-received deduction applicable to corporations generally
equals 70 percent of the dividends received. Corporate stockholders should be
aware that the Code contains rules limiting the availability of the
dividends-received deduction including, but not limited to, rules applicable to
indebtedness directly attributable to the investment in the stock and rules
relating to a stockholder's holding period for the stock.
A Participant will not recognize income, gain or loss when receiving
certificates for whole shares credited to his or her Plan account, either upon
a request for such certificates or upon withdrawal from or termination of the
Plan. However, if a Participant, upon withdrawal from or termination of the
Plan, requests that the Agent sell any shares (including any fractional share)
of Common Stock, the Participant will recognize gain (or loss) in an amount
equal to the difference between the net proceeds of the sale and the
Participant's basis in the shares sold. Such gain or loss will be capital in
character if such shares are a capital asset in the hands of the Participant.
The holding period for all shares of Common Stock purchased through
participation in the Plan commences on the day following the relevant
investment date.
Statements of account will be received by a Participant following each
purchase of Common Stock for a Plan account. The statements of account will
show for all such purchases the per share price paid by the Trust Company or
the Agent, as the case may be, for the Common Stock (which will include
brokerage commissions in the case of Common Stock purchased in the open
market). In the case of Common Stock purchased directly from Magna with
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reinvested dividends, the statements of account will additionally show the fair
market value of the Common Stock so purchased. IRS Form 1099-DIV (or an IRS
successor form) mailed to Participants following year-end will report dividend
income based on the fair market value of Common Stock, as determined for
federal income tax purposes, plus any allocable brokerage commission in the
case of shares acquired in the open market.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL PURPOSES ONLY. EACH
PARTICIPANT IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE
CONSEQUENCES TO HIM OR HER OF PARTICIPATING IN THE PLAN UNDER FEDERAL AND
APPLICABLE STATE, LOCAL AND FOREIGN TAX LAWS.
28. HOW ARE THE UNITED STATES INCOME TAX WITHHOLDING PROVISIONS APPLIED TO
FOREIGN STOCKHOLDERS?
In the case of those foreign stockholders whose Common Stock dividends are
subject to United States federal income tax withholding, the amount of tax
required to be withheld will be deducted from the dividend received for the
Plan account of the foreign stockholder and the amount remaining will be
reinvested in additional shares of Common Stock.
29. WHERE SHOULD CORRESPONDENCE REGARDING THE PLAN BE DIRECTED?
Correspondence regarding the Plan should be directed to the Trust Company
at the following address:
Magna Trust
1 South Church Street
Belleville, Illinois 62220
Telephone: (800) 900-4548
Telecopy: (618) 235-9656
30. WHO BEARS THE RISK OF FLUCTUATIONS IN THE MARKET PRICE OF THE COMMON STOCK?
A Participant's investment in Common Stock held in a Plan account is no
different with regard to market risk than an investment in Common Stock held in
certificate form. A Participant bears the risk of loss (and receives any
benefit of gain) occurring by reason of fluctuations in the market price of
Common Stock held in a Plan account.
NEITHER MAGNA NOR THE TRUST COMPANY NOR THE AGENT CAN ASSURE YOU OF A
PROFIT OR PROTECT YOU AGAINST A LOSS ON ANY SHARES OF COMMON STOCK PURCHASED
UNDER THE PLAN.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby will be passed
upon for Magna by Thompson Coburn, St. Louis, Missouri. Certain lawyers of
Thompson Coburn, as of March 31, 1997, beneficially owned an aggregate of
approximately 41,500 shares of Common Stock.
EXPERTS
The consolidated financial statements of Magna incorporated by reference in
Magna's Annual Report on Form 10-K for the year ended December 31, 1996, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon incorporated by reference therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of Homeland Bankshares Corporation
("Homeland"), Waterloo, Iowa for the fiscal year ended December 31, 1996,
which are incorporated herein by reference to Magna's Current Report on Form
8-K/A dated May 1, 1997, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein
by this reference, and have been so incorporated in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
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