<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
--------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------------- -------------------
Commission file number 1-12405
----------------------------------------------------
MAGNA GROUP, INC.
- --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 37-0996453
- --------------------------------- ---------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or
organization)
One Magna Place
1401 South Brentwood Boulevard
St. Louis, Missouri 63144-1401
- --------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(314) 963-2500
- --------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
------ ------
<TABLE>
<CAPTION>
Title of class of Number of shares
common stock outstanding as of August 8, 1997
- ----------------------------- ------------------------------------
<S> <C>
Common stock, $2.00 par value 32,954,003
</TABLE>
1
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 21
SIGNATURE PAGE 22
EXHIBIT INDEX 23
</TABLE>
2
<PAGE> 3
<TABLE>
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
MAGNA GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
JUNE 30 DECEMBER 31
1997 1996
---------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks $ 219,608 $ 180,412
Federal funds sold 87,487 34,068
Securities:
Held-to-maturity 148,035 154,729
Available-for-sale 1,725,963 1,501,178
Loans, net of unearned income 4,437,047 3,415,309
Reserve for loan losses (55,726) (45,382)
---------- ----------
Net Loans 4,381,321 3,369,927
Premises and equipment 107,587 81,815
Goodwill and other intangibles 125,166 29,310
Other assets 136,474 107,270
---------- ----------
TOTAL ASSETS $6,931,641 $5,458,709
========== ==========
LIABILITIES
Deposits:
Noninterest bearing $ 668,837 $ 575,504
Interest bearing 4,597,290 3,622,272
---------- ----------
Total Deposits 5,266,127 4,197,776
Federal funds purchased 205,155 25,500
Repurchase agreements 613,679 508,948
Other short-term borrowings 81,685 99,487
Long-term debt 82,419 77,577
Other liabilities 74,956 65,460
---------- ----------
TOTAL LIABILITIES 6,324,021 4,974,748
Commitments and contingent liabilities
STOCKHOLDERS' EQUITY
Preferred stock:
Class B, voting, $20 par value -
1,996 shares issued and outstanding 40 40
Common stock, $2 par value - 33,527,943
and 28,954,500 shares issued,
respectively 67,056 57,909
Capital surplus 329,358 230,258
Retained earnings 229,713 215,744
Treasury stock - 630,000 and 745,000
shares at cost, respectively (19,960) (17,605)
Net unrealized gains (losses)
on securities 1,413 (2,385)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 607,620 483,961
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,931,641 $5,458,709
========== ==========
See accompanying notes.
</TABLE>
3
<PAGE> 4
<TABLE>
MAGNA GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ ------------------
1997 1996 1997 1996
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 95,198 $71,125 $174,385 $140,392
Securities:
Taxable 25,661 23,932 50,189 45,005
Tax-exempt 2,965 1,739 5,157 3,460
-------- ------- -------- --------
28,626 25,671 55,346 48,465
Other interest income 887 148 2,042 855
-------- ------- -------- --------
TOTAL INTEREST INCOME 124,711 96,944 231,773 189,712
Interest Expense:
Deposits 51,184 38,533 94,768 76,386
Federal funds purchased 2,158 1,287 2,868 1,976
Repurchase agreements 7,287 5,015 14,042 9,579
Other short-term borrowings 1,172 1,030 2,437 1,870
Long-term debt 1,568 1,797 3,086 3,494
-------- ------- -------- --------
TOTAL INTEREST EXPENSE 63,369 47,662 117,201 93,305
-------- ------- -------- --------
NET INTEREST INCOME 61,342 49,282 114,572 96,407
Provision for Loan Losses 3,277 2,799 18,429 5,282
-------- ------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 58,065 46,483 96,143 91,125
Noninterest Income:
Service charges on deposits 6,528 5,993 12,358 11,539
Trust 3,233 2,382 6,208 4,746
Securities gains, net 721 17 851 690
Other 6,726 4,180 11,745 7,819
-------- ------- -------- --------
17,208 12,572 31,162 24,794
Noninterest Expense:
Employee compensation and
other benefits 22,938 17,269 42,763 34,889
Net occupancy 4,850 4,512 9,591 8,985
Equipment 2,603 2,223 5,076 4,473
FDIC insurance premiums 206 51 360 83
Intangible amortization 2,449 769 3,789 1,387
Other 12,118 9,956 22,002 19,837
-------- ------- -------- --------
45,164 34,780 83,581 69,654
-------- ------- -------- --------
INCOME BEFORE INCOME TAXES 30,109 24,275 43,724 46,265
Income Tax Expense 10,290 8,416 14,467 16,063
-------- ------- -------- --------
NET INCOME $ 19,819 $15,859 $ 29,257 $ 30,202
======== ======= ======== ========
Average Shares Outstanding:
Primary 33,258 28,626 31,782 28,499
Fully diluted 34,612 30,132 32,517 30,017
Per Share Data:
Net income:
Primary $.60 $.55 $.92 $1.06
==== ==== ==== =====
Fully diluted $.59 $.54 $.91 $1.04
==== ==== ==== =====
Dividends declared $.25 $.22 $.50 $ .44
==== ==== ==== =====
See accompanying notes.
</TABLE>
4
<PAGE> 5
<TABLE>
MAGNA GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<CAPTION>
SIX MONTHS ENDED
JUNE 30
---------------------------
1997 1996
--------- ---------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 35,405 $ 43,347
INVESTING ACTIVITIES
Proceeds from maturities of held-to-maturity
securities 8,465 2,069
Purchases of held-to-maturity securities (1,397) (8,073)
Proceeds from maturities of available-
for-sale securities 319,148 205,709
Proceeds from sales of available-for-
sale securities 193,141 38,991
Purchases of available-for-sale securities (567,726) (473,914)
Net increase in loans (122,531) (105,074)
Proceeds from sales of foreclosed property 2,107 3,614
Net purchases of premises and equipment (5,346) (3,397)
Purchase of financial organization,
net of cash received (18,988) (2,412)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (193,127) (342,487)
FINANCING ACTIVITIES
Net increase in deposits 122,664 4,065
Cash dividends (15,289) (12,481)
Net increase in federal funds purchased 145,605 66,160
Net increase in repurchase agreements 104,731 150,217
Net increase (decrease) in other short-
term borrowings (90,408) 10,501
Proceeds from long-term debt - 25,000
Payments of long-term debt (249) (4)
Purchase of treasury stock (19,960) (12,952)
Other 3,243 2,981
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 250,337 233,487
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 92,615 (65,653)
Cash and cash equivalents at beginning of period 214,480 222,213
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 307,095 $ 156,560
========= =========
See accompanying notes.
</TABLE>
5
<PAGE> 6
MAGNA GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A--BASIS OF PRESENTATION
The unaudited interim condensed consolidated financial statements of
Magna Group, Inc. and its affiliates ("Magna") have been prepared in
accordance with generally accepted accounting principles for the banking
industry and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. Reference is hereby made to the notes to consolidated financial
statements contained in Magna's Annual Report on Form 10-K for the year ended
December 31, 1996. In the opinion of management, all adjustments considered
necessary for a fair presentation of the unaudited interim condensed
consolidated financial statements have been included therein and are of a
normal recurring nature. The results of operations for the interim periods
presented herein are not necessarily indicative of the results to be expected
for the full year.
NOTE B--ACQUISITIONS
On March 1, 1997, Magna acquired Homeland Bankshares Corporation
("Homeland") for approximately 5,038,000 shares of common stock and
approximately $92 million in cash. The acquisition contributed approximately
$1.3 billion to total assets and approximately $120 million to stockholders'
equity at the date of acquisition. The acquisition was accounted for under
the purchase method. The following unaudited pro forma information has been
prepared assuming that the Homeland acquisition had taken place at the
beginning of the respective periods, after including the impact of certain
adjustments relevant to the transaction, such as the amortization of goodwill
and the amortization of certain assets acquired based on their respective
fair values.
<TABLE>
PRO FORMA RESULTS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
SIX MONTHS ENDED
June 30
--------------------------
1997 1996
-------- --------
<S> <C> <C>
Net Interest Income $121,922 $118,295
Net Income 28,130 33,351
Net Income Per Share:
Primary .85 1.01
Fully diluted .84 1.00
</TABLE>
6
<PAGE> 7
The pro forma results are not necessarily indicative of what actually
would have occurred if the acquisition had been consummated on January 1,
1996. In addition, the pro forma results are not intended to be a projection
of future results and do not reflect any synergies anticipated from the
combined operations of Magna and Homeland.
NOTE C--CHANGE IN ACCOUNTING METHODS
On January 1, 1997, Magna adopted Financial Accounting Standards No. 125
(FAS No. 125), "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities." FAS No. 125 requires an entity to
recognize financial and servicing assets it controls and the liabilities it
has incurred and to derecognize financial assets when control has been
surrendered in accordance with the criteria provided in the standard. Magna
will apply the new rules prospectively, other than those deferred by
Financial Accounting Standards No. 127 (FAS No. 127), "Deferral of the
Effective Date of Certain Provisions of FAS No. 125." The adoption of the
standards had no material impact on Magna's financial position or results of
operations.
NOTE D--RECLASSIFICATIONS
Certain amounts in the 1996 financial statements have been reclassified
to conform with the 1997 presentation. Such reclassifications had no effect
on net income.
NOTE E--CAPITAL
In January 1995, Magna announced a common stock repurchase program
authorizing the repurchase of up to 5% of its outstanding shares of common
stock, or 1.4 million shares. Prior to August 30, 1996, Magna repurchased
745,000 shares. These shares were subsequently reissued in connection with
the Homeland acquisition. During the period from August 30, 1996 through
March 1, 1997, the acquisition date of Homeland, Magna did not repurchase any
of its outstanding shares of common stock. Subsequent to the acquisition
date of Homeland, Magna repurchased 630,000 shares thereby completing the
repurchase program, as authorized in January 1995. In June 1997, Magna
announced a second common stock repurchase program authorizing the repurchase
of 1.7 million shares. As of June 30, 1997, no shares have been repurchased
in connection with this program.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
- -----------------------------------
OVERVIEW
Net income for the second quarter of 1997 was $19.8 million, or 60 cents
per common share on a primary basis, compared with $15.9 million, or 55 cents
per share, for the second quarter of 1996. For the first six months of 1997,
net income was $29.3 million, or 92 cents per common share on a primary
basis, compared with $30.2 million, or $1.06 per share, in 1996. On a fully
diluted basis, net income per common share was 59 cents for the second
quarter of 1997 compared with 54 cents for the second quarter of 1996 and was
91 cents for the first six months of 1997 compared with $1.04 for the first
six months of 1996.
Operating results of the acquisition consummated on March 1, 1997, are
included since the acquisition date and are significant to Magna's financial
condition and results of operations for the periods presented.
The decrease in net income, for the six month periods compared, is the
result of Magna's decision to add an additional $12.5 million to its first
quarter 1997 provision for loan losses to cover potential exposure associated
with one sizeable credit. Excluding this additional provision, net income
for the first six months of 1997 would have been $37.5 million, or $1.18 per
common share on a primary basis, an increase of 24.2% compared with the first
six months of 1996. The impact of the additional provision for loan losses
during the first six months of 1997 was partially offset by the operating
results of the acquired entity. The operating results of the acquired entity
was also the primary factor contributing to the increase in the net income
for the quarters compared.
On July 18, 1997, Magna completed consolidation of its Iowa banking
operations with and into its largest banking subsidiary, Magna Bank, N.A.,
headquartered in Brentwood, Missouri. As a result, this bank now operates in
the states of Illinois, Iowa and Missouri.
Table 1 summarizes Magna's statement of income and the change in each
category for the periods presented.
8
<PAGE> 9
<TABLE>
TABLE 1 - - Comparative Statements of Income
(In thousands)
<CAPTION>
Three Months Ended
June 30 Change
----------------------- -----------------------
1997 1996 Amount Percent
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Total interest income
(fully tax-equivalent). . . . . . . . $126,691 $98,218 $28,473 29.0%
Total interest expense . . . . . . . . 63,369 47,662 15,707 33.0
-------- ------- -------
Net interest income. . . . . . . 63,322 50,556 12,766 25.3
Provision for loan losses. . . . . . . 3,277 2,799 478 17.1
Noninterest income:
Service charges on deposits. . . 6,528 5,993 535 8.9
Trust. . . . . . . . . . . . . . 3,233 2,382 851 35.7
Other. . . . . . . . . . . . . . 6,726 4,180 2,546 60.9
-------- ------- -------
16,487 12,555 3,932 31.3
Securities gains, net. . . . . . 721 17 704 NM
-------- ------- -------
Total . . . . . . . . . . . . 17,208 12,572 4,636 36.9
-------- ------- -------
Noninterest expense:
Employee compensation and
other benefits. . . . . . . . . 22,938 17,269 5,669 32.8
Net occupancy. . . . . . . . . . 4,850 4,512 338 7.5
Equipment. . . . . . . . . . . . 2,603 2,223 380 17.1
FDIC insurance premiums. . . . . 206 51 155 303.9
Intangible amortization. . . . . 2,449 769 1,680 218.5
Other. . . . . . . . . . . . . . 12,118 9,956 2,162 21.7
-------- ------- -------
Total . . . . . . . . . . . . 45,164 34,780 10,384 29.9
-------- ------- -------
Income before income taxes . . . . . . 32,089 25,549 6,540 25.6
Less: tax-equivalent adjustment. . . . 1,980 1,274 706 55.4
Income tax expense . . . . . . . . . . 10,290 8,416 1,874 22.3
-------- ------- -------
Net income . . . . . . . . . . . . . . $ 19,819 $15,859 $ 3,960 25.0
======== ======= =======
<CAPTION>
Six Months Ended
June 30 Change
----------------------- -----------------------
1997 1996 Amount Percent
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Total interest income
(fully tax-equivalent). . . . . . . . $235,340 $192,210 $43,130 22.4%
Total interest expense . . . . . . . . 117,201 93,305 23,896 25.6
-------- -------- -------
Net interest income. . . . . . . 118,139 98,905 19,234 19.4
Provision for loan losses. . . . . . . 18,429 5,282 13,147 248.9
Noninterest income:
Service charges on deposits. . . 12,358 11,539 819 7.1
Trust. . . . . . . . . . . . . . 6,208 4,746 1,462 30.8
Other. . . . . . . . . . . . . . 11,745 7,819 3,926 50.2
-------- -------- -------
30,311 24,104 6,207 25.8
Securities gains, net. . . . . . 851 690 161 23.3
-------- -------- -------
Total . . . . . . . . . . . . 31,162 24,794 6,368 25.7
-------- -------- -------
Noninterest expense:
Employee compensation and
other benefits. . . . . . . . 42,763 34,889 7,874 22.6
Net occupancy. . . . . . . . . . 9,591 8,985 606 6.7
Equipment. . . . . . . . . . . . 5,076 4,473 603 13.5
FDIC insurance premiums. . . . . 360 83 277 333.7
Intangible amortization. . . . . 3,789 1,387 2,402 173.2
Other. . . . . . . . . . . . . . 22,002 19,837 2,165 10.9
-------- -------- -------
Total . . . . . . . . . . . . 83,581 69,654 13,927 20.0
-------- -------- -------
Income before income taxes . . . . . . 47,291 48,763 (1,472) (3.0)
Less: tax-equivalent adjustment. . . . 3,567 2,498 1,069 42.8
Income tax expense . . . . . . . . . . 14,467 16,063 (1,596) (9.9)
-------- -------- -------
Net income . . . . . . . . . . . . . . $ 29,257 $ 30,202 $ (945) (3.1)
======== ======== =======
</TABLE>
9
<PAGE> 10
The following paragraphs discuss more fully significant changes and trends as
they relate to Magna's results of operations during the three month and six
month periods ended June 30, 1997 and its financial condition, asset quality,
capital resources and liquidity as of June 30, 1997. This discussion should
be read in conjunction with Magna's condensed consolidated financial
statements and notes thereto. The results of operations for the interim
periods presented herein are not necessarily indicative of the results to be
expected for the full year.
The following discussion contains certain forward looking statements with
respect to the financial condition, results of operations and business of
Magna. These forward looking statements involve certain risks and
uncertainties. For example, by accepting deposits at fixed rates at
different times and for different terms and lending funds at fixed rates for
fixed periods, a bank accepts the risk that the cost of funds may rise and
the use of the funds may be at a fixed rate. Similarly, the cost of funds
may fall, but a bank may have committed by virtue of the term of a deposit to
pay what becomes an above market rate. Investments may decline in value in a
rising interest rate environment. Loans, and the reserve for loan losses,
have the risk that the borrower will not repay all funds in a timely manner
as well as the risk of total loss. Collateral may or may not have the value
attributed to it. The loan loss reserve, while believed adequate, may prove
inadequate if one or more large borrowers, or numerous mid-range borrowers,
or a combination of both, experience financial difficulty for individual or
national or international reasons. Because the business of banking is highly
regulated, decisions of governmental authorities, such as the rate of deposit
insurance, can have a major effect on operating results. All of these
uncertainties, as well as others, are present in a banking operation and
stockholders are cautioned that management's view of the future on which it
prices its products, evaluates collateral, sets loan reserves and estimates
costs of operation and regulation may prove to be other than as anticipated.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Tax-equivalent net interest income increased 25.3% for the second quarter
of 1997 compared with 1996 and increased 19.4% for the first six months of
1997 compared with the same period in 1996. The increases in tax-equivalent
net interest income were principally attributable to increased volumes of
interest earning assets and interest bearing liabilities derived from the
Homeland acquisition.
The net interest margin was 4.02% for the second quarter of 1997,
compared with 3.96% for the first quarter of 1997 and 4.09% for the second
quarter of 1996. The increase in the second quarter of 1997 compared with
the first quarter of 1997 was primarily attributable to the Homeland
acquisition as Homeland's net interest margin was greater than that of Magna.
The net interest margin for the first six months of 1997 was 3.99% compared
with 4.09% for the first six months of 1996. The decline during the 1997
period compared to the 1996 period occurred as the cost of funds increased at
a greater rate than the yield on earning assets. The increase in the yield
on earning assets
10
<PAGE> 11
was attributable to an increase in rates earned on Magna's investment portfolio
which was partially offset by an increase in nonaccrual loans which contributed
to a slight decline in rates earned on the loan portfolio. See "ASSET QUALITY."
The increased cost of funds was primarily associated with higher rates paid on
various categories of borrowings. Higher rates paid on other short-term
borrowings derived from the Homeland acquisition contributed to this increase.
PROVISION FOR LOAN LOSSES
Factors which influence management's determination of the provision for
loan losses include, among other things, evaluation of the anticipated impact
on the loan portfolio of current and projected economic conditions,
historical loss trends, a review of individual loans and changes in the
character and size of the portfolio. The increase in the provision for loan
losses during the first six months of 1997 compared with the first six months
of 1996, was primarily due to the additional provision described under
"Overview." Activity in the reserve for loan losses and nonperforming loan
data are presented and discussed under "ASSET QUALITY."
NONINTEREST INCOME
Total noninterest income was $17.2 million for the second quarter of 1997
compared with $12.6 million for the second quarter of 1996. Noninterest
income for the first six months of 1997 was $31.2 million compared with $24.8
million for the same period of 1996. Service charges on deposit accounts
increased $.5 million for the second quarter of 1997 compared with the second
quarter of 1996 and increased $.8 million for the six month periods compared.
Virtually all of these increases were derived from the Homeland acquisition.
The increases in income from trust services for the quarters and the six
month periods compared were primarily due to an increase in the market value
of trust assets on which certain fees are based and from the Homeland
acquisition. The increase in other noninterest income for the periods
compared resulted primarily from various sources of fee income of the
acquired entity coupled with higher levels of fee income from brokerage and
insurance activities along with increased levels of fee income associated
with automatic teller machines ("ATM's"). This particular source of ATM fee
income is derived from charges to non-Magna customers for their use of
Magna's ATM's. The increase in net securities gains for the second quarter
of 1997 compared with the second quarter of 1996 was the result of
management's decision, in the second quarter of 1997, to reconfigure certain
segments of the available-for-sale portion of the investment portfolio.
NONINTEREST EXPENSE
Total noninterest expense was $45.2 million for the second quarter of
1997 compared with $34.8 million for the second quarter of 1996. For the
first six months of 1997, total noninterest expense was $83.6 million
compared with $69.7 million for the same period of 1996.
11
<PAGE> 12
The increases in employee compensation and other benefits for the 1997
periods compared with 1996 were attributable to the Homeland acquisition
coupled with normal merit increases. The increases in net occupancy and
equipment expenses for the 1997 periods compared with 1996 were attributable
to direct expenses of the acquired entity. Federal Deposit Insurance
Corporation ("FDIC") premiums include assessments levied in connection with
the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund
(SAIF). Federal legislation enacted on September 30, 1996, reduced ongoing
SAIF deposit insurance assessment rates and increased ongoing BIF deposit
insurance assessment rates beginning January 1, 1997. This change in the
insurance assessment rate structure, along with increased levels of insured
deposits resulting from the acquired entity, were the primary factors
contributing to the increase in FDIC insurance premiums for the periods
compared. Substantially all of Magna's deposits are insured by the BIF. The
increase in intangible amortization for the periods compared was primarily
associated with amortization of goodwill attributable to the acquired entity.
The increases in other noninterest expenses for the periods compared were
attributable to the acquired entity.
Magna recorded income tax expense of $10.3 million for the second quarter
of 1997 compared with $8.4 million for the second quarter of 1996. For the
first six months of 1997, income tax expense was $14.5 million compared with
$16.1 million for the same period of 1996. The effective income tax rate was
34.2% and 34.7% for the second quarter of 1997 and 1996, respectively. The
effective income tax rate was 33.1% and 34.7% for the first six months of
1997 and 1996, respectively. The decrease in the effective tax rate for the
six month periods compared resulted primarily from generally lower levels of
earnings coupled with increased levels of tax-exempt interest as a percentage
of total interest income.
FINANCIAL CONDITION
GENERAL
Certain components of Magna's consolidated balance sheet at June 30, 1997
compared with December 31, 1996 and June 30, 1996 are presented in summary
form in Table 2. The increase in total assets at June 30, 1997 compared with
December 31, 1996 reflects, primarily, the acquisition consummated in the
first quarter of 1997.
12
<PAGE> 13
<TABLE>
TABLE 2 -- Selected Comparative Balance Sheet Items
(In thousands)
<CAPTION>
June 30 December 31 June 30
1997 1996 1996
---------- ----------- ----------
<S> <C> <C> <C>
Total assets. . . . . . . . . . . . . $6,931,641 $5,458,709 $5,350,174
Loans, net of
unearned income. . . . . . . . . . . 4,437,047 3,415,309 3,349,283
Investments . . . . . . . . . . . . . 1,873,998 1,655,907 1,664,798
Deposits. . . . . . . . . . . . . . . 5,266,127 4,197,776 4,028,161
Federal funds purchased . . . . . . . 205,155 25,500 107,950
Repurchase agreements:
Cash management. . . . . . . . . . . 473,698 428,701 416,390
Other. . . . . . . . . . . . . . . . 139,981 80,247 103,504
Other short-term borrowings . . . . . 81,685 99,487 84,924
Long-term debt. . . . . . . . . . . . 82,419 77,577 94,327
</TABLE>
LOANS
Loans, net of unearned income, increased 29.9%, or $1.0 billion, from
year-end 1996 to June 30, 1997. The majority of this increase was derived
from the Homeland acquisition. In addition to acquired loans, Magna also has
experienced modest growth in all categories of real estate loans.
Table 3 presents the composition of the loan portfolio by type of
borrower and major loan category and the percentage of each to the total
portfolio for the periods presented.
<TABLE>
TABLE 3 -- Loan Portfolio Composition
(In thousands)
<CAPTION>
June 30 December 31 June 30
1997 1996 1996
---------------------- -------------------- ------------------------
Amount Percent Amount Percent Amount Percent
---------- ------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Commercial borrowers:
- ---------------------
Commercial, financial
and agricultural. . . . . . . $ 822,168 18.5% $ 648,881 19.0% $ 618,747 18.5%
Commercial real estate . . . . 1,437,469 32.4 1,156,402 33.9 1,091,394 32.6
Real estate
construction. . . . . . . . . 219,687 5.0 150,157 4.4 181,686 5.4
---------- ----- ---------- ----- ---------- -----
Total commercial . . . . 2,479,324 55.9 1,955,440 57.3 1,891,827 56.5
---------- ----- ---------- ----- ---------- -----
Consumer borrowers:
- -------------------
1-4 family residential
real estate . . . . . . . . . 1,320,249 29.7 942,053 27.6 928,669 27.7
Other consumer loans,
net of unearned income. . . . 637,474 14.4 517,816 15.1 528,787 15.8
---------- ----- ---------- ----- ---------- -----
Total consumer . . . . . 1,957,723 44.1 1,459,869 42.7 1,457,456 43.5
---------- ----- ---------- ----- ---------- -----
Total loans, net of
unearned income . . . . $4,437,047 100.0% $3,415,309 100.0% $3,349,283 100.0%
========== ===== ========== ===== ========== =====
</TABLE>
INVESTMENTS
Total investments increased 13.2%, or $218.1 million, at June 30, 1997
compared with year-end 1996. The increase in investment securities from
year-end 1996 resulted primarily from the Homeland acquisition coupled with
growth in tax-exempt securities. During the first six months of 1997,
management
13
<PAGE> 14
lengthened the duration of the investment portfolio. During this
time frame, longer term tax-exempt securities were emphasized in view of
their positive attributes compared to other alternative investments. Magna's
investment portfolio serves three important functions. First, it is a vehicle
for managing balance sheet rate sensitivity. Second, it is a means for
investment of excess funds. Third, the available-for-sale portion of the
portfolio provides a resource from which liquidity needs may be satisfied.
Table 4 presents the composition of investments for the periods
presented.
<TABLE>
TABLE 4 -- Investment Securities Portfolio Composition
(In thousands)
<CAPTION>
June 30 December 31 June 30
1997 1996 1996
---------- ----------- ----------
<S> <C> <C> <C>
Held-to-maturity securities . . $ 148,035 $ 154,729 $ 142,410
Available-for-sale securities . 1,725,963 1,501,178 1,522,388
---------- ---------- ----------
Total investments. . . . . . $1,873,998 $1,655,907 $1,664,798
========== ========== ==========
</TABLE>
GOODWILL AND OTHER INTANGIBLES
Goodwill and other intangibles increased $95.9 million at June 30, 1997
from year-end 1996. Virtually all of this increase is attributable to
goodwill associated with the first quarter 1997 acquisition of Homeland.
This goodwill will be amortized over a period of 15 years.
DEPOSITS
Total deposits increased $1.1 billion to $5.3 billion at June 30, 1997
from year-end 1996. The majority of this increase was derived from the
Homeland acquisition. Excluding the effects of the acquisition, the time
deposit component of interest bearing deposits increased from year-end 1996.
This increase was partially offset by decreases in noninterest bearing
deposits, interest bearing demand deposits and savings and market rate
deposits. The decrease in noninterest bearing deposits was primarily due to
seasonal factors which generally increase the level of these deposits at the
end of a calendar year. The decreases in interest bearing demand deposits
and savings and market rate deposits occurred, in part, because of a shift
towards higher yielding time deposits. More aggressive sales efforts also
contributed to the increase in time deposits.
Table 5 sets forth the composition of deposits and the changes in each
category for the periods presented.
14
<PAGE> 15
<TABLE>
TABLE 5 -- Deposit Liability Composition
(In thousands)
<CAPTION>
June 30 December 31 June 30
1997 1996 1996
--------------------- ------------------------ -----------------------
Amount Percent Amount Percent Amount Percent
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Noninterest bearing. . . . . . $ 668,837 12.7% $ 575,504 13.7% $ 521,083 12.9%
Interest bearing demand
deposits . . . . . . . . . 600,060 11.4 542,268 12.9 523,080 13.0
Savings and market
rate deposits. . . . . . . 1,006,405 19.1 811,077 19.3 832,852 20.7
Time deposits less than
$100,000 . . . . . . . . . 2,319,824 44.1 1,780,188 42.4 1,745,442 43.3
Time deposits $100,000
or more. . . . . . . . . . 671,001 12.7 488,739 11.7 405,704 10.1
---------- ----- ---------- ----- ---------- -----
Total deposits . . . . . $5,266,127 100.0% $4,197,776 100.0% $4,028,161 100.0%
========== ===== ========== ===== ========== =====
</TABLE>
FEDERAL FUNDS PURCHASED AND REPURCHASE AGREEMENTS
Federal funds purchased increased $179.7 million from year-end 1996.
Included in the increase are federal funds purchased attributable to the
acquired entity. Federal funds purchased are short-term sources of funds
utilized by Magna's banking subsidiary and are primarily obtained from its
network of correspondent banks. As such, levels of federal funds purchased
can fluctuate significantly. Seasonally high demand deposit levels at the
end of a calendar year also tend to reduce the level of federal funds
purchased at that time. Repurchase agreements increased $104.7 million from
year-end 1996. Approximately $45.0 million of this increase was in the form
of cash management repurchase agreements. Such accounts involve the daily
transfer of excess funds from a noninterest bearing deposit account into the
interest bearing cash management repurchase agreement account. The cash
management repurchase agreement accounts are viewed by management as a stable
source of funds from commercial depositors. Repurchase agreements, other
than cash management repurchase agreements, increased $59.7 million from
year-end 1996. Approximately $44.9 million of this increase relates to
certain term repurchase agreements, entered into by Magna, which serve as an
alternative source of funds to deposit funding sources. The remaining
increase relates to other term repurchase agreements which generally
represent an alternative to short-term certificates offered to Magna's
commercial and public fund customer base.
OTHER SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Other short-term borrowings reflected a decrease of $17.8 million at June
30, 1997 compared with year-end 1996. Other short-term borrowings
attributable to the acquired entity included three Federal Home Loan Bank
advances totaling $50.2 million and an additional $4.5 million borrowing in
the form of a treasury tax and loan note option account. One of the Federal
Home Loan Bank advances in the amount of $40.0 million matures on June 5,
2000 but is callable by the holder, on a quarterly basis, beginning September
5, 1997. A $10.0 million advance matures on September
15
<PAGE> 16
12, 1997. The weighted average interest rate associated with these advances
is 5.68%. The increase in other short-term borrowings resulting from the
acquired entity was more than offset by a reduction in other short-term
borrowings previously recorded on the books of Magna. This reduction was
primarily attributable to the maturity, in February 1997, of two Federal Home
Loan Bank advances totaling $23.5 million and an additional advance in the
amount of $50.0 million which was called for redemption in March 1997. As with
federal funds purchased and repurchase agreements, other short-term borrowings
serve as an alternative source of funds to deposit funding sources. The
increase in long-term debt from year-end 1996 of $4.8 million was primarily
attributable to the acquired entity and was comprised of several Federal Home
Loan Bank advances having various interest rates and maturity dates.
ASSET QUALITY
Magna's asset quality management program includes the establishment of
investment and credit policies, the continued evaluation of the quality and
trends of material assets and the prompt implementation of appropriate
actions in view of the results of such evaluation. The objective of Magna's
asset quality management program, particularly with regard to loans, is to
manage credit exposure, a significant risk faced by all financial
institutions, and to support the growth of a profitable and higher quality
portfolio. Management continues to monitor the asset quality of the loan
portfolio, promptly following up on problem credits and implementing workout
strategies to manage the level of nonperforming assets.
At June 30, 1997, nonperforming assets totaled $44.6 million, or .64% of
total assets, compared with nonperforming assets at year-end 1996 of $30.2
million, or .55% of total assets. The level of nonperforming assets at June
30, 1997, includes those resulting from the Homeland acquisition. Excluding
the nonperforming loans associated with the acquired entity, all categories
of nonperforming loans remained relatively stable at June 30, 1997, when
compared to year-end 1996, with the exception of the commercial, financial
and agricultural category. Nonperforming loans associated with the
commercial, financial and agricultural category increased $9.1 million at
June 30, 1997 compared to year-end 1996. This increase primarily related to
one credit in the amount of $14.9 million, which was placed on nonaccrual
status as of March 31, 1997. Since the credit was originally placed on
nonaccrual status, certain collateral has been liquidated, thus reducing the
balance due on the credit. In addition to the portion of this credit being
placed on nonaccrual status, approximately $14.4 million was charged to the
reserve for loan losses. Management continues to take action to maximize
Magna's potential recovery with respect to this credit. The level of foreclosed
property at June 30, 1997 compared to year-end 1996 remained stable. Magna does
not anticipate any significant losses on the disposition of other real estate
owned at June 30, 1997.
16
<PAGE> 17
As a result of the above charge-off, net charge-offs for the first six
months of 1997 totaled $21.2 million compared with $4.3 million for the first
six months of 1996. Net charge-offs increased to $3.2 million for the second
quarter of 1997 from $2.2 million for the second quarter of 1996. With the
exception of the specific charge-off discussed herein, net charge-offs
associated with all other loan categories remained relatively stable for the
periods compared. The ratio of the reserve for loan losses to total loans
was 1.26% and 1.33% at June 30, 1997 and 1996, respectively. Management
believes that the reserve for loan losses is adequate to provide for possible
losses inherent in the loan portfolio. However, no assurance can be given that
subsequent changes in economic conditions, risk elements and other factors will
not require significant changes in the level of the loan loss reserve.
Table 6 sets forth a summary of Magna's loan portfolio mix and nonperforming
assets.
<TABLE>
TABLE 6 -- Loan Portfolio Mix and Nonperforming Assets
(In thousands)
<CAPTION>
June 30, 1997 December 31, 1996
----------------------------- ------------------------------
Loans and Non- Loans and Non-
Foreclosed performing Foreclosed performing
Property Assets Property Assets
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Commercial borrowers:
---------------------
Commercial, financial and
agricultural. . . . . . . . . . . . . $ 822,168 $15,738 $ 648,881 $ 6,684
Commercial real estate . . . . . . . . 1,437,469 7,552 1,156,402 7,229
Real estate construction . . . . . . . 219,687 1,524 150,157 730
---------- ------- ---------- -------
Total commercial . . . . . . . . . . 2,479,324 24,814 1,955,440 14,643
Consumer borrowers:
-------------------
1-4 family residential
real estate . . . . . . . . . . . . . 1,320,249 12,635 942,053 9,971
Other consumer loans, net
of unearned income. . . . . . . . . . 637,474 4,912 517,816 2,694
---------- ------- ---------- -------
Total consumer . . . . . . . . . . . 1,957,723 17,547 1,459,869 12,665
---------- ------- ---------- -------
Total loans, net of
unearned income . . . . . . . . . . . 4,437,047 42,361 3,415,309 27,308
Foreclosed property. . . . . . . . . . . 2,230 2,230 2,906 2,906
---------- ------- ---------- -------
Total. . . . . . . . . . . . . . . . . $4,439,277 $44,591 $3,418,215 $30,214
========== ======= ========== =======
Nonaccrual loans . . . . . . . . . . . . $29,710 $17,133
Loans past due 90 days or more . . . . . 12,409 10,175
Restructured loans . . . . . . . . . . . 242 -
------- -------
Total nonperforming loans. . . . . . . 42,361 27,308
Foreclosed property. . . . . . . . . . . 2,230 2,906
------- -------
Total nonperforming assets . . . . . . $44,591 $30,214
======= =======
Nonperforming loans to
total loans. . . . . . . . . . . . . . .95% .80%
Nonperforming assets to total
loans and foreclosed property. . . . . 1.00 .88
Nonperforming assets to
total assets . . . . . . . . . . . . . .64 .55
</TABLE>
17
<PAGE> 18
Table 7 presents information pertaining to the activity in and an
analysis of Magna's reserve for loan losses for the periods presented.
<TABLE>
TABLE 7 -- Reserve For Loan Losses
(In thousands)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ -----------------
1997 1996 1997 1996
------- -------- ------- -------
<S> <C> <C> <C> <C>
Balance at beginning of period. . . . . . . $55,656 $43,905 $45,382 $42,623
Reserves of acquired institutions . . . . . - - 13,146 890
Loans charged off:
Commercial borrowers:
Commercial, financial and agricultural . (1,420) (1,180) (18,569) (2,553)
Commercial real estate . . . . . . . . . (847) (308) (1,287) (839)
Real estate construction . . . . . . . . (1) (210) (25) (272)
------- ------- ------- -------
Total commercial . . . . . . . . . . . (2,268) (1,698) (19,881) (3,664)
Consumer borrowers:
1-4 family residential real estate . . . (253) (413) (393) (692)
Other consumer loans . . . . . . . . . . (1,528) (1,343) (3,088) (2,520)
------- ------- ------- -------
Total consumer . . . . . . . . . . . . (1,781) (1,756) (3,481) (3,212)
------- ------- ------- -------
Total charge-offs. . . . . . . . . . (4,049) (3,454) (23,362) (6,876)
------- ------- ------- -------
Recoveries of loans previously charged off:
Commercial borrowers:
Commercial, financial and agricultural . 346 634 891 1,405
Commercial real estate . . . . . . . . . 39 189 148 288
Real estate construction . . . . . . . . 2 3 185 17
------- ------- ------- -------
Total commercial . . . . . . . . . . . 387 826 1,224 1,710
Consumer borrowers:
1-4 family residential real estate . . . 43 106 129 232
Other consumer loans . . . . . . . . . . 412 282 778 603
------- ------- ------- -------
Total consumer . . . . . . . . . . . . 455 388 907 835
------- ------- ------- -------
Total recoveries . . . . . . . . . . 842 1,214 2,131 2,545
------- ------- ------- -------
Net loans charged off . . . . . . . . . . . (3,207) (2,240) (21,231) (4,331)
------- ------- ------- -------
Provision for loan losses charged
to operations. . . . . . . . . . . . . . . 3,277 2,799 18,429 5,282
------- ------- ------- -------
Balance at end of period. . . . . . . . . . $55,726 $44,464 $55,726 $44,464
======= ======= ======= =======
Net loan charge-offs (annualized) to
average loans. . . . . . . . . . . . . . . .29% .27% 1.05% .27%
Reserve for loan losses to total loans. . . 1.26 1.33 1.26 1.33
Reserve for loan losses to
nonperforming loans. . . . . . . . . . . . 131.55 156.72 131.55 156.72
</TABLE>
18
<PAGE> 19
CAPITAL RESOURCES AND LIQUIDITY
CAPITAL
Financial institutions are subject to various regulatory capital
guidelines administered by the federal banking agencies. The guidelines are
commonly known as "Risk-Based Guidelines" as they define the capital level
requirements of a financial institution based upon the level of risk
associated with holding various categories of assets. The Risk-Based
Guidelines require minimum ratios of Tier 1 and Total capital to risk-weighted
assets of 4% and 8%, respectively. At June 30, 1997, Magna's Tier 1
and Total capital ratios were 10.84% and 12.02%, respectively. In addition
to the Risk-Based Guidelines, the federal banking agencies have established a
minimum leverage ratio guideline for financial institutions (the "Leverage
Ratio Guideline"). The Leverage Ratio Guideline provides for a minimum ratio
of Tier 1 capital to average assets of 3% for financial institutions that
meet certain specified criteria, including having the highest regulatory
ratings. Other financial institutions generally are required to maintain a
leverage ratio of at least 4% to 5%. Magna's leverage ratio at June 30, 1997
was 7.20%.
DIVIDENDS AND RESOURCE COMMITMENTS
The primary source of funds to Magna, on a parent company only basis,
consists of dividends and management fees paid by its banking subsidiary
whose ability to pay dividends and management fees is subject to limitations
under various laws and regulations, and to prudent and sound banking
principles. Because of such limitations, during the fourth quarter of 1996,
Magna's banking subsidiary requested and received approval from the Office of
the Comptroller of the Currency (the "OCC") to pay to Magna a special
dividend sufficient for Magna to fund the cash portion of the acquisition
consummated on March 1, 1997. The banking subsidiary also requested and
received approval from the OCC to pay dividends in 1997 of up to 50% of
its then-current period earnings, subject to the banking subsidiary
maintaining its status as a "well capitalized" financial institution.
Magna believes that the earnings of its banking subsidiary will be
sufficient to provide capital to fund asset growth and to permit the
distribution of cash dividends to Magna sufficient to meet Magna's operating
and debt service requirements, as well as anticipated dividends, for the
foreseeable future.
19
<PAGE> 20
CREDIT FACILITY
Magna has entered into a three year unsecured revolving credit facility
(the "Credit Facility") with a syndicate of unaffiliated banks, which
provides for borrowings by Magna of up to $100 million. Under the terms of
the Credit Facility, Magna may elect to convert the principal balance of any
outstanding revolving loans into term loans for a term ending no later than
December 30, 2002. The Credit Facility contains specific covenants which,
among other things, limit dividend payments, restrict the sale of assets by
Magna under certain circumstances, provide for possible acceleration of the
repayment terms upon the merger of Magna or its subsidiaries with and into
unaffiliated entities and require the maintenance by Magna of certain
financial ratios. At June 30, 1997, there were no amounts outstanding under
the Credit Facility.
20
<PAGE> 21
PART II - OTHER INFORMATION
- ---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits: See Exhibit Index on page 23 hereof.
(b) Reports on Form 8-K: On May 1, 1997, Magna filed a Current Report on
Form 8-K/A dated May 1, 1997 that amended its Current Report on Form 8-K
dated March 1, 1997 to report the acquisition of Homeland under Item 2. In
addition, Magna filed the following financial statements with such report:
(i) Consolidated Balance Sheets of Homeland as
of December 31, 1996 and 1995;
(ii) Consolidated Statements of Income of Homeland
for the years ended December 31, 1996, 1995 and
1994;
(iii) Consolidated Statements of Cash Flows of Homeland
for the years ended December 31, 1996, 1995 and
1994;
(iv) Consolidated Statements of Changes in Stock-
holders' Equity of Homeland for the years ended
December 31, 1996, 1995 and 1994;
(v) Unaudited Pro Forma Combined Consolidated Balance
Sheet of Magna as of December 31, 1996; and
(vi) Unaudited Pro Forma Combined Consolidated
Statement of Income of Magna for the Twelve
Months ended December 31, 1996.
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAGNA GROUP, INC.
---------------------------
(Registrant)
DATE: August 8, 1997 By:/s/ G. Thomas Andes
- ------------------------ -------------------------
G. Thomas Andes
Chairman of the Board and
Chief Executive Officer
DATE: August 8, 1997 By:/s/ Ronald A. Buerges
- ------------------------ -------------------------
Ronald A. Buerges
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
22
<PAGE> 23
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
- ----------- ------------
3.1 Restated Certificate of Incorporation
of Magna Group, Inc.
3.2 By-laws of Magna Group, Inc., as amended.
10.1 Amended and restated employment agreement
between Magna Group, Inc. and G. Thomas Andes
effective January 1, 1995, and amended
and restated June 6, 1996 and as of May 27, 1997.
10.2 Supplemental Senior Executive Retirement
Plan of Magna Group, Inc. dated May 27, 1997.
11.1 Computation of Net Income Per Common
Share.
27.1 Financial Data Schedule.
23
<PAGE> 1
RESTATED CERTIFICATE OF INCORPORATION
OF
MAGNA GROUP, INC.
Pursuant to Section 245 of the Delaware General Corporation Law, the
Board of Directors of Magna Group Inc., a Delaware corporation incorporated
on the 9th day of December 1974 under the name FOB, CORP., hereby adopts,
without vote of the stockholders of the Corporation, this Restated
Certificate of Incorporation which correctly states and integrates without
change the corresponding amendments to the Corporation's Certificate of
Incorporation as theretofore amended or supplemented. This Restated
Certificate of Incorporation supersedes the original Certificate of
Incorporation and all prior amendments thereto.
ARTICLE 1
---------
The name of this Corporation is Magna Group, Inc.
ARTICLE 2
---------
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.
The name of the registered agent at such address is The Corporation Trust
Company.
ARTICLE 3
---------
The nature of the 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 General Corporation Law of Delaware.
ARTICLE 4
---------
The total number of shares of stock which the Corporation shall have
the authority to issue is eighty million (80,000,000) shares of Common Stock
with a par value of Two Dollars ($2.00) per share; one million (1,000,000)
shares of Preferred Stock with no par value per share; forty-nine thousand
five hundred (49,500) shares of Class B Voting Preferred Stock with a par
value of Twenty Dollars ($20.00) per share; and one million (1,000,000)
shares of Class C Non-Voting Preferred Stock with a par value of Ten Cents
($0.10) per share. For purposes of this Article 4, the Preferred Stock,
Class B Voting Preferred Stock and Class C Non-Voting Preferred Stock are
hereinafter referred to as "Preferred Stock."
The designations and powers, preferences, rights and the
qualifications, limitations or restrictions thereof, of the Preferred Stock
shall be as follows:
(1) The Board of Directors, by adoption of an authorizing
resolution, may cause the Preferred Stock to be issued from time
to time in one or more series.
<PAGE> 2
(2) The Board of Directors, by adoption of an authorizing
resolution, may fix the designations, powers, preferences and
relative, participating, optional or other special rights and the
qualifications, limitations or restrictions thereof, of each
series of the Preferred Stock including but not limited to:
(a) The number of shares constituting the series
and the series' distinctive designation;
(b) The time or times, price or prices, rate or
rates, rights of adjustment, and other terms and conditions of
redemption, if any;
(c) The terms, amount and conditions of a sinking
fund to be used for the purchase or redemption of the Preferred
Stock, if any;
(d) The rate or rates, time or times, preferences,
relative rights of priority, and other terms and conditions of
the payment of dividends, if any;
(e) The date from which and the terms and
conditions under which dividends may be cumulative, if any;
(f) The rights of the holders of the Preferred
Stock upon dissolution or liquidation of the Corporation or any
distribution of the Corporation's assets, if any;
(g) The price or prices, rate or rates, rights of
adjustment, and terms and conditions under which the Preferred
Stock may be converted to or exchanged for other shares, if any;
and
(h) Voting powers or rights in addition to those
provided for by law, if any.
ARTICLE 5
---------
The name and mailing address of each incorporator were as follows:
Name Mailing Address
---- ---------------
B. A. Pennington 100 West Tenth Street
Wilmington, Delaware 19801
W. J. Reif 100 West Tenth Street
Wilmington, Delaware 19801
R. F. Andrews 100 West Tenth Street
Wilmington, Delaware 19801
- 2 -
<PAGE> 3
ARTICLE 6
---------
The Corporation is to have perpetual existence.
ARTICLE 7
---------
A. The Board of Directors shall have the power to make, amend,
alter, change or repeal the by-laws (except in so far as the by-laws adopted
by the stockholders shall otherwise provide). Any by-laws made by the
directors under the powers conferred hereby may be amended, altered, changed
or repealed by the directors or by the stockholders. Notwithstanding the
foregoing or anything contained in this Restated Certificate of Incorporation
to the contrary, Section 11 of Article II, Sections 1 and 2 of Article III
and Article VIII of the by-laws shall not be amended, altered, changed or
repealed and no provision inconsistent therewith shall be adopted without the
affirmative vote of the holders of at least eighty percent (80%) of the
voting power of all shares of the Corporation's outstanding capital stock,
voting together as a single class (it being understood that for purposes of
this Article 7, each share of voting stock shall be entitled to the number of
votes granted to it by law or pursuant to Article 4 of this Restated
Certificate of Incorporation), unless such amendment, alteration, change or
repeal has previously been expressly approved by the Board of Directors by
the affirmative vote or consent of at least sixty-six and two-thirds percent
(66-2/3%) of the number of Directors then in office.
B. In addition to any affirmative vote required by law or otherwise,
any amendment, alteration, change or repeal of the provision of this Article
7 shall require the affirmative vote of at least eighty percent (80%) of the
voting power of all shares of the Corporation's outstanding capital stock,
voting together as a single class (it being understood that for purposes of
this Article 7, each share of voting stock shall be entitled to the number of
votes granted to it by law or pursuant to Article 4 of this Restated
Certificate of Incorporation), unless such amendment, alteration, change or
repeal has previously been expressly approved by the Board of Directors by
the affirmative vote or consent of at least sixty-six and two-thirds percent
(66-2/3%) of the number of directors then in office, in which case the
stockholder vote required by this Section B of Article 7 shall not apply.
ARTICLE 8
---------
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the by-laws of the Corporation. Elections of
directors need not be by written ballot unless the by-laws of the Corporation
shall so provide.
ARTICLE 9
---------
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
- 3 -
<PAGE> 4
ARTICLE 10
----------
A. The number of directors to constitute the Board of Directors
shall be fixed, from time to time, at not less than five (5) nor more than
twenty-one (21), by resolution of the Board of Directors adopted by the vote
or consent of at least sixty-six and two-thirds percent (66-2/3%) of the
number of directors then in office. The directors shall be divided into
three classes: Class I, Class II and Class III; and the number of directors
in such classes shall be as nearly equal as possible. The term of office of
the initial Class I directors expired at the annual meeting of stockholders
of the Corporation in 1986; the term of office of the initial Class II
directors expired at the annual meeting of stockholders of the Corporation in
1987; and the term of office of the initial Class III directors expired at
the annual meeting of stockholders of the Corporation in 1988; or in each
case until their respective successors were duly elected and qualified. At
each annual election held after 1985 the directors chosen to succeed those
whose terms then expire shall be identified as being of the same class as the
directors they succeed and shall be elected for a term of three (3) years
expiring at the third succeeding annual meeting or thereafter until their
respective successors are duly elected and qualified. If the number of
directors is changed, any increase or decrease in the number of directors
shall be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible.
B. Any vacancy on the Board (whether such vacancy is caused by
death, resignation, or removal for cause, or is the result of a newly created
directorship) shall be filled by a majority of the directors then in office.
Any director elected to fill a vacancy in any class (whether such vacancy is
caused by death, resignation or removal for cause, or is the result of an
increase in the number of directors in such class) shall hold office for a
term which shall expire with the term of the directors in such class.
C. No director may be removed without cause from office during such
director's term of office. At a meeting called expressly for that purpose,
any director may be removed by the stockholders for cause by the affirmative
vote of the holders of a majority of the shares entitled to vote at an
election of directors.
D. Any action required or permitted to be taken by the stockholders
of the Corporation shall be effected at a duly called annual or special
meeting of stockholders and may not be effected by any consent in writing by
such holders.
E. In addition to any affirmative vote required by law or otherwise,
any amendment, alteration, change or repeal of the provisions of this Article
10 shall require the affirmative vote of the holders of not less than eighty
percent (80%) of the voting power of the shares then entitled to vote at an
election of directors, unless such amendment, alteration, change or repeal
has previously been expressly approved by the Board of Directors of the
Corporation by the affirmative vote or consent of at least sixty-six and
two-thirds percent (66-2/3%) of the number of directors then in office, in
which case the stockholder vote required by this Section E of Article 10 shall
not apply.
- 4 -
<PAGE> 5
ARTICLE 11
----------
A. In addition to any affirmative vote required by law, and except
as otherwise expressly provided in Section B of this Article 11, a Business
Combination (as hereinafter defined) may not be consummated or effected
unless such transaction shall first have received the affirmative vote of the
holders of at least eighty percent (80%) of the voting power of the then
outstanding shares of capital stock of the Corporation, voting together as a
single class ("Voting Stock") (it being understood that for the purposes of
this Article 11, each share of the Voting Stock shall be entitled to the
number of votes granted to it by law or pursuant to Article 4 of this
Restated Certificate of Incorporation). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that a
lesser percentage may be specified, by or pursuant to law, this Restated
Certificate of Incorporation, or any agreement.
B. Section A of this Article 11 shall not be applicable to a
Business Combination, and such Business Combination shall require only the
affirmative vote (if any) as required by law or otherwise, if the Business
Combination shall have been expressly approved by the Board of Directors of
the Corporation by the affirmative vote or consent of at least sixty-six and
two-thirds percent (66-2/3%) of the number of directors of the Corporation
then in office (the "Whole Board"). In determining whether or not to approve
any such Business Combination, the Board of Directors shall give due
consideration to all factors the Board may consider relevant, including
without limitation:
(1) the legal and economic effects on the depositors and
customers of the Corporation and its subsidiaries, on the
communities and geographic areas in which the Corporation and its
subsidiaries operate or are located, and on any of the businesses
and properties of the Corporation and its subsidiaries; and
(2) the adequacy of the consideration offered in relation
not only to the current market price of the outstanding securities
of the Corporation, but also to the current value of the Corporation
in a freely negotiated transaction and the Board of Directors'
estimate of the future value of the Corporation (including the
unrealized value of its properties and assets) as an independent
going concern.
C. For the purposes of this Article 11 of this Restated Certificate
of Incorporation:
(1) A "Business Combination" shall mean:
(a) any merger, consolidation or exchange of shares
of capital stock of the Corporation or any Subsidiary (as
hereinafter defined) with or into any Interested Person (as
hereinafter defined) or any other corporation or entity (whether
or not it is an Interested Person) which is, or after such
merger, consolidation or exchange of shares would be, an
Interested Person or an Affiliate (as hereinafter defined) of an
Interested Person, regardless of the surviving entity;
- 5 -
<PAGE> 6
(b) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition to or with an Interested Person or
any Affiliate of any Interested Person (in a single transaction
of a series of related transactions) other than in the ordinary
course of business, of all or a substantial part of the assets of
the Corporation or of any Subsidiary, or both;
(c) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition to or with the Corporation or any
Subsidiary (in a single transaction of a series of related
transactions) other than in the ordinary course of business, of
all or a substantial part of the assets of an Interested Person
or any Affiliate of an Interested Person, or both;
(d) any issuance or transfer by the Corporation or
any Subsidiary of any securities of the Corporation or any
Subsidiary to an Interested Person or any Affiliate of an
Interested Person (other than an issuance or transfer of
securities which is effected on a pro rata basis to all
stockholders of the Corporation);
(e) any acquisition by the Corporation or any
Subsidiary, other than in the ordinary course of business, of any
securities of an Interested Person or any Affiliate of an
Interested Person;
(f) any recapitalization or reclassification of
shares of any class of capital stock of the Corporation or any
Subsidiary, or any merger or consolidation of the Corporation
with any Subsidiary (whether or not involving an Interested
Person), which transaction would have the effect, directly or
indirectly, of increasing the proportionate share of the
outstanding shares of any class of capital stock of the
Corporation (or any securities convertible into any class of such
capital stock) with respect to which an Interested Person or an
Affiliate of an Interested Person is the "Beneficial Owner" (as
hereinafter defined);
(g) any merger or consolidation of the Corporation
with any Subsidiary, after which the provisions of this Article
11 shall not be contained in the certificate of incorporation of
the surviving entity;
(h) any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Person or an Affiliate of an Interested Person; or
(i) any agreement, contract, plan, proposal or
other arrangement providing for any of the foregoing.
(2) An "Interested Person" shall mean any individual,
partnership, firm, corporation or other entity (other than the
Corporation or any Subsidiary) who or which,
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<PAGE> 7
directly or indirectly, together with any of his or its Affiliates and
Associates (as hereinafter defined), is, or at any time within the
one-year period immediately prior to the date in question was, the
Beneficial Owner of five percent (5%) or more of the voting power of the
outstanding Voting Stock (it being understood that for purposes of this
Article 11, each share of the Voting Stock shall be entitled to the
number of votes granted to it by law or pursuant to Article 4 of this
Restated Certificate of Incorporation).
(3) A "Subsidiary" shall mean any corporation, of which a
majority of its capital stock is directly or indirectly owned by the
Corporation.
(4) The term "Beneficial Owner" shall have the meaning
ascribed to such term by Rule 13d-3 promulgated by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934,
as in effect on February 1, 1985.
(5) The terms "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 promulgated
by the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as in effect on February 1, 1985.
D. Any amendment, alteration, change or repeal of the provisions of
this Article 11 shall, in addition to any affirmative vote required by law or
otherwise, require the affirmative vote of the holders of at least eighty
percent (80%) of the voting power of the Voting Stock (it being understood
that for purposes of this Article 11, each share of the Voting Stock shall be
entitled to the number of votes granted to it by law or pursuant to Article 4
of this Restated Certificate of Incorporation), unless such amendment,
alteration, change or repeal has previously been expressly approved by the
Board of Directors of the Corporation by the affirmative vote or consent of
at least sixty-six and two-thirds percent (66-2/3%) of the Whole Board, in
which case the stockholder vote required by this Section D of Article 11
shall not apply.
ARTICLE 12
----------
A. Elimination of Certain Liability of Directors. A director of the
---------------------------------------------
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal benefit.
B. Indemnification and Insurance.
-----------------------------
(1) Right to Indemnification. Each person who was or is made a
------------------------
party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a director,
officer, employee or
- 7 -
<PAGE> 8
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
or of a banking association, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis for such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
a director, officer, employee or agent, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection herewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (2) hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred
in this Section shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that, if the Delaware
General Corporation Law requires, the payment of such expense incurred by a
director or officer in his or her capacity as a director or officer (and not
in any other capacity in which service was or is rendered by such person while
a director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be
made only upon delivery to the Corporation of an undertaking, by or on behalf
of such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under this Section or otherwise. The Corporation may, by action of
its Board of Directors, make payments of expenses incurred in defending a
proceeding in advance of its final disposition to employees and agents of the
Corporation and persons who serve as directors, officers, employees or agents
of another corporation, or of a banking association, partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan, subject to the requirements set forth in this Section
and upon such terms and conditions as the Board of Directors deems
appropriate.
(2) Right of Claimant to Bring Suit. If a claim under
-------------------------------
paragraph (1) of this Section is not paid in full by the Corporation within
thirty days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that
the claimant has not met the standards of conduct which make it permissible
under the Delaware General Corporation Law for the Corporation to indemnify
the claimant for the amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel or the
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable
- 8 -
<PAGE> 9
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel or the stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
(3) Non-Exclusivity of Rights. The right to indemnification
-------------------------
and the payment of expenses incurred in defending a proceeding in advance of
its final disposition conferred in this Section shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of this Restated Certificate of Incorporation, by-law, agreement,
vote of stockholders or disinterested directors or otherwise.
(4) Insurance. The Corporation may maintain insurance, at its
---------
expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, banking association, partnership,
joint venture, trust or other enterprise against any such expense, liability
or loss, whether or not the Corporation would have the power to indemnify
such person against such expense, liability or loss under the Delaware
General Corporation Law.
IN WITNESS WHEREOF, Magna Group, Inc. has cause this Restated
Certificate of Incorporation to be signed by G. Thomas Andes, its Chairman of
the Board and Chief Executive Officer, and attested by Carolyn B. Ryseff, its
Secretary, this 16th day of July, 1997.
MAGNA GROUP, INC.
By: /s/ G. Thomas Andes
----------------------------------------
G. Thomas Andes, Chairman of the Board
and Chief Executive Officer
Attest:
/s/ Carolyn B. Ryseff
- ------------------------------
Carolyn B. Ryseff, Secretary
- 9 -
<PAGE> 1
BY-LAWS
OF
MAGNA GROUP, INC.
ARTICLE I
OFFICES AND RECORDS
-------------------
Section 1.1. Delaware Office. The principal office of the Corporation
---------------
in the State of Delaware shall be located in the City of Wilmington, County
of New Castle, and the name and address of its registered agent is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
Section 1.2. Other Offices. The Corporation may have such other
-------------
offices, either within or without the State of Delaware, as the Board of
Directors may designate or as the business of the Corporation may from time
to time require.
Section 1.3. Books and Records. The books and records of the
-----------------
Corporation may be kept outside the State of Delaware at such place or places
as may from time to time be designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
------------
Section 2.1. Annual Meeting. The annual meeting of the stockholders
--------------
of the Corporation shall be held on such date, and at such place and time, as
may be fixed by resolution of the Board of Directors.
Section 2.2. Special Meeting. Subject to the rights of the holders of
---------------
any series of stock having a preference over the Common Stock of the
Corporation as to dividends or upon liquidation ("Preferred Stock") with
respect to such series of Preferred Stock, special meetings of the
stockholders may be called only by the Chairman of the Board or by the Board
of Directors pursuant to a resolution adopted by a majority of the total
number of directors which the Corporation would have if there were no
vacancies (the "Whole Board").
Section 2.3. Place of Meeting. The Board of Directors or the Chairman
----------------
of the Board, as the case may be, may designate the place of meeting for any
annual meeting or for any special meeting of the stockholders called by the
Board of Directors or the Chairman of the Board. If no designation is so
made, or if a special meeting be otherwise called, the place of meeting shall
be the principal office of the Corporation.
Section 2.4. Notice of Meeting. Written or printed notice, stating
-----------------
the place, day and hour of the meeting and the purpose or purposes for which
the meeting is called, shall be delivered by the Corporation not less than
ten (10) days nor more than sixty (60) days before the date of the meeting,
either personally or by mail, to each stockholder of record entitled to vote
at such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail with postage thereon prepaid, addressed
to each stockholder at his address as it appears on the stock transfer books
of the Corporation. Such further notice shall be given as may be required by
law. Only such business shall
<PAGE> 2
be conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting. Meetings
may be held without notice if all stockholders entitled to vote are present, or
if notice is waived by those not present in accordance with Section 6.4 of these
By-Laws. Any previously scheduled meeting of the stockholders may be postponed
by resolution of the Board of Directors upon public notice given prior to the
date previously scheduled for such meeting of stockholders.
Section 2.5. Quorum and Adjournment. Except as otherwise provided by
----------------------
law or by the Certificate in Incorporation, the holders of a majority of the
outstanding shares of the Corporation entitled to vote generally in the
election of directors (the "Voting Stock"), represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders, except that
when specified business is to be voted on by a class or series voting as a
class, the holders of a majority of the shares of such class or series shall
constitute a quorum of such class or series for the transaction of such
business. The Chairman of the meeting or a majority of the shares so
represented may adjourn the meeting from time to time, whether or not there
is such a quorum. No notice of the time and place of adjourned meetings need
be given except as required by law. The stockholders present at a duly
called meeting at which a quorum is presented may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 2.6. Proxies. At all meetings of stockholders, a stockholder
-------
may vote by proxy executed in writing by the stockholder, or by his duly
authorized attorney-in-fact. Such proxy must be filed with the Secretary of
the Corporation or his representative at or before the time of the meeting.
Section 2.7. Notice of Stockholder Business and Nominations.
----------------------------------------------
(A) Annual Meetings of Stockholders. (1) Nominations of persons for
-------------------------------
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual
meeting of stockholders (a) pursuant to the Corporation's notice of meeting,
(b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of notice provided for in this By-Law, who is entitled to vote at the
meeting and who has complied with the notice procedures set forth in this
By-Law.
(2) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1)
of this By-Law, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices
of the Corporation not less than 60 days nor more than 90 days prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is advanced by more
than 30 days or delayed by more than 60 days from such anniversary date,
notice by the stockholder to be timely must be so delivered not earlier than
the 90th day prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual meeting or the
10th day following the day on which public announcement of the date of such
meeting is first made by the Corporation. Such stockholder's notice shall
set forth (a) as to each person whom the stockholder proposes to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); (b) as to
any other business that the stockholder proposes to bring before the meeting,
a brief description of the business desired to be brought before the meeting,
the reasons for conducting such business at the meeting and any material
interest in such business of such
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<PAGE> 3
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner and (ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such stockholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this By-Law to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board of Directors made by
the Corporation at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this
By-Law shall also be considered timely, but only with respect to nominees for
any new positions created by such increase, if it shall be delivered to the
Secretary at the principal executive offices of the Corporation not later
than the close of business on the 10th day following the day on which such
public announcement is made by the Corporation.
(B) Special Meetings of Stockholders. Only such business shall be
--------------------------------
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board of Directors may be made at
a special meeting of stockholders at which directors are to be elected
pursuant to the Corporation's notice of meeting (a) by or at the direction of
the Board of Directors or (b) by any stockholder of the Corporation who is a
stockholder of record at the time of giving of notice provided for in this
By-Law, who shall be entitled to vote at the meeting and who complies with
the notice procedures set forth in this By-Law. Nominations by stockholders
of persons for election to the Board of Directors may be made at such a
special meeting of stockholders if the stockholder's notice required by
paragraph (A)(2) of this By-Law shall be delivered to the Secretary at the
principal executive offices of the Corporation not earlier than the 90th day
prior to such special meeting and not later than the close of business on the
later of the 60th day prior to such special meeting or the 10th day following
the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be elected
at such meeting.
(C) General. (1) Only such persons who are nominated in accordance
-------
with the procedures set forth in this By-Law shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this By-Law. Except as otherwise provided by
law, the Certificate of Incorporation or these By-Laws, the Chairman of the
meeting shall have the power and duty to determine whether a nomination or
any business proposed to be brought before the meeting was made in accordance
with the procedures set forth in this By-Law and, if any proposed nomination
or business is not in compliance with this By-Law, to declare that such
defective proposal or nomination shall be disregarded.
(2) For purposes of this By-Law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this By-Law, a
stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this By-Law. Nothing in this By-Law shall be deemed to
affect any rights (i) of stockholders to request inclusion of proposals in
the Corporation's proxy statement
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<PAGE> 4
pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any
series of Preferred Stock to elect directors under specified circumstances.
Section 2.8. Procedure for Election of Directors. Election of
-----------------------------------
directors at all meetings of the stockholders at which directors are to be
elected shall be by ballot, and, subject to the rights of the holders of any
class or series of Preferred Stock to elect additional directors under
specified circumstances, a plurality of the votes cast thereat shall elect
directors. Except as otherwise provided by law, the Certificate of
Incorporation, or these By-Laws, in all matters other than the election of
directors, the affirmative vote of the majority of shares present in person
or represented by proxy at the meeting and entitled to vote on the matter
shall be the act of the stockholders.
Section 2.9. Inspectors of Elections: Opening and Closing the Polls.
-------------------------------------------------------
The Board of Directors by resolution shall appoint one or more inspectors,
which inspector or inspectors may include individuals who serve the
Corporation in other capacities, including, without limitation, as officers,
employees, agents or representatives of the Corporation, to act at the
meetings of stockholders and make a written report thereof. One or more
persons may be designated as alternate inspectors to replace any inspector
who fails to act. If no inspector or alternate has been appointed to act or
is able to act at a meeting of stockholders, the Chairman of the meeting
shall appoint one or more inspectors to act at the meeting. Each inspector,
before discharging his or her duties, shall take and sign an oath faithfully
to execute the duties of inspectors with strict impartiality and according to
the best of his or her ability. The inspectors shall have the duties
prescribed by law.
The Chairman of the meeting shall fix and announce at the meeting the
date and time of the opening and the closing of the polls for each matter
upon which the stockholders will vote at a meeting.
Section 2.10. No Action by Written Consent. Subject to the rights of
----------------------------
the holders of any series of Preferred Stock with respect to such series of
Preferred Stock, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or special
meeting of the stockholders of the Corporation and may not be effected by any
consent in writing by such stockholders.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 3.1. General Powers. The business and affairs of the
--------------
Corporation shall be managed by or under the direction of its Board of
Directors. In addition to the powers and authorities by these By-Laws
expressly conferred upon it, the Board of Directors may exercise all such
powers of the Corporation and do all such acts and things as are not by
statute or by the Certificate of Incorporation or by these By-Laws required
to be exercised or done by the stockholders.
Section 3.2. Number, Tenure and Qualifications. Subject to the rights
---------------------------------
of the holders of any series of Preferred Stock to elect directors under
specified circumstances, the number of directors shall be fixed from time to
time exclusively pursuant to a resolution adopted by at least sixty-six and
two-thirds percent (66 2/3%) of the Whole Board. The directors, other than
those who may be elected by the holders of any series of Preferred Stock
under specified circumstances, shall be divided, with respect to the time for
which they severally hold office, into three classes, as nearly equal in size
as possible, with the term of office of the third class to expire at the 1991
annual meeting of stockholders, the term of office of the first class to
expire at the 1992 annual meeting of stockholders and the term of
- 4 -
<PAGE> 5
office of the second class to expire at the 1993 annual meeting of stockholders,
with each director to hold office until his or her successor shall have been
duly elected and qualified. At each meeting of stockholders, commencing with
the 1991 annual meeting, (i) directors elected to succeed those directors whose
terms then expire shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders after their election, with each
director to hold office until his or her successor shall have been duly elected
and qualified, and (ii) if authorized by a resolution of the Board of Directors,
directors may be elected to fill any vacancy on the Board of Directors,
regardless of how such vacancy shall have been created. Notwithstanding the
foregoing, the term of office of each director shall expire on the day of the
annual meeting of stockholders that first occurs following the day on which a
director shall have attained seventy years of age.
Section 3.3. Regular Meetings. A regular meeting of the Board of
----------------
Directors shall be held without other notice than this By-Law immediately
after, and at the same place as, the annual meeting of stockholders. The
Board of Directors may, by resolution, provide the time and place for the
holding of additional regular meetings without other notice than such
resolution.
Section 3.4. Special Meetings. Special meetings of the Board of
----------------
Directors shall be called at the request of the Chairman of the Board, the
Vice Chairman of the Board, the President (if any) or a majority of the
directors then in office. The person or persons authorized to call special
meetings of the Board of Directors may fix the place and time of the
meetings.
Section 3.5. Notice. Notice of any special meeting of directors shall
------
be given to each director at his business or residence in writing by mail,
private delivery service, telegram, facsimile transmission or by telephone.
If mailed, such notice shall be deemed adequately delivered when deposited in
the United States mail so addressed, with postage thereon prepaid, at least
five (5) days before such meeting. If by private delivery service, such
notice shall be deemed adequately delivered when delivered to the private
delivery service at least two (2) days before such meeting. If by telegram,
such notice shall be deemed adequately delivered when the telegram is
delivered to the telegraph company at least twenty-four (24) hours before
such meeting. If by facsimile transmission, such notice shall be deemed
adequately delivered when the notice is transmitted at least twenty-four (24)
hours before such meeting. If by telephone, the notice shall be given at
least twelve (12) hours prior to the time set for the meeting. Any one or
more or any combination of such methods of delivery may be used. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice of (or in
any waiver of notice of) such meeting, except for amendments to these
By-Laws, as provided under Section 8.1. A meeting may be held at any time
without notice if all the directors are present of if those not present waive
notice of the meeting in accordance with Section 6.4 of these By-Laws.
Section 3.6. Action by Consent of Board of Directors. Any action
---------------------------------------
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting if all members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
Section 3.7. Conference Telephone Meetings. Members of the Board of
-----------------------------
Directors, or any committee thereof, may participate in a meeting of the
Board of Directors or such committee by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
- 5 -
<PAGE> 6
Section 3.8. Quorum. Subject to Section 3.9, a whole number of
------
directors equal to at least a majority of the Whole Board shall constitute a
quorum for the transaction of business, but if at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of the
directors present may adjourn the meeting from time to time without further
notice. The act of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors. The
directors present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
directors to leave less than a quorum.
Section 3.9. Vacancies. Subject to the rights of the holders of any
---------
series of Preferred Stock with respect to such series of Preferred Stock, and
unless the Board of Directors otherwise determines, vacancies resulting from
death, resignation, retirement, disqualification, removal from office or
other cause, and newly created directorships resulting from any increase in
the authorized number of directors, may be filled only by the affirmative
vote of a majority of the remaining directors, though less than a quorum of
the Board of Directors, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of
the class to which they have been elected expires and until such director's
successor shall have been duly elected and qualified. No decrease in the
number of authorized directors constituting the Whole Board shall shorten the
term of any incumbent director.
Section 3.10. Executive and Other Committees. The Board of Directors
------------------------------
may, by resolution adopted by a majority of the Whole Board, designate an
Executive Committee to exercise, subject to applicable provisions of law, all
the powers of the Board of Directors in the management of the business and
affairs of the Corporation when the Board of Directors is not in session,
including without limitation the power to declare dividends and to authorize
the issuance of the Corporation's capital stock, and may, by resolution
similarly adopted, designate one or more other committees. The Executive
Committee and each such other committee shall consist of two or more
directors of the Corporation. The Board of Directors may designate one or
more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. Any such
committee, other than the Executive Committee (the powers of which are
expressly provided for herein), may to the extent permitted by law exercise
such powers and shall have such responsibilities as shall be specified in the
designating resolution. In the absence or disqualification of any member of
such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not constituting a
quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
Each committee shall keep written minutes of its proceedings and shall report
such proceedings to the Board of Directors when required.
A majority of any committee may determine its action and fix the time
and place of its meetings, unless the Board of Directors shall otherwise
provide. Notice of such meetings shall be given to each member of the
committee in the manner provided for in Section 3.5 of these By-Laws. The
Board of Directors shall have power at any time to fill vacancies in, to
change the membership of, or to dissolve any such committee. Nothing herein
shall be deemed to prevent the Board of Directors from appointing one or more
committees consisting in whole or in part of persons who are not directors of
the Corporation; provided, however, that no such committee shall have or may
exercise any authority of the Board of Directors.
Section 3.11. Removal. Subject to the rights of the holders of any
-------
series of Preferred Stock with respect to such series of Preferred Stock, any
director, or the entire Board of Directors, may be removed from office at any
time, but only for cause and only by the affirmative vote of the holders
- 6 -
<PAGE> 7
of at least 80 percent of the voting power of all of the then outstanding shares
of Voting Stock, voting together as a single class.
Section 3.12. Records. The Board of Directors shall cause to be kept
-------
a record containing the minutes of the proceedings of the meetings of the
Board of Directors and of the stockholders, appropriate stock books and
registers and such books of records and accounts as may be necessary for the
proper conduct of the business of the Corporation.
Section 3.13. Compensation. Unless otherwise restricted by the
------------
Certificate of Incorporation or these By-laws, the Board of Directors shall
have the authority to fix the compensation of Directors. The Directors may
be paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
ARTICLE IV
OFFICERS
--------
Section 4.1. Elected Officers. The elected officers of the
----------------
Corporation shall be a Chairman of the Board, a Vice Chairman of the Board
(if one shall have been elected by the Board of Directors), a Secretary, a
Treasurer, and such other officers (including, without limitation, a
President) as the Board of Directors from time to time may deem proper. The
Chairman of the Board shall be chosen from among the directors. All officers
chosen by the Board of Directors shall each have such powers and duties as
generally pertain to their respective offices, subject to the specific
provisions of this ARTICLE IV. Such officers shall also have such powers and
duties as from time to time may be conferred by the Board of Directors or by
any Committee thereof. The Board of Directors may from time to time elect,
or the Chairman of the Board may appoint, such other officers (including one
or more Assistant Vice President, Assistant Secretaries and Assistant
Treasurers) and such agents, as may be necessary or desirable for the conduct
of the business of the Corporation. Such other officers and agents shall
have such duties and shall hold their offices for such terms as shall be
provided in these By-Laws or as may be prescribed by the Board of Directors
or by the Chairman of the Board.
Section 4.2. Election and Term of Office. The elected officers of the
---------------------------
Corporation shall be elected annually by the Board of Directors at the
regular meeting of the Board of Directors held after each annual meeting of
the stockholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as convenient. Each
officer shall hold office until his successor shall have been duly elected
and shall have qualified or until his death or until he shall resign, but any
officer may be removed from office at any time by the affirmative vote of a
majority of the Whole Board or, except in the case of an officer or agent
elected by the Board of Directors, by the Chairman of the Board. Such
removal shall be without prejudice to the contractual rights, if any, of the
person so removed.
Section 4.3. Chairman of the Board. The Chairman of the Board shall
---------------------
be the chief executive officer and shall have the primary responsibility for
and the general control and management of all of the business and affairs of
the Corporation, under the direction of the Board of Directors. He shall
have power to select and appoint all necessary officers and employees of the
Corporation except such officers as under these By-Laws are to be elected by
the Board of Directors, to remove all appointed officers or employees
whenever he shall deem necessary, and to make new appointments to fill the
- 7 -
<PAGE> 8
vacancies. He shall have the power of suspension from office for cause of
any elected officer, which shall be forthwith declared in writing to the
Board of Directors. Whenever in his opinion it may be necessary, he shall
define the duties of any officer or employee of the Corporation which are not
prescribed in these By-Laws or by resolution of the Board of Directors. He
shall have such other authority and shall perform such other duties as may be
assigned to him by the Board of Directors. He shall preside at meetings of
the stockholders and of the directors.
Section 4.4. Vice Chairman of the Board. The Vice Chairman of the
--------------------------
Board (if one shall have been elected by the Board of Directors) shall be the
chief operating officer of the Corporation and shall have such authority and
perform such duties relative to the business and affairs of the Corporation
as may be delegated to him by the Board of Directors or the Chairman of the
Board. In the absence of the Chairman of the Board, the Vice Chairman of the
Board shall preside at meetings of the stockholders and of the directors.
Section 4.5. President. The President (if one shall have been elected
---------
by the Board of Directors) shall have such powers and discharge such duties
as may be assigned to him from time to time by the Board of Directors, the
Chairman of the Board or the senior officer to whom he reports. If no Vice
Chairman of the Board shall has been elected, and if the office of Chairman
of the Board and Chief Executive Officer is held by another person, he shall
be the chief operating officer of the Corporation.
Section 4.6. Vice President. Each Vice President (including each
--------------
Assistant Vice President, Executive Vice President or Senior Vice President,
if any) shall have such powers and discharge such duties as may be assigned
to him from time to time by the Board of Directors, the Chairman of the
Board, the President or the senior officer to whom he reports.
Section 4.7. Secretary. The Secretary shall keep or cause to be kept
---------
in one or more books provided for that purpose, the minutes of all meetings
of the Board of Directors, the committees of the Board of Directors and the
stockholders; he shall see that all notices are duly given in accordance with
the provisions of these By-Laws and as required by law; he shall be custodian
of the records and the seal of the Corporation and affix and attest the seal
to all stock certificates of the Corporation (unless the seal of the
Corporation on such certificates shall be a facsimile, as hereinafter
provided) and affix and attest the seal to all other documents to be executed
on behalf of the Corporation under its seal; he shall see that the books,
reports, statements, certificates and other documents and records required by
law to be kept and filed are properly kept and filed; and in general, he
shall perform all the duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him by the Board of
Directors or the Chairman of the Board and Chief Executive Officer.
Section 4.8. Chief Financial Officer. The Chief Financial Officer (if
-----------------------
one shall have been elected by the Board of Directors) shall be a Vice
President and act in an executive financial capacity. He shall assist the
Chairman of the Board, the Vice Chairman of the Board and the President in
the general supervision of the Corporation's financial policies and affairs.
Section 4.9. Treasurer. The Treasurer shall exercise general
---------
supervision over the receipt, custody and disbursement of corporate funds.
The Treasurer shall cause the funds of the Corporation to be deposited in
such banks as may be authorized by the Board of Directors, or in such banks
as may be designated as depositaries in the manner provided by resolution of
the Board of Directors. He shall have such further powers and duties and
shall be subject to such directions as may be granted or imposed upon him
from time to time by the Board of Directors or the Chairman of the Board.
The Board of Directors or the Chairman of the Board may appoint one or more
Assistant Treasurers.
- 8 -
<PAGE> 9
Section 4.10. Controller. The Controller (if one shall have been
----------
elected by the Board of Directors) shall be the chief accounting officer of
the Corporation and shall establish and maintain an integrated accounting
plan for the control of operations of the Corporation. He shall maintain the
accounting systems and records and prepare such reports to government
agencies, to the Board of Directors or to the Chairman of the Board as may be
required. The Controller shall also perform such other functions as may from
time to time be assigned to him by the Board of Directors or the Chairman of
the Board. The Board of Directors or the Chairman of the Board may appoint
one or more Assistant Controllers.
Section 4.11. Removal. Any officer elected by the Board of Directors
-------
may be removed by a majority of the members of the Whole Board whenever, in
their judgment, the best interests of the Corporation would be served
thereby. No elected officer shall have any contractual rights against the
Corporation for compensation by virtue of such election beyond the date of
the election of his successor, his death, his resignation or his removal,
whichever event shall first occur, except as otherwise provided in an
employment contract or under an employee deferred compensation plan.
Section 4.12. Vacancies. A newly created office and a vacancy in any
---------
office because of death, resignation or removal may be filled by the Board of
Directors for the unexpired portion of the term at any meeting of the Board
of Directors.
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
--------------------------------
Section 5.1. Stock Certificates and Transfers. The interest of each
--------------------------------
stockholder of the Corporation shall be evidenced by certificates for shares
of stock in such form as the appropriate officers of the Corporation may from
time to time prescribe. The shares of the stock of the Corporation shall be
transferred on the books of the Corporation by the holder thereof in person
or by his attorney, upon surrender for cancellation of certificates for at
least the same number of shares, with an assignment and power of transfer
endorsed thereon or attached thereto, duly executed, with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require.
The certificates of stock shall be signed, counter-signed and
registered in such manner as the Board of Directors may by resolution
prescribe, which resolution may permit all or any of the signatures on such
certificates to be in facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate has ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
Section 5.2. Lost, Stolen or Destroyed Certificates. No certificate
--------------------------------------
for shares of stock in the Corporation shall be issued in place of any
certificate alleged to have been lost, destroyed or stolen, except on
production of such evidence of such loss, destruction or theft and on
delivery to the Corporation of a bond of indemnity in such amount, upon such
terms and secured by such surety, as the Board of Directors or any financial
officer may in its or his discretion require.
Section 5.3 Record Date. In order that the Corporation may determine
-----------
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors
- 9 -
<PAGE> 10
may fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior
to any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
Section 5.4. Registered Stockholders. The Corporation shall be
-----------------------
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and
to hold liable for calls and assessments a person registered on its books as
the owner of shares, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except
as otherwise provided by the laws of Delaware.
ARTICLE VI
MISCELLANEOUS PROVISIONS
------------------------
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall
-----------
begin on the first day of January and end on the thirty-first day of December
of each year.
Section 6.2. Dividends. The Board of Directors may from time to time
---------
declare, and the Corporation may pay, dividends on its outstanding shares in
the manner and upon the terms and conditions provided by law and the
Certificate of Incorporation.
Section 6.3. Seal. The corporate seal shall have inscribed thereon
----
the words "Corporate Seal" and around the margin thereof the words "Magna
Group, Inc."
Section 6.4. Waiver of Notice. Whenever any notice is required to be
----------------
given to any stockholder or director of the Corporation under the provisions
of the General Corporation Law of the State of Delaware or these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be
transacted at, nor the purpose of, any annual or special meeting of the
stockholders need be specified in any waiver of notice of such meeting.
Section 6.5. Audits. The accounts, books and records of the
------
Corporation shall be audited upon the conclusion of each fiscal year by an
independent certified public accountant selected by the Board of Directors,
and it shall be the duty of the Board of Directors to cause such audit to be
made annually.
Section 6.6. Resignations. Any director or any officer, whether
------------
elected or appointed, may resign at any time by giving written notice of such
resignation to the Chairman of the Board, the President (if any) or the
Secretary, and such resignation shall be deemed to be effective as of the
close of business on the date said notice is received by the Chairman of the
Board, the President (if any) or the Secretary, or at such later time as is
specified therein. No formal action shall be required of the Board of
Directors or the stockholders to make any such resignation effective.
Section 6.7. Gender. Whenever the personal pronoun he, she or its is
------
used herein, it shall mean an appropriate gender.
- 10 -
<PAGE> 11
ARTICLE VII
CONTRACTS, PROXIES, ETC.
------------------------
Section 7.1. Contracts. Except as otherwise required by law, the
---------
Certificate of Incorporation or these By-Laws, any contracts or other
instrument may be executed and delivered in the name and on the behalf of the
Corporation by such officer or officers (including any assistant officer) of
the Corporation as the Board of Directors may from time to time direct. Such
authority may be general or confined to specific instances as the Board of
Directors may determine. The Chairman of the Board, the Vice Chairman of the
Board (if any), the President (if any) or any Vice President may execute
bonds, contracts, deeds, leases and other instruments to be made or executed
for or on behalf of the Corporation. Subject to any restrictions imposed by
the Board of Directors or the Chairman of the Board, the Vice Chairman of the
Board (if any), the President (if any) or any Vice President of the
Corporation may delegate contractual power to others under his jurisdiction,
it being understood, however, that any such delegation of power shall not
relieve such officer of responsibility with respect to the exercise of such
delegated power.
Section 7.2. Proxies. Unless otherwise provided by resolution adopted
-------
by the Board of Directors, the Chairman of the Board, the Vice Chairman of
the Board (if any), the President (if any) or any Vice President may from
time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the votes
which the Corporation may be entitled to cast as the holder of stock or other
securities in any other corporation, any of whose stock or other securities
may be held by the Corporation, at meetings of the holders of the stock or
other securities of such other corporation, or to consent in writing, in the
name of the Corporation as such holder, to any action by such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause
to be executed in the name and on behalf of the Corporation and under its
corporate seal or otherwise, all such written proxies or other instruments as
he may deem necessary or proper in the premises.
ARTICLE VIII
AMENDMENTS
----------
Section 8.1. Amendments. The Board of Directors shall have the power
----------
to make, amend, alter, change or repeal the By-laws (except in so far as the
By-laws adopted by the stockholders shall otherwise provide). Any By-law
made by the Board of Directors under the powers conferred hereby may be
amended, altered, changed or repealed by the Board of Directors or by the
stockholders. Notwithstanding the foregoing or anything contained in the
Certificate of Incorporation to the contrary, Sections 2.7, 2.8 and 2.10 of
Article II, Sections 3.2 and 3.9 of Article III and Article VIII of the
By-laws shall not be amended, altered, changed or repealed and no provision
inconsistent therewith shall be adopted without the affirmative vote of the
holders of at least eighty percent (80%) of the voting power of all shares of
the Corporation's outstanding capital stock, voting together as a single
class, unless such amendment, alteration, change or repeal has previously
been expressly approved by the Board of Directors by the affirmative vote or
consent of at least sixty-six and two-thirds percent (66-2/3%) of the number
of Directors then in office.
These By-laws may be altered, amended or repealed or new By-laws may be
adopted by the stockholders or by the Board of Directors, when such power is
conferred upon the Board of Directors by the Certificate of Incorporation, at
any regular meeting of the stockholders or of the Board of
- 11 -
<PAGE> 12
Directors or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
By-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal By-laws is conferred upon the Board of Directors by the
Certificate of Incorporation, it shall not divest or limit the power of the
stockholders to adopt, amend or repeal By-laws.
Section 8.2. Special Provisions with Respect to Certificate of
-------------------------------------------------
Incorporation. For purposes of the By-laws, (i) a reference to Section 11 of
- -------------
Article II in the Certificate of Incorporation shall mean Section 2.10 of the
By-laws, (ii) a reference to Section 1 of Article III in the Certificate of
Incorporation shall mean Sections 3.2 and 3.9 of the By-laws and (iii) a
reference to Section 2 of Article III in the Certificate of Incorporation
shall mean Section 3.11 of the By-laws.
As adopted by the Board of Directors of the Corporation on July 16th,
1997.
/s/ G. Thomas Andes
------------------------------------------
G. Thomas Andes, Chairman of the Board and
Chief Executive Officer
ATTEST
/s/ Carolyn B. Ryseff
- ----------------------------------
Carolyn B. Ryseff, Secretary
- 12 -
<PAGE> 1
MAGNA GROUP, INC.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into
effective the 1st day of January, 1995, and amended and re-
stated the 6th day of June, 1996 and as of the 27th day of May,
1997, by and between Magna Group, Inc., a Delaware corporation
("Company"), and G. Thomas Andes, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board"),
has determined that it is in the best interests of the Company
and its shareholders to reinforce and encourage the continued
attention and dedication of the Executive to the Company as a
member of the Company's management and to assure that the Com-
pany will have the continued dedication of the Executive, not-
withstanding the possibility, threat or occurrence of a Change
in Control (as defined below) of the Company. The Board de-
sires to provide for the continued employment of the Executive
on the terms hereof, and the Executive is willing to commit
himself to continue to serve the Company. Additionally, the
Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened
Change in Control, to encourage the Executive's full attention
and dedication to the Company currently and in the event of
any threatened or pending Change in Control, and to provide
the Executive with compensation and benefits arrangements upon
the breach of this Agreement by the Employer or upon a
termination of employment after a Change in Control which
ensure that the compensation and benefits expectations of the
Executive will be satisfied and which are competitive with
those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company
to enter into this Agreement.
IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement,
the following words and phrases, whether or not capitalized,
shall have the meanings specified below, unless the context
plainly requires a different meaning.
1.1(a) "CASH COMPENSATION" means the Executive's
Annual Base Salary (as defined in Section
<PAGE> 2
2.4(a)) plus the Incentive Bonus (as de-
fined in Section 2.4(b)) anticipated to be
awarded to the Executive in any given
year.
1.1(b) "BOARD" means the Board of Directors of
the Company.
1.1(c) "CHANGE IN CONTROL" means a change in con-
trol of the Company of a nature that would
be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Exchange Act;
provided that, for purposes of this
Agreement, a Change in Control shall be
deemed to have occurred if (i) any Person
(other than the Company) is or becomes the
"beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company
which represent 20% or more of the
combined voting power of the Company's
then outstanding securities; (ii) during
any period of two (2) consecutive years,
individuals who at the beginning of such
period constitute the Board cease for any
reason to constitute at least a majority
thereof, unless the election, or the
nomination for election, by the Company's
stockholders, of each new director is
approved by a vote of at least two-thirds
(2/3) of the directors then still in
office who were directors at the beginning
of the period, but excluding any
individual whose initial assumption of
office occurs as a result of either an
actual or threatened election contest (as
such term is used in Rule 14a-11 of
Regulation 14A promulgated under the
Exchange Act) or other actual or
threatened solicitation of proxies or
consents by or on behalf of a person other
than the Board; (iii) there is consummated
any consolidation or merger of the Company
in which the Company is not the continuing
or surviving corporation or pursuant to
which shares of the Company's Common Stock
are converted into cash, securities, or
other property, other than a merger of the
Company in which the holders of the
Company's Common Stock immediately prior
to the merger have the same proportionate
ownership of common stock of the
-2-
<PAGE> 3
surviving corporation immediately after
the merger; (iv) there is consummated any
consolidation or merger of the Company in
which the Company is the continuing or
surviving corporation in which the holders
of the Company's Common Stock immediately
prior to the merger do not own fifty per-
cent (50%) or more of the stock of the
surviving corporation immediately after
the merger; (v) there is consummated any
sale, lease, exchange, or other transfer
(in one transaction or a series of related
transactions) of all, or substantially
all, of the assets of the Company, or (vi)
the stockholders of the Company approve
any plan or proposal for the liquidation
or dissolution of the Company.
1.1(d) "CHANGE IN CONTROL DATE" shall mean the
date of the Change in Control.
1.1(e) "CODE" shall mean the Internal Revenue
Code of 1986, as amended.
1.1(f) "COMPANY" means Magna Group, Inc., a Dela-
ware corporation.
1.1(g) "EMPLOYMENT PERIOD" means the period
beginning on the Effective Date and ending
on December 31, 1999.
1.1(h) "EFFECTIVE DATE" shall mean January 1,
1995.
1.1(i) "EXCHANGE ACT" means the Securities Ex-
change Act of 1934, as amended.
1.1(j) "PERSON" means any "person" within the
meaning of Sections 13(d) and 14(d) of the
Exchange Act.
1.1(k) "TERM" means the period that begins on the
Effective Date and ends on the earlier of:
(i) the close of business on December 31,
1999, or (ii) the Date of Termination as
defined in Section 3.6.
-3-
<PAGE> 4
1.2 GENDER AND NUMBER. When appropriate, pronouns
in this Agreement used in the masculine gender include the
feminine gender, words in the singular include the plural, and
words in the plural include the singular.
1.3 HEADINGS. All headings in this Agreement are
included solely for ease of reference and do not bear on the
interpretation of the text. Accordingly, as used in this
Agreement, the terms "Article" and "Section" mean the text
that accompanies the specified Article or Section of the
Agreement.
1.4 APPLICABLE LAW. This Agreement shall be gov-
erned by and construed in accordance with the laws of the
state of Missouri, without reference to its conflict of law
principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. Throughout the Term of
this Agreement, the Executive shall remain in the employ of
the Company in accordance with the terms and provisions of
this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement,
the Executive's position (including status, offices,
titles and reporting requirements), authority,
duties and responsibilities shall be at least
commensurate in all material respects with those
assigned to, or held and exercised by, the Executive
on the Effective Date of this Agreement.
2.2(b) Throughout the Term of this Agreement
(but excluding any periods of vacation and sick
leave to which he is entitled), the Executive shall
devote reasonable attention and time during normal
business hours to the business and affairs of the
Company and shall use his reasonable best efforts to
perform faithfully and efficiently such
responsibilities as are assigned to him under or in
accordance with this Agreement; provided that, it
shall not be a violation of this paragraph for the
Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver
lectures or fulfill speaking engagements, or (iii)
manage personal investments, so long as such
activities do not significantly interfere with the
performance of the Executive's responsibilities as
an employee of the Company in accordance with
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this Agreement or violate the Company's conflict of
interest policy as in effect on the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of
this Agreement, the Executive's services shall be performed at
the location where the Executive was employed on the Effective
Date, or any office which is the headquarters of the Company
and is located in the greater St. Louis area.
2.4 COMPENSATION. The Executive's annual Compensa-
tion and other benefits described in this Section 2.4, shall
be provided by the Company.
2.4(a) ANNUAL BASE SALARY. For the first cal-
endar year within the Term of this Agreement, the
Executive shall receive an annual base salary of
three hundred and seventy-five thousand dollars
($375,000.00), which shall be paid in equal or sub-
stantially equal monthly installments. During the
Term of this Agreement, the annual base salary pay-
able to the Executive shall be reviewed thereafter
at least annually but need not be adjusted upward as
a result of such review and shall not be reduced
after any increase thereof. "Annual Base Salary" as
used herein shall mean the annual base salary for a
then current year.
2.4(b) INCENTIVE BONUSES. In addition to An-
nual Base Salary, the Executive shall be entitled to
participate in any incentive bonuses ("Incentive Bo-
nuses") provided through any incentive compensation
plan, which is generally available to other peer ex-
ecutives of the Company. To the extent any incen-
tive bonus is paid in shares of restricted stock,
there shall be included in Cash Compensation the
value of such shares on their award date without any
discount; provided, however, such restricted shares
shall include only those awarded in lieu of
compensation payable, as determined by the
Compensation Committee of the Board. To the extent
any incentive bonus is calculated for a year in
which the bonus has not been paid, such amount shall
be the highest amount that would be paid assuming a)
the Company performance was at or above the level
permitting the maximum award, b) the individual
performance was at or above the level permitting the
maximum award and c) any discretionary award was
made at the maximum level, in each case as in effect
immediately prior to the date of the Change of
Control.
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2.4(c) INCENTIVE, SAVINGS AND RETIREMENT
PLANS. Throughout the Term of this Agreement, the
Executive shall be entitled to participate in all
incentive, savings and retirement plans generally
available to other peer executives of the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout the
Term of this Agreement (and thereafter, subject to
Section 4.1(c) hereof), the Executive and/or the
Executive's family, as the case may be, shall be
eligible for participation in and shall receive all
benefits under welfare benefit plans, practices,
policies and programs provided by the Company
(including, without limitation, medical,
prescription, dental, disability, salary
continuance, employee life, group life, accidental
death and travel accident insurance plans and
programs) to the extent generally available to other
peer executives of the Company.
2.4(e) EXPENSES. Throughout the Term of this
Agreement, the Executive shall be entitled to
receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance
with the most favorable policies, practices and
procedures generally applicable to other peer
executives of the Company.
2.4(f) FRINGE BENEFITS. Throughout the Term
of this Agreement, the Executive shall be entitled
to such fringe benefits as generally are provided to
other peer executives of the Company.
2.4(g) OFFICE AND SUPPORT STAFF. Throughout
the Term of this Agreement, the Executive shall be
entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least
equal to those generally provided to other peer ex-
ecutives of the Company.
2.4(h) VACATION. Throughout the Term of this
Agreement, the Executive shall be entitled to paid
vacation in accordance with the most favorable
plans, policies, programs and practices generally
provided with respect to other peer executives of
the Company.
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SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall termi-
nate automatically upon the Executive's death during the Em-
ployment Period.
3.2 DISABILITY. If the Company determines in good
faith that the Disability of the Executive has occurred during
the Employment Period (pursuant to the definition of
Disability set forth below), it may give to the Executive
written notice in accordance with Section 7.1 of its intention
to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate
effective on the thirtieth (30th) day after receipt of such
notice by the Executive (the "Disability Effective Date"),
provided that, within the thirty (30) days after such receipt
the Executive shall not have returned to full-time performance
of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean that the Executive has been unable to
perform the services required of the Executive hereunder on a
full-time basis for a period of one hundred eighty (180)
consecutive business days by reason of a physical and/or
mental condition. "Disability" shall be deemed to exist when
certified by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not
to be withheld unreasonably). The Executive will submit to
such examinations and tests as such physician deems necessary
to make any such Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may termi-
nate the Executive's employment during the Employment Period
for "Cause," which shall mean termination based upon: (i) the
Executive's willful and continued failure to perform substan-
tially his duties with the Company (other than as a result of
incapacity due to physical or mental condition), after a
demand for substantial performance is delivered to him by the
Chairman of the Compensation Committee of the Board, which
specifically identifies the manner in which the Executive has
not substantially performed his duties, (ii) the Executive's
willful commission of misconduct which is materially injurious
to the Company, monetarily or otherwise, or (iii) the
Executive's material breach of any provision of this
Agreement. For purposes of this paragraph, no act, or failure
to act on the Executive's part shall be considered "willful"
unless done, or omitted to be done, without good faith and
without reasonable belief that the act or omission was in the
best interest of the Company. Notwithstanding the foregoing,
the Executive shall not be deemed to have been terminated for
Cause unless and until (i) he receives a Notice of Termination
(as defined in Section 3.5) from the Chairman of the
Compensation Committee of the Board,
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(ii) he is given the opportunity, with counsel, to be heard
before the Board, and (iii) the Board finds, in its good faith
opinion, that the Executive was guilty of the conduct set forth
in the Notice of Termination.
3.4 GOOD REASON. The Executive may terminate his
employment with the Company for "Good Reason," which shall
mean termination based upon:
(i) the assignment to the Executive of
any duties inconsistent in any respect with the
Executive's position (including status, offices,
titles and reporting requirements), authority,
duties or responsibilities as contemplated by
Section 2.2 or any other action by the Company which
results in a material diminution in such position,
authority, duties or responsibilities, excluding for
this purpose any action not taken in bad faith and
which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(ii) (a) the failure by the Company to
continue in effect any benefit or compensation plan,
stock ownership plan, life insurance plan, health
and accident plan or disability plan to which the
Executive is entitled as specified in Section 2.4,
(b) the taking of any action by the Company which
would adversely affect the Executive's participation
in, or materially reduce the Executive's benefits
under, any plans described in Section 2.4, or
deprive the Executive of any material fringe benefit
enjoyed by the Executive as described in Section
2.4(f), or (c) the failure by the Company to provide
the Executive with the number of paid vacation days
to which the Executive is entitled as described in
Section 2.4(h).
(iii) the Company's requiring the Executive
to be based at any office or location other than
that described in Section 2.3;
(iv) a material breach by the Company of
any provision of this Agreement;
(v) any purported termination by the
Company of the Executive's employment otherwise than
as expressly permitted by this Agreement;
(vi) within a period ending at the close
of business on the date two (2) years after the
Change in Control Date, any failure by the Company
to comply
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<PAGE> 9
with and satisfy Section 6.2, on or after the Change
in Control Date; or
(vii) within a period ending at the close
of business on the date one (1) year after the
Change in Control Date, the Executive, in his sole
and absolute discretion, determines and notifies the
Company in writing, that he does not wish to
continue his employment with the Company.
For purposes of this Section any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the
Company for Cause or Disability, or by the Executive for Good
Reason, shall be communicated by Notice of Termination to the
other party, given in accordance with Section 7.1. For pur-
poses of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and cir-
cumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the
termination date (which date shall be not more than fifteen
(15) days after the giving of such notice). The failure by
the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of
the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's
rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination"
means (i) if the Executive's employment is terminated by the
Company for Cause, the Date of Termination shall be the date
of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's
employment is terminated by him for Good Reason as provided in
Section 3.4 hereof, the Date of Termination shall be the date
on which the Executive receives benefits under Section 4.2
hereof, (iii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall
be the date of death of the Executive or the Disability
Effective Date, as the case may be, or (iv) if the Executive's
employment is terminated by the Company other than for Cause,
death, or Disability, the Date of Termination shall be the
date of receipt of the Notice of Termination; provided that if
within thirty (30) days after any Notice of Termination is
given, the
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party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, the Date
of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or
by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON
PRIOR TO A CHANGE IN CONTROL. If, prior to a Change in Con-
trol, during the Employment Period: (i) the Company shall
terminate the Executive's employment without Cause, or (ii)
the Executive shall terminate employment with the Company for
Good Reason, the Executive shall be entitled to the benefits
provided below:
4.1(a) "Accrued Obligations": On the fifth
(5th) business day following the Date of
Termination, the Company shall pay to the Executive
the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not
previously paid, (2) any compensation previously
deferred by the Executive (together with any accrued
interest or earnings thereon), (3) any accrued
vacation pay; in each case to the extent not
previously paid, and in the event of a termination
pursuant to Section 4.1, 4.2, 4.3 or 4.4 hereof (and
excluding any termination pursuant to Section 4.5)
part or all of the Incentive Bonus for the year in
which the Date of Termination occurs based on a
fraction of the number of whole or part months of
the year through the Date of Termination divided by
twelve.
4.1(b) "Annual Base Salary Continuation": For
the remainder of the Employment Period, the Company
shall pay to the Executive, the Executive's then-
current Annual Base Salary as would have been paid
to the Executive had the Executive remained in the
Company's employ throughout the Employment Period.
The Company at any time may elect to pay the balance
of such payments then remaining in a lump sum, in
which case the total of such payments shall be
discounted to present value as determined according
to Code Section 280G(d)(4).
4.1(c) "Welfare Benefit Continuation": For
the remainder of the Employment Period, or such
longer period as any plan, program, practice or
policy may
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provide, the Company shall continue benefits to the
Executive and/or the Executive's family at least equal
to those which would have been provided to them in
accordance with the plans, programs, practices and
policies described in Section 2.4(d) if the Executive's
employment had not been terminated, in accordance with
the most favorable plans, practices, programs or
policies of the Company as those provided generally to
other peer executives and their families during the
ninety (90) day period immediately preceding the
Effective Date or, if more favorable to the Executive,
as those provided generally at any time after the
Effective Date to other peer executives of the
Company and their families; provided, however, that
if the Executive becomes reemployed with another
employer and is eligible to receive medical or other
welfare benefits under another employer-provided
plan, the medical and other welfare benefits de-
scribed herein shall be secondary to those provided
under such other plan during such applicable period
of eligibility. For purposes of determining eligi-
bility of the Executive for retiree benefits
pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have
remained employed until the end of the Employment
Period and to have retired on the last day of such
period.
4.1(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall
timely pay or provide to the Executive and/or the
Executive's family any other amounts or benefits
required to be paid or provided for which the
Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any
plan, program, policy or practice or contract or
agreement of the Company as those provided generally
to other peer executives and their families during
the ninety (90) day period immediately preceding the
Effective Date or, if more favorable to the
Executive, as those provided generally after the
Effective Date to other peer executives of the
Company and their families.
The Executive shall not be required to mitigate
the amount of any payment provided for in this Sec-
tion by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this
Section be reduced by any compensation earned by the
Executive as the result of employment by another em-
ployer after the Date of Termination, or otherwise.
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4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN
CONTROL. If a Change in Control occurs during the Employment
Period and within two (2) years after a Change in Control:
(i) the Company shall terminate the Executive's employment
without Cause, or (ii) the Executive shall terminate
employment with the Company for Good Reason, then the
Executive shall be entitled to the benefits provided below:
4.2(a) "Accrued Obligations": On the fifth
(5th) business day following the Date of
Termination, the Company shall pay to the Executive
the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not
previously paid, (2) any compensation previously
deferred by the Executive (together with any accrued
interest or earnings thereon) and (3) any accrued
vacation pay; in each case to the extent not
previously paid. No amount shall be paid as Annual
Base Salary for any period following the Date of
Termination.
4.2(b) "Severance Amount": On the fifth (5th)
business day following the Date of Termination, the
Company shall pay to the Executive as severance pay
in a lump sum, in cash, an amount equal to 2.99
times his Cash Compensation for the most recent
calendar year in which occurs the Date of
Termination.
4.2(c) "Welfare Benefit Continuation": For
three years after the Executive's Date of Termina-
tion, or such longer period as may be provided by
the terms of the appropriate plan, program, practice
or policy, the Company shall continue benefits to
the Executive and/or the Executive's family at least
equal to those which would have been provided to
them in accordance with the plans, programs,
practices and policies described in Section 2.4(d)
of this Agreement if the Executive's employment had
not been terminated or, if more favorable to the
Executive, as in effect generally at any time
thereafter with respect to other peer executives of
the Company and its affiliated companies and their
families, provided, however, that if the Executive
becomes reemployed with another employer and is
eligible to receive medical or other welfare
benefits under another employer provided plan, the
medical and other welfare benefits described herein
shall be secondary to those provided under such
other plan during such applicable period of
eligibility. For purposes of determining eligi-
bility (but not the time of commencement of
benefits) of the Executive for retiree benefits
pursuant to
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such plans, practices, programs and policies, the
Executive shall be considered to have remained employed
until three years after the Date of Termination and to
have retired on the last day of such period.
4.2(d) "Other Benefits": To the extent not
previously paid or provided, and for a period ending
on the third anniversary of the Date of Termination,
the Company shall timely pay or provide to the
Executive and/or the Executive's family any other
amounts or benefits required to be paid or provided
for which the Executive and/or the Executive's
family is eligible to receive pursuant to this
Agreement and under any plan, program, policy or
practice or contract or agreement of the Company
applicable to the Executive and for his family as
well as those provided generally to other peer
executives and their families during the ninety (90)
day period immediately preceding the Effective Date
or, if more favorable to the Executive, as those
provided generally after the Effective Date to other
peer executives of the Company and their families.
4.2(e) "Certain Additional Payments by the
Company":
(i) Anything in this Agreement to the
contrary notwithstanding, in the event (A) it shall
be determined that any payment or distribution by
the Company to or for the benefit of the Executive
(whether paid or payable or distributed or
distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would be
subject to the excise tax imposed by Code Section
4999, or (B) any interest or penalties are incurred
by the Executive with respect to such excise tax
(such excise tax, together with any interest and
penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-
Up Payment") in an amount equal to the Excise Tax
imposed on the Payment and on the Gross-Up Payment
as well as any additional income tax, employment tax
and Excise Tax payable with respect to such ad-
ditional payment (including any interest or penal-
ties imposed with respect to such excise tax). The
Gross-Up Payment shall not include any amount for
the payment of any income or employment taxes
imposed on the Payment, but shall include any income
or employment taxes payable with respect to any
Gross-Up Payment
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(and any interest and penalties imposed with respect
thereto).
(ii) Subject to the provisions of Section
4.2(f)(iii), all determinations required to be made
under this Section, including whether and when a
Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized
in arriving at such determination, shall be made by
an independent accountant which shall provide de-
tailed supporting calculations both to the Company
and the Executive within fifteen (15) business days
of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of
the independent accountant shall be borne solely by
the Company. Any Gross-Up Payment, as determined
pursuant to this Section 4.2(f), shall be paid by
the Company to the Executive within five (5) days of
the receipt of the independent accountant's
determination. If the independent accountant
determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a
written opinion that failure to report the Excise
Tax on the Executive's applicable Federal income tax
return would not result in the imposition of a
negligence or similar penalty. Any determination by
the independent accountant shall be binding upon the
Company and the Executive. As a result of the
uncertainty in the application of Code Section 4999
at the time of the initial determination by the
independent accountant hereunder, it is possible
that Gross-Up Payments which will not have been made
by the Company should have been made ("Under-
payment"), consistent with the calculations required
to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section
4.2(f)(iii) and the Executive thereafter is required
to make a payment of any Excise Tax, the independent
accountant shall determine the amount of the
Underpayment that has occurred and any such
Underpayment, as well as any interest and penalties
imposed thereon, shall be promptly paid by the
Company to or for the benefit of the Executive.
(iii) The Executive shall notify the
Company in writing of any claim by the Internal
Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as
practicable but no later than ten (10) business days
after the Executive is
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informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on
which such claim is requested to be paid. The
Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the
date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires
to contest such claim, the Executive shall:
(a) give the Company any information
reasonably requested by the Company relating to
such claim,
(b) take such action in connection with con-
testing such claim as the Company shall reason-
ably request in writing from time to time, in-
cluding without limitation, accepting legal
representation with respect to such claim by an
attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith
in order to effectively contest such claim, and
(d) permit the Company to participate in any
proceedings relating to such claim; provided, how-
ever, that the Company shall bear and pay directly
all costs and expenses (including additional
interest and penalties) incurred in connection with
such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result
of such representation and payment of costs and
expenses. Without limitation on the foregoing
provisions of this Section 4.2(f), the Company shall
control all proceedings taken in connection with
such contest and, at its sole option, may pursue or
forego any and all administrative appeals,
proceedings, hearings and conferences with the
taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine;
provided, however, that if the Company
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directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and
shall indemnify and hold the Executive harmless, on
an after-tax basis, from any Excise Tax or income
tax (including interest or penalties with respect
thereto) imposed with respect to such advance or
with respect to any imputed income with respect to
such advance; and further provided that any
extension of the statute of limitations relating to
payment of taxes for the taxable year of the
Executive with respect to which such contested
amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue
Service or any other taxing authority.
(iv) If, after the receipt by the
Executive of an amount advanced by the Company
pursuant to Section 4.2(f)(iii), the Executive
becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the
Company's compliance with the requirements of
Section 4.2(f)(iii)) promptly pay to the Company the
amount of such refund (together with any interest
paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of
an amount advanced by the Company pursuant to
Section 4.2(f)(iii), a determination is made that
the Executive shall not be entitled to any refund
with respect to such claim and the Company does not
notify the Executive in writing of its intent to
contest such denial or refund prior to the
expiration of thirty (30) days after such determi-
nation, then such advance shall be forgiven and
shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
4.3 DEATH. If the Executive's employment is termi-
nated by reason of the Executive's death during the Employment
Period (either prior or subsequent to a Change in Control),
this Agreement shall terminate without further obligations to
the Executive's legal representatives under this Agreement,
other than for (i) payment of Accrued Obligations (as defined
in Section 4.1(a)) (which shall be paid to the Executive's es-
tate or beneficiary, as applicable, in a lump sum in cash
within five (5) days of the Date of Termination) and (ii) the
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timely payment or provision of Other Benefits (as defined in
Section 4.1(d)), including death benefits pursuant to the
terms of any plan, policy, or arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period (either prior or subsequent to a Change in
Control), this Agreement shall terminate without further obli-
gations to the Executive, other than for (i) payment of
Accrued Obligations (as defined in Section 4.1(a)) (which
shall be paid to the Executive in a lump sum in cash within
five (5) days of the Date of Termination) and (ii) the timely
payment or provision of Other Benefits (as defined in Section
4.1(d)) including disability benefits pursuant to the terms of
any plan, policy or arrangement of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON.
If the Executive's employment shall be terminated for Cause
during the Employment Period (either prior or subsequent to a
Change in Control), this Agreement shall terminate without
further obligations to the Executive other than the obligation
to pay to the Executive Accrued Obligations (as defined in
Section 4.1(a)). If the Executive terminates employment with
the Company during the Employment Period, (excluding a
termination for Good Reason), this Agreement shall terminate
without further obligations to the Executive, other than for
Accrued Obligations (as defined in Section 4.1(a)) and the
timely payment or provision of Other Benefits (as defined in
Section 4.1(d)). In such case, all Accrued Obligations shall
be paid to the Executive in a lump sum in cash within thirty
(30) days of the Date of Termination. If the Executive's
employment shall terminate for the reasons stated in this
Section, the provisions of Section 5 shall continue to apply.
4.6 NON-EXCLUSIVITY OF RIGHTS. Except as provided
in Sections 4.1(c) nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in
any plan, program, policy or practice provided by the Company
and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive
may have under any contract or agreement with the Company.
Amounts which are vested benefits of which the Executive is
otherwise entitled to receive under any plan, policy, practice
or program of, or any contract or agreement with, the Company
at or subsequent to the Date of Termination, shall be payable
in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this
Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to
make the payments provided for in this Agreement and otherwise
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<PAGE> 18
to perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Execu-
tive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement and, except as provided in
Sections 4.1(c), such amounts shall not be reduced whether or
not the Executive obtains other employment. The Company
agrees to pay promptly as incurred, to the full extent
permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any
contest by the Executive regarding the amount of any payment
pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in
Code Section 7872(f)(2)(A).
4.8 RESOLUTION OF DISPUTES. If there shall be any
dispute between the Company and the Executive (i) in the event
of any termination of the Executive's employment by the Com-
pany, whether such termination was for Cause, or (ii) in the
event of any termination of employment by the Executive,
whether Good Reason existed, then, unless and until there is a
final, nonappealable judgment by a court of competent juris-
diction declaring that such termination was for Cause or that
the determination by the Executive of the existence of Good
Reason was not made in good faith, the Company shall pay all
amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be,
that the Company would be required to pay or provide pursuant
to Section 4.1 or 4.2 as though such termination were by the
Company without Cause or by the Executive with Good Reason;
provided, however, that the Company shall not be required to
pay any disputed amounts pursuant to this paragraph except
upon receipt of an undertaking by or on behalf of the
Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
SECTION 5: NON-COMPETITION WITH AND SERVICES FOR THE COMPANY.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that either: (i) during
the Term of this Agreement and for a period ending
three (3) years thereafter; or (ii) if the Execu-
tive's employment is terminated during the Term of
this Agreement, then until the date three (3) years
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<PAGE> 19
after the date of termination, the Executive shall
not, without prior written approval of the Board,
become an officer, employee, agent, partner, or di-
rector of any business enterprise in substantial di-
rect competition (as defined in Section 5.1(b)) with
the Company.
5.1(b) For purposes of Section 5.1, a business
enterprise with which the Executive becomes associ-
ated as an officer, employee, agent, partner, or di-
rector shall be considered in substantial direct
competition, if such entity competes with the
Company in any business in which the Company is
engaged and is within the Company's market area (as
defined herein) as of the Date of Termination. The
Company's market area is defined for this purpose,
as the area which constitutes Central and Southern
Illinois, Northeastern and Central Iowa and the St.
Louis metropolitan area, and if the Company becomes
the successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) after
the Effective Date, to all or substantially all of
the business and/or assets of another business
enterprise, the geographical areas in which such
predecessor business enterprise conducts substantial
business activity.
5.2 CONFIDENTIAL INFORMATION. The Executive shall
hold in a fiduciary capacity for the benefit of the Company
all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by
the Company and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination
of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company,
or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it.
In no event shall an asserted violation of the provisions of
this Section constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this
Agreement.
5.3 SERVICES FOLLOWING A CHANGE IN CONTROL. If a
Change in Control of the Company shall occur and the Executive
shall receive the payment provided in Section 4.2 hereof, then
following the Date of Termination, and for a period of six
months thereafter, the Executive shall make himself available
for no additional payment other than his reasonable expenses
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<PAGE> 20
incurred in the performance of his duties hereunder at such
reasonable times and places as shall be set forth in writing
by notice from the Chief Executive Officer of the Company to
him to perform such reasonable services as may be requested in
writing of him. No services hereunder shall be required on a
"full time" basis.
5.4 MODIFICATION. If any court of competent juris-
diction determines that, consistent with the established
precedent of the forum of jurisdiction, any restriction
contained in Section 5.1 of this Agreement is unenforceable or
unreasonable, a lesser restriction shall be enforced in its
place to the maximum extent deemed enforceable or reasonable,
and the remaining covenants and restrictions shall be
enforceable independently of each other.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is
personal to the Executive, and without the prior written
consent of the Company, amounts receivable hereunder shall not
be assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal
representatives.
6.2 SUCCESSORS OF COMPANY. The Company will
require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company
to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to terminate the
Agreement at his option on or after the Change in Control Date
for Good Reason. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to
its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement,
notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been
duly given
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<PAGE> 21
when delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the President of
the Company with a copy to the Secretary of the Company, or to
such other address as one party may have furnished to the other
in writing in accordance herewith, except that notice of change
of address shall be effective only upon receipt.
Notice to Executive:
-------------------
G. Thomas Andes
409 Lake Christine Drive
Belleville, Illinois 62221
Notice to Company:
-----------------
Magna Group, Inc.
One Magna Place
1401 South Brentwood Blvd.
St. Louis, Missouri 63144-1401
7.2 VALIDITY. The invalidity or unenforceability
of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement.
7.3 WITHHOLDING. The Company may withhold from any
amounts payable under this Agreement such Federal, state or
local taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
7.4 WAIVER. The Executive's or the Company's fail-
ure to insist upon strict compliance with any provision hereof
or any other provision of this Agreement or the failure to as-
sert any right the Executive or the Company may have here-
under, including, without limitation, the right of the Execu-
tive to terminate employment for Good Reason pursuant to Sec-
tion 3.4 shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement.
7.5 REPLACEMENT OF PRIOR AGREEMENT. This Agreement
supersedes and replaces the Agreement between the undersigned
dated January 1, 1995, as amended and restated June 6, 1996.
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<PAGE> 22
IN WITNESS WHEREOF, the Executive and, the Company,
pursuant to the authorization from its Board, have caused this
Agreement to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ G. Thomas Andes
----------------------------------------
G. Thomas Andes
MAGNA GROUP, INC.
By /s/ Carolyn B. Ryseff
--------------------------------------
Name: CAROLYN B. RYSEFF
-----------------------------------
Title: SENIOR VICE PRESIDENT
----------------------------------
By /s/ Carl G. Hogan, Sr.
--------------------------------------
Carl G. Hogan, Sr.
Chairman of the Compensation
Committee of the Board of Directors
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<PAGE> 1
MAGNA GROUP, INC.
SUPPLEMENTAL
SENIOR EXECUTIVE
RETIREMENT PLAN
MAY 27, 1997
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
-----------------
<CAPTION>
Article Content Page
- ------- ------- ----
<S> <C> <C>
I DEFINITIONS 2
II PARTICIPATION 9
III BENEFITS 10
IV NO FUNDING OBLIGATION 14
V ADMINISTRATION 15
VI AMENDMENT OR TERMINATION 20
VII GENERAL LIMITATIONS AND PROVISIONS 21
</TABLE>
<PAGE> 3
MAGNA GROUP, INC.
SUPPLEMENTAL SENIOR EXECUTIVE RETIREMENT PLAN
---------------------------------------------
WHEREAS, effective as of January 1, 1987 Magna Group, Inc. (the "Company")
adopted the Supplemental Executive Retirement Plan of William S. Badgley (the
"Badgley Plan"), and
WHEREAS, the Badgley Plan was amended at various times to, among other
things, include G. Thomas Andes as a participant, and
WHEREFORE, the Company hereby establishes the Supplemental Senior Executive
Retirement Plan (the "Plan") to reward key senior executives in the future
for their dedication, commitment and service to the Company. The purpose of
the Plan is to insure that the covered executives receive retirement benefits
commensurate with their service to the Company and comparable to retirement
benefits provided to executives in similar positions in the banking industry.
WHEREFORE, the Company also determines that Mr. Andes will hereafter have his
entire supplemental retirement benefit provided under the Plan and will no
longer be a participant in the Badgley Plan and will hereafter have his
entire supplemental retirement benefit provided under the Plan.
- 1 -
<PAGE> 4
ARTICLE I
DEFINITIONS
Whenever used herein with the initial letter capitalized, words and phrases
shall have the meanings stated below unless a different meaning is plainly
required by the context. All masculine terms shall include the feminine and
all singular terms shall include the plural, unless the context clearly
indicates the gender or number. Some of the words and phrases used in the
Plan are not defined in this Article, but, for convenience, are defined as
they are introduced into the text.
1.01 ACCRUED BENEFIT means the portion of Retirement Income
payable at Normal Retirement Date which has accrued as of the
determination date based upon Years of Service at such determination
date.
1.02 AFFILIATE means those organizations which are now or ever
have been a member of a controlled group of corporations as that term
is defined in Section 1563(a) of the Code.
1.03 ACTUARIAL EQUIVALENT means benefits of equivalent value when
computed on the basis of Actuarial Assumptions as defined in Section
1.04.
- 2 -
<PAGE> 5
1.04 ACTUARIAL ASSUMPTIONS means the same rate of interest and
rates of mortality as are utilized in computing the benefits provided
by the Company's defined benefit pension plan.
1.05 ACTUARY means the individual enrolled actuary or firm including
one or more enrolled actuaries selected by the Committee to provide
actuarial services in connection with the administration of the Plan.
1.06 ALTERNATE RETIREMENT INCOME means the Actuarial Equivalent amount of a
Participant's Retirement Income payable in the form of a joint
and survivor annuity. Such joint and survivor annuity shall be valued
based on either (a) monthly income for the Participant's life and upon
his death, his spouse, if living, shall receive a monthly life income
which is equal to two-thirds (2/3) of the amount of monthly life income
the Participant was receiving with one hundred twenty (120) monthly
payments guaranteed collectively or (b) a monthly income for the
Participant's life and upon his death, his spouse, if living, shall
receive a monthly life income which is equal to one-half (1/2) of the
amount of monthly life income the Participant was receiving with one
hundred twenty (120) monthly payments guaranteed collectively. If the
Participant and his
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<PAGE> 6
spouse die before one hundred twenty (120) monthly payments have been
made then the balance of said guaranteed one hundred twenty (120)
monthly payments shall be made to the Participant's Beneficiary if the
Participant survived his spouse or to the Participant's spouse's estate
if she survived the Participant.
1.07 BENEFICIARY OR BENEFICIARIES means the person or persons
designated by Participant to receive amounts under the Plan payable by
reason of the Participant's death. If the Beneficiary of a Participant
predeceases him, or if a Participant dies without having designated a
Beneficiary, then the full amount payable upon the death of the
Participant shall be paid to his surviving spouse or, if none, shall be
paid to the Participant's estate.
1.08 BOARD means the Board of Directors of the Company.
1.09 CHANGE OF CONTROL means a change in control of the Company
of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange
Act; provided tht, for purposes of this Agreement, a Change in Control
shall be deemed to have occurred if (i) any Person (other than the
Company) is or becomes the "beneficial owner" (as defined in rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company which represent 20%
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<PAGE> 7
or more of the combined voting power of the Company's then outstanding
securities; (ii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election, by the Company's
stockholders, of each new director is approved by a vote of ast lease
two-thirds(2/3) of the directors then still in office who were directors
at the beginning of the period, but excluding any individuals whose
initial assumptionof office occurs as a result of either an actual or
threatened solicitation of proxies or consents by or on behalf of a
person other than the Board; (iii) there is consummated any
consolidation or merger of the Company in which the Company is not
the continuing or surviving corporation or pursuant to which shares of
the Company's Common Stock are converted into cash, securities, or other
property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger; (iv) there is consummated any
consolidation or merger of the Company in which the Company is the
continuing or surviving corporation in which the holders of the
Company's Common Stock immediately prior to the merger do
- 5 -
<PAGE> 8
not own fifty percent (50%) or more of the stock of the surviving
corporation immediately after the merger; (v) there is consummated any
sale, lease, exchange, or other transfer (in one transaction or a series
of related transactions) of all, or substantially all, of the assets of
the Company, or (vi) the stockholders of the Company approve
any plan or proposal for the liquidation or dissolution of the Company.
1.10 CAUSE means "Cause" as defined in the Employment Agreement.
1.11 CODE means the Internal Revenue Code of 1986, as amended.
1.12 COMMITTEE means the compensation committee of the Board.
1.13 COMPANY means Magna Group, Inc., an organization incorpo-
rated under the laws of the State of Delaware, and any Affiliate
thereof.
1.14 COMPENSATION means the sum of a Participant's Annual Base
Salary and Incentive Bonus as defined in the Employment Agreement.
1.15 DISABILITY means "Disability" as defined in the Employment
Agreement.
- 6 -
<PAGE> 9
1.16 EMPLOYMENT AGREEMENT means the Amended and Restated Employment by and
between the Company and G. Thomas Andes dated as of the -- day of May,
1997.
1.17 ELIGIBLE EMPLOYEE means an individual employed by the Company in a
senior management position.
1.18 FINAL MONTHLY EARNINGS means one-twelfth (1/12) of a Participant's
average annual Compensation computed using the highest five
(5) complete calendar years out of the last ten (10) complete calendar
years of his employment with the Company which precedes the earlier of
(a) his termination of employment for any reason or, (b) date of
termination of this Plan. If a Participant completes fewer than five
(5) complete calendar years of employment with the Company prior to the
determination of his Final Monthly Earnings hereunder then Final Monthly
Earnings shall mean one-twelfth (1/12) of his average annual
Compensation for all complete calendar years of employment with the
Company preceding the earlier of (a) his termination of employment for
any reason or (b) the date of the termination of this Plan.
1.19 NORMAL RETIREMENT DATE means a Participant's sixty-fifth
(65) birthday.
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<PAGE> 10
1.20 OTHER RETIREMENT BENEFITS means those Actuarial Equivalent
amounts which are due and payable to such Participant, his spouse, or
his Beneficiaries under any other Company defined benefit pension plan
qualified under Section 401(a) of the Code and in the event of
Disability those Actuarial Equivalent amounts due and payable to the
Participant under any Company sponsored long term disability program or
plan.
1.21 PARTICIPANT means G. Thomas Andes and any other Eligible
Employee who is participating in the Plan in accordance with the
provisions of Section II.
1.22 PLAN means the Magna Group, Inc. Supplemental Senior
Executive Retirement Plan as set forth in this document.
1.23 RETIREMENT INCOME means a monthly benefit payable for the
life of the Participant with one hundred twenty (120) monthly payments
guaranteed equal to 1.7142857 percent times the Participant's number of
Years of Service (up to a maximum of sixty percent (60%)) times the
Participant's Final Monthly Earnings, provided, however, such amount
shall be offset and reduced by Other Retirement Benefits.
1.24 YEARS OF SERVICE means any calendar year during which a
Participant was employed by the Company for one thousand (1,000) hours
or more.
- 8 -
<PAGE> 11
ARTICLE II
PARTICIPATION
2.01 The Company in its sole discretion shall determine when an
Eligible Employee of the Company shall become a Participant in the Plan.
The Committee may require all Eligible Employees, as a condition of
participation, to file with the Company any enrollment form, optional
payment form or other pertinent information concerning the Eligible
Employee.
- 9 -
<PAGE> 12
ARTICLE III
BENEFITS
3.01 If the Participant is in the employ of the Company on his
Normal Retirement Date the Participant shall be entitled, unless his
employment terminates subsequent thereto by reason of Disability or
death, to the payment of Retirement Income commencing within thirty (30)
days following his actual termination of employment.
3.02 Except as provided in Section 3.08, if the Participant
terminates employment with the Company for any reason other than
following a Change of Control or as a result of Disability or death
prior to his Normal Retirement Date, the provisions of this Plan shall
automatically terminate as to such Participant and such Participant
and/or his Beneficiary shall have no rights to any benefits hereunder
and the Company shall be relieved of all obligations under this Plan to
such Participant and/or his Beneficiary. If this Plan is terminated by
the Company prior to any such voluntary termination of employment by the
Participant then the Participant and/or his Beneficiary shall be
entitled to such benefits as are described in Section 3.06.
3.03 If the Participant terminates employment with the Company at
any time following a Change of Control, such Participant shall be
entitled to Retirement Income equal to 60%
- 10 -
<PAGE> 13
of the Participant's Final Monthly Earnings commencing within thirty
(30) days of the termination, irrespective of the Executive's age at the
time of such termination.
3.04 If the Participant terminates employment by reason of Disability, he
shall be entitled to payment of his Accrued Benefit as of the date of
his Disability commencing at age 65 or the Actuarial Equivalent lump sum
thereof payable within thirty (30) days of his termination of
employment, irrespective of his age on the date of his Disability.
3.05 If the Participant dies at any time while employed by the Company, he
shall forfeit any right to Retirement Income, but his Beneficiary shall
receive 50% of the benefit described in Section 3.04 above, commencing
on the date the Participant would have attained age 65.
3.06 If this Plan is amended at any time by the Company prior to
the Participant being entitled to receive any benefits hereunder the
amendment shall not reduce the "benefit otherwise payable" under the
terms of this Plan to such Participant and/or his Beneficiary. For
purposes hereof the term "benefit otherwise payable" shall mean
Participant's Accrued Benefit determined as of the date of any such
amendment provided, however, in order for the Participant or his
Beneficiary to receive any benefits hereunder the Participant must
satisfy the distribution requirements of
- 11 -
<PAGE> 14
the Plan or the Plan as amended if such distribution requirements are
less restrictive as to such Participant.
3.07 If this Plan is terminated by the Company for any reason
while the Participant is still in the employment of the Company and
prior to the Participant being entitled to receive any benefits
hereunder, the Participant, or his Beneficiary, in the event of a
Participant's death subsequent to termination of this Plan, shall be
entitled to the Actuarial Equivalent lump sum amount of his Accrued
Benefit determined as of the date of termination of the Plan payable
within sixty (60) days following his death or actual termination of
employment with the Company for any other reason.
3.08 If the Participant is involuntarily terminated without Cause
by the Company prior to his Normal Retirement Date, the Participant
shall be entitled to the Actuarial Equivalent lump sum amount of his
Accrued Benefit determined as of his date of termination of employment
from the employment of the Company and payable to him within sixty (60)
days thereof, irrespective of his age on such date.
3.09 If a Participant is entitled to Retirement Income under this
Plan, the Participant may elect, within a reasonable time prior to the
commencement of Retirement Income payments, and with the consent and
approval of the Committee,
- 12 -
<PAGE> 15
to receive his benefits under the Plan in the form of an Actuarial
Equivalent lump sum amount, or; if married at such time, with the
consent and approval of the Committee, to receive his benefits under the
Plan in the form of Alternate Retirement Income.
3.10 Notwithstanding the provisions of Section 3.02 above, in the
event a Participant terminates employment with the Company other than
following a Change of Control, or as a result of death, Disability or
attaining his Normal Retirement Date, the Committee may recommend, and
the Board may approve, the continued application of the provisions of
the Plan to a Participant and/or the Participant's Beneficiary. In such
an event, the Participant and/or his Beneficiary will be entitled to
such benefits as are approved by the Board in its sole discretion.
3.11 The Company may withhold or cause to be withheld from any
distribution all Federal, state, city, or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
- 13 -
<PAGE> 16
ARTICLE IV
NO FUNDING OBLIGATION
4.01 Nothing contained in this Plan and no action taken pursuant
to the provisions of this Plan shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Company and
the Participant, his spouse, or any other person. The Company may,
although shall not be required, establish a grantor trust and/or set
aside funds to meet its contingent obligations hereunder, and may invest
such funds in stocks, bonds, common funds, other securities or interest
bearing instruments selected by the Committee in its sole discretion.
Any funds which may be set aside and invested under the provisions of
this Plan shall continue for all purposes to be a part of the general
funds of the Company, and no person other than the Company shall by
virtue of the provisions of this Plan have any interest in
such funds. To the extent that any person acquires a right to receive
payments from the Company under this Plan, such right shall be no
greater than the right of any unsecured general creditor of the Company.
- 14 -
<PAGE> 17
ARTICLE V
ADMINISTRATION
5.01 The Company through the Committee shall have general ad-
ministrative authority under the Plan. In addition, the Board may
appoint other individuals, firms or organizations to act as agent of the
Company in carrying out administrative duties under the Plan.
5.02 The Committee shall have such authority as may be necessary
to discharge its responsibilities under the Plan, including the
following rights, powers, and duties:
(a) The Committee may adopt rules governing its procedures not
inconsistent herewith and shall keep a permanent record of its
meetings and actions. The Company shall maintain the Accounts of
Participants and Beneficiaries under the Plan or shall cause them
to be maintained under its direction.
(b) The Company through the Committee shall have the sole
responsibility for the administration of the Plan and, except as
herein expressly provided, the Company through the committee
shall have the exclusive right to interpret the provisions of the
Plan and to determine any question arising hereunder or in
connection with the administration of the Plan, including the
- 15 -
<PAGE> 18
remedying of any omission, inconsistency, or ambiguity, and its
decision or action in respect thereof shall be conclusive and
binding upon any and all Participants, former Participants,
Beneficiaries, heirs, distributees, executors, administrators,
and assigns.
(c) The Committee may employ such counsel and agents in such
clerical, accounting, and other services as it may require in
carrying out the provisions of the Plan.
(d) The Company shall employ an actuary to calculate the
benefits due under this Plan and his determination shall be
conclusive and binding on all parties.
(e) Participants, former Participants, or their Beneficiaries
shall be notified by the Committee or by the Company of their
right to receive benefits.
(f) No member of the Board or any other individual to whom
administrative authority is delegated under the Plan shall be
entitled to act on or decide any matters relating solely to
himself or any of his rights or benefits under the Plan.
5.03 The Company shall indemnify all officers and employees
assigned any powers or duties under the Plan to the extent that such
officers or employees incur loss or damage which
- 16 -
<PAGE> 19
may result from such officers' or employees' duties, exercises of
discretion under the Plan, or any other acts or omissions hereunder.
Such duties, exercises of discretion, acts, or omissions will not be
indemnified by the Company in the event that such loss or damage is
judicially determined or agreed by the officers or employees to be due
to their respective gross negligence or willful misconduct.
5.04 Any individual who is employed by the Company and who is acting as
agent of the Company for purposes of this Plan shall serve without
compensation for services as such, but all proper expenses incurred by
the individual incident to the functioning of the Plan shall be paid by
the Company.
5.05 Any Eligible Employee who believes that he is entitled to receive a
benefit under the Plan may file a claim in writing with the
Committee. The Committee shall, within ninety (90) days after the
receipt of the claim, either allow or deny the claim in writing. A
denial of the claim shall be written in a manner calculated to be
understood by the claimant and shall include:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent Plan provisions on which the
denial is based;
- 17 -
<PAGE> 20
(c) A description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and
(d) An explanation of the Plan's review procedure.
A claimant whose claim is denied may, within sixty (60) days after receipt of
denial of his claim:
(a) Seek a review upon written request to the Company;
(b) Review pertinent documents; and
(c) Submit issues and comments in writing.
Any written request for review shall contain all additional information which
the claimant wishes the Committee to consider. The Company may hold any
hearing or conduct any independent investigation which it deems necessary to
render its decision.
The Committee shall make its decision within sixty (60) days after receipt of
the request for review unless a greater period is agreed to by the claimant
and the Committee. The decision on review shall be in writing and shall
include specific reasons for the decision, and shall be written in a manner
calculated to be understood by the claimant and with specific references to
the pertinent Plan provisions on which the decision
- 18 -
<PAGE> 21
is based. The Company shall have the sole authority to interpret the Plan, to
determine benefit eligibility, and to decide any and all matters arising
hereunder, including, without limitation, the right to interpret ambiguities,
inconsistencies, or omissions, and its decision or action thereon shall be
final, conclusive, and binding upon any and all employees.
The ninety (90) and sixty (60) days described above may be extended at the
discretion of the Committee for a second ninety (90) or sixty (60) day
period, as the case may be, provided that written notice of the extension is
furnished to the claimant prior to the termination of the initial period,
indicating the special circumstances requiring such extension and the date by
which a final decision is expected. Any person submitting a claim may, with
the consent of the Committee:
(a) Withdraw the claim at any time; or
(b) Defer the date as of which such claim shall be deemed filed
for purposes of this procedure.
- 19 -
<PAGE> 22
ARTICLE VI
AMENDMENT OR TERMINATION
6.01 Subject to Section 3.05 in the case of amendment and Section 3.06 in
the case of termination the Company reserves the right at any
time, by resolution of the Board, to amend or terminate the Plan
for any reason and without the consent of any Eligible Employee,
Participant, spouse, Beneficiary, or other person.
6.02 The Committee shall give notice of any amendment or
termination pursuant to Section 6.01 to all affected Participants.
- 20 -
<PAGE> 23
ARTICLE VII
GENERAL LIMITATIONS AND PROVISIONS
7.01 The Plan shall be binding on each Participant and his
Beneficiary, heirs and personal representative and the Company,
its successors and assigns.
7.02 Nothing contained herein shall give any individual the right
to be retained in the employment of the Company or affect the right
of the Company to terminate any individual's employment. The adoption
and maintenance of the Plan shall not constitute a contract between the
Company and any individual, or consideration for or an inducement to or
condition of the employment of any individual.
7.03 If the Committee shall find that any person to whom any
amount is payable under the Plan is unable to care for his affairs, any
payment due him (unless a prior claim therefor has been made by a duly
appointed legal representative) may, if the Committee so elects, be paid
to his spouse, a child, a relative, or any other person maintaining or
having custody of such person otherwise entitled to payment or deemed by
the Committee to be a proper recipient on behalf of such person. Any
such payment shall be a complete discharge of the Company of all
liability under the Plan therefor.
- 21 -
<PAGE> 24
7.04 Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, transfer, hypothecate or convey in advance of
actual receipt the amounts, if any, payable hereunder, or any part
thereof, which are, and all right to which are, expressly declared to be
unassignable and non-transferable. No part of the amounts payable
shall, prior to the actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other
person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.
7.05 Each Participant shall file with the Committee such pertinent
information concerning himself and his spouse or Beneficiary
as the Committee may specify, and no Participant, spouse, Beneficiary,
or other person shall have any rights or be entitled to any benefits
under the Plan unless such information is filed by or with respect to
him.
7.06 All elections, designations, requests, notices, instructions, and other
communications from the Participant, spouse, Beneficiary, or other
person to the Company or the Committee required or permitted under the
Plan shall be in
- 22 -
<PAGE> 25
such form as is prescribed from time to time by the Company or the
Committee, shall be mailed by first-class mail or delivered to the
principal office of the Company, and shall be deemed to have been given
and delivered only upon actual receipt thereof at such location.
7.07 All notices, statements, reports, and other communications from the
Company or the Committee to any Eligible Employee, Participant,
spouse, Beneficiary, or other person required or permitted under the
Plan shall be deemed to have been duly given when delivered to, or when
mailed by first-class mail, postage prepaid and addressed to, such
Eligible Employee, Participant, spouse, Beneficiary, or other person at
his address last appearing on the records of the Company.
7.08 The Company does not represent or guarantee that any par-
ticular Federal or state income, payroll, personal property, or other
tax consequence will result from participation in this Plan. A
Participant should consult with professional tax advisers to determine
the tax consequences of his or her participation.
7.09 The Plan and all rights hereunder shall be governed by and
construed in accordance with the Code, and the regulations promulgated
thereunder, and with the laws of the State of Missouri.
- 23 -
<PAGE> 26
IN WITNESS WHEREOF, this Plan has been executed the day and year first above
written.
MAY 27, 1997
MAGNA GROUP, INC.
By: /s/ Carolyn B. Ryseff
--------------------------------
Senior Vice President
By: /s/ Carl G. Hogan, Sr.
--------------------------------
Carl G. Hogan, Sr.
Chairman of the Compensation
Committee of the Board
of Directors
- 24 -
<PAGE> 1
<TABLE>
MAGNA GROUP, INC. EXHIBIT 11.1
COMPUTATION OF NET INCOME PER COMON SHARE ------------
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
------- ------- ------- -------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Primary:
- --------
Average common shares outstanding 32,955 28,509 31,478 28,380
Net effect of stock options 303 117 304 119
------- ------- ------- -------
Total 33,258 28,626 31,782 28,499
======= ======= ======= =======
Net income $19,819 $15,859 $29,257 $30,202
Less preferred stock dividends:
Class B voting preferred -- (1) (1) (2)
------- ------- ------- -------
Primary net income $19,819 $15,858 $29,256 $30,200
======= ======= ======= =======
Per common share:
Net income $0.60 $0.55 $0.92 $1.06
======= ======= ======= =======
Fully Diluted:
- ------------------
Average common shares outstanding 32,955 28,509 31,478 28,380
Net effect of stock options 376 130 380 135
Assumed conversion of:
7% convertible subordinated capital notes 639 799 659 809
8-3/4% convertible subordinated debentures 642 694 -- 693
------- ------- ------- -------
Average common shares and common share equivalents 34,612 30,132 32,517 30,017
======= ======= ======= =======
Primary net income $19,819 $15,858 $29,256 $30,200
Elimination of interest net of related tax effects on:
7% convertible subordinated capital notes 132 164 268 337
8-3/4% convertible subordinated debentures 333 359 -- 713
------- ------- ------- -------
Fully diluted net income $20,284 $16,381 $29,524 $31,250
======= ======= ======= =======
Per common share:
Net income $0.59 $0.54 $0.91<FA> $1.04
======= ======= ======= =======
<FN>
<FA> For the six months ended June 30, 1997, inclusion of common stock equivalents for the 8-3/4% convertible subordinated
debentures in the computation of fully diluted net income per share results in antidilution, and therefore, these are
excluded from the computation.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Magna
Group Inc. quarterly report on Form 10Q for the quarterly period ended June
30, 1997, and is qualified in its entirety by reference to such report.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1997
<PERIOD-END> Jun-30-1997
<CASH> 219,608
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 87,487
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,725,963
<INVESTMENTS-CARRYING> 148,035
<INVESTMENTS-MARKET> 151,225
<LOANS> 4,437,047
<ALLOWANCE> 55,726
<TOTAL-ASSETS> 6,931,641
<DEPOSITS> 5,266,127
<SHORT-TERM> 900,519
<LIABILITIES-OTHER> 74,956
<LONG-TERM> 82,419
0
40
<COMMON> 67,056
<OTHER-SE> 540,524
<TOTAL-LIABILITIES-AND-EQUITY> 6,931,641
<INTEREST-LOAN> 174,385
<INTEREST-INVEST> 55,346
<INTEREST-OTHER> 2,042
<INTEREST-TOTAL> 231,773
<INTEREST-DEPOSIT> 94,768
<INTEREST-EXPENSE> 117,201
<INTEREST-INCOME-NET> 114,572
<LOAN-LOSSES> 18,429
<SECURITIES-GAINS> 851
<EXPENSE-OTHER> 83,581
<INCOME-PRETAX> 43,724
<INCOME-PRE-EXTRAORDINARY> 43,724
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,257
<EPS-PRIMARY> .92
<EPS-DILUTED> .91
<YIELD-ACTUAL> 3.99
<LOANS-NON> 29,710
<LOANS-PAST> 12,409
<LOANS-TROUBLED> 242
<LOANS-PROBLEM> 0<F1>
<ALLOWANCE-OPEN> 45,382
<CHARGE-OFFS> 23,362
<RECOVERIES> 2,131
<ALLOWANCE-CLOSE> 55,726
<ALLOWANCE-DOMESTIC> 55,726
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1>Information not currently available; is reported on an annual basis only.
</TABLE>
