UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
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 0-4170
Fourth Financial Corporation
(Exact name of registrant as specified in its charter)
Kansas 48-0761683
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 North Broadway
Wichita, Kansas 67202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (316) 261-4444
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $5.00 per share
(Title of Class)
Depositary Shares, each representing a 1/16th interest in a share of Class
A 7% Cumulative Convertible Preferred Stock, Par Value $100.00 per
share, Liquidation Preference $400.00 per share (equivalent
to $25.00 per Depositary Share)
(Title of Class)
Indicate by check mark whether 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_____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.
As of March 1, 1994, the aggregate market value of the voting stock of
Registrant held by nonaffiliates of Registrant was approximately
$624,500,000. Such value was computed by reference to the reported last
sales price of such stock on March 1, 1994. At March 1, 1994, 26,463,733 shares
of Common Stock, par value $5 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the April 21, 1994 Annual Meeting
of Stockholders of Registrant (the "1994 Proxy Statement") to be filed pursuant
to Regulation 14A are incorporated by reference into Part III of this report.
TABLE OF CONTENTS
Item Page
PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . .10
4. Submission of Matters to a Vote of Security Holders. . . . . . . .10
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . . . . . . .11
6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . .11
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . .. . . . . .11
8. Financial Statements and Supplementary Data. . . . . . .. . . . . .11
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . .. . . . .12
PART III
10. Directors and Executive Officers of the Registrant . . . . . . . .12
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . .12
12. Security Ownership of Certain Beneficial Owners and Management . .12
13. Certain Relationships and Related Transactions . . . . . . . . . .12
PART IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Financial Information. . . . . . . . . . . . . . . . . . . . . . . Appendix A
PART I
Item 1. Business.
General
Fourth Financial Corporation ("Registrant" or the "Company") is
a bank holding company headquartered in Wichita, Kansas, which offers
a broad range of bank and bank-related services through its
subsidiaries, BANK IV Kansas, National Association ("BANK IV Kansas")
and BANK IV Oklahoma, National Association ("BANK IV Oklahoma"). The
Company is the largest bank holding company in Kansas and, at
December 31, 1993, had total assets of $6.7 billion, total deposits of
$5.3 billion, and stockholders' equity of $598 million. BANK IV Kansas,
whose predecessor was originally organized in 1887, is the largest
commercial bank in Kansas and, at December 31, 1993, had approximately
11% of all insured deposits in Kansas. BANK IV Kansas, the only major
statewide bank in Kansas, has 78 offices in 31 communities. BANK IV
Oklahoma has 39 offices in eleven communities. Registrant has entered
into agreements to acquire additional banks in Oklahoma, Kansas, and
Missouri and intends to continue expanding its operations throughout
Oklahoma and Kansas and into Missouri. See "Pending Acquisitions"
below.
The two BANK IV banks provide a wide range of commercial and
retail banking services. BANK IV Kansas' commercial and retail
operations are conducted through three metropolitan divisions and a
fourth division which oversees eleven smaller community banking
operations. Each separate BANK IV market-based unit is operated
semi-autonomously under the management of a local president. Trust,
commercial and retail investments, mortgage banking, leasing, and bank
card services are each managed on a line-of-business basis. At
December 31, 1993, the BANK IV banks held total assets of $6.1 billion
in various fiduciary capacities and exercised investment authority over
$2.5 billion of these assets. Also on that date, the BANK IV banks
serviced a $1.0 billion residential mortgage loan portfolio, of which
$384 million was serviced for others. The BANK IV banks operate the VIA
system, a network of 302 automated teller machines located throughout
Kansas and Oklahoma serving over 227,000 accounts.
In addition, Registrant owns several other subsidiaries which
perform various financially-related services such as reinsurance of
credit life and health insurance policies. Such subsidiaries in the
aggregate do not account for a material portion of the Company's
revenues or profits.
Recent Acquisitions
During 1993, the Company acquired two banks located in Kansas and
eight banks located in Oklahoma. The Company also assumed the deposits
and acquired substantially all of the assets of Commercial Bank and
Trust Company, Tulsa, Oklahoma ("Commercial-Tulsa") and assumed $99.4
million of deposits of a failed bank located in Mission, Kansas by
paying a premium of $1.1 million to the Federal Deposit Insurance
Corporation.
The Kansas banks acquired were Southgate Bank and Trust Company,
Prairie Village, Kansas ("Southgate"), and Farmers & Merchants State
Bank, Derby, Kansas ("F&M"). The Oklahoma banks acquired were Guaranty
Bank & Trust Company, Tulsa, Oklahoma ("Guaranty"); Bank of Woodward,
Woodward and Waukomis, Oklahoma ("Woodward"); Nichols Hills Bank and
Trust Company, Nichols Hills (Oklahoma City), Oklahoma ("Nichols
Hills"); Commercial Bank and Trust Co., Muskogee, Oklahoma
("Commercial-Muskogee"); First Bank & Trust Co. of Ft. Gibson, Ft.
Gibson, Oklahoma ("Ft. Gibson"); First Bank and Trust Co. of Tahlequah,
Tahlequah, Oklahoma ("Tahlequah"); Western National Bank of Tulsa,
Tulsa, Oklahoma ("Western"); and Security Bank & Trust Company of Ponca
City, Ponca City, Oklahoma ("Ponca").
The following table sets forth for each such bank acquisition the
amount of assets of the acquired bank at the date of acquisition, the
amount paid by the Company, the number of shares of common stock of the
Company issued, and the accounting method used to account for the
acquisition.
<TABLE>
<CAPTION>
No. of Accounting
Bank Assets Cash Paid Shares Method
- ---------- -------- --------- --------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Southgate $ 62,628 - 451,310 Pooling
Guaranty 82,606 $ 4,386 - Purchase
Woodward 130,192 17,859 - Purchase
Derby 61,565 8,068 - Purchase
Nichols Hills 97,869 - 469,906 Pooling
Commercial-Muskogee
Ft. Gibson, Tahlequah
and Commercial-Tulsa 465,060 - 1,874,812 Pooling
Western 206,288 - 1,110,695 Pooling
108,748(1) Purchase
Ponca 117,275 - 478,395 Pooling
<FN>
__________
(1) To acquire minority interest.
</TABLE>
Pending Acquisitions
The Company has entered into definitive agreements to acquire a
Missouri savings association, Great Southern Savings Bank, Springfield,
Missouri ("Great Southern"); two Kansas banks, Emprise Bank, National
Association, Hutchinson, Kansas ("Emprise") and First National Bank and
Trust Company in Dodge City, Dodge City, Kansas ("First National"); one
Oklahoma bank, Metro Bank of Broken Arrow, Broken Arrow, Oklahoma
("Metro"); and one Oklahoma savings association, Equity Bank for
Savings, F.A., Oklahoma City, Oklahoma ("Equity"). The following table
sets forth for each such proposed acquisition the amount of assets of
the financial institution at December 31, 1993 (unaudited), the amount
of cash proposed to be paid by the Company, the number of shares of
common stock of the Company proposed to be issued, and the accounting
method to be used to account for the acquisition.
<TABLE>
<CAPTION>
Cash to No. of Accounting
Bank Assets be Paid Shares Method
- -------- ------- ------- --------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Great Southern $530,368 - 2,798,813 Pooling
Emprise 268,450 $29,953 - Purchase
First National and Metro 148,818 - 662,220 Pooling
Equity 520,224 92,046 - Purchase
</TABLE>
All of such agreements are subject to various conditions,
including obtaining regulatory approvals, the banks or holding
companies meeting specified net worth requirements, and, in the case of
the two proposed acquisitions for Fourth Stock, that the transactions
be eligible for treatment for accounting purposes as "poolings of
interests." The Company is in various stages of obtaining the required
regulatory approvals and it is anticipated that all of the various
pending transactions will be completed in the second and third quarters
of 1994.
The Company has also agreed in principle to acquire an automobile
leasing company for a cash purchase price of approximately $28.5
million. The proposed acquisition is subject to various conditions,
among which are negotiation and execution of a definitive agreement,
completion of the Company's due diligence investigation, and obtaining
regulatory approvals.
The Company continues to be engaged in an active acquisition
program. Pursuant to that program, the Company is presently
considering or engaging in discussions concerning additional
acquisitions. However, except for the pending transactions described
above, as of March 1, 1994, the Company has no binding commitments,
agreements, or understandings to acquire any additional financial
institutions, but additional acquisition agreements may be negotiated
or entered into at any time.
Competition
BANK IV Kansas is the largest bank in Kansas, and as of
September 30, 1993 (the latest date for which statewide information is
available), held approximately 14.9% of the total bank deposits in
Kansas. As of December 31, 1993, BANK IV Kansas was the largest of
approximately 490 commercial banks in the State of Kansas. As of
June 30, 1993, BANK IV Kansas ranked 114th largest, as measured by
total assets, out of approximately 11,100 commercial banks in the
United States. BANK IV Oklahoma is the third-largest bank in Tulsa,
Oklahoma, and the fifth-largest out of nearly 400 banks in Oklahoma.
There are one or more other commercial banks located in each
BANK IV community, resulting in strong competition in all areas of bank
services. The principal methods of competition in the commercial
banking industry are price, service, and interest rates paid to
depositors and charged to credit customers. In addition, banks compete
for loans and deposits with other types of financial institutions such
as savings and loan associations, credit unions, money market mutual
funds, and finance companies. Increasingly, banks also compete for both
consumer and commercial loans and for deposits with large retail and
commercial enterprises. Among other things, this increased competition
has resulted in banks being required to accept lower interest rates on
loans and to pay interest on a larger percentage of their deposits.
Lines of Business and Reportable Segments
Registrant and its subsidiaries engage primarily in commercial
banking. Registrant and its subsidiaries, therefore, did not engage in
material operations in separate reportable industry segments for the
last three fiscal years.
Employees
As of March 1, 1994, Registrant and its subsidiaries had a total
of 3,437 full-time-equivalent employees. Registrant had 982
full-time-equivalent employees. BANK IV Kansas had 1,646, BANK IV
Oklahoma had 807, and Fourth Financial Insurance Company and BANK IV
Community Development Corporation each had one.
Regulation and Supervision
Federal Regulation. The Company is subject to the Bank Holding
Company Act of 1956, as amended (the "Act"), and to regulation by the
Board of Governors of the Federal Reserve System (the "Board"). The Act
limits the nonbanking activities which may be engaged in by the Company
and its subsidiaries to those so closely related to banking or managing
or controlling banks as to be a proper incident thereto. In determining
whether a particular activity is a proper incident to banking or
managing or controlling banks, the Board must consider whether
performance of an activity by an affiliate of a bank holding company
can reasonably be expected to produce benefits to the public, such as
greater convenience, increased competition, or gains in efficiency. The
benefits of the activity must also outweigh possible adverse effects,
such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices.
The Act also prohibits bank holding companies from acquiring
substantially all the assets of, or owning more than 5% of the voting
shares of, any bank which is not already majority-owned, or of any
nonbanking company, without the prior approval of the Board. No
application to acquire shares or assets of a bank located outside the
state in which the operations of the applicant's banking subsidiaries
are principally conducted may be approved by the Board unless such
acquisition is specifically authorized by a statute of the state in
which the bank whose shares or assets are to be acquired is located.
The Company, its nonbanking subsidiaries, BANK IV Kansas, and
BANK IV Oklahoma, are all affiliates of each other within the meaning
of the Federal Reserve Act. As such, they are subject to certain
restrictions on loans by the two BANK IV banks to the Company or such
nonbanking subsidiaries and on investments in and loans secured by
their stock or other securities. The Company and its subsidiaries,
including the two BANK IV banks, are also subject to certain
restrictions on the issuance, underwriting, and distribution of
securities. In addition, the Board may examine the Company or any of
its subsidiaries.
As a bank holding company, the Company is a legal entity separate
and distinct from its subsidiaries. The principal sources of funds
available for dividends on the Company's common stock and its preferred
stock are dividends from the two BANK IV banks and cash and other
investments held by the Company. The approval of the Comptroller of the
Currency (the "Comptroller") is required if total dividends declared by
a national bank in any one year exceed the bank's net profits for that
year plus the profits for the two preceding years retained by the bank.
In 1994, the BANK IV banks may pay an aggregate of approximately $15.8
million (in addition to their 1994 net profits) in dividends to the
Company without obtaining regulatory approval.
The Comptroller's approval was required and obtained for
dividends paid by the BANK IV banks in 1993. Because of the financial
strength of Registrant, and both banks' anticipated earnings capacity,
the BANK IV banks both anticipate they will be able to obtain
permission from the Comptroller to pay dividends in 1994 to the extent
justified by their respective financial conditions and subject to the
capital requirements described in the next section.
Capital Guidelines. Bank holding companies, such as the Company,
and their bank subsidiaries are required to maintain three capital
ratios which measure capital adequacy. Capital is separated into
"Tier 1 capital" (as applied to the Company, common stockholders'
equity and Preferred Stock, less certain intangible assets) and "Tier 2
capital" (as applied to the Company, the allowance for credit losses
limited to 1.25% of risk-weighted assets).
The first two ratios, which are based on the degree of credit
risk in the company's assets, provide for weighting assets based on
assigned risk factors and include off-balance-sheet items such as loan
commitments and stand-by letters of credit. The ratio of total capital
(Tier 1 capital plus Tier 2 capital) to risk-weighted assets and
off-balance-sheet commitments and contingencies must be at least 8.0%
and the ratio of Tier 1 capital to risk-weighted assets and off-
balance-sheet commitments must be at least 4.0%.
The capital leverage ratio supplements the risk-based capital
guidelines. Banks and bank holding companies are to maintain a minimum
ratio of Tier 1 capital to average adjusted total assets of 3.0%.
These ratio requirements are minimums. Any institution operating
at or near those levels would be expected by the regulators to have
well-diversified risk, including no undue interest rate risk exposures,
excellent asset quality, high liquidity, and good earnings and, in
general, would have to be considered a strong banking organization. All
other organizations and any institutions experiencing or anticipating
significant growth are expected to maintain capital ratios at least one
to two percent above the minimum levels, and higher capital ratios can
be required if warranted by particular circumstances or risk profile.
A bank's deposit insurance premium is based, in part, on the
bank's capital levels. The Federal Deposit Insurance Corporation is
the single insurer of deposits in financial institutions. Deposit
insurance premium rates range from 0.23% to 0.31% of a bank's
assessment base (as defined), depending on the bank's supervisory
rating by the bank's primary regulator and its capital level. A bank
is typically defined to be "well capitalized" if it maintains a Tier I
capital ratio of at least 6.0%, a total risk-based capital ratio of at
least 10.0%, and a leverage ratio of at least 5.0%. It is the
Company's intention to maintain sufficient capital in each of its bank
subsidiaries to permit them to maintain a "well capitalized"
designation. The capital ratios for both of the Company's subsidiary
banks exceeded the "well capitalized" regulatory capital requirements
at December 31, 1993.
Because of the Company's intention to continue making
acquisitions, it is anticipated that the Comptroller will expect the
BANK IV banks to maintain the greater of a 6.0% leverage ratio or a
10.0% total risk-based capital ratio. At December 31, 1993, the
Company's capital exceeded the amount required by the greater of a 6.0%
leverage or a 10.0% risk-based capital ratio by an aggregate of
approximately $107.9 million.
Pending and Proposed Legislation. There are various pending and
proposed bills in Congress that, among other things, would
substantially eliminate existing federal and state law restrictions on
interstate banking and on interstate acquisitions of banks and bank
holding companies and would restructure the federal supervision of
financial institutions. The Company is unable to predict with any
certainty the effect any such legislation would have on the Company and
its subsidiaries.
Kansas Regulation. A Kansas bank holding company is prohibited
from acquiring, directly or indirectly, any voting shares in any Kansas
bank if, after such acquisition, all of the Kansas banks in which such
bank holding company or any subsidiary of such bank holding company has
ownership or control of any voting shares would have, in the aggregate,
more than 15% of the total deposits of all banks domiciled in Kansas
plus the total deposits, savings deposits, shares and other accounts in
savings and loan associations, federal savings banks, and building and
loan associations in Kansas as determined by the Kansas bank
commissioner on the basis of the most recent reports to supervisory
authorities which are available at the time of the acquisition. The
statute contains an exception from the 15%-of-statewide-deposits
limitation in the case of an acquisition that the Kansas bank
commissioner determines would be in the public interest to prevent the
failure or probable failure of the acquired bank. As of December 31,
1993, BANK IV Kansas had approximately 11.0% (12.0% on a pro forma
basis) of the total deposits of all Kansas banks, savings and loan
associations, federal savings banks, and building and loan associations
according to the most recent information available to the Company.
Bank holding companies located in Nebraska, Missouri, Colorado,
Oklahoma, and Arkansas are permitted to acquire banks and bank holding
companies located in Kansas upon obtaining the approval of the Kansas
State Banking Board. Among the factors to be considered in granting
such approval are whether existing subsidiaries of the applicant are
operated in a safe, sound, and prudent manner, the adequacy of services
being provided by existing subsidiaries of the applicant, whether the
applicant proposes to provide adequate and appropriate services in the
communities served by the Kansas banks to be acquired, whether the
proposed acquisition will result in a Kansas bank or bank holding
company located in Kansas that has adequate capital and good earnings
prospects, and whether the proposed acquisition is in the interests of
the depositors and creditors of the bank or bank holding company which
is the subject of the proposed acquisition and in the public interest
generally. Such acquisitions are also subject to the deposits
limitation described above. No application can be approved unless the
state banking board finds that the laws of the state or jurisdiction in
which the applicant bank holding company is located permit a Kansas
bank holding company to acquire a bank located in that state or
jurisdiction on terms that are substantially no more restrictive than
those established under the Kansas statute. The Kansas statute would
also permit Iowa banks or bank holding companies to acquire Kansas
banks and bank holding companies if Iowa were to adopt appropriate
reciprocal legislation.
Oklahoma Regulation. The Company is permitted under Oklahoma law
to acquire additional banks, but such banks must have been in existence
and continuous operation for at least five years. Oklahoma prohibits a
multi-bank holding company from acquiring any additional banks if such
acquisition would result in the bank holding company having direct or
indirect ownership of banks located in Oklahoma that would have in
excess of 11% of the aggregate deposits of all financial institutions
located in Oklahoma which have deposits insured by the Federal Deposit
Insurance Corporation or National Credit Union Administration. As of
December 31, 1993, BANK IV Oklahoma had approximately 4.8% (6.0% on a
pro forma basis) of the total deposits of insured Oklahoma savings and
loans, credit unions, and banks. This restriction is not expected to
affect the Oklahoma acquisition activities of the Company in the near
future.
Missouri Regulation. The Company is also permitted under
Missouri law to acquire additional banks. Missouri law prohibits an
adjoining-state bank holding company from obtaining control of any bank
if the total deposits in that bank together with the total deposits in
all banks controlled by the adjoining-state bank holding company exceed
13% of the total deposits in all depository financial institutions in
Missouri which have deposits insured by an agency of the federal
government. As of December 31, 1992, the latest date for which
information concerning deposits in Missouri financial institutions is
available to the Company, Great Southern had approximately 0.5% of the
total deposits of federally insured depository financial institutions
in Missouri. This restriction is not expected to affect the Missouri
acquisition activities of the Company in the near future.
Government Monetary Policy and Economic Controls
The earnings of Registrant and the BANK IV banks are affected by
the policies of regulatory authorities. An important function of the
Federal Reserve System is to regulate the national supply of bank
credit in order to affect the level of economic activity. Among the
instruments used to implement these objectives are open market
operations in U.S. Government securities, changes in the discount rate
on member bank borrowings, and changes in reserve requirements. These
instruments are used in varying combinations to influence overall
growth and distribution of bank loans, investments and deposits, and
their use may also affect interest rates charged on loans or paid for
deposits.
Statistical Disclosure
The information required by Guide 3, "Statistical Disclosure by
Bank Holding Companies," has been integrated throughout the attached
Appendix under the captions "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," and such information is hereby incorporated
herein by reference.
Executive Officers of the Registrant
Listed below are the names and ages of all executive officers of
Registrant and offices held by them with Registrant and the BANK IV
banks.
Name Age Positions and Offices
- ------------ ----- ---------------------
Darrell G. Knudson 56 Chairman of the Board, President,
and Chief Executive Officer of
Registrant and Director of BANK IV
Kansas and BANK IV Oklahoma
K. Gordon Greer 57 Chairman of the Board, President,
and Chief Executive Officer of BANK
IV Kansas
Edward F. Keller 53 Chairman of the Board and Chief
Executive Officer of BANK IV
Oklahoma
Michael R. Ritchey 54 President, Trust and Asset
Management, and Senior Trust Officer
of Registrant and of BANK IV Kansas;
Executive Vice President of
BANK IV Oklahoma
David L. Strohm 42 Executive Vice President and
Treasurer of Registrant; Executive
Vice President of BANK IV Kansas
and BANK IV Oklahoma
James J. Gartner 52 Executive Vice President and
Director of the Risk Control Group
of Registrant
William J. Rainey 47 Executive Vice President, Secretary
and General Counsel of Registrant
Michael J. Shonka 46 Senior Vice President and Chief
Financial Officer of Registrant;
Senior Vice President of BANK IV
Kansas and BANK IV Oklahoma
John F. Guettler 48 Senior Vice President and Director
of Human Resources of Registrant
Mr. Knudson is a member of the Executive Committee of Registrant.
There is no family relationship between any of the executive
officers of Registrant.
Mr. Knudson was elected Vice Chairman of Registrant effective
December 31, 1990, Chairman of the Board on July 1, 1991, and President
on March 16, 1992. Mr. Knudson was Vice Chairman of First Bank System,
Inc., a Minnesota-based multi-bank holding company, from 1982 until his
resignation in 1990 to join Registrant.
Mr. Greer has been Chairman of the Board of BANK IV Kansas since
December, 1992, and President of BANK IV Kansas (or its predecessor
BANK IV Wichita) since March, 1989. He was a director and President of
the Company from September, 1990 through March, 1992 and was also
Chairman of the Board of BANK IV Kansas (or its predecessor BANK IV
Wichita) from January, 1991 through December, 1991.
Mr. Keller has been Chairman of the Board of BANK IV Oklahoma
since December 31, 1992, and was Chairman of the Board and Chief
Executive Officer of The Fourth National Bank of Tulsa prior to its
acquisition by the Company in December, 1992.
Mr. Ritchey has been the senior trust officer of the Company and
its subsidiary banks and responsible for their trust operations for
more than five years. He was elected Executive Vice President of
Registrant in February, 1990.
Mr. Strohm was elected to his present position with BANK IV
Kansas in January, 1994, was elected to his present position with BANK
IV Oklahoma in January, 1993, and was elected Executive Vice President
of Registrant in September, 1990 and Treasurer in 1986. Mr. Strohm has
been responsible for supervising Registrant's funds management,
treasury, and asset and liability management functions since 1983. He
has also been responsible for supervising Registrant's acquisition
activities since 1993.
Mr. Gartner was Senior Vice President and Senior Credit Officer
of First Bank South Dakota, N.A. (from July 1987) and Senior Credit
Officer of First Bank North Dakota, N.A. and First Bank East Grand
Forks, N.A. from 1990, until he became employed by Registrant in
February, 1992.
Mr. Rainey was Senior Vice President, General Counsel, and
Secretary of Valley National Corporation (Arizona bank holding company)
from 1987 to 1991 and Vice President and General Counsel of Cabot
Corporation, Boston, Massachusetts (specialty chemicals and energy)
from 1991 to 1993. He commenced his employment with Registrant on
February 28, 1994.
Mr. Shonka, Registrant's chief financial officer, has been Senior
Vice President of Registrant since January, 1988.
Mr. Guettler has held his present position since December, 1988.
Directors of the Registrant
Listed below are the names and principal occupations of
Registrant's directors.
Name Principal Occupation
Lionel D. Alford . . . . . . . . . .President, Alford, Inc. (investments and
consulting)
Thomas R. Clevenger. . . . . . . . .Investments
Jordan L. Haines . . . . . . . . . .Chairman of the Board of Registrant until
his retirement in 1991
Joseph M. Klein. . . . . . . . . . .President, CCI Corporation (truck parts
distributor)
Lawrence M. Jones. . . . . . . . . .Chairman and Chief Executive Officer, The
Coleman Company, Inc. (manufacturer of
outdoor recreational products) until
his retirement in December, 1993
Darrell G. Knudson . . . . . . . . .Chairman of the Board of Registrant
Fred L. Merrill, Sr. . . . . . . . .Chief Executive Officer, Cereal Food
Processors, Inc. (flour mills)
Russell W. Meyer, Jr.. . . . . . . .Chairman and Chief Executive Officer, The
Cessna Aircraft Company (general aviation
aircraft manufacturer)
Laird G. Noller. . . . . . . . . . .President, Noller Enterprises (automobile
dealerships)
Patrick E. O'Shaughnessy . . . . . .Chairman and Chief Executive Officer, Lario
Oil & Gas Company (oil exploration)
Robert F. Vickers. . . . . . . . . .Trustee and Administrator, The Vickers
Trusts
Ken Wagnon . . . . . . . . . . . . .Owner, franchise restaurants and other
investments, and President,
Capital Enterprises, Inc. (accounting and
management services)
Item 2. Properties.
Kansas
The only significant real property owned by Registrant is a
building located in Wichita, Kansas, acquired in January 1994 that is
being remodeled for use as a data processing and operations facility.
BANK IV Kansas owns substantially all of its banking facilities, but
the land on which some of such facilities are located is leased and 13
branch facilities, including seven branches located in supermarkets,
are leased entirely. Registrant believes that all of such properties
are well maintained and suitable for their intended purposes. Described
below are the principal buildings operated by BANK IV Kansas.
Wichita
Registrant and BANK IV Kansas occupy a four-building complex
located in downtown Wichita, Kansas. The Fourth Financial Center is a
ten-level office building located at 100 North Broadway. The building
is located on an 88,450-square-foot tract of land and contains
approximately 396,000 square feet of gross area, which includes a
25,000-square-foot enclosed courtyard. The building contains
approximately 312,000 rentable square feet, of which BANK IV Kansas and
Registrant utilize approximately 156,000 square feet with the balance
being leased to tenants. Fourth Operations Center is a five-level
office building located adjacent to Fourth Financial Center and
connected by an enclosed pedestrian walkway. The 63,000-square-foot
building is located on a 13,020-square-foot tract of land and houses
operating functions of Registrant and its subsidiaries. A 450-car,
six-level parking garage and walk-in bank facility is located just west
of Fourth Financial Center and is connected to it by an enclosed
pedestrian walkway.
Another building, Exchange Place, is located one block west of
the Fourth Financial Center. Exchange Place is located on five tracts
of land, two of which are owned by BANK IV Kansas and three of which
are leased. The leases on the three leased tracts expire on August 31,
2003, and on December 31, 2009. The building, constructed prior to 1903
with various additions to the basic structure being completed through
1957, is an eight-level structure plus a full basement, a mezzanine
floor, and an eighth floor mechanical area. The building contains
approximately 147,000 square feet of rentable space of which BANK IV
Kansas and Registrant are currently occupying approximately 118,700
square feet and the remaining 28,300 square feet are leased.
Topeka
BANK IV Kansas owns the BANK IV Tower, a 16-story office building
in downtown Topeka, Kansas containing 146,900 square feet. At February
1, 1994, BANK IV Kansas occupied approximately 127,700 square feet of
the building with approximately 19,200 square feet available for lease
and expansion. A 260-car, eight-level parking garage is attached to the
building.
Townsite Plaza Development, Inc., a subsidiary of BANK IV Kansas,
owns and operates three buildings located immediately east of the
BANK IV Tower above a municipal subsurface garage. The three buildings,
constructed between 1976 and 1981, contain an aggregate of
approximately 138,000 square feet of rentable space, of which a total
of 112,350 square feet was leased as of February 1, 1994.
Oklahoma
BANK IV Oklahoma does not own any major building facilities. It
leases 71,000 square feet in the BANK IV Center Building in downtown
Tulsa which is used as the BANK IV Oklahoma headquarters. In addition,
BANK IV Oklahoma owns banking facilities in Muskogee, Nichols Hills,
Braman, Ponca City, Shidler, Fort Gibson, Tahlequah, Woodward, and
Waukomis, and 15 branch facilities in Tulsa. Its remaining ten
facilities in Tulsa are leased. BANK IV Oklahoma believes its
facilities are substantially all well-maintained and generally suitable
for their intended purposes.
Item 3. Legal Proceedings.
Except for the legal proceeding described in the next paragraph,
neither Registrant nor any of its subsidiaries is a party to any
pending legal proceedings required to be disclosed in this Item.
Because of the nature of their businesses, the BANK IV banks are at all
times subject to legal actions, which are ordinary routine litigation
incidental to their normal business operations. Claims in various
amounts of up to approximately $20,000,000 have been asserted; however,
after consultation with its legal counsel, Registrant does not
anticipate that any potential liabilities arising from these claims
would have a material effect on the results of operations.
BANK IV Kansas and the United States Department of Justice have
agreed to settle an action against BANK IV Kansas seeking statutory
civil penalties and injunctive relief for alleged violations of the
Clean Air Act and regulations promulgated thereunder. The lawsuit,
filed in the United States District Court for the District of Kansas,
is captioned United States of America v. BANK IV Kansas, et al., Case
No. 93-2315-KVH. The lawsuit arises out of the demolition by the bank
of an apartment building in Independence, Kansas, which allegedly
contained asbestos-containing building materials. It is alleged that
the bank failed to inspect the building prior to demolition, failed to
notify the appropriate governmental agencies of its intent to demolish
the building, and failed to comply with certain work practice
requirements. The proposed consent decree provides for the payment of
$127,500. The settlement is subject to a mandatory 30-day public
comment period and court approval.
Item 4. Submission of Matters to a Vote of Security Holders.
No information is required in response to this Item as no matters
were submitted to a vote of Registrant's security holders during the
fourth quarter of the fiscal year covered by this report.
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters.
(a) Market Information. The Common Stock of Registrant is
traded in the national over-the-counter market. The NASDAQ symbol for
the Common Stock is FRTH.
Information concerning the high and low bid prices for the
Registrant's Common Stock for each full quarterly period within the two
most recent fiscal years is contained in the attached Appendix under
the caption "Quarterly Financial Data" and is hereby incorporated
herein by reference.
(b) Holders. There were approximately 5,940 holders of record
of Registrant's Common Stock at March 1, 1994.
(c) Dividends. The information concerning the payment of
dividends by Registrant during the past two fiscal years contained in
the attached Appendix under the caption "Quarterly Financial Data" is
hereby incorporated herein by reference. The information concerning
restrictions on the ability of Registrant's subsidiaries to transfer
funds to Registrant contained in Item 1 under the caption "Regulation
and Supervision," in Note 19 - Restrictions on Intercompany Funds
Transfers of the Notes to Consolidated Financial Statements contained
in the attached Appendix, and under the caption "Parent Company Funding
Sources and Dividends" in the attached Appendix is hereby incorporated
herein by reference.
Item 6. Selected Financial Data.
The information required by Item 301 of Regulation S-K, contained
in the attached Appendix under the caption "Selected Consolidated
Financial Data," is hereby incorporated by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information required by Item 303 of Regulation S-K, contained
in the attached Appendix under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations," is hereby
incorporated by reference.
Item 8. Financial Statements and Supplementary Data.
Set forth below are the consolidated financial statements of
Registrant and its subsidiaries, appearing in the attached Appendix,
which are hereby incorporated by reference:
a. Consolidated Statements of Condition
b. Consolidated Statements of Income
c. Consolidated Statements of Changes in Stockholders'
Equity
d. Consolidated Statements of Cash Flows
e. Notes to Consolidated Financial Statements
f. Report of Independent Auditors
g. Reports of Other Auditors
The information required by Item 302 of Regulation S-K, contained
in the attached Appendix under the caption "Quarterly Financial Data,"
is hereby incorporated by reference.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
No information is required in response to this Item.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by Item 401 of Regulation S-K will be
contained in the 1994 Proxy Statement under the caption "Election of
Directors" and is hereby incorporated by reference. The information
required by Item 405 of Regulation S-K will be contained in the 1994
Proxy Statement under the caption "Compliance with Section 16(a) of the
Securities Exchange Act of 1934" and is hereby incorporated by
reference.
Information concerning the executive officers of Registrant is
contained in Item 1 of this report under the caption "Executive
Officers of the Registrant."
Item 11. Executive Compensation.
The information required by Item 402 of Regulation S-K will be
contained in the 1994 Proxy Statement under the captions "Compensation
of Directors and Executive Officers," "Compensation Committee
Interlocks and Insider Participation," "Report of Compensation
Committee on Executive Compensation," and "Company Performance" and is
hereby incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
The information required by Item 403 of Regulation S-K will be
contained in the 1994 Proxy Statement under the caption "Stock
Ownership" and is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions.
The information required by Item 404 of Regulation S-K will
appear under the caption "Transactions with Management" in the 1994
Proxy Statement and is hereby incorporated by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K.
(a) The following documents are filed as part of this
report:
(1) Financial Statements: the financial statements,
notes, and independent auditors' reports described in
Item 8 to which reference is hereby made.
(2) Financial Statement Schedules: none.
(3) Exhibits: the following exhibits:
Exhibit
No. Description
-------
3.01 - Restated Articles of Incorporation and
amendments (Exhibit 3.01 to Form 10-Q for the
quarter ended June 30, 1992, previously filed
by Registrant).*
3.02 - Certificate of Designation (Exhibit 3.02 to
Form 10-K for year ended December 31, 1991,
previously filed by Registrant (the "1991 10-
K")).*
3.03 - Form of Deposit Agreement (Exhibit 3.03 to
1991 10-K).*
3.04 - Form of Depositary Receipt (Exhibit 3.04 to
1991 10-K).*
3.05 - Bylaws.
10.01 - Amended and Restated Fourth Financial
Corporation 1981 Incentive Stock Option Plan
(Exhibit 4(a) to Post-Effective Amendment
No. 2 to Form S-8, Regis. No. 2-80907,
previously filed by Registrant).*
10.02 - Amended and Restated Fourth Financial
Corporation 1986 Incentive Stock Option Plan
(Exhibit 10.02 to Form 10-K for the year ended
December 31, 1990, previously filed by
Registrant).*
10.03 - Revolving Credit and Term Loan Agreement,
dated as of July 1, 1987, between Chemical
Bank and Registrant (Exhibit 10.04 to Form 10-
K for the year ended December 31, 1987,
previously filed by Registrant).*
10.04 - First Amendment dated as of July 1, 1989, to
Revolving Credit and Term Loan Agreement
(Exhibit 10.04 to Form 10-K for the year ended
December 31, 1989, previously filed by
Registrant).*
10.05 - Second Amendment dated as of November 15,
1989, to Revolving Credit and Term Loan
Agreement (Exhibit 10.05 to Form 10-K for the
year ended December 31, 1989, previously filed
by Registrant).*
10.06 - Third Amendment, dated as of March 29, 1991,
to Revolving Credit and Term Loan Agreement
(Exhibit 10.06 to 1991 10-K).*
10.07 - Fourth Financial Corporation 1993 Employee
Stock Purchase Plan.
10.08 - Fourth Financial Corporation 1993 Incentive
Stock Option Plan.
10.09 - Fourth Financial Corporation Amended and
Restated Non-Employee Directors Deferred Fee
Plan.
10.10 - Fourth Financial Corporation Non-Employee
Directors Stock Option Plan.
10.11 - Agreement and Plan of Reorganization, dated as
of October 12, 1993, between Fourth Financial
Corporation and Great Southern Bancorp, Inc.
(Exhibit 2.1 to Form 8-K, dated October 12,
1993).*
10.12 - Stock Purchase Agreement, dated as of January
31, 1994, between BANK IV Kansas, National
Association, and Emprise Financial
Corporation.
10.13 - Agreement and Plan of Reorganization, dated as
of February 2, 1994, among Fourth Financial
Corporation, First Dodge City Bancshares,
Inc., First National Bancshares of Dodge City,
Inc., Metro Bancshares, Inc., Metro Bank of
Broken Arrow, First National Bank and Trust
Company in Dodge City, and the stockholders of
First Dodge City Bancshares, Inc.
10.14 - Stock Purchase Agreement, dated as of February
9, 1994, among Fourth Financial Corporation,
LSB Industries, and Prime Financial
Corporation.
10.15 - $35,000,000 line of credit agreement, dated as
of June 21, 1993, between Fourth Financial
Corporation and Continental Bank N.A.
22 - Subsidiaries of Registrant.
24.01 - Consent of Ernst & Young.
24.02 - Consent of Arthur Andersen & Co.
24.03 - Consent of Sartain Fischbein & Co.
24.04 - Consent of GRA, Thompson, White & Co, P.A.
24.05 - Consent of Grant Thornton.
24.06 - Consent of Deloitte & Touche.
Exhibits 10.01, 10.02, 10.07, 10.08, 10.09, 10.10, and 10.13 are
compensation plans required to be filed as exhibits pursuant to
Item 14(c).
___________
* Document has been previously filed with the Securities and Exchange
Commission and is incorporated by reference and made a part hereof.
(b) Reports on Form 8-K
During the last quarter of the period covered by this report
Registrant filed two reports on Form 8-K. The first report dated
October 12, 1993, reported under Item 5 the Registrant's agreement to
acquire Great Southern Bancorp, Inc. Another Form 8-K, dated
November 12, 1993, reported under Item 5 three agreements in principle
to acquire four financial institutions.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
FOURTH FINANCIAL CORPORATION
By: /s/ Darrell G. Knudson
------------------
Darrell G. Knudson
Chairman of the Board
Date: March 11, 1994
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Darrell G. Knudson Chairman of the Board March 11, 1994
Darrell G. Knudson (Principal Executive Officer)
/s/ Michael J. Shonka Senior Vice President March 11, 1994
Michael J. Shonka (Principal Financial Officer)
/s/ Barbara M. Noyes Vice President and Controller March 11, 1994
Barbara M. Noyes (Principal Accounting Officer)
/s/ Lionel D. Alford Director March 11, 1994
Lionel D. Alford
/s/ Thomas R. Clevenger Director March 11, 1994
Thomas R. Clevenger
/s/ Jordan L. Haines Director March 11, 1994
Jordan L. Haines
/s/ Lawrence M. Jones Director March 11, 1994
Lawrence M. Jones
/s/ Joseph M. Klein Director March 11, 1994
Joseph M. Klein
/s/ Darrell G. Knudson Director March 11, 1994
Darrell G. Knudson
/s/ Russell W. Meyer, Jr. Director March 11, 1994
Russell W. Meyer, Jr.
/s/ Fred L. Merrill, Sr. Director March 11, 1994
Fred L. Merrill, Sr.
/s/ Laird G. Noller Director March 11, 1994
Laird G. Noller
/s/ Patrick E. O'Shaughnessy Director March 11, 1994
Patrick E. O'Shaughnessy
/s/ Robert F. Vickers Director March 11, 1994
Robert F. Vickers
/s/ Ken Wagnon Director March 11, 1994
Ken Wagnon
FOURTH FINANCIAL CORPORATION
INDEX TO FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
Pages
Consolidated Statements of Condition. . . . . . . . . . . . . . A-2
Consolidated Statements of Income . . . . . . . . . . . . . . . A-3
Consolidated Statements of Changes in Stockholders' Equity. . . A-4
Consolidated Statements of Cash Flows . . . . . . . . . . . . . A-5
Notes to Consolidated Financial Statements . . . . . . . . . . A-6 - A-46
Report of Independent Auditors. . . . . . . . . . . . . . . . . A-36
Reports of Other Auditors . . . . . . . . . . . . . . . . . . . A-37 - A-42
Selected Consolidated Financial Data . . . . . . . . . . . . . A-43
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . A-44 - A-74
<TABLE>
<CAPTION>
FOURTH FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
December 31,
-------------------------
1993 1992
----------- -----------
(Dollars in thousands)
<S> <C> <C>
Assets:
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 313,799 $ 400,531
Interest-bearing deposits in other financial institutions . . . . . . . . . . . . 2,232 4,641
Investment securities (Market value-$2,930,908 and $2,610,180) . . . . . . . . . 2,929,543 2,564,918
Trading account securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 474 3,524
Federal funds sold and securities purchased under agreements to resell . . . . . 4,575 200,121
Loans and leases:
Total loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,257,787 2,841,036
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . (66,368) (73,055)
---------- ----------
Net loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,191,419 2,767,981
Bank premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,972 123,336
Income receivable and other assets . . . . . . . . . . . . . . . . . . . . . . . 94,061 440,208
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,798 63,522
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,742,873 $6,568,782
========== ==========
Liabilities And Stockholders' Equity:
Deposits:
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 944,290 $1,036,371
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,363,446 4,343,546
---------- ----------
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,307,736 5,379,917
Federal funds purchased and securities sold under agreements to repurchase . . . 493,927 326,137
Federal Home Loan Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . 250,000 --
Other borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,002 23,692
Accrued interest, taxes, and other liabilities . . . . . . . . . . . . . . . . . 55,874 282,585
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,989 29,340
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,144,528 6,041,671
---------- ----------
Minority interest in subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,298
Stockholders' Equity:
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 103,641
Common stock, par value $5 per share
Authorized: 50,000,000 shares
Issued: 26,575,251 and 25,218,204 shares . . . . . . . . . . . . . . . . . . 132,876 126,091
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,905 101,717
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239,456 195,433
Less: Treasury stock at cost (111,518 shares) . . . . . . . . . . . . . . . . . (3,245) --
Stock option loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,795) (1,069)
---------- ----------
Stockholders' equity before net unrealized gains on
available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . 573,197 525,813
Net unrealized gains on available-for-sale securities . . . . . . . . . . . . . 25,148 --
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . 598,345 525,813
---------- ----------
Total liabilities and stockholders' equity. . . . . . . . . . . . . . . . . $6,742,873 $6,568,782
========== ==========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
FOURTH FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
----------------------------------
1993 1992 1991
--------- --------- ---------
(Dollars in thousands,
except per share amounts)
<S> <C> <C> <C>
Interest Income:
Interest and fees on loans and leases . . . . . . . . . . . . . . . . . $254,730 $260,741 $305,778
Interest on short-term investments . . . . . . . . . . . . . . . . . . . 1,937 4,336 13,724
Interest and dividends on investment securities:
Taxable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157,800 140,701 133,983
Tax-preferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,864 21,119 25,489
Interest and dividends on trading account securities . . . . . . . . . . 136 222 594
-------- -------- --------
Total interest income. . . . . . . . . . . . . . . . . . . . . . . . 433,467 427,119 479,568
-------- -------- --------
Interest Expense:
Interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 154,725 179,013 254,005
Interest on borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 18,909 10,060 13,070
Interest on long-term debt . . . . . . . . . . . . . . . . . . . . . . . 1,867 3,324 4,134
-------- -------- --------
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . 175,501 192,397 271,209
-------- -------- --------
Net Interest Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 257,966 234,722 208,359
Provision for credit losses. . . . . . . . . . . . . . . . . . . . . . . 7,056 21,343 43,665
-------- -------- --------
Net Interest Income After Provision For Credit Losses. . . . . . . . . . . 250,910 213,379 164,694
-------- -------- --------
Noninterest Income:
Trust fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,310 17,627 17,335
Service charges on deposit accounts. . . . . . . . . . . . . . . . . . . 32,711 26,820 23,211
Bank card fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,658 13,531 13,927
Investment securities gains. . . . . . . . . . . . . . . . . . . . . . . 1,311 2,520 4,721
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,113 22,516 26,702
-------- -------- --------
Total noninterest income . . . . . . . . . . . . . . . . . . . . . . 89,103 83,014 85,896
-------- -------- --------
Noninterest Expense:
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . 114,575 100,491 93,123
Furniture and equipment. . . . . . . . . . . . . . . . . . . . . . . . . 22,004 19,030 17,944
Net occupancy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,307 14,458 14,020
FDIC insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,071 11,679 10,915
Bank card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,577 5,021 7,074
Amortization of intangible assets. . . . . . . . . . . . . . . . . . . . 9,132 5,424 5,080
Nonoperating charge. . . . . . . . . . . . . . . . . . . . . . . . . . . 12,708 5,573 6,997
Net costs of operation of other real estate and nonperforming assets . . 3,088 2,356 6,736
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,524 52,894 48,452
-------- -------- --------
Total non-interest expense . . . . . . . . . . . . . . . . . . . . . 252,986 216,926 210,341
-------- -------- --------
Income Before Income Taxes, Extraordinary Item and Cumulative
Effect of a Change in Accounting Principle . . . . . . . . . . . . . . . 87,027 79,467 40,249
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,845 18,534 9,537
-------- -------- --------
Income Before Extraordinary Item and Cumulative Effect of a Change
in Accounting Principle. . . . . . . . . . . . . . . . . . . . . . . . . 65,182 60,933 30,712
Extraordinary item - tax benefit from utilization of net
operating loss carryforward. . . . . . . . . . . . . . . . . . . . . . -- -- 1,397
Cumulative effect of a change in accounting for income taxes . . . . . . 10,509 2,373 --
-------- -------- --------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,691 $ 63,306 $ 32,109
======== ======== ========
Net Income Applicable to Common and Common-Equivalent Shares . . . . . . . $ 68,691 $ 57,355 $ 32,109
======== ======== ========
Primary Earnings Per Common Share:
Income applicable to common and common-equivalent shares
before extraordinary item and cumulative effect of a
change in accounting principle . . . . . . . . . . . . . . . . . . . . $2.26 $2.17 $1.26
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- .06
Cumulative effect of a change in accounting for income taxes . . . . . . .41 .10 --
----- ----- -----
Net income applicable to common and common-equivalent shares . . . . . . $2.67 $2.27 $1.32
===== ===== =====
Fully Diluted Earnings Per Common Share:
Income before extraordinary item and cumulative effect
of a change in accounting principle. . . . . . . . . . . . . . . . . . $2.19 $2.11 $1.23
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- .05
Cumulative effect of a change in accounting for income taxes . . . . . . .35 .08 --
----- ----- -----
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2.54 $2.19 $1.28
===== ===== =====
Dividends Per Common Share . . . . . . . . . . . . . . . . . . . . . . . . $ .98 $ .88 $ .88
===== ===== =====
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
FOURTH FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Net
Preferred Stock Common Stock Treasury Stock Stock Unrealized
--------------- --------------- Capital Retained -------------- Option Gains on
Shares Amount Shares Amount Surplus Earnings Shares Amount Loans Securities Total
------ -------- ------ -------- -------- -------- ------ ------- ------ ---------- -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1990
As previously
reported . . . . . . -- $ -- 21,485 $107,425 $ 82,537 $135,248 -- $ -- $ (705) $ -- $324,505
Adjustment for
poolings
of interests . . . . 790 2,511 2,719 13,596 14,897 5,504 -- -- (235) -- 36,273
------ -------- ------ -------- -------- -------- ---- ------- ------- ------- --------
Adjusted balance. . 790 2,511 24,204 121,021 97,434 140,752 -- -- (940) -- 360,778
Net income. . . . . . -- -- -- -- -- 32,109 -- -- -- -- 32,109
Purchase of stock
for treasury . . . . -- -- -- -- -- -- (40) (697) -- -- (697)
Issuance of common
stock under stock
option plans . . . . -- -- 147 736 835 -- 40 697 -- -- 2,268
Cash dividends:
Common stock. . . . -- -- -- -- -- (16,434) -- -- -- -- (16,434)
Pooled companies. . -- -- -- -- -- (95) -- -- -- -- (95)
Net change in stock
option loans . . . . -- -- -- -- -- -- -- -- (346) -- (346)
Capital transactions
of pooled companies. 92 576 73 366 501 -- -- -- 60 -- 1,503
------ -------- ------ -------- -------- -------- ---- ------- ------- -------- --------
Balance, December 31,
1991 . . . . . . . . . 882 3,087 24,424 122,123 98,770 156,332 -- -- (1,226) -- 379,086
Adjustment for pool-
ing of interests . . -- -- 479 2,392 2,833 -- -- -- -- -- 5,225
------ -------- ------ -------- -------- -------- ---- ------- ------- -------- --------
Adjusted balance,
January 1, 1992. . . . 882 3,087 24,903 124,515 101,603 156,332 -- -- (1,226) -- 384,311
Net income. . . . . . -- -- -- -- -- 63,306 -- -- -- -- 63,306
Issuance of
preferred stock. . . 250 100,000 -- -- (3,080) -- -- -- -- -- 96,920
Issuance of common
stock under stock
option plans . . . . -- -- 163 813 1,657 -- -- -- -- -- 2,470
Cash dividends:
Preferred stock . . -- -- -- -- -- (5,951) -- -- -- -- (5,951)
Common stock . . . -- -- -- -- -- (16,768) -- -- -- -- (16,768)
Pooled companies. . -- -- -- -- -- (1,486) -- -- -- -- (1,486)
Net change in stock
option loans . . . . -- -- -- -- -- -- -- -- (18) -- (18)
Capital transactions
of pooled companies. 90 554 152 763 1,537 -- -- -- 175 -- 3,029
------ -------- ------ -------- -------- -------- ---- ------- ------- -------- --------
Balance, December 31,
1992 . . . . . . . . . 1,222 103,641 25,218 126,091 101,717 195,433 -- -- (1,069) -- 525,813
Net income. . . . . . -- -- -- -- -- 75,691 -- -- -- -- 75,691
Purchase of stock
for treasury . . . . -- -- -- -- -- -- (112) (3,245) -- -- (3,245)
Issuance of common
stock under stock
option plans . . . . -- -- 199 993 2,414 -- -- -- -- -- 3,407
Cash dividends:
Preferred stock . . -- -- -- -- -- (7,000) -- -- -- -- (7,000)
Common stock . . . -- -- -- -- -- (22,705) -- -- -- -- (22,705)
Pooled companies. . -- -- -- -- -- (1,963) -- -- -- -- (1,963)
Net change in stock
option loans . . . . -- -- -- -- -- -- -- -- (726) -- (726)
Capital transactions
of pooled companies. (972) (3,641) 1,158 5,792 1,774 -- -- -- -- -- 3,925
Net unrealized gains
on available-for-
sale securities. . . -- -- -- -- -- -- -- -- -- 25,148 25,148
------ -------- ------ -------- -------- -------- ---- ------- ------- -------- --------
Balance, December 31,
1993 . . . . . . . . . 250 $100,000 26,575 $132,876 $105,905 $239,456 (112) $(3,245) $(1,795) $ 25,148 $598,345
====== ======== ====== ======== ======== ======== ==== ======= ======= ======== ========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
FOURTH FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
-----------------------------------
1993 1992 1991
----------- ----------- -----------
Increase (Decrease) in Cash and Due from Banks (In thousands)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,691 $ 63,306 $ 32,109
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 219 171
Provision for credit losses. . . . . . . . . . . . . . . . . . . . . . . . . 7,056 21,343 43,665
Provision for security losses. . . . . . . . . . . . . . . . . . . . . . . . -- -- 1,491
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . 24,374 20,033 18,455
Accretion of discounts on investment securities,
net of amortization of premiums . . . . . . . . . . . . . . . . . . . . . . 15,692 9,268 409
Write-down of other real estate owned. . . . . . . . . . . . . . . . . . . . 4,376 3,005 4,713
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,711) (1,071) (4,466)
Investment securities gains. . . . . . . . . . . . . . . . . . . . . . . . . (1,311) (2,520) (4,721)
Write-down of core deposit intangibles, purchased mortgage
servicing rights, premises and equipment, and other assets. . . . . . . . . 6,652 -- --
Gain on sales of premises and equipment, other real estate
owned, and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . (2,934) (3,405) (4,562)
Gain on sale of credit card loans. . . . . . . . . . . . . . . . . . . . . . -- (169) (3,226)
Change in assets and liabilities, net of
effects from purchases of acquired entities:
Trading account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,062 4,125 (3,477)
Loans held for sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . (109,631) 2,087 (1,158)
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317,285 (29,815) 43,903
Accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,156) 14,588 44,902
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,681 3,823 11,147
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,970) (7,640) (7,366)
---------- ---------- ----------
Net cash provided by operating activities . . . . . . . . . . . . . . . 324,309 97,177 171,989
---------- ---------- ----------
Cash Flows From Investing Activities:
Purchase of banks, net of cash acquired . . . . . . . . . . . . . . . . . . . (2,468) (7,662) (2,280)
Purchase of consumer loans . . . . . . . . . . . . . . . . . . . . . . . . . . -- (60,751) --
Proceeds from sales of investment securities . . . . . . . . . . . . . . . . . 10,202 70,444 249,716
Proceeds from maturities and prepayments of investment securities. . . . . . . 1,037,690 946,753 1,378,158
Purchases of investment securities . . . . . . . . . . . . . . . . . . . . . . (1,488,299) (1,320,880) (2,001,658)
Purchase of mortgage servicing rights. . . . . . . . . . . . . . . . . . . . . -- (1,247) (28)
Proceeds from sale of credit card loans. . . . . . . . . . . . . . . . . . . . -- 4,038 25,473
Proceeds from sales of premises and equipment,
other real estate owned, and other assets . . . . . . . . . . . . . . . . . . 15,740 28,775 42,759
Purchases of premises and equipment. . . . . . . . . . . . . . . . . . . . . . (34,757) (17,788) (14,278)
Change in assets and liabilities, net of effects from
purchases of acquired entities:
Interest-bearing deposits in other financial institutions. . . . . . . . . . 3,432 728 1,372
Federal funds sold and securities purchased under agreements to resell . . . 205,698 (1,782) 242,243
Loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (201,051) 128,093 166,301
---------- ---------- ----------
Net cash provided by (used in) investing activities. . . . . . . . . . . (453,813) (231,279) 87,778
---------- ---------- ----------
Cash Flows From Financing Activities:
Transfers associated with the assumptions of savings
and loan association net liabilities, less premiums paid. . . . . . . . . . . 91,832 46,413 187,461
Other transfer associated with the assumption of
deposits, net of premium paid . . . . . . . . . . . . . . . . . . . . . . . . -- 28,998 --
Repayment of long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . (15,125) (17,560) (10,338)
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . -- -- 35,000
Acquisition of treasury stock. . . . . . . . . . . . . . . . . . . . . . . . . (3,245) -- (697)
Dividends on common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . (22,705) (16,768) (16,434)
Dividends on preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . (7,000) (5,368) --
Proceeds from exercise of stock options. . . . . . . . . . . . . . . . . . . . 3,407 2,470 2,268
Net change in stock option loans . . . . . . . . . . . . . . . . . . . . . . . (726) (18) (346)
Proceeds from issuance of preferred stock, net of offering costs . . . . . . . -- 96,920 --
Capital transactions of pooled companies . . . . . . . . . . . . . . . . . . . (1,524) (346) 331
Change in liabilities, net of effects from purchases of acquired entities:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (414,912) (152,290) (353,645)
Federal funds purchased and securities sold under agreements to repurchase . 167,790 177,913 (73,375)
Federal Home Loan Bank borrowings. . . . . . . . . . . . . . . . . . . . . . 250,000 -- --
Other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,020) (18,960) (47,715)
---------- ---------- ----------
Net cash provided by (used in) financing activities. . . . . . . . . . . 42,772 141,404 (277,490)
---------- ---------- ----------
Increase (decrease) in cash and due from banks . . . . . . . . . . . . . . . . . (86,732) 7,302 (17,723)
Cash and due from banks at beginning of period . . . . . . . . . . . . . . . . . 400,531 387,535 405,258
Adjustment for pooling of interests. . . . . . . . . . . . . . . . . . . . . . . -- 5,694 --
---------- ---------- ----------
Cash and due from banks at end of period . . . . . . . . . . . . . . . . . . . . $ 313,799 $ 400,531 $ 387,535
========== ========== ==========
Supplemental Disclosures:
Cash payments for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 178,079 $ 199,110 $ 278,256
========== ========== ==========
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,377 $ 20,940 $ 13,128
========== ========== ==========
<FN>
See accompanying notes.
</TABLE>
FOURTH FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 - Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of
Fourth Financial Corporation and its wholly-owned subsidiaries (the
"Company"). All significant intercompany balances and transactions
have been eliminated.
The consolidated financial statements for prior years have been
restated to reflect the poolings of interests detailed in Footnote 2 -
Bank Acquisitions. Certain reclassifications of previously reported
amounts have been made to conform with current year presentation
format.
Investment and Trading Account Securities
Management determines the appropriate classification of
securities at the time of purchase. Securities are classified as
"Held-to-maturity" when management has the intent and the Company has
the positive ability to hold the securities to maturity. Held-to-
maturity securities are stated at cost, adjusted for amortization of
premiums and accretion of discounts, both computed on the constant
yield method. The prepayment history of each mortgage-backed security
pool is used to recalculate the yield used to amortize and accrete the
premium and discount on these securities. Amortization, accretion, and
interest and dividends on held-to-maturity securities are included in
"Interest and dividends on investment securities."
In May 1993, the Financial Accounting Standards Board issued
Financial Accounting Standard ("FAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." As permitted by the
Statement, the Company elected to adopt the provisions of the new
standard as of December 31, 1993. Marketable equity securities and
debt securities that at the time of adoption (and subsequently upon
purchase) were deemed to be available-for-sale for the implementation
of asset and liability management strategies, possible liquidity needs,
and other purposes were classified as available-for-sale. Available-
for-sale securities are carried at fair value, with the unrealized
gains and losses, net of tax, reported in a separate component of
stockholders' equity. In accordance with FAS No. 115, prior-period
financial statements have not been restated to reflect the change in
accounting principle. At December 31, 1993, investment securities were
increased $41,227,000; deferred income taxes payable were increased
$16,079,000; and stockholders' equity was increased $25,148,000 to
reflect the net unrealized gains on available-for-sale securities
previously carried at amortized cost or lower of cost or market. The
amortized cost of debt securities in this category is adjusted for
amortization of premiums and accretion of discounts to maturity.
Amortization, accretion, and interest and dividends on securities
classified as available-for-sale are included in "Interest and
dividends on investment securities." Realized gains and losses and
declines in value judged to be other-than-temporary on available-for-
sale securities are included in "Investment securities gains." The
cost of securities sold is based on the specific identification method.
Securities held for sale to customers and in anticipation of
short-term market movements are classified as "Trading account
securities." Securities held in the trading account are stated at
market value. Gains and losses, both realized and unrealized, are
reflected in "Other noninterest income." The specific identification
method is used to determine the cost of securities sold.
Loans and Leases
Loans are reported at the principal amount outstanding, net of
unearned discount. Interest income on loans is accrued based on the
unpaid principal and the applicable rate. Interest on discounted loans
and leases is generally accrued on a basis approximating a level yield
over the terms of the loans or leases.
Residential mortgage loans and educational loans held for sale
are stated at the lower of cost or market value. These loans are
analyzed on an aggregate basis to determine the lower of cost or market
value. Net gains or losses on the sale of these loans, including
adjustments to market value, are part of normal operations and are
reflected in "Other noninterest income." The specific identification
method is used to determine the cost of loans sold.
A loan is placed on nonaccrual status when principal or interest
is due and has remained unpaid for 90 days or more unless the loan is
both well secured and in the process of collection. A loan is also
placed on nonaccrual status when there is reasonable doubt as to the
ability of the borrower to continue to pay principal or interest. At
the time a loan is classified as nonaccrual, interest previously
recorded but not collected is reversed. Interest payments received on
such loans are generally recorded as a reduction in carrying value
unless such carrying value is deemed to be collectible. A loan is not
reclassified as accruing until all principal and interest payments are
brought current and the borrower has demonstrated the ability to
service the loan in accordance with its contractual terms.
Fair Values of Financial Instruments
The following methods and assumptions were used by the Company in
estimating its fair value disclosures in accordance with FAS No. 107,
"Disclosures About Fair Value of Financial Instruments." Because there
is no market for many of these financial instruments, the Company has
no basis to determine whether these estimated fair values would be
indicative of the value that could be obtained in an arm's-length sale.
Cash and due from banks: The carrying amounts reported in the
consolidated statements of condition for cash and due from banks
approximate those assets' fair values.
Interest-bearing deposits in other financial institutions: Fair
values of $2,279,000 for these fixed-rate certificates of deposit
were estimated using a discounted cash flow calculation that
applies interest rates currently being offered on certificates
with similar maturities. The carrying amount of these
certificates of deposit was $2,232,000.
Investment and trading account securities: Fair values for
investment securities were based on quoted market prices, where
available. If quoted market prices were not available, fair
values were based on quoted market prices of comparable
instruments.
Federal funds sold and securities purchased under agreements to
resell: The carrying amounts of federal funds sold and
securities purchased under agreements to resell approximate their
fair values.
Loans and leases: For variable-rate loans that reprice in
accordance with indices, fair values were estimated to be equal
to carrying values. A significant portion of a credit card
portfolio's value results from the ongoing cardholder
relationship that generates receivables and fees over time. This
relationship value is not defined as a financial instrument and
therefore not disclosed under FAS No. 107. The carrying values
of the credit card receivables approximate their fair values.
The fair values for one-to-four family fixed-rate mortgage loans
were based on quoted market prices of similar loans, adjusted for
differences in loan characteristics. The fair values for other
fixed-rate loans were estimated using discounted cash flow
analyses, using interest rates currently being offered for loans
with similar terms. Because the allowance for credit losses
provides for the credit risk inherent in the loan and lease
portfolio, neither the cash flows nor discount rates were
adjusted to reflect changes in credit risk subsequent to when
loans were originated. Nonperforming loans have not been
discounted.
Off-balance-sheet instruments: No premium or discount was
ascribed to loan commitments because virtually all funding will
be at current market rates. The estimated fair values of the
interest rate swaps generally represent an estimate of the amount
the Company would receive or pay to terminate the agreement at
the reporting date. These values were based on dealer quotes
with respect to the amortizing swaps. For swaps with fixed
maturities, the estimated values represent the present value of
the cash flow stream discounted at current interest rate spreads.
Deposit liabilities: For deposits with no defined maturities,
demand deposits, interest-bearing checking deposits, and savings
deposits, FAS No. 107 defines fair value as the amount payable on
demand at the reporting date (i.e., their carrying amounts).
Included in "Intangible assets" at December 31, 1993 was
$15,828,000 (net of accumulated amortization) representing the
value of core deposits assumed in deposit assumption
transactions. The value of the core deposit relationships built
by the Company over time was neither considered in the fair value
amounts nor recorded as an intangible asset in the statements of
condition. The carrying amounts for variable-rate certificates
of deposit approximated their fair values at the reporting date.
Fair values for fixed-rate certificates of deposit were estimated
using a discounted cash flow calculation that applies interest
rates currently being offered on certificates with similar
maturities.
Federal funds purchased, securities sold under agreements to
repurchase, and other borrowings: The carrying amounts of
federal funds purchased, borrowings under repurchase agreements,
and other short-term borrowings approximate their fair values.
Federal Home Loan Bank borrowings: The carrying amounts of the
short-term portion of these borrowings approximate their fair
values. A discounted cash flow analysis, using the current rates
on Federal Home Loan Bank borrowings of similar maturities, was
used to estimate the fair values of these borrowings with
maturities greater than one year.
Long-term borrowings: The fair values of the Company's long-term
debt were estimated using discounted cash flow analyses, based on
the Company's current incremental borrowing rates for similar
types of borrowing arrangements.
Other Real Estate and Nonperforming Assets
Other real estate and nonperforming assets include assets
acquired from loan settlements and foreclosures. These assets are
carried at the lower of the loan carrying amount or fair value minus
estimated selling costs and are included in "Income receivable and
other assets" in the consolidated statements of condition. At the time
of acquisition or repossession, any write-down necessary to record an
asset at its fair value is charged to the allowance for credit losses.
A valuation allowance for estimated selling costs is recorded through
a charge to "Net costs of operation of other real estate and
nonperforming assets." Losses and gains as well as net costs
associated with these properties are also included in "Net costs of
operation of other real estate and nonperforming assets" in the
consolidated statements of income.
In accordance with the Securities and Exchange Commission's
Financial Reporting Release 28 ("FRR 28"), "Other real estate and
nonperforming assets" previously has included certain loans valued at
the fair value of the underlying collateral even though the Company did
not have possession of that collateral. The main objective of FRR 28
was to require a systematic methodology to be applied to the
recognition and measurement of potential losses inherent in loans,
where the repayment of the loan was expected to come only from the
operation or the sale of the collateral. Collateral was to be
considered repossessed in substance and accounted for at fair value in
those cases where the borrower had little or no equity in the
collateral considering the property's fair value and where, considering
economic conditions, the borrower's ability to rebuild equity was
doubtful.
During 1993, banking system regulators issued guidance confirming
that the loss recognition on collateral-dependent loans should be based
on the fair value of the collateral, but that such loans need not be
reported as "Other real estate" unless possession of the underlying
collateral has been obtained. The Company's consolidated statement of
condition reflects the adoption of this regulatory guidance as of
December 31, 1993, and the 1992 consolidated statement of condition has
been restated to reclassify substantive repossessions from "Other
assets" to "Loans." These loans are all classified as nonaccrual
loans.
Allowance for Credit Losses
The allowance for credit losses is the amount deemed by
management to be reasonably necessary to provide for possible losses on
loans that may become uncollectible. Additions to the allowance are
charged to expense as the provision for credit losses. Loan losses and
recoveries are charged or credited directly to the allowance. It is
the Company's policy to charge off any loan or portion of that loan
when it is deemed to be uncollectible in the ordinary course of
business.
An evaluation of the overall quality of the portfolio is
performed to determine the necessary level of the allowance for credit
losses. This evaluation takes into consideration the classification of
loans and the application of loss estimates to these classifications.
It is the responsibility of management in each of the Company's markets
to classify its loans as pass, special mention, substandard, doubtful,
or loss. The classification criteria are established by the credit
administration function of the Company, which is independent of all
lending functions, and are intended to be consistent with the criteria
applied by federal banking system examiners. These classifications
take into consideration all sources of repayment, underlying
collateral, the value of such collateral, and current and anticipated
economic conditions, trends, and uncertainties. The Company has an
independent loan review function which reviews the loans periodically.
The Company's bank subsidiaries also are subjected to periodic
examinations by the Office of the Comptroller of the Currency.
Loss factors are developed by loan type and classification using
historical loss data and statistical modeling techniques. The
application of these loss factors to the portfolio classifications,
combined with analyses of general economic conditions, trends in
portfolio volume, maturity, and composition, and estimates of potential
future losses on specific large loans and those loans requiring special
attention, provide management with data essential to identify and
estimate the credit risk inherent in the portfolio. The allowance for
credit losses reflects the result of these estimates and is deemed to
be adequate at each balance sheet date.
Loan and Loan Commitment Fees
The Company generally recognizes loan and loan commitment fees as
revenue when received and related costs as expenses when incurred. FAS
No. 91, "Accounting for Nonrefundable Fees and Costs Associated with
Originating Loans," provides for the deferral of such fees and direct
loan origination costs and the amortization of such fees and costs over
the lives of the related loans as an adjustment of yield. However, the
adoption of FAS No. 91 would not have a material effect on operating
results.
Bank Premises and Equipment
Land is stated at cost, and buildings and equipment are stated at
cost less accumulated depreciation. For financial reporting purposes,
depreciation is included in operating expenses and is computed
principally on the straight-line method over the estimated useful lives
of the related assets. Accelerated methods are generally used for
income tax purposes with deferred income taxes provided for timing
differences. Additions, major replacements, and improvements to
buildings and equipment are added to the asset accounts at cost.
Maintenance, repairs, and minor replacements are charged directly to
operating expense.
The costs incidental to the operation and maintenance of
buildings, net of income received from tenants, are reflected as "Net
occupancy" expense in the accompanying consolidated statements of
income.
Income Taxes
The Company and its subsidiaries, except the insurance
subsidiary, file a consolidated federal income tax return. The income
tax effects of transactions are recognized in the years in which they
enter into the determination of reported income, regardless of when
they are recognized for tax return purposes. When income and expenses
are recognized in different periods for tax purposes, applicable
deferred taxes are provided in the financial statements. Effective
January 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required
by FAS No. 109, "Accounting for Income Taxes." As permitted under the
new rules, prior years' financial statements have not been restated.
2 - Acquisitions
Purchase Transactions
During 1993 three acquisitions accounted for as purchases were
completed: Guaranty Bancorporation ("GB"), Bancshares of Woodward,
Inc. ("BOW"), and F&M Bank Services, Inc. ("FBS"). The following table
presents information regarding these purchase transactions.
<TABLE>
<CAPTION>
Acquisition Bank Subsidiary Assets
Date Company Acquired Location Acquired Cash Paid
- ----------- ------------------ ------------------------------------- ---------- -----------
(In thousands)
<S> <C> <C> <C> <C>
May 14, 1993 GB Guaranty Bank & Trust Company
Tulsa, OK . . . . . . . . . . . . . . $ 82,606 $ 4,386
May 28, 1993 BOW Bank of Woodward
Woodward and Waukomis, OK . . . . . . 130,192 17,859
May 28, 1993 FBS Farmers & Merchants State Bank
Derby, KS . . . . . . . . . . . . . . 61,565 8,068
-------- -------
$274,363 $30,313
======== =======
</TABLE>
During 1992 two acquisitions accounted for as purchases were completed:
Farmers and Merchants Bank ("FMB") and Southern Bancorp, Inc. ("SBI").
The following table presents information regarding these purchase transactions.
<TABLE>
<CAPTION>
Acquisition Bank Subsidiary Assets
Date Company Acquired Location Acquired Cash Paid
- ----------- ------------------ ------------------------------------- ---------- -----------
(In thousands)
<S> <C> <C> <C> <C>
July 31, 1992 FMB Farmers and Merchants Bank
Colby, KS . . . . . . . . . . . . . . $ 66,827 $ 8,921
December 11, 1992 SBI Southern National Bank
Tulsa, OK . . . . . . . . . . . . . . 64,510 9,951
-------- -------
$131,337 $18,872
======== =======
</TABLE>
The following table presents supplementary information regarding the cash
paid in these purchase transactions.
<TABLE>
<CAPTION>
1993 1992
-------- --------
(In thousands)
<S> <C> <C>
Fair value of assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . $274,363 $131,337
Fair value of liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . (253,378) (115,464)
Cost in excess of net assets acquired . . . . . . . . . . . . . . . . . . . . . 9,328 2,999
-------- --------
Cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,313 18,872
Cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,845 11,210
-------- --------
Net cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,468 $ 7,662
======== ========
</TABLE>
For each of these transactions, the consolidated statements of
income include only the income and expenses of the acquired company
since acquisition. The purchase price has been allocated to the net
identifiable assets acquired based on their fair values with the excess
allocated to cost in excess of net assets acquired. The effect on
results of operations for 1993 and 1992, had the purchase transactions
occurred at the beginning of these years, was not material.
Poolings of interests
The following table presents the five 1993 business combinations
accounted for as poolings of interests. The consolidated statements
for the prior periods have been restated as if the entities had been
combined at the beginning of the periods presented, with the exception
that periods prior to January 1, 1992 have not been restated for the
results of operations of Ponca Bancshares, Inc. ("PBI") which were not
material. Adjustments to conform the acquired companies' accounting
policies to those of the Company were not material.
<TABLE>
<CAPTION>
Company Acquired/ Company Assets Shares
Date Location Abbreviation Acquired Issued
- ------------------ ------------------------------------- ------------ ------------ --------
(In thousands)
<S> <C> <C> <C> <C>
February 12, 1993 Southgate Banking Corporation, SBC $ 62,628 451,310
Prairie Village, KS
May 28, 1993 Nichols Hills Bancorporation, Inc., NHB 97,869 469,906
Nichols Hills (Oklahoma City), OK
September 17, 1993 Commercial Landmark Corporation, CLC 465,060 1,874,812
Muskogee, OK
December 3, 1993 Western National Bancorporation, Inc., WNB 206,288 1,110,695
Tulsa, OK
December 10, 1993 Ponca Bancshares, Inc., PBI 117,275 478,395
Ponca City, OK -------- ---------
$949,120 4,385,118
======== =========
</TABLE>
In addition to the business combinations listed, the Company
issued 108,748 shares to acquire the minority interest of Western
National Bank of Tulsa, the bank subsidiary of WNB. As prescribed by
Accounting Principles Board Opinion No. 16, the acquisition of the
minority interest was accounted for as a purchase. The fair market
value of shares issued exceeded the net asset value of the minority
interest by $1,673,000 at the time of acquisition.
The following table presents the four 1992 business combinations
accounted for as poolings of interests. The consolidated statements
for the prior periods have been restated as if the entities had been
combined at the beginning of the periods presented. Adjustments to
conform the acquired companies' accounting policies to those of the
Company were not material.
<TABLE>
<CAPTION>
Company Acquired/ Company Assets Shares
Date Location Abbreviation Acquired Issued
- ------------------ ------------------------------------- ------------ ------------ --------
(In thousands)
<S> <C> <C> <C> <C>
September 9, 1992 KNB Bancshares, Inc., KNB $ 99,256 267,390
Prairie Village, KS
October 30, 1992 Mission Hills Bancshares, Inc., MHB 94,762 358,709
Mission Woods, KS
December 30, 1992 United Bank of Kansas, Inc., UBK 122,885 663,739
Liberal, KS
December 31, 1992 Fourth National Corporation, FNC 368,325 1,639,941
Tulsa, OK -------- ----------
$685,228 2,929,779
======== =========
</TABLE>
The effect of pooling-of-interests accounting treatment on previously
reported selected operating results is as follows:
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended December 31,
September 30, -------------------------
1993 1992 1991
---------------- ---------- ----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
Interest income:
Company. . . . . . . . . . . . . . . . . . . . . . $305,596(1) $352,697 $409,274
Pooled companies . . . . . . . . . . . . . . . . . 17,921 74,422 70,294
-------- -------- --------
Combined . . . . . . . . . . . . . . . . . . . . $323,517 $427,119 $479,568
======== ======== ========
Net interest income:
Company. . . . . . . . . . . . . . . . . . . . . . $180,407(1) $191,483 $174,782
Pooled companies . . . . . . . . . . . . . . . . . 11,292 43,239 33,577
-------- -------- --------
Combined . . . . . . . . . . . . . . . . . . . . $191,699 $234,722 $208,359
======== ======== ========
Net income:
Company. . . . . . . . . . . . . . . . . . . . . . $ 56,096(1) $ 53,187 $ 25,320
Pooled companies . . . . . . . . . . . . . . . . . (587) 10,119 6,789
-------- -------- --------
Combined . . . . . . . . . . . . . . . . . . . . $ 55,509 $ 63,306 $ 32,109
======== ======== ========
Net income applicable to common stock:
Company. . . . . . . . . . . . . . . . . . . . . . $ 50,846(1) $ 47,236 $ 25,320
Pooled companies . . . . . . . . . . . . . . . . . (587) 10,119 6,789
-------- -------- --------
Combined . . . . . . . . . . . . . . . . . . . . $ 50,259 $ 57,355 $ 32,109
======== ======== ========
Primary earnings per common share, after cumulative
effect of a change in accounting principle:
Company. . . . . . . . . . . . . . . . . . . . . . $ 2.06(1) $ 2.17 $ 1.18
Pooled companies . . . . . . . . . . . . . . . . . (.10) .10 .14
-------- -------- --------
Combined . . . . . . . . . . . . . . . . . . . . $ 1.96 $ 2.27 $ 1.32
======== ======== ========
Fully diluted earnings per common share,
after cumulative effect of a change in
accounting principle:
Company. . . . . . . . . . . . . . . . . . . . . . $ 1.99(1) $ 2.16 $ 1.18
Pooled companies . . . . . . . . . . . . . . . . . (.12) .03 .10
-------- -------- --------
Combined . . . . . . . . . . . . . . . . . . . . $ 1.87 $ 2.19 $ 1.28
======== ======== ========
<FN>
_________
(1) Includes SBC, NHB, and CLC which were acquired prior to September 30, 1993.
</TABLE>
Pending Acquisitions
Pending acquisitions as of December 31, 1993 are listed in the table below.
The proposed transactions are subject to approval by regulators and other
contractual conditions.
<TABLE>
<CAPTION>
Assets Number of
December 31, 1993 Cash Expected Shares Expected Accounting
Bank (Unaudited) To Be Paid To Be Issued Method
------ ----------------- ------------- --------------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Great Southern Savings Bank
Springfield, MO ("Great Southern"). . . $ 530,368 $ -- 2,798,813 Pooling
Emprise Bank, National Association,
Hutchinson, KS ("Emprise"). . . . . . . 268,450 29,953 -- Purchase
First National Bank and Trust Company
in Dodge City, Dodge City, KS and
Metro Bank of Broken Arrow, Broken
Arrow, OK, ("First National") . . . . . 148,818 -- 662,220 Pooling
Equity Bank for Savings, F.A.
Oklahoma City, OK ("Equity"). . . . . . 520,224 92,046 -- Purchase
---------- -------- ---------
$1,467,860 $121,999 3,461,033
========== ======== =========
</TABLE>
3 - Assumption of Deposits
On April 2, 1993, $99,399,000 of deposits and other liabilities
were assumed by the Kansas bank subsidiary from a failed bank in
Mission, Kansas. A premium of $1,141,000 was paid to the Federal
Deposit Insurance Corporation ("FDIC") to assume these deposits.
During 1992, the Company completed two deposit assumption
transactions. On March 27, 1992, $46,484,000 of deposits and other
liabilities were assumed by the Kansas bank subsidiary from a failed
savings and loan in Hays, Kansas. A premium of $57,000 was paid to the
Resolution Trust Corporation ("RTC") to assume these deposits. On
December 31, 1992, the Company's Oklahoma bank subsidiary assumed the
deposits and acquired the branch facilities and equipment of nine
offices from a S&L in Tulsa, Oklahoma. The following table presents
supplementary information regarding the cash paid in this transaction.
<TABLE>
<CAPTION>
1992
--------------
(In thousands)
<S> <C>
Fair value of assets acquired . . . . . . . . . . . . . . . $346,595
Fair value of liabilities assumed . . . . . . . . . . . . . (349,355)
Cost in excess of net assets acquired . . . . . . . . . . . 2,376
Value of core deposits assumed . . . . . . . . . . . . . . 15,240
--------
Cash paid . . . . . . . . . . . . . . . . . . . . . . . . 14,856
Cash acquired . . . . . . . . . . . . . . . . . . . . . . 43,854
--------
Net cash received . . . . . . . . . . . . . . . . . . . . $ 28,998
========
</TABLE>
4 - Cash and Due from Banks
The subsidiary banks are required by federal law to maintain
reserves against their deposit liabilities. These reserves can be
maintained in the form of vault cash or balances at a Federal Reserve
Bank. The average cash and Federal Reserve balances maintained as
reserves were $117,490,000 for 1993 and $93,282,000 for 1992. Cash and
due from banks also includes checks in process of collection and
balances maintained at correspondent banks for services rendered.
5 - Investment Securities
In May 1993, the Financial Accounting Standards Board issued FAS
No. 115 which modified the accounting for investment securities. As
permitted by the statement, the Company elected to adopt the provisions
of the new standard as of December 31, 1993. In accordance with FAS
No. 115, prior-period financial statements have not been restated to
reflect the change in accounting principle. Pursuant to FAS 115, the
Company's investment securities at December 31, 1993 were classified as
either held-to-maturity securities or available-for-sale securities.
Those securities classified as held-to-maturity securities are those
management has the intent and the Company has the positive ability to
hold until maturity. The available-for-sale securities are those
securities deemed to be available for sale for the implementation of
asset and liability management strategies, possible liquidity needs,
and other purposes. At December 31, 1992, the Company's "Investment
securities" were carried at amortized cost since management had the
intent and the Company had the ability to hold the securities on a
long-term basis.
The following table presents the amortized cost and estimated
fair value of investment securities classified as held-to-maturity and
carried at amortized cost.
<TABLE>
<CAPTION>
Held-to-maturity
December 31, 1993 December 31, 1992
------------------------------------------ ------------------------------------------
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
---------- ---------- ---------- --------- ---------- ---------- ---------- ---------
(In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury obligations. $ 1,514 $ 21 $ -- $ 1,535 $ 284,856 $ 5,377 $ (457) $ 289,776
Obligations of U.S.
government agencies
and corporations:
Mortgage-backed. . . . . 1,751,443 13,443 (12,191) 1,752,695 1,731,879 18,219 (10,301) 1,739,797
Other. . . . . . . . . . 359 43 (1) 401 279,783 6,736 (397) 286,122
Obligations of states and
political subdivisions. . 4,750 13 (56) 4,707 215,471 25,345 (36) 240,780
Other securities:
Collateralized auto
receivables . . . . . . 12,364 88 -- 12,452 28,935 594 -- 29,529
Corporate notes and
bonds . . . . . . . . . -- -- -- -- 10,580 179 (11) 10,748
Foreign debt securities. 2,155 5 -- 2,160 -- -- -- --
Money market mutual
funds . . . . . . . . . 212 -- -- 212 220 -- -- 220
---------- ------- -------- ---------- ---------- ------- -------- ----------
Total debt securities. 1,772,797 13,613 (12,248) 1,774,162 2,551,724 56,450 (11,202) 2,596,972
Federal Home Loan
Bank stock(1) . . . . . 24,911 -- -- 24,911 1,166 -- -- 1,166
Federal Reserve
Bank stock(1) . . . . . 12,589 -- -- 12,589 8,452 -- -- 8,452
Other equity
securities(1) . . . . . 1,470 -- -- 1,470 3,576 18 (4) 3,590
---------- ------- -------- ---------- ---------- ------- -------- ----------
Total. . . . . . . . . $1,811,767 $13,613 $(12,248) $1,813,132 $2,564,918 $56,468 $(11,206) $2,610,180
========== ======= ======== ========== ========== ======= ======== ==========
<FN>
- -----------
(1) Securities do not have a readily determinable fair value.
</TABLE>
The amortized cost and estimated fair value of the held-to-maturity debt
securities at December 31, 1993 are shown below by contractual maturity.
<TABLE>
<CAPTION>
December 31, 1993
-------------------------------
Estimated
Amortized Fair
Cost Value
---------- ----------
(In thousands)
<S> <C> <C>
Due in one year or less . . . . . . . . . . . . . . $ 2,071 $ 2,126
Due after one year through five years . . . . . . . 17,258 17,314
Due after five years through ten years. . . . . . . 25 27
Due after ten years . . . . . . . . . . . . . . . . 2,000 2,000
---------- ----------
21,354 21,467
Mortgage-backed securities. . . . . . . . . . . . . 1,751,443 1,752,695
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . $1,772,797 $1,774,162
========== ==========
</TABLE>
The following table presents the amortized cost and estimated fair
value of investment securities classified as available-for-sale and
carried at estimated fair value.
<TABLE>
<CAPTION>
Available-for-sale
December 31, 1993
------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C>
U.S. Treasury obligations. . . . . . . . . . . . . . . . . $ 297,891 $10,518 $ (78) $ 308,331
Obligations of U.S. government agencies
and corporations:
Mortgage-backed. . . . . . . . . . . . . . . . . . . . . 215,889 4,530 (1,571) 218,848
Other. . . . . . . . . . . . . . . . . . . . . . . . . . 299,900 7,179 (803) 306,276
Obligations of states and political subdivisions . . . . . 222,130 21,266 (463) 242,933
Corporate notes and bonds. . . . . . . . . . . . . . . . . 39,567 710 (40) 40,237
---------- ------- -------- ----------
Total debt securities. . . . . . . . . . . . . . . . . 1,075,377 44,203 (2,955) 1,116,625
Equity securities. . . . . . . . . . . . . . . . . . . . . 1,172 -- (21) 1,151
---------- ------- -------- ----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . $1,076,549 $44,203 $ (2,976) $1,117,776
========== ======= ======== ==========
</TABLE>
The amortized cost and estimated fair value of the available-for-sale
debt securities at December 31, 1993 are shown below by contractual maturity.
<TABLE>
<CAPTION>
December 31, 1993
-------------------------------
Estimated
Amortized Fair
Cost Value
---------- ----------
(In thousands)
<S> <C> <C>
Due in one year or less . . . . . . . . . . . . . . $ 89,296 $ 90,289
Due after one year through five years . . . . . . . 615,487 641,886
Due after five years through ten years. . . . . . . 128,606 134,916
Due after ten years . . . . . . . . . . . . . . . . 26,099 30,686
---------- ----------
859,488 897,777
Mortgage-backed securities. . . . . . . . . . . . . 215,889 218,848
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . $1,075,377 $1,116,625
========== ==========
</TABLE>
The fair values of investment securities are based upon available
market data and estimates which often reflect transactions of
relatively small size and which are not necessarily indicative of
prices at which larger amounts of particular issues could be readily
sold. Expected maturities may differ from contractual maturities
because borrowers have the right to call or prepay obligations with or
without call or prepayment penalties.
The book value of investment securities pledged to secure public
deposits and for other purposes, as required or permitted by law,
aggregated $1,135,612,000 at December 31, 1993.
The gross proceeds, gains, and losses realized from the sale of
investment securities are detailed in the following table. This table
does not include proceeds from nor realized gains and losses
attributable to prepayments of investment securities.
<TABLE>
<CAPTION>
1993 1992 1991
----------- ------------ ------------
<S> <C> <C> <C>
Proceeds from sale of investment securities . . . . . . . . $10,202,000 $ 70,444,000 $249,716,000
=========== ============ ============
Gross realized gains . . . . . . . . . . . . . . . . . . . $ 55,000 $ 2,311,000 $ 5,540,000
Gross realized losses . . . . . . . . . . . . . . . . . . . 43,000 47,000 978,000
----------- ------------ ------------
Net gains . . . . . . . . . . . . . . . . . . . . . . . $ 12,000 $ 2,264,000 $ 4,562,000
=========== ============ ============
</TABLE>
Gross securities gains in 1992 include $688,000 realized by a
pooled company associated with securities which were sold due to a
deterioration in credit quality. A gain was realized because the
securities had previously been written down to 37.0% of par value.
Not included in the table above are $299,685,000 of 1992 sales of
short-term Treasury Bills related to the restructuring of the
securities portfolio obtained with the assumption of deposits from a
Tulsa, Oklahoma S&L. These securities were sold within 14 days of
maturity; thus the market risk had been substantially eliminated as a
pricing factor, and a gain of only $5,000 was realized. "Income
receivable and other assets" includes the receivable for the proceeds
from this sale, which were received January 4, 1993.
6 - Loans and Leases
The book value and estimated fair value of loans and leases are
as follows:
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
--------------------- ---------------------
Amount Percent Amount Percent
----------- --------- ----------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Commercial and industrial . . . . . . . . . . . . . . . . . . $ 849,026 26.1% $ 737,924 26.0%
Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . 164,752 5.0 143,383 5.0
Energy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,962 2.4 55,754 2.0
Bank stock. . . . . . . . . . . . . . . . . . . . . . . . . . 34,576 1.1 41,282 1.4
Real estate, less unearned discount:
Construction. . . . . . . . . . . . . . . . . . . . . . . . 92,158 2.8 63,948 2.2
Secured by 1-4 family residences. . . . . . . . . . . . . . 781,946 24.0 690,202 24.3
Permanent commercial real estate and other. . . . . . . . . 500,129 15.4 436,888 15.4
Residential mortgage loans held for sale. . . . . . . . . . 110,132 3.4 501 --
Consumer, less unearned discount. . . . . . . . . . . . . . . 417,126 12.8 467,916 16.5
Credit card . . . . . . . . . . . . . . . . . . . . . . . . . 91,562 2.8 81,012 2.9
Educational . . . . . . . . . . . . . . . . . . . . . . . . . 55,968 1.7 41,889 1.5
Lease financing . . . . . . . . . . . . . . . . . . . . . . . 40,195 1.2 29,490 1.0
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,255 1.3 50,847 1.8
---------- ------ ---------- ------
Loans and leases - book value . . . . . . . . . . . . . . $3,257,787 100.0% $2,841,036 100.0%
========== ====== ========== ======
Loans and leases - estimated fair value . . . . . . . . . $3,281,535 $2,859,833
========== ==========
</TABLE>
The Company manages exposure to credit risk through loan portfolio
diversification by customer and market, as well as by product.
Although the aggregate legal lending limits of the Company's bank
subsidiaries totaled $79,422,000 at December 31, 1993, the Company had
no single lending relationship with an aggregate loan amount
outstanding in excess of $20,000,000. The Company principally lends to
businesses and individuals in Kansas, Oklahoma, and the contiguous
states or to Kansas and Oklahoma based customers that do business in
other states.
Nonaccrual loans and troubled debt restructurings are summarized
below:
December 31,
---------------------
1993 1992
-------- --------
(In thousands)
Nonaccrual loans . . . . . . . . . . . . . . . . $33,833 $36,772
Troubled debt restructurings . . . . . . . . . . 290 1,906
------- -------
$34,123 $38,678
======= =======
The effect of nonaccrual loans and troubled debt restructurings on
interest income was:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
1993 1992 1991
------ ------ ------
(In thousands)
<S> <C> <C> <C>
Interest income which would have been
recorded pursuant to the original terms . . . . . . . . . . $4,039 $7,823 $11,241
====== ====== =======
Interest income recorded . . . . . . . . . . . . . . . . . . $1,504 $1,598 $ 2,073
====== ====== =======
</TABLE>
In the ordinary course of business, the Company has made loans to
directors and executive officers of the Company and its significant
subsidiaries. Loans to these customers were transacted on the same
terms, including similar interest rates and collateral terms, as those
prevailing at the time for comparable transactions with unrelated
persons and, in management's opinion, did not involve more than a
normal risk of collectibility or present other unfavorable features at
the time they were made. An analysis of aggregate loan activity with
this group, including their immediate families, companies in which they
are principal owners, and trusts in which they are involved, follows:
1993
--------------
(In thousands)
Loans outstanding at December 31, 1992. . . . . . . . $ 39,236
New loans . . . . . . . . . . . . . . . . . . . . . 214,894
Repayments. . . . . . . . . . . . . . . . . . . . . (176,635)
Other changes . . . . . . . . . . . . . . . . . . . 271
--------
Loans outstanding at December 31, 1993. . . . . . . . $ 77,766
========
Other changes include loans outstanding at December 31, 1992 to
directors elected or retired in 1993, loans purchased or sold during
the current year, and any other loans outstanding at December 31, 1992
to related individuals or entities not considered to be related parties
at December 31, 1993.
7 - Allowance for Credit Losses
Changes in the allowance for credit losses are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Balance at January 1, as previously reported . . . . . . . . . . . . . . . . $60,498 $57,459 $53,049
Adjustment for poolings of interests . . . . . . . . . . . . . . . . . . . 12,557 13,210 9,672
------- ------- -------
Balance at January 1, as restated. . . . . . . . . . . . . . . . . . . . . . 73,055 70,669 62,721
Allowance for credit losses of purchased banks . . . . . . . . . . . . . . 3,266 1,739 464
Allowance for purchased loans. . . . . . . . . . . . . . . . . . . . . . . -- 3,424 --
------- ------- -------
76,321 75,832 63,185
Provisions charged to operating expense. . . . . . . . . . . . . . . . . . 7,056 21,343 43,665
Recoveries on loans and leases previously charged off. . . . . . . . . . . 9,799 6,958 7,189
Loans and leases charged off . . . . . . . . . . . . . . . . . . . . . . . (26,808) (31,078) (44,559)
------- ------- -------
Balance at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . $66,368 $73,055 $69,480
======= ======= =======
</TABLE>
8 - Bank Premises and Equipment
A summary of land, buildings, and equipment appears below:
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
------------------------------- --------------------------------
Accumulated Book Accumulated Book
Cost Depreciation Value Cost Depreciation Value
-------- ------------ ------- -------- ------------ --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Land . . . . . . . . . . . . . . . . . . $ 22,993 $ -- $ 22,993 $ 21,382 $ -- $ 21,382
Buildings and leasehold improvements . . 153,368 71,155 82,213 136,342 63,796 72,546
Furniture and equipment. . . . . . . . . 111,207 73,441 37,766 89,770 60,362 29,408
-------- -------- -------- -------- -------- --------
Total. . . . . . . . . . . . . . . . $287,568 $144,596 $142,972 $247,494 $124,158 $123,336
======== ======== ======== ======== ======== ========
</TABLE>
Depreciation expense amounted to $15,705,000 in 1993, $14,204,000 in 1992,
and $13,470,000 in 1991.
9 - Intangible Assets
Included in intangible assets are the following items:
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
------------------------------- --------------------------------
Accumulated Book Accumulated Book
Cost Amortization Value Cost Amortization Value
-------- ------------ ------- -------- ------------- -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Cost in excess of net assets acquired . . $64,728 $18,259 $46,469 $53,386 $14,992 $38,394
Value of core deposits assumed. . . . . . 28,055 12,227 15,828 26,825 5,335 21,490
Purchased mortgage servicing rights . . . 5,749 4,248 1,501 5,749 2,111 3,638
------- ------- ------- ------- ------- -------
$98,532 $34,734 $63,798 $85,960 $22,438 $63,522
======= ======= ======= ======= ======= =======
</TABLE>
The cost of purchased entities in excess of fair value of net assets
acquired is being amortized on a straight-line basis over a period of
twenty years. The value of core deposits assumed and the purchased
mortgage servicing rights are being amortized using accelerated methods
over the estimated periods benefitted, not exceeding ten years.
10 - Deposits
The book value and estimated fair value of deposits are presented
below:
<TABLE>
<CAPTION>
December 31,
-----------------------------
1993 1992
------------ ------------
(In thousands)
<S> <C> <C>
Noninterest-bearing deposits . . . . . . . . . . . . . . . . . . . . . $ 944,290 $1,036,371
Interest-bearing deposits:
Interest-bearing checking deposits . . . . . . . . . . . . . . . . . 908,792 800,606
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 1,259,486 1,220,952
Time deposits under $100,000 . . . . . . . . . . . . . . . . . . . . 1,835,211 1,923,026
Time deposits of $100,000 or more . . . . . . . . . . . . . . . . . . 359,957 398,962
---------- ----------
Total interest-bearing deposits . . . . . . . . . . . . . . . . . . 4,363,446 4,343,546
---------- ----------
Deposits - book value . . . . . . . . . . . . . . . . . . . . . . $5,307,736 $5,379,917
========== ==========
Deposits - estimated fair value . . . . . . . . . . . . . . . . . $5,350,182 $5,424,630
========== ==========
</TABLE>
11 - Purchased Funds, Borrowings and Long-Term Debt
The following schedules summarize, by category, purchased funds,
borrowings, and long-term debt.
Federal funds purchased and securities sold
under agreements to repurchase
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
-------------------- ---------------------
Amount Rate Amount Rate
-------- -------- --------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Federal funds purchased . . . . . . . . . . . . . . . . . . . . $370,026 2.96% $261,048 2.92%
Securities sold under agreements to repurchase. . . . . . . . . 123,901 3.27 65,089 3.49
-------- --------
Total book value. . . . . . . . . . . . . . . . . . . . . . . $493,927 3.04 $326,137 3.03
======== ========
Estimated fair value. . . . . . . . . . . . . . . . . . . . . $493,927 $326,137
======== ========
</TABLE>
Federal funds purchased and securities sold under agreements to
repurchase generally mature daily or on demand.
Federal Home Loan Bank borrowings
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
-------------------- ---------------------
Amount Rate Amount Rate
-------- -------- --------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Federal Home Loan Bank borrowings - book value. . . . . . . . . $250,000 4.01% $ -- --%
======== ========
Estimated fair value. . . . . . . . . . . . . . . . . . . . . . $251,402 $ --
======== ========
</TABLE>
At December 31, 1993, Federal Home Loan Bank borrowings included
$175,000,000 with an average rate of 3.76% that matures in 1994.
The remaining balance matures in 1995 ($50,000,000) and 1996 ($25,000,000).
Other borrowings
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
-------------------- ---------------------
Amount Rate Amount Rate
-------- -------- --------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Treasury tax and loan . . . . . . . . . . . . . . . . . . . . . $23,002 2.75% 17,306 2.67
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 5,961 6.57
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . -- -- 425 2.80
-------- --------
Total book value. . . . . . . . . . . . . . . . . . . . . . . $ 23,002 2.75 $ 23,692 3.65
======== ========
Estimated fair value. . . . . . . . . . . . . . . . . . . . . $ 23,002 $ 23,692
======== ========
</TABLE>
Treasury tax and loan borrowings generally mature daily or on
demand. The $5,961,000 of notes payable at December 31, 1992 were
debts of pooled companies. These notes were paid in full at the
acquisition dates. Commercial paper has a maximum maturity of 270
days.
The Company has a $35,000,000 committed line of credit from an
unaffiliated bank. Amounts borrowed under the agreement have
alternative fluctuating interest rates. A commitment fee of 1/8 of 1%
is charged on this commitment, which matures on May 31, 1994. There
have been no borrowings under this agreement. The Company is required
to maintain capital ratios above the regulatory "Well Capitalized"
standard and the ratio of nonperforming assets to total loans plus
other real estate owned may not exceed 4.0%. In the event of a default
on either of these covenants, the lender would have the right to impose
additional covenants, and increase fees and margins as it may deem
prudent, or the lender could deny any future advances, as well as cause
the obligations then outstanding to become immediately due and payable.
At December 31, 1993, the Company was in compliance with all the terms
of this agreement.
Long-term debt
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
----------------- -----------------
Amount Rate Amount Rate
---------- ------ ---------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,125 8.60% $21,875 8.60%
Mortgage indebtedness and other notes payable . . . . . . . . . . 864 4.60 5,950 6.94
Subordinated debentures . . . . . . . . . . . . . . . . . . . . . -- -- 1,515 6.70
------- -------
Total book value. . . . . . . . . . . . . . . . . . . . . . . . $13,989 8.35 $29,340 8.17
======= =======
Estimated fair value. . . . . . . . . . . . . . . . . . . . . . $14,352 $30,358
======= =======
</TABLE>
The parent company's term loan with an unaffiliated bank requires
semiannual installments of $4,375,000, due the last day of March and
September through March 1995. The Company is required to maintain
consolidated net worth above an adjusted base of $498,076,000 at
December 31, 1993; maintain a ratio of consolidated equity to
consolidated assets above the level required by the Federal Reserve
Board of Governors; maintain investments in subsidiaries below 140% of
consolidated equity; and to maintain a level of consolidated tangible
net worth exceeding consolidated funded debt. The Company is in
compliance with all of the terms of the agreement.
The mortgage indebtedness and other notes payable of $5,950,000 in
1992 includes $5,368,000 from current year pooling-of-interests
acquisitions. The majority (87.5%) of the acquired balance was paid
off at the acquisition dates. Certain buildings and real estate have
been pledged as collateral on mortgage indebtedness and other notes
payable. Maturities of this long-term debt for years subsequent to
December 31, 1993, are as follows:
Years ended December 31, (In thousands)
------------------------ --------------
1994 . . . . . . . . . . . . . $ 554
1995 . . . . . . . . . . . . . 75
1996 . . . . . . . . . . . . . 29
1997 . . . . . . . . . . . . . 32
1998 . . . . . . . . . . . . . 14
Thereafter . . . . . . . . . . 160
------
Total . . . . . . . . . . . . $ 864
======
The subordinated debentures were also obligations of a pooled
company. The interest rate was 2% above the average of the one year
United States treasury bill obligations issued in the two previous
Treasury auctions preceding December 31 each year. Although the
debentures were not due until December 31, 1998, they were subject to
redemption at the face amount plus accrued interest on any quarterly
interest payment date after December 31, 1991. These debentures were
redeemed by the Company in 1993.
12 - Preferred Stock
<TABLE>
<CAPTION>
December 31, December 31,
1993 1992
------------- -------------
(Dollars in thousands)
<S> <C> <C>
Class A cumulative convertible preferred stock,
par value $100 per share
Authorized: 250,000 shares
Issued: 250,000 shares (at liquidation preference) . . . . . . . $100,000 $100,000
Class B preferred stock, no par value
Authorized: 5,000,000 shares . . . . . . . . . . . . . . . . . . -- --
CLC's convertible preferred stock, par value $6.22 per share
Authorized: 771,720 shares
Issued: None and 181,700 shares. . . . . . . . . . . . . . . . . -- 1,130
WNB's 1987 convertible preferred stock
Issued: None and 51,368 shares . . . . . . . . . . . . . . . . . -- 769
WNB's 1989 convertible preferred stock
Issued: None and 398,749 shares. . . . . . . . . . . . . . . . . -- 1,742
-------- --------
$100,000 $103,641
======== ========
</TABLE>
On February 24, 1992, the Company issued 250,000 shares of nonvoting
Class A Cumulative Convertible Preferred Stock. This preferred stock
was issued in the form of 4,000,000 depositary shares each representing
a 1/16 interest in a share of preferred stock and each having a
liquidation preference of $25.00. Dividends are payable quarterly
beginning June 1, 1992 at an annual rate of $1.75 per depositary share.
The depositary shares are not redeemable by the Company prior to March
1, 1997. However, they may be converted at the election of
shareholders into a total of 3,448,275 shares of the Company's common
stock at a conversion price of $29.00 per common share.
At the Company's annual meeting in April 1992, the stockholders
authorized 5,000,000 shares of a new class of preferred stock,
designated Class B Preferred Stock. The Board of Directors has been
authorized to set the dividend, voting, conversion, redemption, and
other rights of this stock when and if issued.
The restatement of prior-period financial statements for the
poolings of interests resulted in the inclusion of CLC's and WNB's
convertible preferred stock in the Company's prior-period financial
statements. The par value, shares authorized, and shares issued in the
previous table have been adjusted by the exchange ratio to reflect
equivalent Company shares at December 31, 1992. Prior to CLC's merger
with the Company, CLC's preferred stock was converted to CLC common
stock, which was then exchanged for Company common stock. All of WNB's
preferred stock was exchanged for Company common stock in the business
combination.
CLC's convertible preferred stock was convertible into one share of
CLC common stock for each share of CLC preferred stock at the option of
the holder. Dividends were noncumulative and could only be paid if
covered by current-period profits and approved by CLC's Board of
Directors. Dividends were payable at the following rates:
1991 - 5% of par
1992 - 7% of par
1993 - 8% of par
1994 and thereafter - 8.75% of par
WNB's 1987 convertible preferred stock was convertible into
approximately 2.2 shares of WNB common stock for each share of WNB 1987
preferred stock. The 1987 preferred was redeemable by WNB at any time
after December 31, 1992, at book value plus any unpaid cumulative
dividends. Dividends accumulated at 3.5% annually. At December 31,
1992, cumulative unpaid dividends amounted to $108,000 which had not
been charged to retained earnings. The WNB 1987 preferred stock
shareholders received 117,487 Company shares in the business
combination and no dividends were declared.
Each share of WNB 1989 preferred stock was convertible into one
share of WNB common stock and was redeemable by WNB at any time after
December 31, 2000, at book value increased by 3.0% per year compounded
quarterly, plus any unpaid cumulative dividends. The dividends
accumulated at 12%, but were payable only in additional shares of 1989
preferred stock. At December 31, 1992, cumulative undeclared dividend
shares totaled 198,731 (as adjusted for the business combination
exchange ratio). The WNB 1989 preferred stock shareholders received
672,462 shares of Company stock in the business combination and no
dividends were declared.
13 - Nonoperating Charge
During 1993, the Company recorded a nonoperating charge of
$12,708,000 to reflect merger, integration, and restructuring charges
associated with the current- year acquisitions and to accelerate core
deposit intangible amortization, data processing hardware depreciation,
and software amortization. Acquisition-related premises and equipment
write-downs totaled $1,252,000 and were associated with dispositions of
excess facilities and equipment. Merger, integration, and
restructuring charges also included severance and other compensation of
$2,970,000; systems conversion costs of $1,579,000; and other
restructuring expenses related to acquisitions of $1,233,000.
The 1992 nonoperating charge of $5,573,000 was principally
associated with the consolidation of Oklahoma data processing,
operations, and staff functions. This expense included severance and
other compensation of $886,000; systems conversion costs of $1,941,000;
acquisition-related premises and equipment write-downs of $621,000; the
settlement of lease obligations on excess facilities of $991,000; and
other restructuring expenses of $884,000 related to acquisitions. Also
included in the 1992 nonoperating charge was a $250,000 computer write-
down.
The $6,997,000 nonoperating charge for 1991 recognized the costs of
a work force reduction. This charge included $5,648,000 attributable
to an early retirement incentive plan, $1,062,000 for the cost of
severance compensation, and $287,000 associated with the closing of
five loan production offices.
14 - Income Taxes
Effective January 1, 1993, the Company changed its method of
accounting for income taxes from the deferred method to the liability
method required by FAS No. 109, "Accounting for Income Taxes." As
permitted under the new rules, prior years' financial statements have
not been restated. The cumulative effect of adopting FAS No. 109 as of
January 1, 1993 was to increase net income by $10,509,000. The
$2,373,000 increase for the year ended December 31, 1992 was a result
of the 1993 pooling-of-interests transactions. Two of the "pooled"
companies elected early adoption of FAS No. 109 effective January 1,
1992.
At December 31, 1993, the Company had net operating loss and
general business credit carryforwards of $14,777,000 and $424,000,
respectively, which can be carried forward to reduce future federal
income taxes payable. These carryforwards are principally related to
previous losses of banks acquired in 1992 and 1993. Utilization of the
carryforwards is limited by tax law to the future earnings of and other
limits on the use of tax attributes of acquired companies. Net
operating loss carryforwards expire in years 2000 through 2007 and
general business credit carryforwards expire in years 1994 through 2005
if not utilized. For financial reporting purposes, a valuation
allowance of $13,211,000 has been recognized to offset the deferred tax
assets related to these carryforwards and other deferred tax assets
whose realization is uncertain. If realized, the tax benefit on
$3,413,000 of net operating loss carryforwards will be applied to
reduce "cost in excess of net assets acquired" recorded in connection
with acquisitions accounted for as purchases. The net change in the
valuation allowance for deferred tax assets for 1993 was a decrease of
$3,294,000. Pursuant to FAS No. 109, the Company's third quarter 1993
financial statements reflected certain adjustments to recognize the
impact of the new tax law on the Company's financial condition. These
adjustments reduced 1993 income tax expense by $616,000.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets as of
December 31, 1993 are as follows:
<TABLE>
<CAPTION>
December 31, 1993
-----------------
(In thousands)
<S> <C>
Deferred tax assets:
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . $18,874
Net operating loss carryforwards. . . . . . . . . . . . . . . . . . . . . . 8,159
Write-down of other real estate owned . . . . . . . . . . . . . . . . . . . 5,425
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,043
Core deposit amortization . . . . . . . . . . . . . . . . . . . . . . . . . 1,854
Nonoperating charge accrual . . . . . . . . . . . . . . . . . . . . . . . . 1,132
Pension contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,018
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334
-------
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . 38,839
Valuation allowance for deferred tax assets . . . . . . . . . . . . . . . . (13,211)
-------
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . 25,628
-------
Deferred tax liabilities:
Securities fair value adjustment. . . . . . . . . . . . . . . . . . . . . . (16,079)
Purchase accounting adjustment. . . . . . . . . . . . . . . . . . . . . . . (4,173)
Discount accretion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,145)
State taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,343)
Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,121)
Depreciation expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,752)
-------
Total deferred tax liabilities. . . . . . . . . . . . . . . . . . . . . . (29,613)
-------
Net deferred tax liability. . . . . . . . . . . . . . . . . . . . . . . . $(3,985)
=======
</TABLE>
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
Liability Deferred Deferred
Method Method Method
------------ ------------ ------------
December 31, December 31, December 31,
1993 1992 1991
------------ ------------ ------------
(In thousands)
<S> <C> <C> <C>
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . $23,636 $16,166 $11,203
State . . . . . . . . . . . . . . . . . . . . . . . . . . 3,920 3,439 2,800
------- ------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . 27,556 19,605 14,003
------- ------- -------
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . (5,936) (312) (3,578)
State . . . . . . . . . . . . . . . . . . . . . . . . . . 225 (759) (888)
------- ------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . (5,711) (1,071) (4,466)
------- ------- -------
Total income tax expense. . . . . . . . . . . . . . . $21,845 $18,534 $ 9,537
======= ======= =======
</TABLE>
Tax effects of investment securities transactions included in the
above amounts are $459,000 in 1993, $504,000 in 1992, and $954,000 in 1991.
The components of the provision for deferred income taxes for the
periods ended December 31, 1992 and December 31, 1991 are as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1992 1991
------------ ------------
(In thousands)
<S> <C> <C>
Provision for credit losses. . . . . . . . . . . . . . . . . . . . . . . $(1,571) $(1,823)
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . (939) (1,012)
Write-down of other real estate owned. . . . . . . . . . . . . . . . . . 972 (791)
Bond discount accretion. . . . . . . . . . . . . . . . . . . . . . . . . 147 (646)
Leasing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 142
Cash basis tax reporting . . . . . . . . . . . . . . . . . . . . . . . . -- (596)
Employee benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . (385) (478)
Write-down of investment securities. . . . . . . . . . . . . . . . . . . -- 465
State taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372 334
Utilization of loss carryforwards against deferred tax liability . . . . -- (381)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 320
------- -------
Provision for deferred income taxes. . . . . . . . . . . . . . . . . . $(1,071) $(4,466)
======= =======
</TABLE>
The effective income tax rates differ from the federal statutory rates
for the reasons shown in the following table.
<TABLE>
<CAPTION>
Liability Method Deferred Method Deferred Method
------------------- ------------------- -------------------
December 31, 1993 December 31, 1992 December 31, 1991
------------------- ------------------- -------------------
Amount Rate Amount Rate Amount Rate
--------- -------- --------- -------- --------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Income tax expense at federal statutory rate . . . $30,459 35.0% $27,019 34.0% $13,685 34.0%
Tax-preferred income on obligations of states,
political subdivisions, and U.S. possessions. . . (6,457) (7.4) (7,076) (8.9) (8,637) (21.5)
Goodwill and purchase accounting amortization. . . 1,271 1.5 986 1.2 1,018 2.5
State taxes, net of federal income tax benefit . . 2,688 3.1 1,693 2.1 1,374 3.4
Alternative minimum tax. . . . . . . . . . . . . . -- -- -- -- 2,348 5.8
Investment tax credit. . . . . . . . . . . . . . . -- -- (232) (.3) -- --
Benefit of net operating losses and
alternative minimum tax credits . . . . . . . . . (4,090) (4.7) (5,208) (6.6) (1,486) (3.7)
Deferred tax benefits not recorded due to
uncertainty of realization. . . . . . . . . . . . -- -- -- -- 605 1.5
Other, net . . . . . . . . . . . . . . . . . . . . (2,026) (2.4) 1,352 1.8 630 1.7
------- ---- ------- ---- ------- -----
Actual income tax expense. . . . . . . . . . . $21,845 25.1% $18,534 23.3% $ 9,537 23.7%
======= ==== ======= ==== ======= ====
</TABLE>
15 - Employee Benefit Plans
The Company and its subsidiaries have two types of pension plans.
The Company's defined benefit plan covers substantially all employees.
The supplemental executive retirement plan provides for payments equal
to the benefit which would have been paid under the pension plan and
the savings and investment plan if certain Internal Revenue Code
limitations had not been imposed including Section 415, Section
401(a)(17), and the Section 401(a)(4) prohibition on deferred
compensation as eligible compensation under the pension plan.
The plans' funded status and amounts included in the consolidated
financial statements are presented below:
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
------------------------- -------------------------
Supplemental Supplemental
Defined Executive Defined Executive
Benefit Retirement Benefit Retirement
Plan Plan Plan Plan
---------- ------------ ---------- ------------
(In thousands)
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation . . . . . . . . . . . . . . . . $(20,425) $ (737) $(14,682) $(1,035)
======== ======= ======== =======
Accumulated benefit obligation. . . . . . . . . . . . . . $(21,695) $ (799) $(15,410) $(1,050)
======== ======= ======== =======
Projected benefit obligation. . . . . . . . . . . . . . . $(28,234) $(1,169) $(20,880) $(1,107)
Plan assets, at fair value. . . . . . . . . . . . . . . . . 20,086 -- 16,580 --
-------- ------- -------- -------
Funded status . . . . . . . . . . . . . . . . . . . . . . . (8,148) (1,169) (4,300) (1,107)
Prior service cost (benefit) not yet recognized in
periodic pension cost, being amortized over 10 years . . . (1,641) 1 41 55
Unrecognized net (asset) obligation from date of
initial application, being amortized over 15 years . . . . (2,541) 104 (2,900) 119
Unrecognized net loss from past experience different
from that assumed and effects of changes in assumptions. . 10,499 377 5,342 258
-------- ------- -------- -------
Accrued pension cost included in
consolidated statements of condition . . . . . . . . . . $ (1,831) $ (687) $ (1,817) $ (675)
======== ======= ======== =======
</TABLE>
Effective January 1, 1994, the pension plan was amended to reduce
the pension benefits by approximately 10%. Both the projected benefit
obligation and the prior service benefit reflect this change. The
accumulated benefit obligation at December 31, 1993 was not affected by
this plan amendment.
The assets of the defined benefit plan are administered by the trust
division of a subsidiary bank and consist of a wide variety of
diversified securities including common stocks, corporate bonds, and
U.S. Treasury obligations. The trust also participates in commingled
funds for qualified employee benefit accounts, including two equity
funds and one fixed-income fund. Contributions to the plan are based
upon the Projected Unit Credit Actuarial Funding method and are limited
to amounts that are currently deductible for tax reporting purposes.
Net pension cost includes the following components:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Service cost-benefits earned during the year. . . . . . . . . . $2,329 $1,441 $1,425
Interest cost on the projected benefit obligation . . . . . . . 1,579 1,414 1,744
Actual return on plan assets. . . . . . . . . . . . . . . . . . (2,119) (1,397) (3,865)
Net amortization and deferrals. . . . . . . . . . . . . . . . . 691 (314) 1,560
------ ------ ------
Net periodic pension cost . . . . . . . . . . . . . . . . . . $2,480 $1,144 $ 864
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Assumptions used in the accounting include:
As of December 31,
------------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Discount rates. . . . . . . . . . . . . . . . . . . . . . . . . 7.00% 7.00% 7.75%
Average rates of increase in compensation levels. . . . . . . . 4.70% 4.70% 6.00%
Expected long-term rate of return on assets . . . . . . . . . . 8.75% 9.25% 9.25%
</TABLE>
The Company and its subsidiaries also maintain a contributory
savings and investment plan for substantially all employees. The
savings and investment plan and related trust qualify under Section 401
of the Internal Revenue Code as a qualified profit-sharing plan and
trust. According to the plan, an employee may contribute from 2% to 4%
of base salary, which the employer then supplements with a contribution
of 50% of the employee's contributed amount. Employees may contribute
up to an additional 11% of base salary in pre-tax dollars, but without
further employer contributions. The plan also provides for an
additional matching contribution of up to an additional 2% of the
employee's eligible compensation based on the Company's achievement of
established earnings-per-share targets. Vesting in the employer
contributions ranges from 20% with three years to 100% with seven years
of service. During 1993, employees could elect to invest in one or
more of four investment funds, in 25% increments. These funds included
a Fourth Financial Corporation common stock fund, a fixed-income fund,
an equity fund, and a money market fund. An additional fund, an
international equity fund, was added effective January 1, 1994, and the
fund elections may now be made in 10% increments. Forfeitures are used
to reduce the Company's contributions. The expense for this plan plus
similar plans of pooled companies which were merged with this plan was
$1,823,000 in 1993, $1,951,000 in 1992, and $1,150,000 in 1991. This
expense includes additional matching contributions of $629,000 and
$625,000 for 1993 and 1992, respectively, attributable to the
achievement of performance goals. No additional performance-based
matching contribution was made for 1991.
The restatement of prior period financial statements for the
poolings of interests resulted in the inclusion of SBC's contributory
Employee Stock Ownership Plan ("ESOP") and PBC's noncontributory ESOP.
Both plans covered substantially all employees with one year of
service. Annual contributions to these plans were determined by the
respective Boards of Directors of SBC and PBC. In 1993, 1992, and
1991, contributions made to the plans totaled $230,000, $247,000, and
$316,000, respectively. The SBC ESOP was terminated February 12, 1993
and all stock was allocated to the participants. At December 31, 1993,
the PBC ESOP was in the process of being terminated.
Effective January 1, 1990, the Company discontinued providing
medical coverage for employees who retired at age 65 or older. The
Company continues to underwrite approximately $30,000 of the annual
cost of health care benefits for such employees who retired prior to
January 1, 1990. Employees retiring after age 55 but before age 65 and
with at least ten years' service may continue participation in the
Company's health plan until age 65, but the plan requires that the full
cost of providing coverage under the plan be paid by the covered
retirees. Financial Accounting Standard ("FAS") No. 106 establishes
accounting standards for "Employers' Accounting for Postretirement
Benefits Other Than Pensions." Although it applies to all forms of
postretirement benefits, FAS No. 106 focuses principally on
postretirement health care benefits. The Statement provides that the
expected cost of postretirement benefits be accrued during the years
that the employee renders services. This Statement was effective for
1993; however, the adoption of FAS No. 106 would not have a material
effect on the Company's statement of condition and operating results.
16 - Stock Option and Stock Purchase Plans
The Company grants options to key employees under incentive stock
option plans at prices equal to the market value on the date of grant.
Terms of the plans generally provide for the exercise of the options
for periods of up to ten years, as determined by the Board of
Directors. Under the 1981 stock option plan, 162,141 shares were
reserved for issuance, of which 94,975 shares were under option, and
28,100 were exercisable at December 31, 1993. Options may no longer be
granted under this plan. At December 31, 1993, there were 867,653
shares reserved for issuance under the 1986 stock option plan of which
703,063 were under option, and 78,426 were exercisable. The 1993
stock option plan, which is substantially identical to the 1986 plan,
was approved and adopted in 1993. Under the 1993 plan, a maximum of
1,000,000 shares may be issued; however, at December 31, 1993, no
options had been granted.
The following table presents information regarding stock option
transactions and prices:
<TABLE>
<CAPTION>
Shares Under Option
-------------------------------------------------------------------------
1993 1992 1991
----------------------- ----------------------- -----------------------
Price Price Price
Number Per Share Number Per Share Number Per Share
---------- ------------ --------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1 . . . . . . . 684,339 $14.80-29.88 518,297 $14.80-23.50 804,928 $11.30-24.70
Granted. . . . . . . . . . . . . . 299,100 27.50-30.38 248,900 22.87-29.88 14,000 18.37-19.63
Exercised. . . . . . . . . . . . . (172,747) 14.80-23.20 (74,858) 14.80-23.20 (220,138) 11.30-18.20
Terminated or canceled . . . . . . (12,654) -- (8,000) -- (80,493) --
-------- -------- --------
Balance at December 31 . . . . . . 798,038 17.00-30.38 684,339 14.80-29.88 518,297 14.80-23.50
======== ======== ========
</TABLE>
An optionee may pay the option exercise price by tendering stock of
the Company having a market value equal to the exercise price. The
optionee must have held the tendered stock for at least six months
before it can be used to exercise an option. Transactions under this
program are accounted for as the purchase and reissuance of treasury
stock. The following is a summary of activity:
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Shares tendered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,399 23,954 74,933
Shares issued under the stock option plans (including
reissued treasury stock). . . . . . . . . . . . . . . . . . . . . . . . 75,720 37,891 108,759
</TABLE>
An optionee also may borrow the amount of the option exercise price
from the Company. The loans under this program bear interest at the
Company's base rate adjusted quarterly and mature annually. Although
the Company reserves the right not to renew any loan at maturity, it is
the Company's present intention to allow each borrowing to be renewed
for additional annual periods. At a minimum, Company stock valued at
125% of the loan amount must collateralize the loan. Such loans, which
amounted to $1,795,000 and $1,069,000 at December 31, 1993 and 1992,
respectively are reported as a reduction of stockholders' equity.
The Fourth Financial Corporation 1993 Non-Employee Directors Stock
Option Plan (the "Directors Option Plan") was approved and adopted in
1993. The plan will terminate, for the purposes of granting options,
in ten years unless the plan is earlier terminated by the Board of
Directors.
The Directors Option Plan provides that each year, on the first
Monday following the Company's annual meeting of stockholders, each
non-employee director of the Company will automatically receive an
option to acquire 2,000 shares of the Company's common stock and each
non-employee director of the Company's subsidiaries will automatically
receive an option to acquire 1,000 shares of the Company's common
stock. A total of 500,000 shares of common stock were reserved for
issuance under the Directors Option Plan.
On April 26, 1993 twelve non-employee directors of the Company
received an aggregate of 24,000 options and 20 non-employee directors
of the Company's subsidiaries received an aggregate of 20,000 options
for a total of 44,000 shares at an exercise price of $29.50. Each
option was immediately exercisable and will expire ten years from the
date of grant. No options were exercised in 1993.
Under the 1988 Employee Stock Purchase Plan, which expired in April,
1993, and the 1993 Employee Plan which replaced it, employees are
offered the option to purchase shares of the Company's common stock at
85% of the lower of the fair market value of such shares on the date
granted or one year thereafter. Options issued under the plan are
exercisable one year from the date of grant. At December 31, 1993,
750,000 shares were reserved for issuance, including 180,597 shares
under option. No options under the plan were exercisable at December
31, 1993. Additional data regarding the Employee Stock Purchase Plan
are as follows:
<TABLE>
<CAPTION>
Shares Under Option
-------------------------------------------------------------------------
1993 1992 1991
----------------------- ----------------------- -----------------------
Price Price Price
Number Per Share Number Per Share Number Per Share
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1. . . . . . . 165,078 $23.06 214,611 $16.36 150,467 $21.89
Granted . . . . . . . . . . . . . 192,109 24.81 178,534 23.06 263,374 16.36
Exercised . . . . . . . . . . . . (71,259) 23.06 (111,612) 16.36 (42,117) 16.36
Terminated or canceled. . . . . . (105,331) -- (116,455) -- (157,113) --
-------- -------- --------
Balance at December 31. . . . . . 180,597 24.81 165,078 23.06 214,611 16.36
======== ======== ========
</TABLE>
17 - Earnings Per Common Share
Earnings per common share are based on the following weighted average
numbers of shares outstanding.
<TABLE>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . 25,733,838 25,310,475 24,417,006
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . 29,764,552 28,897,968 25,202,528
</TABLE>
Primary earnings per common share were computed by dividing net
income applicable to common and common-equivalent shares by the
weighted average common and common-equivalent shares outstanding during
the period (common share equivalents include CLC's preferred stock and
WNB's 1987 preferred stock). Fully diluted earnings per common share
were computed by adjusting net income for interest expense (net of
income taxes) associated with CLC's and WNB's convertible debt. The
adjusted net income was then divided by the weighted average of common
and common-equivalent shares outstanding plus the number of shares
which would have been outstanding during the year had the Class A
convertible preferred stock, the CLC and WNB convertible notes and
debentures, and WNB's 1989 preferred stock been converted in accordance
with their respective governing instruments. Stock options outstanding
have been excluded from the computations as they were not materially
dilutive.
CLC's 9.5% convertible capital debentures were convertible into
common stock based on the net book value (as defined by the debenture)
of CLC. The $300,000 of debentures outstanding in March 1993 were
converted to CLC common stock and were exchanged for the Company's
stock (14,683 shares) in the business combination.
WNB's convertible notes were convertible into common stock at $4.00
per share. The $61,247 of notes outstanding in October 1993 were
converted to WNB common stock and were exchanged for the Company's
stock (6,134 shares) in the business combination. At December 31,
1991, $593,677 of convertible debentures bearing interest at 12% were
outstanding. These debentures were repaid during 1992.
The adjustment of net income for CLC's and WNB's convertible debt
interest expense (net of income taxes) was as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
(In thousands)
<S> <C> <C> <C>
Interest expense adjustment . . . . . . . . . . . . . . . . . . . $ 4 $ 85 $264
</TABLE>
18 - Dividends Per Common Share
Dividends per common share represent the Company's historical
dividends declared without adjustment for the poolings of interests.
The following table presents dividends declared by entities pooled
during 1993 and 1992 prior to combination with the Company.
<TABLE>
<CAPTION>
1993 1992 1991
--------------------- --------------------- ---------------------
Per Per Per
Equivalent Equivalent Equivalent
Pooled Entity Historical Share Historical Share Historical Share
- --------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
SBC . . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ -- $ -- $ --
NHB . . . . . . . . . . . . . . . . . . .43 .48 -- -- -- --
CLC . . . . . . . . . . . . . . . . . . .93 .72 -- -- -- --
WNB . . . . . . . . . . . . . . . . . . -- -- -- -- -- --
PBI . . . . . . . . . . . . . . . . . . .99 .81 .15 .12 n/a n/a
KNB . . . . . . . . . . . . . . . . . . n/a n/a 3.06 .22 -- --
MHB . . . . . . . . . . . . . . . . . . n/a n/a 1.51 .44 -- --
UBK . . . . . . . . . . . . . . . . . . n/a n/a 17.78 .61 3.50 .12
FNC . . . . . . . . . . . . . . . . . . n/a n/a .25 .44 -- --
</TABLE>
19 - Restrictions on Intercompany Funds Transfers
Restrictions imposed by federal law limit the transfer of funds to
the Company and certain other affiliates from the subsidiary banks in
the form of loans or other extensions of credit, investments, and
purchases of assets. Transfers by the subsidiary banks to the Company
or any such single affiliate may not exceed 10% and transfers in the
aggregate may not exceed 20% of a bank's capital, surplus, and
undivided profits, after adding back the allowance for credit losses
and subtracting certain intangibles. Based on these limitations,
approximately $52,949,000 was available for transfer to the Company at
December 31, 1993. In addition, the approval of the Comptroller of the
Currency is required if dividends declared by either of the Company's
national bank subsidiaries in 1994 exceed the bank's net profits for
that year combined with its retained net profits for 1992 and 1993. In
1994, the subsidiary banks may distribute to the Company (in addition
to their 1994 net profits) an aggregate of approximately $15,764,000 in
dividends without approval from regulatory agencies.
20 - Financial Instruments with Off-Balance-Sheet Risk
In the normal course of business in meeting the financing needs of
its customers and managing its own exposure to fluctuations in interest
rates, the Company is a party to various financial instruments. These
instruments involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in the Statements
of Condition. The contract or notional amounts of these instruments
are an indicator of the Company's activities in particular classes of
financial instruments. The following schedule summarizes the contract
or notional amount of these instruments.
<TABLE>
<CAPTION>
Contract or
Notional Amount
-------------------------
December 31,
-------------------------
1993 1992
---------- ----------
(In thousands)
<S> <C> <C>
Commitments to extend credit:
Standby letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 91,422 $ 75,614
Commercial letters of credit. . . . . . . . . . . . . . . . . . . . . . . . . . . 13,728 19,827
Credit card lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325,338 306,755
Other loan commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,122,794 800,973
Commitments to sell loans:
Commitments to sell residential mortgage loans. . . . . . . . . . . . . . . . . . 10,159 2,499
Interest rate instruments:
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251,000 1,000
Forward foreign currency contracts:
Commitments to purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,717 67
Commitments to sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
</TABLE>
Commitments to extend credit are agreements to lend to a customer as
long as the customer is in compliance with the conditions established
in the contract. Commitments generally have fixed expiration dates or
other termination clauses and may require payment of a fee. Since many
of the commitments are expected to expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash
requirements. The Company uses the same credit policies in making
commitments as it does for direct extensions of credit. The Company
evaluates each customer's creditworthiness on a case-by-case basis.
The amount of collateral obtained, if deemed necessary by the Company
upon extension of credit, is based on management's credit evaluation of
the customer. Collateral held varies but may include accounts
receivable, inventory, real estate, equipment, and income-producing
commercial properties.
Standby letters of credit irrevocably obligate the issuing bank to
pay a third-party beneficiary when a customer fails to repay an
outstanding debt instrument or fails to perform some contractual non-
financial obligation. Standby letters of credit are primarily issued
to secure bonds from insurance companies, provide security for self-
insured portions of workers compensation insurance, and collateralize
guaranties or secure loans to other financial institutions. A
commercial letter of credit is issued to facilitate trade or commerce.
Under the terms of a commercial letter of credit, drafts will be drawn
when the underlying transaction is consummated as intended. The credit
risk involved in issuing letters of credit is essentially the same as
that involved in extending loans to customers. Substantially all
letters of credit mature within two years.
At December 31, 1993, the Company was committed under agreements
with the Federal National Mortgage Association to sell $13.5 million of
30-year fixed-rate residential mortgage loans with coupons ranging from
6.71% to 7.30%. Residential mortgage loans held for sale included $3.3
million of such loans at December 31, 1993. These commitments were all
met in January 1994.
Subsequent to December 31, 1993, the Company entered into similar
contracts for the sale of $106.8 million of 15-year fixed-rate
residential mortgage loans with rates of 7.00% or less. The maturities
of these commitments extend to March 14, 1994. These commitments were
satisfied by residential mortgage loans held for sale at December 31,
1993.
Single-family mortgage loans which the Company's subsidiaries
originate for sale are sold without recourse. However, the Company is
obligated under recourse provisions related to $13,253,000 of loans it
is servicing. These loans were included in the $371,000,000 mortgage
loan servicing portfolio purchased during 1990. A pooled company was
also committed to $334,000 of recourse loans at December 31, 1993. The
Company assesses the credit risk of these and other loan commitments
when evaluating the adequacy of the allowance for credit losses.
Interest rate swaps involve the contractual exchange of fixed and
floating rate interest payments based on an established notional
amount. The Company uses interest rate swaps to modify the interest
sensitivity position inherent in the repricing characteristics of
specific assets or liabilities. The net interest received or paid on
the interest rate swaps is accounted for as an adjustment to the
interest income or interest expense on the assets or liabilities,
respectively, that the swap was intended to modify.
At December 31, 1993 and 1992 interest rate swaps were as follows:
<TABLE>
<CAPTION>
December 31, 1993
-----------------------------------------------------------------
Weighted Estimated
Notional Average Weighted Average Rate Fair
Amount Term Received Paid Value
---------- -------- ---------- --------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Receive fixed rate . . . . . . . . . . . . $ 51,000 29 months (1) 5.89% 3.47% 157
Pay fixed rate . . . . . . . . . . . . . . 200,000 10 months 3.44% 3.94% (722)
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
-----------------------------------------------------------------
Weighted Estimated
Notional Average Weighted Average Rate Fair
Amount Term Received Paid Value
---------- -------- ---------- --------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Receive fixed rate . . . . . . . . . . . . $ 1,000 52 months 10.00% 3.13% 133
<FN>
________
(1)The term of $50.0 million of these swaps may extend up to an additional 48 months after the initial term depending on the
variable rate index at the end of the initial term and each quarter thereafter as compared to that same index when the swaps
were initiated.
</TABLE>
The Company enters into forward foreign currency contracts to assist
customers with their foreign currency needs related to foreign
operations, exporting, or importing. These customer-driven contracts
are generally hedged with offsetting contracts. The market value gains
and losses relating to currency exchange contracts are recorded at
settlement in "Other noninterest income." The contracts held at
December 31, 1993 all matured in January 1994.
21 - Commitments and Contingencies
At December 31, 1993, the Company was committed to make future
rental payments under several long-term lease agreements for land,
buildings, and equipment. There were no material capital leases.
Future minimum rental payments required under operating leases that
have initial or remaining non-cancelable lease terms in excess of one
year as of December 31, 1993 are as follows:
Years ending December 31, (In thousands)
------------------------- --------------
1994 . . . . . . . . . . . . . $ 3,926
1995 . . . . . . . . . . . . . 3,297
1996 . . . . . . . . . . . . . 2,909
1997 . . . . . . . . . . . . . 2,162
1998 . . . . . . . . . . . . . 1,633
Later years . . . . . . . . . 7,826
------
Total . . . . . . . . . . . $21,753
=======
Total rental expense (net of sublease income, which is not material)
amounted to $5,670,000, $6,373,000, and $5,736,000 for 1993, 1992, and
1991, respectively.
The Company and its subsidiaries are defendants in various matters
of litigation which arose in the ordinary course of operations. Some
of the pending litigation seeks damages in substantial amounts, but
management, after consultation with legal counsel, does not anticipate
that potential liabilities, if any, arising from these claims would
have a material effect on the results of operations of the Company.
22 - Condensed Financial Information of Parent Corporation
In the following condensed financial information of Fourth Financial
Corporation (parent only), investments in subsidiaries are recorded
using the equity method of accounting.
Fourth Financial Corporation (Parent Only)
Condensed Statements Of Condition
<TABLE>
<CAPTION>
December 31,
-------------------------
1993 1992
----------- ----------
(In thousands)
<S> <C> <C>
Assets:
Cash in subsidiary banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100 $ 248
Interest-bearing deposits in subsidiary banks. . . . . . . . . . . . . . . . . . . 1,856 4,665
Securities repurchase agreement with subsidiary bank . . . . . . . . . . . . . . . 23,100 55,900
Investments securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,145 104
Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,281 13,215
Investments in bank subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 480,601 447,782
Investments in other subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 46,615 5,329
Other assets (including receivables from subsidiaries
of $4,718 in 1993 and $945 in 1992) . . . . . . . . . . . . . . . . . . . . . . . 9,725 4,311
Cost in excess of net assets acquired. . . . . . . . . . . . . . . . . . . . . . . 39,625 31,201
-------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $621,048 $562,755
======== ========
Liabilities And Stockholders' Equity:
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ 425
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 5,850
Other liabilities (including amounts owed to subsidiaries
of $314 in 1993 and $977 in 1992) . . . . . . . . . . . . . . . . . . . . . . . . 9,578 8,158
Long-term debt (including notes due subsidiaries
of $0 in 1993 and $634 in 1992) . . . . . . . . . . . . . . . . . . . . . . . . . 13,125 22,509
-------- --------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,703 36,942
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598,345 525,813
-------- --------
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . . . . . $621,048 $562,755
======== ========
</TABLE>
<TABLE>
<CAPTION>
Fourth Financial Corporation (Parent Only)
Condensed Statements of Income
Year Ended December 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Dividends from subsidiaries:
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 74,595 $ 56,122 $ 47,439
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470 250 600
Fee income (principally from subsidiaries) . . . . . . . . . . . . . . . . 57,498 39,370 31,752
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,760 3,555 1,253
Investment securities gains. . . . . . . . . . . . . . . . . . . . . . . . 161 -- --
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 -- --
-------- -------- --------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,799 99,297 81,044
-------- -------- --------
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . . 33,023 21,660 19,457
Furniture and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . 10,282 8,204 8,832
Net occupancy (includes rent paid to bank subsidiaries
of $2,371 in 1993, $1,632 in 1992, and $1,400 in 1991). . . . . . . . . . 3,039 2,024 1,593
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,180 1,780 1,635
Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,429 2,407 1,897
Fees paid to bank subsidiaries . . . . . . . . . . . . . . . . . . . . . . 42 196 307
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,869 3,171 4,621
Nonoperating charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,358 2,386 1,219
Amortization of cost in excess of net assets acquired. . . . . . . . . . . 2,680 2,628 2,024
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,577 6,718 4,425
-------- -------- --------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,479 51,174 46,010
-------- -------- --------
Income before income taxes, cumulative effect of a change in
accounting principle, and undistributed net income of subsidiaries. . . . 63,320 48,123 35,034
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,863 1,293 3,634
Cumulative effect of a change in accounting for income taxes . . . . . . . 681 384 --
Net income of subsidiaries in excess of (less than) dividends received . . 7,827 13,506 (6,559)
-------- -------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,691 $ 63,306 $32,109
======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
Fourth Financial Corporation (Parent Only)
Condensed Statements of Cash Flows
Year Ended December 31,
--------------------------------
1993 1992 1991
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash Flows From Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,691 $ 63,306 $ 32,109
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . 7,643 6,315 6,650
Write-down of premises and equipment . . . . . . . . . . . . . . . . 1,250 -- --
Net income of subsidiaries (in excess of) less than
dividends received. . . . . . . . . . . . . . . . . . . . . . . . . (7,827) (13,506) 6,559
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . (889) (275) (365)
Investment securities gains. . . . . . . . . . . . . . . . . . . . . (161) -- --
(Gain) loss on sale of equipment . . . . . . . . . . . . . . . . . . (8) 377 1
Change in assets and liabilities, net of effects
from purchases of acquired entities:
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,517) (720) 606
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 1,420 1,281 1,720
-------- -------- --------
Net cash provided by operating activities. . . . . . . . . . . . 72,602 56,778 47,280
-------- -------- --------
Cash Flows From Investing Activities:
Purchase of banks, net of cash acquired. . . . . . . . . . . . . . . . (30,043) (9,951) --
Purchases of premises and equipment. . . . . . . . . . . . . . . . . . (11,001) (3,310) (2,842)
Proceeds from sale of premises and equipment . . . . . . . . . . . . . 25 1,559 37
Purchases of investment securities . . . . . . . . . . . . . . . . . . (901) -- --
Proceeds from sales of investment securities . . . . . . . . . . . . . -- -- 5
Investments in subsidiaries. . . . . . . . . . . . . . . . . . . . . . (15,290) (57,520) (1,335)
-------- -------- --------
Net cash used in investing activities. . . . . . . . . . . . . . (57,210) (69,222) (4,135)
-------- -------- --------
Cash Flows From Financing Activities:
Net change in commercial paper . . . . . . . . . . . . . . . . . . . . (425) (2,751) 821
Net change in other borrowings . . . . . . . . . . . . . . . . . . . . (5,850) (6,312) (45,550)
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . -- -- 35,000
Repayment of long-term debt. . . . . . . . . . . . . . . . . . . . . . (13,628) (11,043) (6,005)
Acquisition of treasury stock. . . . . . . . . . . . . . . . . . . . . (3,245) -- (697)
Dividends on common stock. . . . . . . . . . . . . . . . . . . . . . . (22,705) (16,768) (16,434)
Dividends on preferred stock . . . . . . . . . . . . . . . . . . . . . (7,000) (5,368) --
Proceeds from issuance of preferred stock, net of offering costs . . . -- 96,920 --
Proceeds from exercise of stock options. . . . . . . . . . . . . . . . 3,407 2,470 2,268
Net change in stock option loans . . . . . . . . . . . . . . . . . . . (726) (18) (346)
Capital transactions of pooled companies . . . . . . . . . . . . . . . (977) (415) 926
-------- -------- --------
Net cash provided by (used in) financing activities. . . . . . . (51,149) 56,715 (30,017)
-------- -------- --------
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . (35,757) 44,271 13,128
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . 60,813 16,542 3,414
-------- -------- --------
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . $ 25,056 $ 60,813 $ 16,542
======== ======== ========
Supplemental Disclosures:
Cash and cash equivalents:
Cash in subsidiary banks . . . . . . . . . . . . . . . . . . . . . . $ 100 $ 248 $ 324
Interest-bearing deposits in subsidiary banks. . . . . . . . . . . . 1,856 4,665 16,218
Securities repurchase agreements with subsidiary bank. . . . . . . . 23,100 55,900 --
-------- -------- --------
Total cash and cash equivalents. . . . . . . . . . . . . . . . . $ 25,056 $ 60,813 $ 16,542
======== ======== ========
Cash payments for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,900 $ 3,246 $ 4,309
======== ======== ========
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,689 $ 16,094 $ 9,321
======== ======== ========
Detail of entities acquired:
Fair value of bank stock and other assets acquired . . . . . . . . . $ 20,986 $ 7,784 $ --
Cost in excess of net assets acquired. . . . . . . . . . . . . . . . 9,328 2,167 --
-------- -------- --------
Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,314 $ 9,951 $ --
======== ======== ========
</TABLE>
FOURTH FINANCIAL CORPORATION
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Fourth Financial Corporation
We have audited the accompanying consolidated statements of
condition of Fourth Financial Corporation as of December 31, 1993 and
1992 and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three years in the
period ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We did not audit the 1992 financial statements of Commercial Landmark
Corporation, Western National Bancorporation, Inc. or Ponca Bancshares,
Inc., which statements reflect total assets and interest income
constituting 12% and 15%, respectively, of the related consolidated
totals. We did not audit the 1991 financial statements of Commercial
Landmark Corporation, Western National Bancorporation, Inc., Fourth
National Corporation, United Bank of Kansas, Inc. or KNB Bancshares,
Inc., which statements reflect interest income constituting 22% of the
related consolidated total. Those statements were audited by other
auditors and our opinion, insofar as it relates to data included for
these companies, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other
auditors, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Fourth
Financial Corporation at December 31, 1993 and 1992, and the
consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles.
As discussed in Notes 1, 5 and 14 to the consolidated financial
statements, in 1993 the Company changed its method of accounting for
income taxes and investment securities.
/s/ Ernst & Young
Wichita, Kansas
January 20, 1994
WESTERN NATIONAL BANCORPORATION, INC.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Western National Bancorporation, Inc.:
We have audited the consolidated balance sheets of Western National
Bancorporation, Inc. (Western, an Oklahoma corporation) and subsidiary
as of December 31, 1992 and 1991, and the related consolidated
statements of income, stockholders' equity and cash flows for each of
the three years in the period ended December 31, 1992 (such financial
statements are not presented herein) prior to the pooling of Western
with Fourth Financial Corporation (see Note 2 to the consolidated
financial statements of Fourth Financial Corporation contained herein).
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Western
National Bancporation, Inc. and subsidiary as of December 31, 1992 and
1991, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1992, in conformity
with generally accepted accounting principles.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
Tulsa, Oklahoma
March 11, 1993
COMMERCIAL LANDMARK CORPORATION AND SUBSIDIARIES
Independent Auditors' Report
The Board of Directors and Stockholders
Commercial Landmark Corporation and
Subsidiaries
Muskogee, Oklahoma
We have audited the accompanying consolidated balance sheets of
Commercial Landmark Corporation and Subsidiaries as of December 31,
1992 and 1991, and the related consolidated statements of income,
changes in stockholders' equity, and cash flows for the years then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Commercial Landmark Corporation and Subsidiaries as of December 31,
1992 and 1991, and the results of their operations and their cash
flows, for the years then ended, in conformity with generally accepted
accounting principles.
/s/ Sartain Fischbein & Co.
February 19, 1993 SARTAIN FISCHBEIN & CO.
PONCA BANCSHARES, INC.
Independent Auditors' Report
The Board of Directors
Ponca Bancshares, Inc.
Ponca, City, Oklahoma
We have audited the accompanying consolidated balance sheet of Ponca
Bancshares, Inc. and Subsidiary as of December 31, 1992 and the related
consolidated statements of earnings, stockholders' equity and cash
flows for the period from inception (February 4, 1992) to December 31,
1992. These financial statements are the responsibility of management.
Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Ponca Bancshares, Inc. and Subsidiary as of December 31, 1992, and
the consolidated results of their operations and their cash flows for
the period then ended in conformity with generally accepted accounting
principles.
/S/ GRA, Thompson, White & Co., P.A.
GRA, Thompson, White & Co., P.A.
September 16, 1993
FOURTH NATIONAL CORPORATION
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
Fourth National Corporation:
We have audited the consolidated balance sheets of Fourth National
Corporation (Fourth, a Delaware corporation) and subsidiaries as of
December 31, 1991 and 1990, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1991 (such financial statements
are not presented herein) prior to the pooling of Fourth with Fourth
Financial Corporation (see Note 2 to the consolidated financial
statements of Fourth Financial Corporation contained herein). These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Fourth
National Corporation and subsidiaries as of December 31, 1991 and 1990,
and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1991, in conformity
with generally accepted accounting principles.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
Tulsa, Oklahoma
February 7, 1992
UNITED BANK OF KANSAS, INC. AND SUBSIDIARY
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
United Bank of Kansas, Inc.
We have audited the consolidated balance sheet of United Bank of
Kansas, Inc. and Subsidiary as of December 31, 1991, and the related
consolidated statements of operations, changes in stockholders' equity
and cash flows for the year ended December 31, 1991 (not presented
herein). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of United Bank of Kansas, Inc. and Subsidiary as of December 31, 1991,
and the consolidated results of their operations and their consolidated
cash flows for the year ended December 31, 1991 in conformity with
generally accepted accounting principles.
As discussed in Note B to the financial statements, the Company owns
certain municipal bonds which are in default and the subject of
litigation. The Company currently reflects these bonds in their
financial statements at their estimated market value of $2,528,950.
The ultimate outcome of the litigation and the amount ultimately
recovered on these bonds cannot presently be determined.
/s/ Grant Thornton
Grant Thornton
Wichita, Kansas
January 23, 1992
KNB BANCSHARES, INC. AND SUBSIDIARIES
INDEPENDENT AUDITORS' REPORT
KNB Bancshares, Inc. and Subsidiaries:
We have audited the consolidated statements of operations, changes in
stockholders' equity and cash flows of KNB Bancshares, Inc. and
Subsidiaries ("Bancshares and Subsidiaries") for the year ended
December 31, 1991 (none of which are presented herein). These
consolidated financial statements are the responsibility of the
management of Bancshares and Subsidiaries. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the results of operations and cash flows of
Bancshares and Subsidiaries for the year ended December 31, 1991 in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche
Deloitte & Touche
February 7, 1992
<TABLE>
<CAPTION>
FOURTH FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
Year Ended December 31,
----------------------------------------------------------
1993 1992(1) 1991(1) 1990(1) 1989(1)
---------- ---------- ---------- ---------- ----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Summary Income Statement Information:
Interest income . . . . . . . . . . . . . . . . . . $ 433,467 $ 427,119 $ 479,568 $ 471,191 $ 402,947
Interest expense. . . . . . . . . . . . . . . . . . 175,501 192,397 271,209 292,655 243,235
Net interest income . . . . . . . . . . . . . . . . 257,966 234,722 208,359 178,536 159,712
Net interest income (fully tax-equivalent)(2) . . . 267,929 245,431 221,323 193,381 175,013
Provision for credit losses . . . . . . . . . . . . 7,056 21,343 43,665 49,000 27,397
Noninterest income. . . . . . . . . . . . . . . . . 89,103 83,014 85,896 68,290 55,009
Noninterest expense(3). . . . . . . . . . . . . . . 252,986 216,926 210,341 187,155 157,474
Net income before extraordinary item and cumula-
tive effect of a change in accounting principle. . 65,182 60,933 30,712 5,192 21,425
Net income. . . . . . . . . . . . . . . . . . . . . 75,691 63,306 32,109 9,092 21,425
Net income applicable to common stock . . . . . . . 68,691 57,355 32,109 9,092 21,425
Per Common Share Data(4):
Earnings per common and common equivalent share:
Primary . . . . . . . . . . . . . . . . . . . . . $ 2.67 $ 2.27 $ 1.32 $ .41 $ 1.00
Fully diluted . . . . . . . . . . . . . . . . . . 2.54 2.19 1.28 .40 1.00
Fully diluted as originally reported(1) . . . . . 2.54 2.16 1.24 .98 1.99
Common dividend(5). . . . . . . . . . . . . . . . . .98 .88 .88 .88 .82
Book value(6) . . . . . . . . . . . . . . . . . . . 18.83 16.74 15.39 14.80 15.47
Average common and common equivalent
shares outstanding (000s). . . . . . . . . . . . . 25,734 25,310 24,417 22,223 21,345
Year-end common shares outstanding (000s) . . . . . 26,464 25,218 24,425 24,204 21,901
Year-end common shares outstanding
assuming full dilution (000s). . . . . . . . . . . 29,912 29,578 25,441 24,862 21,901
Earnings Performance Ratios(7):
Return on assets. . . . . . . . . . . . . . . . . . 1.16% 1.10% .57% .17% .50%
Return on total stockholders' equity. . . . . . . . 13.74 13.00 8.66 2.62 6.57
Return on common stockholders' equity . . . . . . . 15.32 14.35 8.72 2.64 6.59
Summary Statement of Condition Information:
Year-end assets . . . . . . . . . . . . . . . . . . $6,742,873 $6,568,782 $5,627,798 $5,763,227 $4,664,372
Year-end loans and leases . . . . . . . . . . . . . 3,257,787 2,841,036 2,795,615 2,988,966 2,581,643
Year-end allowance for credit losses. . . . . . . . 66,368 73,055 69,480 62,721 42,395
Year-end long-term debt . . . . . . . . . . . . . . 13,989 29,340 47,105 18,798 28,207
Year-end common stockholders' equity. . . . . . . . 498,345 422,172 375,999 358,266 338,748
Year-end stockholders' equity . . . . . . . . . . . 598,345 525,813 379,086 360,777 341,259
Average assets. . . . . . . . . . . . . . . . . . . 6,535,871 5,769,862 5,630,089 5,204,592 4,301,151
Average loans and leases. . . . . . . . . . . . . . 2,953,470 2,822,525 2,914,788 2,835,045 2,455,848
Average investment securities . . . . . . . . . . . 2,917,071 2,300,282 1,922,956 1,433,033 1,074,579
Average deposits. . . . . . . . . . . . . . . . . . 5,319,195 4,901,015 4,932,013 4,502,677 3,676,915
Average common stockholders' equity . . . . . . . . 448,509 399,551 368,165 344,029 325,176
Average stockholders' equity. . . . . . . . . . . . 550,821 487,035 370,676 346,540 326,175
Asset Quality Ratios:
Allowance for credit losses/year-end loans
and leases . . . . . . . . . . . . . . . . . . . . 2.04% 2.57% 2.49% 2.10% 1.64%
Nonperforming assets/year-end loans plus other
real estate and nonperforming assets . . . . . . . 1.34 2.01 3.50 4.51 4.10
Allowance for credit losses/year-end
nonperforming loans. . . . . . . . . . . . . . . . 194.50 188.88 115.21 74.52 73.69
Net charge-offs/average loans and leases. . . . . . .58 .85 1.28 1.19 1.03
Capital Ratios:
Stockholders' equity/assets(7). . . . . . . . . . . 8.43% 8.44% 6.58% 6.66% 7.58%
Leverage ratio(8) . . . . . . . . . . . . . . . . . 7.61 7.99 8.41 -- --
Tier I risk-based capital(9). . . . . . . . . . . . 12.97 13.18 14.25 -- --
Total risk-based capital(9) . . . . . . . . . . . . 14.22 14.43 15.50 -- --
Common dividend payout ratio(10). . . . . . . . . . 36.70 38.77 66.67 214.63 82.00
<FN>
__________
(1) Prior year financial statements have been restated to reflect poolings of interests, refer to Notes 2 and 3 of the
Notes to Consolidated Financial Statements. Fully diluted earnings per share as originally reported represent
historical earnings per share as reported in the Company's annual report for the year indicated.
(2) Stated on a tax-equivalent basis assuming a marginal tax rate of 35% in 1993 and 34% in previous years.
(3) Noninterest expense included nonoperating charges of $12.7 million, $5.6 million and $7.0 million for 1993, 1992,
and 1991, respectively.
(4) Adjusted for the five-for-four stock split effected as a 25% stock dividend and paid on March 1, 1990.
(5) Dividends per common share represent historical dividends declared without adjustment for the poolings of interests.
(6) Refer to Note 1 of the Notes to Consolidated Financial Statements regarding the adoption of FAS No. 115 which
increased stockholders' equity by $25,148,000 at December 31, 1993.
(7) Based on daily averages for all statement of condition items.
(8) Tier I capital/fourth quarter average assets less certain intangibles.
(9) Tier I capital is composed of common stockholders' equity less certain intangibles plus preferred stockholders'
equity. Tier I capital does not include any unrealized gain or loss on securities available for sale, as regulators
had not officially adopted the change by year-end. Total capital is Tier I capital plus the allowance for credit
losses (limited to 1.25% of risk-weighted assets). Both capital amounts are divided by risk-weighted assets.
(10) Common dividend per share divided by primary earnings per share.
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Performance Summary
Net income for 1993 was $75.7 million compared to $63.3 million
in 1992 and $32.1 million in 1991. Fully diluted earnings per share
were $2.54, $2.19, and $1.28 for 1993, 1992, and 1991, respectively.
For 1993 return on assets and return on common equity were 1.16% and
15.32%, respectively. Return on assets was 1.10% for 1992 and .57% for
1991; return on common equity was 14.35% and 8.72% for the respective
prior periods.
These financial results reflect acquisitions accounted for as
poolings of interests for the entire three-year period, as prior
periods have been restated, with the exception that periods prior to
January 1, 1992 have not been restated for the results of operations of
Ponca Bancshares, Inc. which were not material. However, acquisitions
accounted for using the purchase method of accounting are only included
in the results of operations for the periods subsequent to acquisition.
During 1991, 1992, and 1993, the Company completed the fifteen business
combinations detailed in the following schedule.
<TABLE>
<CAPTION>
Number of
Acquisition Company Accounting Assets Cash Shares
Date Company Acquired/Location Abbreviation Method Acquired Paid Issued
- ------------- ------------------------------------ ------------ ---------- ---------- ---------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
1991 -
- ------
January 30 Citadel Bank of Independence, "CBI" Purchase $ 54,187 $ 3,966 --
Independence, KS
1992 -
- ------
July 31 Farmers and Merchants Bank, "FMB" Purchase 66,827 8,921 --
Colby, KS
September 9 KNB Bancshares, Inc., "KNB" Pooling 99,256 -- 267,390
Prairie Village, KS
October 30 Mission Hills Bancshares, Inc., "MHB" Pooling 94,762 -- 358,709
Mission Woods, KS
December 11 Southern Bancorp, Inc., "SBI" Purchase 64,510 9,951 --
Tulsa, OK
December 30 United Bank of Kansas, Inc., "UBK" Pooling 122,885 -- 663,739
Liberal, KS
December 31 Fourth National Corporation, "FNC" Pooling 368,325 -- 1,639,941
Tulsa, OK
1993 -
- ------
February 12 Southgate Banking Corporation, "SBC" Pooling 62,628 -- 451,310
Prairie Village, KS
May 14 Guaranty Bancorporation, "GB" Purchase 82,606 4,386 --
Tulsa, OK
May 28 Bancshares of Woodward, Inc., "BOW" Purchase 130,192 17,859 --
Woodward and Waukomis, OK
May 28 F&M Bank Services, Inc., "FBS" Purchase 61,565 8,068 --
Derby, KS
May 28 Nichols Hills Bancorporation, Inc., "NHB" Pooling 97,869 -- 469,906
Nichols Hills, OK
September 17 Commercial Landmark Corporation, "CLC" Pooling 465,060 -- 1,874,812
Muskogee, OK
December 3 Western National Bancorporation, Inc., "WNB" Pooling 206,288 -- 1,110,695(1)
Tulsa, OK
December 10 Ponca Bancshares, Inc., "PBI" Pooling 117,275 -- 478,395
Ponca City, OK
---------- ------- ---------
$2,094,235 $53,151 7,314,897
========== ======= =========
<FN>
- ----------
(1) An additional 108,748 shares were issued on December 3, 1993 to
acquire the minority interest of WNB's bank subsidiary.
</TABLE>
Five deposit assumption transactions also were completed during the
three-year period ended December 31, 1993.
<TABLE>
<CAPTION>
Transaction Liabilities Cash
Date Location Assumed Paid
--------------- --------------------------- ------------- ------------
(In thousands)
<S> <C> <C> <C>
February 15, 1991 Wichita, KS $168,568 $ 1,848
February 15, 1991 Garden City, KS 45,126 --
March 27, 1992 Hays, KS 46,484 57
December 31, 1992 Tulsa, OK 349,355 14,856
April 2, 1993 Mission, KS 99,399 1,141
-------- -------
$708,932 $17,902
======== =======
</TABLE>
Net income for each of the last three years included
extraordinary gains and nonoperating charges. A new accounting
standard, Financial Accounting Standard ("FAS") No. 109 - Accounting
for Income Taxes, was implemented effective January 1, 1993 and
resulted in an addition to income of $10.5 million ($.35 per fully
diluted share). Two of the companies acquired in pooling-of-interests
transactions in 1993 had elected to adopt FAS No. 109 early, resulting
in the $2.4 million ($.08 per fully diluted share) income item in 1992.
An extraordinary item of $1.4 million ($.05 per fully diluted share) in
1991 reflects the utilization of a net operating loss carryforward by
one of the pooled companies.
A nonoperating charge of $12.7 million (after-tax $8.6 million,
or $.29 per fully diluted share) was taken during 1993 to record
merger, integration, and restructuring charges associated with current-
year acquisitions and to accelerate core deposit intangible
amortization, data processing hardware depreciation, and software
amortization. The merger, integration, and restructuring charges
include premises and equipment write-downs associated with dispositions
of excess facilities and equipment, severance and other compensation,
and systems conversion costs. Both 1992 and 1991 financial results
also reflected nonoperating charges. The 1992 nonoperating charge of
$5.6 million (after-tax $3.7 million, or $.13 per fully diluted share)
was recorded to recognize costs associated with the consolidation of
Oklahoma data processing, operations, and staff functions. This
expense also includes a loss from the disposal of excess facilities and
a computer write-down. The 1991 nonoperating charge of $7.0 million
(after-tax $4.6 million, or $.18 per fully diluted share) was
associated with a work force reduction and included early retirement
benefits and severance compensation.
The increased income from operations for the current year was
principally attributable to increased net interest income, improved
credit quality, and earnings contributions from acquisitions made in
prior years. Net interest income in 1993 increased by $23.3 million to
total $258.0 million for 1993 as compared to $234.7 million for last
year. The increase in net interest income was principally related to
the increased volume of interest-earning assets. Total average
interest-earning assets were $5.9 billion for 1993, a $687.9 million,
or 13.1%, increase over 1992. Comparing 1993 and 1992, average loans
and leases increased $130.9 million, while average investment
securities increased $616.8 million. The increased average assets were
principally funded by increases in average deposits of $418.2 million,
net federal funds purchased and securities sold under agreements to
repurchase of $194.3 million, and Federal Home Loan Bank borrowings of
$162.6 million. The increase in net interest income attributable to
the increased volume of interest-earning assets was partially offset by
a decrease in the net yield on earning assets to 4.52% in 1993 from
4.68% in 1992.
The provision for credit losses totaled $7.1 million and $21.3
million for 1993 and 1992, respectively. The 66.9% decrease in the
provision reflects continued improvement in credit quality as
demonstrated by a lower level of nonperforming assets and lower net
charge-offs in 1993 as compared to 1992, and the strong allowance for
credit losses. At December 31, 1993, nonperforming assets were $43.8
million or .65% of assets, down from $57.6 million or .88% of assets at
December 31, 1992. Net charge-offs declined 29.5% to total $17.0
million in 1993 from $24.1 million in 1992. The allowance for credit
losses was $66.4 million or 194.50% of nonperforming loans at December
31, 1993, compared to a ratio of 188.88% for 1992.
Noninterest income was $89.1 million in 1993, a $6.1 million
increase over the 1992 noninterest income of $83.0 million. Service
charges on deposit accounts increased $5.9 million; brokerage and
annuity sales commissions increased $1.8 million; and bank card fees
increased $1.1 million. The larger customer base plus aggressive sales
efforts resulted in a larger volume of service charge transactions,
expanded brokerage and annuity sales activities, and additional
merchant and credit cardholder sales volumes.
Operating expenses (noninterest expense less the nonoperating
charge and net costs of operations of other real estate and
nonperforming assets) increased 13.4% to total $236.7 million in 1993.
The Company's efficiency ratio (operating expense/fee income plus tax-
equivalent net interest income) was 66.57% for 1993 compared to 64.40%
for 1992. The current-year increase in the efficiency ratio
principally reflects the Company's substantial increase in acquisition
activity in the past two years and the resultant commitment of
resources to acquisitions. Specifically, the Company makes a
substantial initial investment towards identifying and managing the
credit and other significant business risks associated with
acquisitions, converting and consolidating the operations of the
acquired entities, and instilling the BANK IV credit and sales culture,
products, and services. In addition, entities acquired during 1993 and
1992, which increased total assets by over $2.0 billion or almost
30.3%, had a combined efficiency ratio of 71.5% resulting in a higher
ratio for the entire company.
The increased net income of $31.2 million reflected in a
comparison of results of operations for 1992 and 1991 also can be
attributed to increased net interest income and a decreased provision
for credit losses. The $26.4 million increase in net interest income
between 1992 and 1991 was due to an increased level of interest-free
sources of funds, such as demand deposits and stockholders' equity, and
the widening of spreads between the yields on earning assets and the
rates paid on interest-bearing liabilities. At $21.3 million, the 1992
provision for credit losses was $22.3 million less than the 1991
provision for credit losses. The 1991 provision for credit losses of
$43.7 million reflected the high level of nonperforming assets at
December 31, 1991 of $99.3 million. By year-end 1992 nonperforming
assets had declined to $57.6 million, and the ratio of the allowance
for credit losses to nonperforming loans had increased to 188.88% from
115.21% at December 31, 1991.
Net Interest Income
For 1993, net interest income amounted to $258.0 million,
representing an increase of $23.3 million or 9.9% over the $234.7
million earned during 1992. On a fully tax-equivalent basis, net
interest income increased 9.2% to total $267.9 million in 1993 from
$245.4 million in 1992. The increase in net interest income was
attributable to an increased level of interest-earning assets due to
loan growth, acquisitions, assumptions of savings and loan association
("S&L") and bank deposits, and increased borrowings associated with a
higher level of federal funds purchased and Federal Home Loan Bank
borrowings. However, the net yield on earning assets decreased to
4.52% in 1993 compared to 4.68% in 1992. The decrease in the net yield
on earning assets is principally attributable to a sustained period of
lower rates. The average cost of funds (interest expense/earning
assets) declined 71 basis points while the earning asset yield declined
87 basis points. The prevailing low interest rates also have
stimulated a high volume of mortgage loan originations and refinancings
nationwide. Although the Company has benefitted from the originations
and refinancings in its markets through increased loan fees, the
nationwide refinancings and originations have resulted in accelerated
prepayments on the Company's mortgage-backed securities. The net yield
has declined as the proceeds from these prepayments have been
reinvested at lower current rates, also reducing the net yield.
Net interest income of $234.7 million for 1992 represented an
increase of $26.3 million over the $208.4 million earned during 1991.
On a tax-equivalent basis, net interest income increased 10.9% to total
$245.4 million in 1992 from $221.3 million in 1991. The increase in
net interest income between 1992 and 1991 was due to an increased level
of interest-free sources of funds, such as demand deposits and
stockholders' equity, and the widening of spreads between the earning
asset yields and interest-bearing liability rates. As interest rates
declined during 1992, interest-bearing liabilities repriced faster than
interest-earning assets, causing the spread to widen to 3.96% (stated
on a tax-equivalent basis) in 1992 from 3.55% in 1991.
Loan fees included in net interest income amounted to $11.4
million, $8.4 million, and $5.6 million for 1993, 1992, and 1991,
respectively. The increase in loan fees reflected an increase in the
volume of residential mortgage loan originations and the refinancing of
existing mortgages, both of which were stimulated by the continuing
relatively low mortgage rates. The dollar volume of residential
mortgage loan originations increased $175.0 million or 87.2% between
1993 and 1992 and $125.4 million or 166.5% between 1992 and 1991.
The following table provides the dollar volume and the number of
residential mortgage loan originations during each of the last three
years.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1993 1992 1991
---------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C>
Residential mortgage loan originations:
Dollar volume . . . . . . . . . . . . . . . . . . . . . . . $375,647 $200,696 $75,321
Number of loans . . . . . . . . . . . . . . . . . . . . . . 5,659 3,062 1,124
</TABLE>
The following table summarizes the changes in net interest income
on a fully tax-equivalent basis, by major category of interest-earning
assets and interest-bearing liabilities, identifying changes related to
volumes, rates, and changes related to both volumes and rates.
Nonaccrual loans are included in the loan volumes used to calculate the
following analysis of net interest income; however, interest collected
on such loans is usually recorded as a reduction in loans outstanding
and is excluded from interest income.
<TABLE>
<CAPTION>
1993 vs 1992
---------------------------------------------
Change
Attributable to
Total ---------------------------------
Change Volume Yield/Rate Combination
-------- -------- ---------- -----------
(In thousands)
<S> <C> <C> <C> <C>
Increase (decrease) in:
Interest income:
Loans and leases(1) . . . . . . . . . . . . . . . . . $ (6,050) $ 12,112 $(17,217) $ (945)
Interest-bearing deposits in other
financial institutions . . . . . . . . . . . . . . . (48) (31) (19) 2
Federal funds sold and securities
purchased under agreements to resell . . . . . . . . (2,351) (2,159) (411) 219
Taxable investment securities . . . . . . . . . . . . 17,098 42,557 (19,441) (6,018)
Tax-preferred investment securities(1). . . . . . . . (2,965) (1,225) (1,810) 70
Trading account securities(1) . . . . . . . . . . . . (82) (45) (46) 9
-------- -------- -------- --------
Total interest income change. . . . . . . . . . . . 5,602 51,209 (38,944) (6,663)
-------- -------- -------- --------
Interest expense:
Savings and interest checking . . . . . . . . . . . . (5,646) 8,474 (12,402) (1,718)
Time deposits . . . . . . . . . . . . . . . . . . . . (18,642) 3,860 (21,773) (729)
Federal funds purchased and securities
sold under agreements to repurchase. . . . . . . . . 3,100 4,646 (1,007) (539)
Federal Home Loan Bank borrowings . . . . . . . . . . 6,415 6,415 -- --
Other borrowings. . . . . . . . . . . . . . . . . . . (666) (342) (424) 100
Long-term debt. . . . . . . . . . . . . . . . . . . . (1,457) (1,384) (126) 53
-------- -------- -------- --------
Total interest expense change . . . . . . . . . . . (16,896) 21,669 (35,732) (2,833)
-------- -------- -------- --------
Increase (decrease) in net interest
income on a taxable equivalent basis(1) . . . . . . . 22,498 $ 29,540 $ (3,212) $ (3,830)
-------- ======== ======== ========
Decrease in taxable equivalent adjustment. . . . . . . 746
--------
Net interest income change . . . . . . . . . . . . . . $ 23,244
========
</TABLE>
<TABLE>
<CAPTION>
1992 vs 1991
---------------------------------------------
Change
Attributable to
Total ---------------------------------
Change Volume Yield/Rate Combination
-------- -------- ---------- -----------
(In thousands)
<S> <C> <C> <C> <C>
Increase (decrease) in:
Interest income:
Loans and leases(1) . . . . . . . . . . . . . . . . . $(45,186) $ (9,697) $(36,726) $ 1,237
Interest-bearing deposits in other
financial institutions . . . . . . . . . . . . . . . 44 334 (107) (183)
Federal funds sold and securities
purchased under agreements to resell . . . . . . . . (9,432) (7,083) (4,920) 2,571
Taxable investment securities . . . . . . . . . . . . 6,718 34,093 (21,930) (5,445)
Tax-preferred investment securities(1). . . . . . . . (6,462) (5,812) (767) 117
Trading account securities(1) . . . . . . . . . . . . (386) (356) (65) 35
-------- -------- -------- --------
Total interest income change. . . . . . . . . . . . (54,704) 11,479 (64,515) (1,668)
-------- -------- -------- --------
Interest expense:
Savings and interest checking . . . . . . . . . . . . (22,013) 9,111 (28,041) (3,083)
Time deposits . . . . . . . . . . . . . . . . . . . . (52,979) (18,529) (38,715) 4,265
Federal funds purchased and securities
sold under agreements to repurchase. . . . . . . . . (801) 4,313 (3,503) (1,611)
Federal Home Loan Bank borrowings . . . . . . . . . . -- -- -- --
Other borrowings. . . . . . . . . . . . . . . . . . . (2,209) (1,618) (1,054) 463
Long-term debt. . . . . . . . . . . . . . . . . . . . (810) (548) (300) 38
-------- -------- -------- --------
Total interest expense change . . . . . . . . . . . (78,812) (7,271) (71,613) 72
-------- -------- -------- --------
Increase (decrease) in net interest
income on a taxable equivalent basis(1) . . . . . . . 24,108 $ 18,750 $ 7,098 $ (1,740)
-------- ======== ======== ========
Decrease in taxable equivalent adjustment. . . . . . . 2,255
--------
Net interest income change . . . . . . . . . . . . . . $ 26,363
========
<FN>
__________
(1) Computed on a tax-equivalent basis assuming a marginal tax rate of 35% in 1993 and 34% in 1992 and 1991.
</TABLE>
The following table presents average balances, income and expense,
and yields and rates for 1993, 1992 and 1991.
<TABLE>
<CAPTION>
1993 1992 1991
-------------------------- -------------------------- --------------------------
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
---------- -------- ------ ---------- -------- ------ ---------- -------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-Earning Assets:
Loans and leases(1)(2). . . $2,953,470 $255,046 8.64% $2,822,525 $261,096 9.25% $2,914,788 $306,282 10.51%
Interest-bearing deposits
in other financial
institutions . . . . . . . 4,216 190 4.49 4,858 238 4.88 1,787 194 10.86
Federal funds sold and
securities purchased under
agreements to resell . . . 52,564 1,747 3.32 111,067 4,098 3.69 233,184 13,530 5.80
Investment securities:
Taxable . . . . . . . . . 2,694,069 157,800 5.86 2,068,237 140,702 6.80 1,648,884 133,984 8.13
Tax-preferred(1). . . . . 223,002 28,469 12.77 232,045 31,434 13.55 274,072 37,896 13.83
Trading account
securities(1). . . . . . . 3,349 178 5.31 4,047 260 6.45 9,013 646 7.17
---------- -------- ---------- -------- --------- --------
Total interest-earning
securities(1). . . . . 5,930,670 443,430 7.48 5,242,779 437,828 8.35 5,081,728 492,532 9.69
Cash and due from banks . . . 338,645 302,851 313,505
Bank premises and equipment . 131,612 114,006 109,637
Income receivable and
other assets . . . . . . . . 145,562 139,294 142,492
Intangible assets, net. . . . 62,380 43,640 47,068
Allowance for credit losses . (72,998) (72,708) (64,341)
---------- ---------- ----------
Total assets. . . . . . $6,535,871 $5,769,862 $5,630,089
========== ========== ==========
Liabilities And Stockholders'
Equity:
Interest-Bearing Liabilities:
Interest-bearing deposits:
Savings and interest
checking . . . . . . . . $2,085,435 $ 53,476 2.56% $1,823,880 $ 59,122 3.24% $1,639,815 $ 81,135 4.95%
Time under $100,000 . . . 1,929,077 87,439 4.53 1,816,111 103,911 5.72 1,984,143 144,382 7.28
Time of $100,000 or more. 387,867 13,810 3.56 428,552 15,980 3.73 529,838 28,488 5.38
---------- -------- ---------- -------- ---------- --------
Total interest-bearing
deposits . . . . . . . 4,402,379 154,725 3.51 4,068,543 179,013 4.40 4,153,796 254,005 6.12
Federal funds purchased
and securities sold under
agreements to repurchase . 387,555 11,697 3.02 251,711 8,597 3.42 172,571 9,398 5.45
Federal Home Loan Bank
borrowings . . . . . . . . 162,603 6,415 3.95 -- -- -- -- -- --
Other borrowings. . . . . . 21,929 797 3.63 28,619 1,463 5.11 51,180 3,672 7.17
Long-term debt. . . . . . . 18,320 1,867 10.19 31,390 3,324 10.59 36,187 4,134 11.42
---------- -------- ---------- -------- ---------- --------
Total interest-bearing
liabilities. . . . . . 4,992,786 175,501 3.52 4,380,263 192,397 4.39 4,413,734 271,209 6.14
-------- -------- --------
Noninterest-bearing deposits. 916,816 832,472 778,217
Other liabilities and
minority interest in
subsidiary . . . . . . . . . 75,448 70,092 67,462
---------- ---------- ----------
Total liabilities . . . 5,985,050 5,282,827 5,259,413
Preferred stockholders'
equity . . . . . . . . . . . 102,312 87,484 2,511
Common stockholders' equity . 448,440 399,551 368,165
Net unrealized gains on
available-for-sale
securities . . . . . . . . . 69 -- --
---------- ---------- ----------
Total stockholders'
equity . . . . . . . . 550,821 487,035 370,676
---------- ---------- ----------
Total liabilities and
stockholders' equity . $6,535,871 $5,769,862 $5,630,089
========== ========== ==========
Net interest income(1). . . . . $267,929 $245,431 $221,323
======== ======== ========
Rate Analysis:
Interest income/
interest-earning assets(1). 7.48% 8.35% 9.69%
Interest expense/
interest-earning assets . . 2.96 3.67 5.34
----- ----- -----
Net yield on earning
assets(1) . . . . . . 4.52% 4.68% 4.35%
===== ===== =====
<FN>
_________
(1) Income and rates are stated on a tax-equivalent basis assuming a marginal tax rate of 35% in 1993 and 34% in 1992
and 1991.
(2) Nonaccrual loans are included in loans and leases.
</TABLE>
Provision for Credit Losses
The provisions for credit losses were $7.1 million, $21.3
million, and $43.7 million for 1993, 1992, and 1991, respectively. The
provisions for 1992 and 1991 include $5.8 million and $9.2 million,
respectively, associated with the current year pooling-of-interests
transactions. The lower provision for credit losses in 1993 reflects
the continued improvement in credit quality as demonstrated by a lower
level of nonperforming assets and lower net charge-offs in 1993 as
compared to 1992, and the strong allowance for credit losses. Net
charge-offs for 1993 totaled $17.0 million or .58% of average loans as
compared to net charge-offs of $24.1 million or .85% of average loans
for 1992 and $37.4 million or 1.28% of average loans for 1991.
Nonperforming loans at December 31, 1993 were $34.1 million, down from
$38.7 million at year-end 1992 and $60.3 million at year-end 1991. The
allowance for credit losses was $66.4 million, $73.1 million, and $69.5
million at December 31, 1993, 1992, and 1991, respectively. The ratio
of allowance for credit losses to nonperforming loans increased to
194.50% at December 31, 1993, compared with 188.88% at December 31,
1992 and 115.21% at December 31, 1991.
Noninterest Income
Total noninterest income was $89.1 million for 1993, representing
an increase of $6.1 million or 7.3% over the $83.0 million recorded in
1992. Included in 1993 noninterest income were $1.3 million of
investment securities gains, compared to $2.5 million of similar gains
realized in 1992. The securities gains in both years were due
principally to called bonds. UBK, a prior-year business combination
accounted for as a pooling of interests, realized a $1.5 million gain
in 1992 from the settlement of a lawsuit. Fees collected in the normal
course of business increased 11.3% to total $87.7 million in 1993 from
$78.8 million in 1992.
The most significant changes in noninterest income between 1993
and 1992 occurred in service charges on deposit accounts, brokerage and
annuity sales commissions, and bank card fees. The $5.9 million or
22.0% increase in service charges was attributable to both consumer and
commercial customers. These increased revenues were due to a reduction
in waived fees and a larger volume of fee-based transactions. The $1.8
million or 49.7% increase in brokerage and annuity sales fees reflected
expanded sales activities, particularly in the sale of mutual funds and
annuities resulting in part from the additional BANK IV markets across
Kansas and Oklahoma now served by an investment sales representative.
These products are now available at most locations, and the low
interest rates on deposits continue to make them more attractive to
certain customers as alternative investments to interest-bearing
deposits. Bank card fees increased $1.1 million to total $14.7 million
in 1993. The increased fees were principally attributable to the
addition of merchants and credit cardholders and increased merchant and
cardholder sales volumes.
Real estate loan service fees declined $883,000 or 26.9% as
serviced loans also experienced accelerated prepayments due to the
volume of mortgage loan refinancings and originations stimulated by low
interest rates. At December 31, 1993, $384.1 million of loans were
serviced for others. In addition, servicing will be retained on the
$110.1 million of mortgages to be sold in the first quarter of 1994.
Total noninterest income was $83.0 million for 1992, as compared
to $85.9 million for 1991. Income for 1991 included a $3.2 million
gain from the sale of a credit card portfolio. This gain occurred as
a result of the exercise of a purchase option by an affinity group.
Also included in 1991 noninterest income was a $4.0 million gain for
the sale of a banking facility realized by SBC, a 1993 business
combination accounted for as a pooling of interests. Investment
securities gains were $2.5 million in 1992 and $4.7 million in 1991.
Reimbursements from the RTC for expenses incurred on its behalf in
connection with S&L deposit assumptions amounted to only $68,000 for
1992 compared to $945,000 for 1991. Fees collected in the normal
course of business increased 7.9% from $73.0 million in 1991 to $78.8
million in 1992. The increased fees were due to increased service
charges on deposit accounts and brokerage and annuity sales fees.
The following table provides an analysis of noninterest income
segregated between fees collected in the normal course of business and
other revenues for the past three years.
<TABLE>
<CAPTION>
Percent Change
Year Ended December 31, -----------------
-------------------------------- 1992- 1991-
1993 1992 1991 1993 1992
-------- -------- -------- ------ ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Fee income:
Trust fees . . . . . . . . . . . . . . . . . . . . . $18,310 $17,627 $17,335 3.9% 1.7%
Service charges on deposit accounts . . . . . . . . . 32,711 26,820 23,211 22.0 15.5
Bank card fees . . . . . . . . . . . . . . . . . . . 14,658 13,531 13,927 8.3 (2.8)
Brokerage and annuity sales commissions . . . . . . . 5,274 3,522 1,566 49.7 124.9
Trading account profits and commissions . . . . . . . 770 840 1,360 (8.3) (38.2)
Real estate loan service fees . . . . . . . . . . . . 2,399 3,282 2,823 (26.9) 16.3
Safe deposit rent . . . . . . . . . . . . . . . . . . 1,398 1,226 1,174 14.0 4.4
Travelers and official check
fees and item handling charges . . . . . . . . . . . 2,154 2,282 2,296 (5.6) (.6)
Insurance premiums. . . . . . . . . . . . . . . . . . 1,564 1,369 1,160 14.2 18.0
Other . . . . . . . . . . . . . . . . . . . . . . . . 8,447 8,258 8,115 2.3 1.8
------- ------- -------
Total fee income . . . . . . . . . . . . . . . . . 87,685 78,757 72,967 11.3 7.9
------- ------- -------
Other revenues:
Investment securities gains . . . . . . . . . . . . . 1,311 2,520 4,721 (48.0) (46.6)
Gain on sale of credit card loans . . . . . . . . . . -- 169 3,226 -- (94.8)
Gain on sale of banking facility. . . . . . . . . . . -- -- 4,037 -- --
RTC reimbursements . . . . . . . . . . . . . . . . . 107 68 945 57.4 (92.8)
Lawsuit settlement. . . . . . . . . . . . . . . . . . -- 1,500 -- -- --
------- ------- -------
Total noninterest income. . . . . . . . . . . . . . $89,103 $83,014 $85,896 7.3 (3.4)
======= ======= =======
Fee income/average assets . . . . . . . . . . . . . . 1.34% 1.36% 1.30%
Noninterest income/average assets . . . . . . . . . . 1.36% 1.44% 1.53%
</TABLE>
Noninterest Expense
Noninterest expense amounted to $253.0 million, $216.9 million,
and $210.3 million for 1993, 1992, and 1991, respectively. Noninterest
expense for each of these years includes certain nonoperating items
such as net costs of operation of other real estate and nonperforming
assets, the nonoperating charge primarily related to integration of
acquired companies, and other unusual items.
Net costs of operation of other real estate and nonperforming
assets were $3.1 million in 1993, $2.4 million in 1992, and $6.7
million in 1991. The increased net costs of nonperforming asset
properties in 1993 were principally attributable to write-downs
recorded by CLC. The decline in net costs of operation of other real
estate and nonperforming assets between 1992 and 1991 reflects the
lower level of other real estate and nonperforming assets. As detailed
in Note 13 to the Consolidated Financial Statements, the $12.7 million
nonoperating charge for 1993 included write-downs of excess facilities
and equipment, severance and other compensation, and system conversion
costs, all associated with the merger and integration of the current-
year acquisitions. The 1993 nonoperating charge also includes:
acceleration of core deposit intangibles amortization associated with
disintermediation of acquired deposits; and increased data processing
hardware depreciation and software amortization related to the
Company's commitment to continue to improve its technology. The $5.6
million nonoperating charge recorded during 1992 was principally
associated with the consolidation of Oklahoma data processing,
operations, and staff functions. The expense included severance and
other compensation, systems conversion costs, the cost of the disposal
of excess facilities, a computer write-down and other charges
associated with acquisitions. In 1991, a $7.0 million nonoperating
charge was recorded in connection with a work force reduction and
included early retirement benefits and severance compensation. SBC, a
current-year business combination accounted for as a pooling of
interests, settled a lawsuit during the first quarter of 1993 resulting
in $313,000 of lawsuit settlement cost. The provision for securities
losses of $1.5 million in 1991 relates to municipal securities owned by
another pooled company, which established an allowance for securities
losses to reflect the decline in market value associated with the
downgrading of the bonds by rating agencies. The bonds were
subsequently sold during 1992 resulting in a gain of $688,000.
Operating expense increased $27.9 million or 13.4% to total
$236.7 million for 1993. The Company's efficiency ratio (operating
expense/fee income plus tax-equivalent net interest income) was 66.57%
for 1993 as compared to 64.40% for 1992. The increased operating
expenses and efficiency ratio principally reflect: costs of effecting
business combinations and deposit assumption transactions; operating
expenses of purchase business combinations and deposit assumption
transactions subsequent to consummation (including intangible asset
amortization); and normal inflation-related and other cost increases.
The large number of acquisitions have required a substantial commitment
of resources for thorough assessment of credit and other business
risks; software systems conversion and operations consolidation of
acquired entities; and advertising, training, and other costs
associated with instilling the BANK IV sales and credit culture,
products, and services. Approximately $9.4 million of the current year
expenses were attributable to these activities. Approximately 78% of
the $27.9 million increase in total operating expenses was attributable
to business combinations accounted for as purchase and deposit
assumption transactions.
Entities acquired in 1993 and 1992 had a combined efficiency
ratio of 71.5% resulting in a higher ratio for the entire Company. A
portion of the higher ratio is due to amortization of intangible
assets. The ratio is also affected by excess branch capacity,
facilities improvements, and the cost of implementing service delivery
technology through such things as automated teller machines and loan
and deposit platform automation. Management anticipates that the
efficiency ratios of these acquired entities will improve as they
become more fully assimilated and become increasingly focused on sales
activities. Also, certain branches will be closed or consolidated.
The efficiency ratio will continue to be affected by due diligence and
other acquisition costs as long as the Company engages in an active
acquisition program; however, the expense will represent a smaller
portion of total expenses as the company grows.
Also reflected in the increased intangible asset amortization
between 1993 and 1992 was an acceleration of purchased mortgage
servicing rights amortization. The increased amortization reflects a
more rapid pay-off of mortgage loans which are serviced for other
investors. Amortization of purchased mortgage servicing rights was
$1.8 million in 1993, an increase of $617,000 from the 1992
amortization. The remaining unamortized balance of purchased mortgage
servicing rights at December 31, 1993 was $1.5 million.
During 1991 the Company sold approximately $22.2 million of
credit card loans associated with an affinity group. The Company
continued to service this portfolio for the purchaser through September
30, 1992, and the reimbursement for the cost of servicing was reflected
in the lower 1992 bank card expense.
Between 1992 and 1991 operating expense increased $13.8 million
or 7.1%. This increase reflected the implementation of a sales and
performance based compensation program, additional depreciation
associated with an increased investment in data processing equipment,
and the execution of retail and commercial strategies. Sales incentive
and performance based compensation increased $2.7 million, reflecting
the improved performance of the Company during 1992 as compared to
1991. The Company invested in additional data processing equipment to
provide improved customer service and convenience and to handle the
increase in transaction volumes from acquisitions. The $1.4 million
increase in advertising expense between 1992 and 1991 reflects an
increased focus on the retail customer, as well as additional product
and image advertising associated with the merger of the Kansas
subsidiary banks and promoting the Company's expansion into Oklahoma in
late 1992.
The following table presents an analysis of noninterest expense
for the past three years.
<TABLE>
<CAPTION>
Percent Change
Year Ended December 31, --------------
-------------------------------- 1992- 1991-
1993 1992 1991 1993 1992
-------- -------- -------- ------ ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits . . . . . . . . . . . . $114,575 $100,491 $ 93,123 14.0% 7.9%
Furniture and equipment. . . . . . . . . . . . . . . . 22,004 19,030 17,944 15.6 6.1
Net occupancy. . . . . . . . . . . . . . . . . . . . . 16,307 14,458 14,020 12.8 3.1
FDIC insurance . . . . . . . . . . . . . . . . . . . . 12,071 11,679 10,915 3.4 7.0
Bank card. . . . . . . . . . . . . . . . . . . . . . . 7,577 5,021 7,074 50.9 (29.0)
Advertising and public relations . . . . . . . . . . . 8,343 6,296 4,924 32.5 27.9
Communication. . . . . . . . . . . . . . . . . . . . . 3,731 2,650 2,470 40.8 7.3
Postage and freight. . . . . . . . . . . . . . . . . . 6,194 5,403 5,190 14.6 4.1
Supplies, printed materials and forms. . . . . . . . . 5,162 5,272 4,809 (2.1) 9.6
Federal Reserve service fees . . . . . . . . . . . . . 1,461 1,090 1,067 34.0 2.2
Loan acquisition and maintenance . . . . . . . . . . . 2,295 2,372 2,870 (3.2) (17.4)
Outside service fees . . . . . . . . . . . . . . . . . 4,064 5,719 4,884 (28.9) 17.1
Consulting fees. . . . . . . . . . . . . . . . . . . . 1,618 1,703 1,520 (5.0) 12.0
Other professional fees and examinations . . . . . . . 5,548 5,933 6,326 (6.5) (6.2)
Amortization of intangible assets. . . . . . . . . . . 9,132 5,424 5,080 68.4 6.8
Other . . . . . . . . . . . . . . . . . . . . . . . . 16,642 16,237 12,730 2.5 27.5
-------- -------- --------
Total operating expense . . . . . . . . . . . . . 236,724 208,778 194,946 13.4 7.1
Net costs of operation of other real
estate and nonperforming assets . . . . . . . . . . . 3,088 2,356 6,736 31.1 (65.0)
Nonoperating charge. . . . . . . . . . . . . . . . . . 12,708 5,573 6,997 1.3X (20.4)
Minority interest. . . . . . . . . . . . . . . . . . . 153 219 171 (30.1) 28.1
Provision for securities losses. . . . . . . . . . . . -- -- 1,491 -- --
Lawsuit settlement . . . . . . . . . . . . . . . . . . 313 -- -- -- --
-------- -------- --------
Total noninterest expense. . . . . . . . . . . . . $252,986 $216,926 $210,341 16.6 3.1
======== ======== ========
Noninterest expense/average assets . . . . . . . . . . 3.87% 3.76% 3.74%
Noninterest expense less noninterest
income/average assets . . . . . . . . . . . . . . . . 2.51% 2.32% 2.21%
Operating expense less fee
income/average assets . . . . . . . . . . . . . . . . 2.28% 2.25% 2.17%
Operating expense/fee income plus
tax-equivalent net interest income. . . . . . . . . . 66.57% 64.40% 66.24%
</TABLE>
Income Taxes
Effective January 1, 1993, the Company changed its method of
accounting for income taxes from the deferred method to the liability
method required by Financial Accounting Standard ("FAS") No. 109,
"Accounting for Income Taxes." As permitted under the new rules, prior
years' financial statements have not been restated. The cumulative
effect of adopting FAS No. 109 as of January 1, 1993 was to increase
net income by $10.5 million. Two pooled companies, CLC and PBI,
elected early adoption of FAS No. 109, resulting in a $2.4 million
increase in 1992 earnings.
At December 31, 1993, the Company had net operating loss and
general business credit carryforwards of $14.8 million and $424,000,
respectively, which can be carried forward to reduce future federal
income taxes payable. These carryforwards are principally related to
previous losses of banks acquired in 1992 and 1993. Utilization of the
carryforwards is limited by tax law to the future earnings of and other
limits on the use of tax attributes of acquired companies. Net
operating loss carryforwards expire in years 2000 through 2007 and
general business credit carryforwards expire in years 1994 through 2005
if not utilized. At December 31, 1993, for financial reporting
purposes, a valuation allowance of $13.2 million offset the deferred
tax assets related to these carryforwards and other deferred tax assets
whose realization is uncertain. If realized, the tax benefit on $3.4
million of net operating loss carryforwards will be applied to reduce
"cost in excess of net assets acquired" recorded in connection with
acquisitions accounted for as purchases.
Income tax expense amounted to $21.8 million, $18.5 million, and
$9.5 million for 1993, 1992, and 1991, respectively. The higher tax
expense in each succeeding year was primarily attributable to a higher
level of income before taxes. The federal tax expense for 1991 was
computed using the Alternative Minimum Tax ("AMT") provisions of the
Tax Reform Act of 1986. In 1992, federal tax expense computed in
accordance with the then statutory tax rate of 34% exceeded AMT expense
and AMT tax credits were recognized during 1992, reducing the tax
provision to the amount which would have been recorded using the AMT
provisions. The Revenue Reconciliation Bill of 1993 contained several
provisions affecting corporations and financial institutions, including
a tax rate increase to 35% and provisions mandating specific periods
for the amortization of intangibles. Pursuant to FAS No. 109, the
Company's third quarter 1993 financial statements reflected certain
adjustments to recognize the impact of the new tax law on the Company's
financial condition. These adjustments reduced 1993 income tax expense
by $616,000.
Statements of Condition
Total assets amounted to $6.7 billion, $6.6 billion, and $5.6
billion at December 31, 1993, 1992, and 1991, respectively. Between
December 31, 1991 and December 31, 1993, the Company completed five
bank acquisitions accounted for as purchases and three bank and S&L
purchase and assumption transactions. Assets acquired in these eight
transactions totaled $900.9 million. The statements of condition for
all of the periods presented include nine business combinations
accounted for as poolings of interests. In aggregate the pooled
companies had assets of $1.6 billion. The following sections describe
the changes in the major Statement of Condition categories.
Loans and Leases
Period-end loans and leases increased $416.8 million or 14.7% to
total $3.3 billion at December 31, 1993. Increases were realized in
various commercial and retail categories. Loans added through bank
purchase transactions totaled $121.7 million. Net internal loan growth
was $295.1 million, two thirds of which was realized in the fourth
quarter of 1993.
The $91.7 million increase in the 1-4 family mortgage portfolio
between December 31, 1992 and December 31, 1993 primarily reflects
originations and refinancing activity stimulated by relatively low
mortgage interest rates. In connection with the Company's adoption of
FAS No. 115 relating to the classification of investment securities as
held-to-maturity, available-for-sale, and trading securities, the
Company evaluated its portfolio of residential mortgage loans which
could be sold in the secondary market. This evaluation resulted in a
decision to reclassify $110.1 million of residential mortgage loans as
held for sale, resulting in the increase in this category.
The consumer portfolio declined $50.8 million or 10.9%. This
decrease is principally due to the $36.2 million paydown of automobile
loans associated with the 1991 closure of the Company's indirect loan
production offices.
During 1991 and 1992, both commercial and retail loan demand were
affected by an uncertain legislative and economic environment. Between
December 31, 1991 and 1992 total loans did not change materially.
Except for the origination and refinancing activity in loans secured by
1-4 family mortgages, which was stimulated by low mortgage rates, most
loan categories showed little change.
Total loans decreased $193.4 million or 6.5% from $3.0 billion at
December 31, 1990 to $2.8 billion at year-end 1991. The decreases,
which were realized in almost all categories, were attributable to the
lack of loan demand and enhanced underwriting standards which emphasize
cash flow rather than collateral based lending. Credit card loans
decreased $16.7 million, or 17.4%, from year-end 1990 to year-end 1991
as an affinity group exercised its option to purchase its portfolio
from the Company.
Total loans increased by $407.3 million or 15.8% from December
31, 1989 to 1990. Approximately $269.8 million of this increase
occurred in the 1-4 family residential mortgage portfolio and was
principally attributable to the acquisition of loans from failed S&Ls.
Additionally, $89.3 million of the increase was associated with bank
acquisitions accounted for as purchases.
The following table shows the composition of loans and leases for
the past five years.
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Commercial and industrial . . . . . . . . . . . . $ 849,026 $ 737,924 $ 728,222 $ 830,307 $ 817,885
Agriculture . . . . . . . . . . . . . . . . . . . 164,752 143,383 147,839 136,429 121,821
Energy . . . . . . . . . . . . . . . . . . . . . 77,962 55,754 60,053 69,091 68,136
Bank stock . . . . . . . . . . . . . . . . . . . 34,576 41,282 48,509 61,866 78,686
Real estate, less unearned discount:
Construction . . . . . . . . . . . . . . . . . 92,158 63,948 92,634 112,301 134,293
Secured by 1-4 family residences . . . . . . . 781,946 690,202 629,593 653,267 383,486
Permanent commercial real estate and other . . 500,129 436,888 425,964 440,266 421,007
Residential mortgage loans held for sale. . . . 110,132 501 2,588 923 1,867
Consumer, less unearned discount . . . . . . . . 417,126 467,916 453,102 451,752 337,894
Credit card . . . . . . . . . . . . . . . . . . . 91,562 81,012 78,913 95,590 79,241
Educational . . . . . . . . . . . . . . . . . . . 55,968 41,889 34,686 32,042 48,637
Lease financing . . . . . . . . . . . . . . . . . 40,195 29,490 27,166 25,235 20,150
Other . . . . . . . . . . . . . . . . . . . . . . 42,255 50,847 66,346 79,897 68,540
---------- ---------- ---------- ---------- ----------
Total loans and leases . . . . . . . . . . . $3,257,787 $2,841,036 $2,795,615 $2,988,966 $2,581,643
========== ========== ========== ========== ==========
</TABLE>
Commercial and Industrial: The Company's commercial and
industrial loans generally are made to middle market and small
businesses. There are no highly leveraged transactions.
Agriculture: Loans secured by feeder cattle and other livestock
accounted for approximately 58% of the agriculture portfolio at
December 31, 1993. The remainder of the agriculture portfolio is
secured by equipment, farm assets and accounts receivable and
inventory, none of which represent a significant concentration.
Energy: Loans secured by proven oil and gas reserves constitute
substantially all of the energy loan portfolio. Generally, the Company
will loan no more than 60% of the discounted value of such proven
reserves. Annual engineering reports are required on all production
loans of $100,000 or more. These reports include cash flow analyses on
all properties and provide estimates of remaining recoverable reserves,
rates of recovery, operating expenses, and taxes. There are no oil rig
acquisition loans, and loans to well-servicing companies and suppliers
are not material.
Bank Stock: Loans for the purpose of purchasing a material
interest in a bank make up this portfolio.
Real Estate: Most of the construction loans are for 1-4 family
residential construction and development. At December 31, 1993,
approximately 43.2% of the portfolio was in the Kansas metropolitan
markets of Wichita, Topeka and Kansas City. The Tulsa and Oklahoma
City markets represented an additional 39.3% of this portfolio.
The 1-4 family residence portfolio consists of loans secured by
residences located primarily in Kansas and Oklahoma and is principally
permanent first mortgage loans with the remainder consisting of home
equity loans. At December 31, 1993, this portfolio included $100.9
million of seasoned, performing loans acquired in 1990 and 1991 as part
of the S&L transactions.
At December 31, 1993 $110.1 million of fixed-rate residential
first mortgage loans were held for sale in the secondary market. Most
of these loans had original maturities of 15 and 20 years and loan
rates of 7.00% or less. Residential mortgage loans held for sale are
carried at the lower of cost or market value determined on an aggregate
basis.
Permanent commercial real estate loans include loans in the
Company's market for small office buildings/parks; neighborhood strip
shopping centers; small manufacturing machine shop buildings; office
warehouse properties; medical offices; and loans for purposes other
than funding the acquisition of the collateral properties and in which
cash flows from the properties are not the principal source of
repayment. Also included in this portfolio are loans for the financing
of apartment buildings in the Company's five metropolitan markets.
Most of these loans are "mini-perms" with five-year maturities. The
remaining commercial real estate loans are secured by farmland.
Concentrations: The Company makes substantially all of its loans
within Kansas, Oklahoma, and the contiguous states or to Kansas and
Oklahoma based customers that do business in other states. At
December 31, 1993, the Company had 20 lending relationships in which
the aggregate loan amount exceeded $8 million; of these, seven were $10
million or more. The Company had no single lending relationship with
an aggregate loan amount outstanding in excess of $20 million. The
Company had no industry concentrations greater than 10.0% of total
loans outstanding and no foreign loans at December 31, 1993.
Maturity Distribution and Interest Sensitivity of Loans
The maturity distribution of loans outstanding as of December 31,
1993 (excluding real estate-secured by 1-4 family residences, consumer,
credit card, educational, and lease financing) by type and sensitivity
to changes in interest rates is as follows:
<TABLE>
<CAPTION>
Remaining Maturity
--------------------------------------------------
Over One
Year
One Year Through Over Five
or Less Five Years Years Total
---------- ---------- ---------- -----------
(In thousands)
<S> <C> <C> <C> <C>
Commercial and industrial . . . . . . . . . . . . . . . $ 565,040 $240,066 $ 43,920 $ 849,026
Agriculture . . . . . . . . . . . . . . . . . . . . . . 145,439 16,168 3,145 164,752
Energy . . . . . . . . . . . . . . . . . . . . . . . . 55,569 18,105 4,288 77,962
Bank stock . . . . . . . . . . . . . . . . . . . . . . 23,164 8,034 3,378 34,576
Real estate-construction . . . . . . . . . . . . . . . 66,738 23,438 1,982 92,158
Real estate-permanent commercial and other . . . . . . 144,589 243,578 111,962 500,129
Other . . . . . . . . . . . . . . . . . . . . . . . . . 35,459 6,316 480 42,255
---------- -------- -------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . $1,035,998 $555,705 $169,155 $1,760,858
========== ======== ======== ==========
Loans with fixed interest rates . . . . . . . . . . . . $ 254,289 $193,618 $ 43,248 $ 491,155
Loans with floating interest rates . . . . . . . . . . 781,709 362,087 125,907 1,269,703
---------- -------- -------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . $1,035,998 $555,705 $169,155 $1,760,858
========== ======== ======== ==========
</TABLE>
Nonperforming Assets
Nonperforming assets consist of nonaccrual loans, troubled debt
restructurings, and other real estate and nonperforming assets. A loan
is placed on nonaccrual status when principal or interest is due and
has remained unpaid for 90 days or more unless the loan is both well
secured and in the process of collection. A currently performing loan
also may be placed on nonaccrual status when there is reasonable doubt
as to the ability of the borrower to continue to pay principal or
interest. Nonaccrual loans at December 31, 1993 included $13.1 million
of these "performing/nonperforming" loans. Troubled debt
restructurings are those loans for which the original contractual terms
have been modified to provide a concession because of a deterioration
in the borrower's financial condition. Other real estate and
nonperforming assets include assets acquired from loan settlements and
foreclosures.
In accordance with the Securities and Exchange Commission's
Financial Reporting Release 28 ("FRR 28"), "Other real estate and
nonperforming assets" previously has included certain loans valued at
the fair value of the underlying collateral even though the Company did
not have possession of that collateral. The main objective of FRR 28
was to require a systematic methodology to be applied to the
recognition and measurement of potential losses inherent in loans,
where the repayment of the loan was expected to come only from the
operation or the sale of the collateral. Collateral was to be
considered repossessed in substance and accounted for at fair value in
those cases where the borrower had little or no equity in the
collateral considering the property's fair value and where, considering
economic conditions, the borrower's ability to rebuild equity was
doubtful.
During 1993, banking regulators issued guidance confirming that
the loss recognition on collateral dependent loans should be based on
the fair value of the collateral, but that such loans need not be
reported as "Other real estate" unless possession of the underlying
collateral has been obtained. The Company's consolidated statement of
condition reflects the adoption of this regulatory guidance as of
December 31, 1993 and the 1992 consolidated statement of condition has
been restated to reclassify substantive repossessions from "Other
assets" to "Loans." The following table reflects the effects of this
new classification policy at December 31 for the past five years.
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(Dollars In thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans . . . . . . . . . . . . . . . . $ 3,707 $ 6,403 $ 4,563 $ 6,416 $ 3,140
Other real estate and nonperforming assets . . . (3,707) (6,403) (4,563) (6,416) (3,140)
------- ------- ------- ------- -------
Total nonperforming assets . . . . . . . . . . $ 0 $ 0 $ 0 $ 0 $ 0
======= ======= ======= ======= =======
</TABLE>
Generally, principal and interest payments received on nonaccrual
loans are applied as reductions of principal. For this reason and
because of charge-offs, the book value of such loans understates the
remaining contractual obligation of the borrowers. As of December 31,
1993, the carrying value of nonaccrual loans had been charged down to
71.4% of the customers' contractual principal obligations. Also, the
carrying values of other real estate and nonperforming assets have been
written down to current estimates of their fair values less a reserve
for the estimated costs to sell the properties.
Interest income of $1.5 million has been included in income for
the year ended December 31, 1993 on loans which at year-end were
considered nonaccrual loans or troubled debt restructurings. Interest
of $4.0 million would have been recorded for the year if these loans
had been current in accordance with their original terms.
The following table presents nonperforming assets and those loans
which are contractually past due 90 days or more as to principal or
interest payments at December 31 for the past five years.
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------
1993 1992 1991 1990 1989
------- ------- ------- ------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans . . . . . . . . . . . . . . . . . $33,833 $36,772 $55,389 $ 79,595 $ 48,874
Troubled debt restructurings . . . . . . . . . . . 290 1,906 4,918 4,576 8,660
------- ------- ------- -------- --------
Total nonperforming loans . . . . . . . . . . 34,123 38,678 60,307 84,171 57,534
Other real estate and nonperforming assets . . . . 9,667 18,876 39,017 53,031 50,445
------- ------- ------- -------- --------
Total nonperforming assets . . . . . . . . . . $43,790 $57,554 $99,324 $137,202 $107,979
======= ======= ======= ======== ========
Past due loans (90 days or more) . . . . . . . . . $ 9,072 $10,533 $ 5,455 $ 6,809 $ 11,005
======= ======= ======= ======== ========
Nonperforming assets/year-end loans plus
other real estate and nonperforming assets. . . . 1.34% 2.01% 3.50% 4.51% 4.10%
==== ==== ==== ==== ====
Nonperforming assets/year-end assets . . . . . . . .65% .88% 1.76% 2.38% 2.31%
==== ==== ==== ==== ====
</TABLE>
Nonperforming assets decreased $13.8 million or 23.9% from
December 31, 1992 to total $43.8 million at the end of 1993. At
December 31, 1993, total nonperforming assets represented 1.34% of
total loans plus other real estate owned and nonperforming assets and
.65% of total assets as compared to 2.01% of total loans plus other
real estate owned and nonperforming assets and .88% of total assets at
December 31, 1992. Companies acquired during 1993 in pooling-of-
interests transactions represent $13.9 million of the December 31, 1993
total nonperforming assets compared to $17.6 million for those same
companies at year-end 1992. Purchased banks added $1.8 million to the
1993 nonperforming asset total. The 1993 and 1992 pooling-of-interests
combinations accounted for $61.1 million, $87.3 million, and $85.0
million of nonperforming assets at year-end 1991, 1990, and 1989,
respectively.
Management continues to focus on asset quality. An emphasis is
placed on pro-active management of problem credits, early detection of
potential problems, and timely charge-offs. A due diligence team is
responsible for assessing potential problem loans in banks to be
acquired prior to the execution of a definitive agreement. A separate
work-out department is responsible for the resolution and collection of
problem assets. An analysis of nonperforming loans by type is provided
in the following table. There are no significant concentrations of
nonperforming assets in any one market or industry.
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------------
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Commercial and industrial. . . . . . . $14,695 $13,194 $23,021 $37,288 $19,701
Agriculture. . . . . . . . . . . . . . 1,526 1,449 1,250 766 1,001
Energy . . . . . . . . . . . . . . . . 510 184 402 2,508 511
Bank stock . . . . . . . . . . . . . . -- -- 41 -- 700
Real Estate:
Construction . . . . . . . . . . . . 1,343 1,883 7,029 5,756 4,975
Secured by 1-4 family
residences. . . . . . . . . . . . . 2,384 3,861 3,752 4,454 4,257
Permanent commercial
real estate and other . . . . . . . 11,668 16,056 22,200 30,173 23,965
Consumer . . . . . . . . . . . . . . . 1,890 1,863 2,228 2,731 2,424
Lease financing. . . . . . . . . . . . 107 188 384 495 --
------- ------- ------- ------- -------
Total nonperforming loans. . . . . $34,123 $38,678 $60,307 $84,171 $57,534
======= ======= ======= ======= =======
Nonaccrual loans/nonaccrual
loans and prior charge-offs . . . . . 71.41%
=====
</TABLE>
Potential Problem Loans
Certain loans classified for regulatory purposes as doubtful,
substandard, or special mention are included in the nonperforming loan
table. Also included in the classified loans are certain other loans
which are deemed to be potential problems.
Potential problem loans are those loans which are currently
performing but where known information about trends or uncertainties or
possible credit problems of the borrowers causes management to have
concerns as to the ability of such borrowers to comply with present
repayment terms, possibly resulting in the transfer of such loans to
nonperforming status. These loans totaled $6.3 million at December 31,
1993.
Allowance for Credit Losses
The allowance for credit losses is the amount deemed by
management to be reasonably necessary to provide for possible losses on
loans that may become uncollectible. Additions to the allowance are
charged to expense as the provision for credit losses. Loan losses and
recoveries are charged or credited directly to the allowance. It is
the Company's policy to charge off any loan or portion of that loan
when it is deemed to be uncollectible in the ordinary course of
business.
An evaluation of the overall quality of the portfolio is
performed to determine the necessary level of the allowance for credit
losses. This evaluation takes into consideration the classification of
loans and the application of loss estimates to these classifications.
It is the responsibility of management in each of the Company's markets
to classify its loans as pass, special mention, substandard, doubtful,
or loss. The classification criteria are established by the credit
administration function of the Company, which is independent of all
lending functions, and are intended to be consistent with the criteria
applied by federal banking system examiners. These classifications
take into consideration all sources of repayment, underlying
collateral, the value of such collateral, and current and anticipated
economic conditions, trends, and uncertainties. The Company has an
independent loan review function which periodically reviews the loans
and the classifications. The Company's bank subsidiaries also are
subjected to periodic examinations by the Office of the Comptroller of
the Currency.
Loss factors are developed by loan type and classification using
historical loss data and statistical modeling techniques. The
application of these loss factors to the portfolio classifications
combined with analyses of general economic conditions, trends in
portfolio volume, maturity, and composition, and estimates of potential
future losses on specific large loans and those loans requiring special
attention provide management with data essential to identify and
estimate the credit risk inherent in the portfolio. The allowance for
credit losses reflects the result of these estimates, and is deemed to
be adequate at each balance sheet date.
As of December 31, 1993, the allowance for credit losses equaled
$66.4 million or 2.04% of total loans and leases and 194.50% of
nonperforming loans. Comparatively, the allowance for credit losses
amounted to $73.1 million or 2.57% of total loans and leases and
188.88% of nonperforming loans at December 31, 1992. The decreased
level of net charge-offs in 1993 compared to 1992 and the sound
coverage ratio of the allowance for credit losses to nonperforming
loans at December 31, 1993 reflected the continuing emphasis management
is placing on resolving problem loans, reducing the risk profile of the
Company, and prudently reserving for identifiable risks.
The following table summarizes the changes in the allowance for
credit losses for the past five years and presents selected related ratios.
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance at January 1, as previously reported . . . $ 60,498 $ 57,459 $ 53,049 $ 33,089 $ 29,342
Adjustment for poolings of interests . . . . . . . 12,557 13,210 9,672 9,306 9,378
---------- ---------- ---------- ---------- ----------
Balance at January 1, as restated . . . . . . . . 73,055 70,669 62,721 42,395 38,720
Allowance for credit losses of purchased banks . . 3,266 1,739 464 2,827 1,643
Allowance for purchased loans . . . . . . . . . . -- 3,424 -- 2,165 --
---------- ---------- ---------- ---------- ----------
76,321 75,832 63,185 47,387 40,363
Charge-offs:
Commercial and industrial . . . . . . . . . . . 15,450 16,126 22,342 15,519 15,327
Energy . . . . . . . . . . . . . . . . . . . . . 371 254 1,690 1,127 1,170
Real estate:
Construction . . . . . . . . . . . . . . . . . 269 881 2,492 4,628 1,539
Secured by 1-4 family residences . . . . . . . 701 1,082 1,547 1,262 1,729
Permanent commercial real estate and other . . 3,954 4,624 6,184 8,865 4,757
Consumer . . . . . . . . . . . . . . . . . . . . 3,936 5,196 5,870 3,350 1,999
Credit card . . . . . . . . . . . . . . . . . . 1,596 2,243 2,470 2,046 1,231
Bank stock . . . . . . . . . . . . . . . . . . . -- -- 852 250 --
Agriculture . . . . . . . . . . . . . . . . . . 214 121 215 503 290
Lease financing . . . . . . . . . . . . . . . . 246 258 477 728 161
Other . . . . . . . . . . . . . . . . . . . . . 71 293 420 741 1,010
---------- ---------- ---------- ---------- ----------
Total charge-offs . . . . . . . . . . . . . 26,808 31,078 44,559 39,019 29,213
---------- ---------- ---------- ---------- ----------
Recoveries:
Commercial and industrial . . . . . . . . . . . 4,592 3,214 3,330 2,084 2,403
Energy . . . . . . . . . . . . . . . . . . . . . 206 230 936 1,319 411
Real estate:
Construction . . . . . . . . . . . . . . . . . 220 112 132 388 6
Secured by 1-4 family residences . . . . . . . 304 179 243 48 210
Permanent commercial real estate and other . . 1,358 409 463 294 24
Consumer . . . . . . . . . . . . . . . . . . . . 1,687 1,594 1,180 459 389
Credit card . . . . . . . . . . . . . . . . . . 496 604 418 300 281
Bank stock . . . . . . . . . . . . . . . . . . . 148 38 -- -- --
Agriculture . . . . . . . . . . . . . . . . . . 272 309 155 252 95
Lease financing . . . . . . . . . . . . . . . . 91 232 87 34 23
Other . . . . . . . . . . . . . . . . . . . . . 425 37 245 175 6
---------- ---------- ---------- ---------- ----------
Total recoveries . . . . . . . . . . . . . . 9,799 6,958 7,189 5,353 3,848
---------- ---------- ---------- ---------- ----------
Net loans and leases charged off . . . . . . . . . 17,009 24,120 37,370 33,666 25,365
Provision for credit losses . . . . . . . . . . . 7,056 21,343 43,665 49,000 27,397
---------- ---------- ---------- ---------- ----------
Balance at December 31 . . . . . . . . . . . . . . $ 66,368 $ 73,055 $ 69,480 $ 62,721 $ 42,395
========== ========== ========== ========== ==========
Loans and leases at year-end . . . . . . . . . . . $3,257,787 $2,841,036 $2,795,615 $2,988,966 $2,581,643
Average loans and leases . . . . . . . . . . . . . $2,953,470 $2,822,525 $2,914,788 $2,835,045 $2,455,848
Net charge-offs/average loans and leases . . . . . .58% .85% 1.28% 1.19% 1.03%
Allowance for credit losses/net charge-offs . . . 390.19% 302.88% 185.92% 186.30% 167.14%
Allowance for credit losses/year-end
nonperforming loans . . . . . . . . . . . . . . . 194.50% 188.88% 115.21% 74.52% 73.69%
Allowance for credit losses/year-end
nonperforming assets. . . . . . . . . . . . . . . 151.56% 126.93% 69.95% 45.71% 39.26%
Allowance for credit losses/year-end
loans and leases. . . . . . . . . . . . . . . . . 2.04% 2.57% 2.49% 2.10% 1.64%
</TABLE>
The allowance for credit losses has been allocated by loan
category. It should be recognized that such allocations are not
necessarily indicative of future loan losses and that all of such
allowance, except for the $1.3 million allowance for purchased loans
included in the secured by 1-4 family residences and $3.5 million
allowance for purchased loans included in consumer, is available to
absorb losses on loans for any category. The allocation of the
allowance for credit losses by loan type is as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------------
1993 1992 1991 1990 1989
------------ ------------ ------------ ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Commercial and industrial. . . . . . . $24,791 $29,211 $29,799 $21,471 $14,447
Agriculture . . . . . . . . . . . . . 1,210 2,762 2,515 2,122 1,653
Energy . . . . . . . . . . . . . . . . 973 1,105 1,386 2,490 3,001
Bank stock . . . . . . . . . . . . . . 446 968 820 497 583
Real estate:
Construction . . . . . . . . . . . . 1,364 1,895 2,163 5,266 3,642
Secured by 1-4 family residences . . 3,659 4,797 5,547 6,169 1,397
Permanent commercial real estate
and other . . . . . . . . . . . . . 17,500 17,421 17,602 15,261 11,210
Consumer . . . . . . . . . . . . . . . 9,266 7,633 5,148 4,576 2,974
Credit card . . . . . . . . . . . . . 2,455 3,673 2,215 2,500 1,582
Educational. . . . . . . . . . . . . . -- -- -- -- --
Lease financing . . . . . . . . . . . 393 933 315 381 95
Other . . . . . . . . . . . . . . . . 4,311 2,657 1,970 1,988 1,811
------- ------- ------- ------- -------
Total . . . . . . . . . . . . . . $66,368 $73,055 $69,480 $62,721 $42,395
======= ======= ======= ======= =======
</TABLE>
The following table compares the allocation of the allowance for
credit losses by loan type expressed as a percentage of the total
allowance for credit losses to the percentage of loans in each loan
type to total loans:
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------------------------------------
1993 1992 1991 1990 1989
-------------- -------------- -------------- -------------- --------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and industrial. 37.3% 26.1% 40.0% 26.0% 42.9% 26.1% 34.2% 27.8% 34.1% 31.7%
Agriculture . . . . . . . 1.8 5.0 3.8 5.0 3.6 5.3 3.4 4.6 3.9 4.7
Energy . . . . . . . . . . 1.5 2.4 1.5 2.0 2.0 2.1 4.0 2.3 7.1 2.6
Bank stock . . . . . . . . .7 1.1 1.3 1.4 1.2 1.7 .8 2.1 1.4 3.1
Real estate:
Construction . . . . . . 2.1 2.8 2.6 2.2 3.1 3.3 8.4 3.7 8.6 5.2
Secured by 1-4 family
residences . . . . . . 5.5 27.4 6.6 24.3 8.0 22.6 9.8 21.9 3.3 15.0
Permanent commercial
real estate and other . 26.3 15.4 23.8 15.4 25.3 15.2 24.3 14.7 26.4 16.3
Consumer . . . . . . . . . 14.0 12.8 10.4 16.5 7.4 16.2 7.3 15.1 7.0 13.1
Credit card . . . . . . . 3.7 2.8 5.0 2.9 3.2 2.8 4.0 3.2 3.7 3.0
Educational . . . . . . . -- 1.7 -- 1.5 -- 1.3 -- 1.1 -- 1.9
Lease financing . . . . . .6 1.2 1.3 1.0 .5 1.0 .6 .8 .2 .8
Other . . . . . . . . . . 6.5 1.3 3.7 1.8 2.8 2.4 3.2 2.7 4.3 2.6
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total . . . . . . . . 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
<FN>
_____
(1) Allocation of allowance for credit losses by loan type as a percent of total allowance.
(2) Loans by type as a percent of total loans.
</TABLE>
Investment Portfolio
The year-end book value of investment securities at December 31
for each of the last three years is presented in the tables below.
<TABLE>
<CAPTION>
Held-to-maturity
December 31,
----------------------------------------
1993 1992 1991
---------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
U.S. Treasury obligations . . . . . . . . . . . . . . . . . . . . . $ 1,514 $ 284,856 $ 140,835
Obligations of U.S. government agencies and corporations:
Mortgage-backed . . . . . . . . . . . . . . . . . . . . . . . . . 1,751,443 1,731,879 1,354,866
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359 279,783 126,542
Obligations of states and political subdivisions . . . . . . . . . 4,750 215,471 245,768
Other securities:
Collateralized auto receivables . . . . . . . . . . . . . . . . . 12,364 28,935 51,607
Corporate notes and bonds . . . . . . . . . . . . . . . . . . . . -- 10,580 7,121
Foreign debt securities . . . . . . . . . . . . . . . . . . . . . 2,155 -- --
Money market mutual funds . . . . . . . . . . . . . . . . . . . . 212 220 50,228
Commercial paper. . . . . . . . . . . . . . . . . . . . . . . . . -- -- 20,194
Bankers' acceptances . . . . . . . . . . . . . . . . . . . . . . -- -- 11,950
Non-agency mortgage-backed securities . . . . . . . . . . . . . . -- -- 5,672
Nonaccrual investments. . . . . . . . . . . . . . . . . . . . . . -- -- 2,529
---------- ---------- ----------
Total debt securities . . . . . . . . . . . . . . . . . . . . . 1,772,797 2,551,724 2,017,312
Federal Home Loan Bank stock. . . . . . . . . . . . . . . . . . . 24,911 1,166 577
Federal Reserve Bank stock. . . . . . . . . . . . . . . . . . . . 12,589 8,452 6,355
Other equity securities . . . . . . . . . . . . . . . . . . . . . 1,470 3,576 3,827
---------- ---------- ----------
Total, at amortized cost. . . . . . . . . . . . . . . . . . . . $1,811,767 $2,564,918 $2,028,071
========== ========== ==========
Excess market value . . . . . . . . . . . . . . . . . . . . . . . . $ 1,365 $ 45,262 $ 71,817
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Available-for-sale
December 31,
------------
1993
------------
(In thousands)
<S> <C>
U.S. Treasury obligations . . . . . . . . . . . . . . . . . . . . . $ 308,331
Obligations of U.S. government agencies and corporations:
Mortgage-backed . . . . . . . . . . . . . . . . . . . . . . . . . 218,848
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306,276
Obligations of states and political subdivisions . . . . . . . . . 242,933
Corporate notes and bonds . . . . . . . . . . . . . . . . . . . . . 40,237
----------
Total debt securities . . . . . . . . . . . . . . . . . . . . . 1,116,625
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . 1,151
----------
Total, at estimated fair value. . . . . . . . . . . . . . . . $1,117,776
==========
</TABLE>
At December 31, 1993, the Company elected to adopt Financial
Accounting Standard ("FAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." In accordance with FAS No.
115, prior period financial statements have not been restated to
reflect the change in accounting principle. Pursuant to FAS No. 115
the securities classified as available-for-sale are carried at fair
value. Upon adoption, the available-for-sale portfolio was increased
by a net unrealized gain of $41.2 million, deferred income taxes
payable was increased by $16.1 million, and stockholders' equity was
increased by $25.1 million.
Not including the adjustment to fair value for the available-for-
sale portfolio, investment securities increased $323.4 million between
December 31, 1992 and 1993. Acquisition transactions accounted for as
purchases added $112.0 million of investment securities. The remainder
of the increase is attributable to the Company becoming more fully
invested and a larger volume of borrowed funds.
Excluding U.S. Treasury obligations and obligations of U.S.
government agencies and corporations, there were no security holdings
of any one issuer at December 31, 1993 that exceeded 10% of
consolidated stockholders' equity.
The tables below summarize the maturity and yield distribution of
investment securities at December 31, 1993.
<TABLE>
<CAPTION>
Held-to-maturity
Maturing
------------------------------------------------------------------------------------------
After One After Five
Within But Within But Within After
One Year Five Years Ten Years Ten Years Total
---------------- ---------------- ---------------- ---------------- ------------------
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
-------- ------ -------- ------ -------- ------ -------- ------ ---------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
obligations . . . . $ 601 5.24% $ 913 5.09% $ -- --% $ -- --% $ 1,514 5.15%
Obligations of
U.S. government
agencies and
corporations:
Mortgage-backed. . 181 8.50 218,773 6.49 215,721 5.59 1,316,768 5.14 1,751,443 5.36
Other. . . . . . . 168 4.56 191 4.94 -- -- -- -- 359 4.76
Obligations of
states and
political
subdivisions(1) . . 1,090 7.04 3,790 6.02 25 11.54 2,000 11.54 6,905 7.80
Other securities:
Collateralized
auto receivables. -- -- 12,364 7.91 -- -- -- -- 12,364 7.91
Money market
mutual funds. . . 212 3.00 -- -- -- -- -- -- 212 3.00
Other. . . . . . . -- -- -- -- -- -- 38,970 6.41 38,970 6.41
------ -------- -------- ---------- ----------
Total. . . . . . $2,252 6.11 $236,031 6.55 $215,746 5.59 $1,357,738 5.18 $1,811,767 5.41
====== ======== ======== ========== ==========
<FN>
_________
(1) Yields on tax-preferred securities are shown on a fully tax-equivalent basis assuming a marginal
tax rate of 35%.
</TABLE>
<TABLE>
<CAPTION>
Available-for-sale
Maturing
------------------------------------------------------------------------------------------
After One After Five
Within But Within But Within After
One Year Five Years Ten Years Ten Years Total
---------------- ---------------- ---------------- ---------------- ------------------
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
-------- ------ -------- ------ -------- ------ -------- ------ ---------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
obligations . . . . $48,773 6.04% $254,305 6.13% $ 5,253 5.09% $ -- --% $ 308,331 6.10%
Obligations of
U.S. government
agencies and
corporations:
Mortgage-backed. . -- -- 855 7.83 12,481 6.09 205,512 6.76 218,848 6.73
Other. . . . . . . 12,420 7.80 253,774 6.02 40,082 7.51 -- -- 306,276 6.29
Obligations of
states and
political
subdivisions(1) . . 27,171 12.84 120,264 14.12 64,812 10.46 30,686 14.23 242,933 13.02
Other securities . . 1,925 7.70 13,543 6.15 24,769 6.10 1,151 -- 41,388 6.02
------- -------- -------- -------- ----------
Total. . . . . . $90,289 8.36 $642,741 7.58 $147,397 8.36 $237,349 7.69 $1,117,776 7.78
======= ======== ======== ======== ==========
<FN>
_________
(1) Yields on tax-preferred securities are shown on a fully tax-equivalent basis assuming a marginal
tax rate of 35%.
</TABLE>
Mortgage-backed securities have been included in the maturity
tables based on their final maturities. However, this classification
is not indicative of the interest rate risk characteristics of the
portfolio.
At December 31, 1993 the held-to-maturity portfolio included
$513.3 million of floating-rate mortgage-backed securities guaranteed
by the Federal National Mortgage Association. The yields on these
securities float on a monthly basis with the Federal Home Loan Bank
("FHLB") Board 11th District average cost of funds, which reduces the
interest rate risk associated with these investments as the changes in
the cost of funds index have historically correlated with the changes
in the Company's cost of funds. Also included in the held-to-maturity
portfolio at December 31, 1993 were $847.4 million of collateralized
mortgage obligations ("CMO"). These investments are secured by
mortgage-backed securities guaranteed by agencies of the U.S.
government. Of this CMO portfolio, $155.6 million also float on a
monthly basis with the FHLB 11th District average cost of funds. The
remaining $691.8 million of fixed-rate CMOs in the held-to-maturity
portfolio are comprised of classes with an anticipated remaining
average duration of two to three years.
The December 31, 1993 available-for-sale mortgage-backed
securities portfolio is comprised principally of securities issued by
U.S. government agencies and corporations with an estimated average
duration of up to five years. Also included in the December 31, 1993
mortgage-backed securities available-for-sale were $49.4 million of
CMOs that do not meet the Office of the Comptroller of Currency's
("OCC") guidelines to be classified as "held-to-maturity" securities.
The OCC requires simulation testing of mortgage derivative products to
measure their estimated maturity or price sensitivity to interest rate
increases or decreases of 300 basis points. Under current accounting
practices, CMOs that fall outside the OCC's volatility guidelines are
required to be included in the available-for-sale portfolio.
Scheduled principal reductions and prepayments on the mortgage-
backed securities approximated $219.6 million during the fourth quarter
of 1993. The volume of principal reductions and prepayments combined
with the Company's strong liquidity position (which is described in the
Asset and Liability Management Section) demonstrates the Company's
ability to hold a substantial portion of its investment securities to
maturity.
Deposits
Average total deposits increased $418.2 million or 8.5% between
December 31, 1993 and 1992. This increase in average deposits reflects
the assumption of deposits from S&L and bank purchase acquisitions,
which took place in December of 1992 and the second quarter of 1993.
Deposits assumed from S&Ls totaled $448.3 million and deposits acquired
through bank acquisitions accounted for as purchases totaled $246.1
million. At December 31, 1993, deposits totaled $5.3 billion, which
was not materially different from deposits at December 31, 1992. The
increased deposits from the assumptions and acquisitions were partially
offset by the attrition of time deposits associated with the current
low interest rates offered on these instruments. In addition, December
31, 1992 deposits included an unusually high volume of items in the
process of collection. In response to perceived customer needs for a
higher yield, a time deposit product was offered which provided the
customer with the opportunity to reprice the instrument twice during
its three- year term. At December 31, 1993, $222.8 million of these
adjustable-rate time deposits were outstanding. Certain customers have
reinvested maturing deposits in alternative investment instruments and
some of these customers have purchased annuities, mutual funds, and
other investments through the Company, resulting in increased fee
income. Core deposits (demand, interest checking, savings, and time
deposits under $100,000) represented 92.7% of total deposits at
December 31, 1993 compared to 91.1% at December 31, 1992.
The following table provides a breakdown of average deposits and
average rates paid, by type, for the past three years.
<TABLE>
<CAPTION>
1993 1992 1991
-------------------- -------------------- --------------------
Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate
---------- -------- ---------- -------- ---------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing deposits. . . . . . . . $ 916,816 -- $ 832,472 -- $ 778,217 --
Interest-bearing deposits:
Interest-bearing checking deposits. . . . 870,178 2.49% 699,112 3.10% 595,778 4.61%
Savings deposits . . . . . . . . . . . . 1,215,257 2.61 1,124,768 3.33 1,044,037 5.14
Time deposits under $100,000. . . . . . . 1,929,077 4.53 1,816,111 5.72 1,984,143 7.28
Time deposits of $100,000 or more . . . . 387,867 3.56 428,552 3.73 529,838 5.38
---------- ---------- ----------
Total interest-bearing deposits . . . . 4,402,379 3.51 4,068,543 4.40 4,153,796 6.12
---------- ---------- ----------
Total deposits . . . . . . . . . . . $5,319,195 $4,901,015 $4,932,013
========== ========== ==========
</TABLE>
The following table sets forth, by time remaining to maturity,
certificates and other time deposits of $100,000 or more:
<TABLE>
<CAPTION>
December 31, 1993
-----------------
(In thousands)
<S> <C>
Under three months . . . . . . . . . . . . . . . . . . . . . . . . . . $130,256
Over three through six months . . . . . . . . . . . . . . . . . . . . 52,367
Over six through twelve months . . . . . . . . . . . . . . . . . . . . 67,877
Over twelve months . . . . . . . . . . . . . . . . . . . . . . . . . . 109,457
--------
$359,957
========
Brokered deposits were immaterial at December 31, 1993.
</TABLE>
Short-term Borrowings
Short-term borrowings include federal funds purchased, securities
sold under agreements to repurchase, Federal Home Loan Bank borrowings
with a maturity of less than one year, commercial paper, notes payable,
treasury tax and loan accounts and other borrowings. Amounts and
interest rates related to short-term borrowings for the last three
years were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C>
Federal funds purchased:
Outstanding at year-end . . . . . . . . . . . . . . . . . . . . . . $370,026 $261,048 $103,643
Average interest rate at year-end . . . . . . . . . . . . . . . . . 2.96% 2.92% 3.06%
Average outstanding during the year . . . . . . . . . . . . . . . . $321,023 $190,780 $125,829
Weighted average interest rate . . . . . . . . . . . . . . . . . . 3.00% 3.36% 5.50%
Highest outstanding balance at any month-end . . . . . . . . . . . $474,245 $339,511 $129,633
Securities sold under agreements to repurchase:
Outstanding at year-end . . . . . . . . . . . . . . . . . . . . . . $123,901 $ 65,089 $ 44,581
Average interest rate at year-end . . . . . . . . . . . . . . . . . 3.27% 3.49% 4.12%
Average outstanding during the year . . . . . . . . . . . . . . . . $ 66,532 $ 60,931 $ 46,742
Weighted average interest rate . . . . . . . . . . . . . . . . . . 3.10% 3.58% 5.30%
Highest outstanding balance at any month-end . . . . . . . . . . . $123,901 $112,345 $ 58,883
Federal Home Loan Bank borrowings:
Outstanding at year-end . . . . . . . . . . . . . . . . . . . . . . $175,000 $ -- $ --
Average interest rate at year-end . . . . . . . . . . . . . . . . . 3.76% --% --%
Average outstanding during the year . . . . . . . . . . . . . . . . $ 77,534 $ -- $ --
Weighted average interest rate . . . . . . . . . . . . . . . . . . 5.05% --% --%
Highest outstanding balance at any month-end . . . . . . . . . . . $175,000 $ -- $ --
Commercial paper:
Outstanding at year-end . . . . . . . . . . . . . . . . . . . . . . $ -- $ 425 $ 3,176
Average interest rate at year-end . . . . . . . . . . . . . . . . . --% 2.80% 4.76%
Average outstanding during the year . . . . . . . . . . . . . . . . $ 184 $ 1,118 $ 10,163
Weighted average interest rate . . . . . . . . . . . . . . . . . . 2.85% 3.85% 6.08%
Highest outstanding balance at any month-end . . . . . . . . . . . $ 625 $ 3,528 $ 22,026
Notes payable:
Outstanding at year-end . . . . . . . . . . . . . . . . . . . . . . $ -- $ 5,961 $ 9,362
Average interest rate at year-end . . . . . . . . . . . . . . . . . --% 6.57% 6.97%
Average outstanding during the year . . . . . . . . . . . . . . . . $ 3,140 $ 10,158 $ 17,247
Weighted average interest rate . . . . . . . . . . . . . . . . . . 7.84% 7.98% 10.02%
Highest outstanding balance at any month-end . . . . . . . . . . . $ 134 $ 13,360 $ 56,635
Treasury tax and loan and other borrowings:
Outstanding at year-end . . . . . . . . . . . . . . . . . . . . . . $ 23,002 $ 17,306 $ 26,051
Average interest rate at year-end . . . . . . . . . . . . . . . . . 2.75% 2.67% 3.84%
Average outstanding during the year . . . . . . . . . . . . . . . . $ 18,605 $ 17,343 $ 23,770
Weighted average interest rate . . . . . . . . . . . . . . . . . . 2.97% 3.37% 5.57%
Highest outstanding balance at any month-end . . . . . . . . . . . $ 26,092 $ 25,397 $ 27,784
</TABLE>
Asset and Liability Management
Interest Rate Risk: The Company manages its assets and
liabilities to control the exposure of its net interest income and
capital to risks associated with interest rate changes and to achieve
consistent growth in net interest income. Interest rate risk is
evaluated using various tools, including interest sensitivity gap and
simulation analysis. From time to time, interest rate swaps are used
to modify the interest sensitivity position inherent in the repricing
characteristics of specific assets or liabilities. The net interest
received or paid on the interest rate swaps is accounted for as an
adjustment to the interest income or interest expense on the assets or
liabilities, respectively, that the swap was intended to modify.
At December 31, 1993 and 1992 interest rate swaps were as follows:
<TABLE>
<CAPTION>
December 31, 1993
-----------------------------------------------------------------
Weighted Weighted Average Rate
Notional Average --------------------------
Amount Term Received Paid
---------- -------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Receive fixed rate . . . . . . . . . . . . $ 51,000 29 months (1) 5.89% 3.47%
Pay fixed rate . . . . . . . . . . . . . . 200,000 10 months 3.44% 3.94%
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
-----------------------------------------------------------------
Weighted Weighted Average Rate
Notional Average --------------------------
Amount Term Received Paid
---------- -------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Receive fixed rate . . . . . . . . . . . . $ 1,000 52 months 10.00% 3.13%
<FN>
- --------
(1) The term of $50.0 million of these swaps may extend up to an additional 48 months after the initial term depending on
the variable rate index at the end of the initial term and each quarter thereafter as compared to that same index when
the swaps were initiated.
</TABLE>
The following table presents the Company's interest sensitivity
gap position as of December 31, 1993. This table depicts the timing of
the contractual maturity or repricing of most assets and liabilities at
this date. Fixed-rate mortgage-backed securities are included in
repricing-maturity categories based upon estimates of prepayments
provided by a third-party market information service. These estimates
may vary depending upon both the volatility and the level of market
interest rates in relationship to the coupon rates of the underlying
mortgages. Interest-bearing checking and savings deposits are included
in the under-three-month category. This table does not indicate the
effect the repricing of assets and liabilities would have on net
interest income. Also, it does not reflect interest rate exposures,
such as basis risk, prepayment risk, intra-period sensitivity, and the
effect of interest rate floors and ceilings associated with certain
financial instruments.
<TABLE>
<CAPTION>
Repricing Maturity
--------------------------------------------------------------------------------
Over Three Over Six Over One
Under Through Through Through Over
Three Six Twelve Five Five Noninterest-
Months Months Months Years Years bearing Total
---------- --------- --------- --------- ---------- ----------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Loans and leases. . . . . . $1,772,016 $ 153,203 $ 243,776 $ 678,264 $366,515 $ 44,013 $3,257,787
Investments and trading
account securities . . . . 1,119,962 169,416 291,559 1,239,671 68,182 41,227 2,930,017
Other earning assets . . . 4,673 269 1,538 327 -- -- 6,807
Nonearning assets . . . . . -- -- -- -- -- 548,262 548,262
---------- --------- --------- ---------- -------- ---------- ----------
Total assets . . . . . . $2,896,651 $ 322,888 $ 536,873 $1,918,262 $434,697 $ 633,502 $6,742,873
========== ========= ========= ========== ======== ========== ==========
Liabilities and
stockholders' equity:
Deposits. . . . . . . . . . $2,772,609 $ 375,370 $ 368,853 $ 840,427 $ 6,187 $ 944,290 $5,307,736
Federal funds purchased
and securities sold under
agreements to repurchase . 493,927 -- -- -- -- -- 493,927
Federal Home Loan Bank
borrowings . . . . . . . . 50,000 75,000 50,000 75,000 -- -- 250,000
Other borrowings. . . . . . 23,002 -- -- -- -- -- 23,002
Long-term debt . . . . . . 4,482 8 4,787 4,476 236 -- 13,989
Other liabilities . . . . . -- -- -- -- -- 55,874 55,874
Stockholders' equity . . . -- -- -- -- -- 598,345 598,345
---------- --------- --------- ---------- -------- ---------- ----------
Total liabilities and
stockholders' equity . . $3,344,020 $ 450,378 $ 423,640 $ 919,903 $ 6,423 $1,598,509 $6,742,873
========== ========= ========= ========== ======== ========== ==========
Interest rate swaps . . . . . $ 149,000 $(100,000) $ -- $ (49,000) $ -- $ -- $ --
Repricing gap adjusted
for interest rate swaps. . . (298,909) (227,490) 113,233 949,359 428,274 (964,467) --
Cumulative adjusted
repricing gap. . . . . . . . (298,909) (526,399) (413,166) 536,193 964,467 -- --
Cumulative adjusted rate-
sensitive assets/
rate-sensitive liabilities . .87 .85 .89 (*) (*) (*)
<FN>
___________
(*) Not meaningful.
</TABLE>
The Company has a negative cumulative repricing gap in the one-
year horizon. Consequently, it is more sensitive to a rising rate
environment which, if it occurred, would adversely impact the net
interest margin. Simulation modeling has demonstrated that a sudden
and large increase in rates or a dramatic narrowing in the spread
between asset yields and liability costs would result in an adverse
impact on the net interest margin; however, the adverse impact is more
moderate if interest rates increase gradually.
Liquidity: The Company's consolidated statements of cash flows
are presented elsewhere in this report. These statements distinguish
cash flows as operating, investing, and financing. They provide a
historical accounting of the Company's ability to generate cash
required to meet its customers' and creditors' demands. Certain
statement-of-condition items and ratios are indicative of the Company's
strong liquidity position at December 31, 1993. The loans-to-deposits
and loans-to-assets ratios averaged 55.52% and 45.19%, respectively,
during 1993. During 1993, average core deposits (demand, interest
checking, savings, and time deposits under $100,000) represented 91.8%
of total deposits and 74.7% of average assets.
At December 31, 1993, federal funds purchased, securities sold
under agreements to repurchase, Federal Home Loan Bank borrowings, and
other borrowings totaled $766.9 million. At that same date, additional
borrowing liquidity was also available in the form of $1.0 billion of
unpledged investment securities classified as held-to-maturity which
could secure short-term borrowing requirements. In addition,
substantial liquidity is available from the available-for-sale
securities which could secure short-term borrowings or be sold.
Regular maturities and prepayments of investment securities,
particularly the mortgage-backed securities, also generate significant
liquidity. Scheduled principal reductions and prepayments on the
mortgage-backed securities approximated $219.6 million during the
fourth quarter of 1993.
As disclosed in Note 20 to the Consolidated Financial Statements,
the Company had commitments to extend credit at December 31, 1993,
including standby letters of credit of $91.4 million, commercial
letters of credit of $13.7 million, unused credit card lines of $325.3
million, and other loan commitments of $1.1 billion. Some of these
commitments will not be fully utilized, others will expire without
being drawn upon, and the commitments will not all be used at the same
time. Accordingly, management anticipates that the Company has ample
liquidity to meet these and other demands.
Capital Resources
At December 31, 1993, total stockholders' equity was $598.3
million or 8.87% of total assets compared to $525.8 million or 8.00% of
total assets at December 31, 1992. Included in total stockholders'
equity at December 31, 1993 were $25.1 million in unrealized gains on
available-for-sale securities recorded in connection with the Company's
adoption of FAS No. 115. For 1993, total stockholders' equity averaged
$550.8 million or 8.43% of average assets. The prior year average
equity was $487.0 million or 8.44% of average assets.
Banking system regulators apply two measures of capital adequacy
to banking companies: the risk-based capital and leverage ratios. The
risk-based capital rules provide for the weighting of assets and
off-balance-sheet commitments and contingencies according to prescribed
risk categories ranging from 0 to 100%. Regulatory capital is then
divided by risk-weighted assets to determine the risk-adjusted capital
ratios. The leverage ratio supplements the risk-based capital
guidelines by placing a constraint on the degree to which a banking
company can leverage its equity capital, regardless of the balance
sheet composition. The leverage ratio is computed by dividing Tier I
capital by quarter-to-date average assets less certain intangibles.
The following table presents the Company's risk-based capital and
leverage ratios together with the required minimums. At December 31,
1993, banking system regulators had not amended the regulatory capital
rules to include net unrealized gains and losses on available-for-sale
securities in Tier I capital. Accordingly, the ratios in the following
table exclude the $25.1 million net unrealized gain on available-for-
sale securities.
<TABLE>
<CAPTION>
December 31,
-------------------------------
1993 1992
------------ ------------
(Dollars in thousands)
<S> <C> <C>
Tier I capital:
Common stockholders' equity . . . . . . . . . . . . . . . . . . . . . . $ 476,277 $ 425,252
Preferred stockholders' equity. . . . . . . . . . . . . . . . . . . . . 96,920 100,561
Less intangible assets (1) . . . . . . . . . . . . . . . . . . . . . . (62,296) (59,883)
---------- ----------
Total Tier I capital . . . . . . . . . . . . . . . . . . . . . . . . 510,901 465,930
---------- ----------
Tier II capital:
Allowance for credit losses (2) . . . . . . . . . . . . . . . . . . . . 49,259 44,188
---------- ----------
Total regulatory capital. . . . . . . . . . . . . . . . . . . . . . $ 560,160 $ 510,118
========== ==========
Risk-weighted assets and off-balance-sheet
commitments and contingencies . . . . . . . . . . . . . . . . . . . . . $3,940,574 $3,534,759
========== ==========
Adjusted average assets (3) . . . . . . . . . . . . . . . . . . . . . . . $6,717,389 $5,828,591
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Regulatory
Minimums
----------
<S> <C> <C> <C>
Risk-based capital ratios:
Tier I . . . . . . . . . . . . . . . . . . . . . . . . 4.00% 12.97% 13.18%
Total . . . . . . . . . . . . . . . . . . . . . . . . . 8.00 14.22 14.43
Leverage ratio . . . . . . . . . . . . . . . . . . . . . 3.00 7.61 7.99
<FN>
___________
(1) All intangible assets except purchased mortgage servicing rights are subtracted from capital.
(2) The allowance for credit losses is limited to 1.25% of risk-weighted assets.
(3) Quarter-to-date average assets less all intangibles except purchased mortgage servicing rights.
</TABLE>
As indicated in the preceding table, the Company's risk-based and
leverage capital ratios substantially exceed the minimums required by
banking system regulators. If the regulatory capital rules had been
amended to include the net unrealized gain on available-for-sale
securities in Tier I capital, the Company's risk-based and leverage
ratios at December 31, 1993 would have been as follows:
<TABLE>
<CAPTION>
December 31, 1993
-----------------
<S> <C>
Risk-based capital ratios:
Tier I . . . . . . . . . . . . . . . . . . . . . . . . . 13.64
Total. . . . . . . . . . . . . . . . . . . . . . . . . . 14.89
Leverage ratio . . . . . . . . . . . . . . . . . . . . . . 7.98
</TABLE>
Including the net unrealized gains and losses on available-for-sale
securities in regulatory capital computations could result in more
volatile regulatory capital levels. However, it is the Company's
intention to simulate the estimated volatility various interest rate
forecasts could have on the net unrealized gains or losses in the
available-for-sale portfolio and maintain capital levels in excess of
those required by the regulators including the consideration of this
volatility.
The Federal Deposit Insurance Corporation adopted final
regulations under the Federal Deposit Insurance Corporation Improvement
Act, effective June 16, 1992. A bank is typically defined to be "well
capitalized" if it maintains a Tier I capital ratio of at least 6.0%,
a total risk-based capital ratio of at least 10.0% and a leverage
ratio of at least 5.0%. Generally, it is the Company's intention to
maintain sufficient capital in each of its bank subsidiaries to permit
them to maintain a "well capitalized" designation. The capital ratios
for both of the Company's subsidiary banks exceeded the "well
capitalized" regulatory capital requirements at December 31, 1993.
For 1993, the Company's board of directors had authorized the
purchase of up to 500,000 shares of the Company's common stock to be
used for general corporate purposes. A separate board of directors'
action in December 1993 authorized the purchase of an additional 71,518
shares to be used to acquire the minority interests in the subsidiaries
of First Dodge City Bancshares, Inc., a pending 1994 acquisition. A
total of 111,518 shares were purchased in 1993, 40,000 shares for
general corporate purposes and 71,518 shares specifically for the
pending acquisition. The purchase of up to 500,000 common shares, or
the equivalent in depositary shares representing interests in the
Company's Class A Cumulative Preferred Stock, or a combination of the
two has been authorized for 1994.
Acquisitions
As more fully explained in Notes 2 and 3 to the Consolidated
Financial Statements, the Company completed 14 business combinations
and three deposit assumption transactions during 1993 and 1992.
Frequently, common stock is used as consideration in acquisitions
so that stockholders' equity is increased as assets are acquired.
During 1993 and 1992 a total of almost 7.3 million common shares were
issued in pooling-of-interests transactions increasing common equity
$105.1 million. Of the four pending acquisitions represented by
definitive agreements (detailed in Item 1. Business of PART I of this
Annual Report on Form 10-K), two will be accounted for as poolings of
interests. These transactions will result in the issuance of
approximately 3.5 million shares of common stock.
The funding for the 1993 and 1992 purchase acquisitions was
primarily derived from the proceeds of the public offering of $100.0
million of depositary shares representing interests in the Company's
Class A 7.00% Cumulative Convertible Preferred Stock. Funding for
currently pending acquisitions will be derived from retained earnings.
The Company continues to be engaged in an active acquisition
program. Pursuant to that program, the Company is presently
considering or participating in discussions concerning additional
acquisitions.
Parent Company Funding Sources and Dividends
The ability of the parent company to fund various operating
expenses and dividend requirements is dependent in part on its ability
to derive funds from its bank subsidiaries. Historically, these funds
have been primarily provided by intercompany dividends. Intercompany
dividends amounted to $76.3 million, $57.8 million, and $49.5 million
for 1993, 1992, and 1991, respectively. The approval of the
Comptroller of the Currency ("Comptroller") is required if total
dividends declared by a national bank in any one year exceed the bank's
net profits for that year plus the profits for the two preceding years
retained by the bank. The Comptroller's approval was required and
received for the 1993 dividends. In 1994, the subsidiary banks may
distribute to the parent company (in addition to their 1994 net
profits) an aggregate of approximately $15.8 million in dividends
without approval from regulatory agencies.
Because of the financial strength of the parent company and the
anticipated earnings capacity of both the BANK IV banks, it is
anticipated that the banks will be able to obtain permission from the
Comptroller to pay additional dividends in 1994 to the extent justified
by their respective financial condition and subject to the capital
requirements described in the next paragraph.
Because of the Company's intention to continue making
acquisitions, it is anticipated that the Comptroller will expect the
BANK IV banks to maintain the greater of a 6.0% leverage ratio or a
10.0% total risk-based capital ratio. These ratios exceed the
otherwise applicable minimum regulatory requirements of a 3.0% leverage
ratio and an 8.0% total risk-based capital ratio. At December 31,
1993, the BANK IV banks' aggregate capital exceeded the amount required
by the greater of a 6.0% leverage or a 10.0% risk-based capital ratio
by approximately $107.9 million.
The parent company had approximately $25.1 million of cash and
short-term investments at December 31, 1993. In addition, the parent
company has available an unused $35.0 million committed line of credit
from an unaffiliated bank to be used for general corporate purposes.
The parent company has a term loan outstanding from an unaffiliated
bank in the amount of $13.1 million at December 31, 1993. This note
bears interest at 8.6% and matures in March 1995. Principal payments
of approximately $4.4 million are payable semiannually on the last day
of March and September. The borrowing agreements subject the Company
to certain restrictions and covenants related to, among others,
tangible net worth and the maintenance of specific ratios related to
leverage, funded debt, total indebtedness, nonperforming loans, and
nonperforming assets. The parent company is currently in compliance
with all restrictions and covenants under both of these agreements.
Recently Issued Accounting Standards
In May 1993, the Financial Accounting Standards Board issued
Financial Accounting Standard ("FAS") No. 114 which could have an
effect on the Company in 1994 and after. FAS No. 114 addresses the
accounting by creditors for impairment of certain loans. It is
applicable to all creditors and to all loans, uncollateralized as well
as collateralized, except large groups of smaller-balance homogeneous
loans that are collectively evaluated for impairment, loans that are
measured at fair value or at the lower of cost or fair value, leases,
and debt securities. It applies to all loans that are restructured in
a troubled debt restructuring involving a modification of terms. The
Statement requires that, when evaluating the need for an allowance for
credit losses on impaired loans that are within the scope of this
Statement, the loss accrual be measured based on the present value of
expected future cash flows discounted at the loan's effective interest
rate or, as a practical expedient, at the loan's observable market
price or the fair value of the collateral if the loan is collateral-
dependent. This Statement is effective for fiscal years beginning
after December 15, 1994. The Company has not completed the analyses
required to estimate the impact of FAS 114; however, the Company does
not believe the adoption of the new rules will have an adverse effect
on its financial condition.
Effects of Inflation and Changing Prices
Virtually all assets and liabilities of a banking organization
are monetary in nature. As such, they represent obligations to pay or
receive fixed and determinable amounts of money which are not affected
by future changes in prices. Changes in interest rates are the
greatest determinant of bank earnings. However, interest rates do not
necessarily move in the same direction or with the same magnitude as
prices of other goods and services. A financial institution can
respond to changes in interest rates by matching the maturities and
costs of its liabilities against its interest earning assets. How well
the institution copes with changing interest rates may then be
determined by examining its net yield on earning assets and analyzing
its asset and liability structure. Accordingly, reference to the
various supplementary schedules shown elsewhere in this report will
assist in the understanding of how the Company is positioned to react
to changing interest rates and inflationary trends.
Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
1993
----------------------------------------------
4th 3rd 2nd 1st
------- ------- ------- -------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Summary Income Statement Information:
Interest income . . . . . . . . . . . . . . . . . . . . . $109,950 $111,465 $108,047 $104,005
Interest expense. . . . . . . . . . . . . . . . . . . . . 43,683 45,857 44,218 41,743
-------- -------- -------- --------
Net interest income . . . . . . . . . . . . . . . . . . . 66,267 65,608 63,829 62,262
Provision for credit losses . . . . . . . . . . . . . . . 540 425 2,885 3,206
-------- -------- -------- --------
Net interest income after provision for credit losses . . 65,727 65,183 60,944 59,056
Investment securities gains . . . . . . . . . . . . . . . 262 168 133 748
Other noninterest income. . . . . . . . . . . . . . . . . 23,326 21,860 20,820 21,786
Noninterest expense . . . . . . . . . . . . . . . . . . . (61,233) (66,043) (62,535) (63,175)
-------- -------- -------- --------
Income before income taxes and cumulative
effect of a change in accounting principle . . . . . . . 28,082 21,168 19,362 18,415
Income tax expense. . . . . . . . . . . . . . . . . . . . 7,900 4,816 4,396 4,733
-------- -------- -------- --------
Income before cumulative effect
of a change in accounting principle. . . . . . . . . . . 20,182 16,352 14,966 13,682
Cumulative effect of a change in accounting principle . . -- -- (5) 10,514
-------- -------- -------- --------
Net income. . . . . . . . . . . . . . . . . . . . . . . . $ 20,182 $ 16,352 $ 14,961 $ 24,196
======== ======== ======== ========
Net income applicable to common
and common equivalent shares . . . . . . . . . . . . . . $ 18,432 $ 14,602 $ 13,211 $ 22,446
======== ======== ======== ========
Per Common Share Data:
Earnings per common and common equivalent share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . $ .71 $ .57 $ .51 $ .88
Fully diluted . . . . . . . . . . . . . . . . . . . . . .68 .55 .50 .81
Common dividend . . . . . . . . . . . . . . . . . . . . . .26 .24 .24 .24
Book value (period-end) . . . . . . . . . . . . . . . . . 18.83 17.91 17.70 17.37
Market value (period-end) bid . . . . . . . . . . . . . . 28 3/4 29 3/4 30 1/4 30 3/4
Market value (bid):
High . . . . . . . . . . . . . . . . . . . . . . . . . $ 30 $ 31 $ 30 3/4 $ 31
Low . . . . . . . . . . . . . . . . . . . . . . . . . . 25 3/4 28 1/2 26 3/4 28 1/2
As Previously Reported:
Net interest income . . . . . . . . . . . . . . . . . . . $ 66,267 $ 61,851 $ 54,422 $ 51,915
Net income. . . . . . . . . . . . . . . . . . . . . . . . 20,182 18,795 17,032 22,152
Net income applicable to common
and common equivalent shares . . . . . . . . . . . . . . 18,432 17,045 15,281 20,402
Fully diluted earnings per common share . . . . . . . . . .68 .67 .65 .86
</TABLE>
<TABLE>
<CAPTION>
1992
----------------------------------------------
4th 3rd 2nd 1st
------- ------- ------- -------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Summary Income Statement Information:
Interest income . . . . . . . . . . . . . . . . . . . . . $104,147 $106,849 $107,599 $108,524
Interest expense. . . . . . . . . . . . . . . . . . . . . 42,332 46,222 50,126 53,717
-------- -------- -------- --------
Net interest income . . . . . . . . . . . . . . . . . . . 61,815 60,627 57,473 54,807
Provision for credit losses . . . . . . . . . . . . . . . 5,418 4,124 5,307 6,494
-------- -------- -------- --------
Net interest income after provision for credit losses . . 56,397 56,503 52,166 48,313
Investment securities gains . . . . . . . . . . . . . . . 884 559 224 853
Other noninterest income. . . . . . . . . . . . . . . . . 20,288 20,464 20,811 18,931
Noninterest expense . . . . . . . . . . . . . . . . . . . (60,488) (54,009) (51,005) (51,424)
-------- -------- -------- --------
Income before income taxes and cumulative
effect of a change in accounting principle . . . . . . . 17,081 23,517 22,196 16,673
Income tax expense. . . . . . . . . . . . . . . . . . . . 4,917 5,267 4,446 3,904
-------- -------- -------- --------
Income before cumulative effect
of a change in accounting principle. . . . . . . . . . . 12,164 18,250 17,750 12,769
Cumulative effect of a change in accounting principle . . -- -- -- 2,373
-------- -------- -------- --------
Net income. . . . . . . . . . . . . . . . . . . . . . . . $ 12,164 $ 18,250 $ 17,750 $ 15,142
======== ======== ======== ========
Net income applicable to common
and common equivalent shares . . . . . . . . . . . . . . $ 10,414 $ 16,500 $ 16,000 $ 14,441
======== ======== ======== ========
Per Common Share Data:
Earnings per common share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . $ .41 $ .65 $ .63 $ .58
Fully diluted . . . . . . . . . . . . . . . . . . . . . .41 .62 .60 .56
Common dividend . . . . . . . . . . . . . . . . . . . . . .22 .22 .22 .22
Book value (period-end) . . . . . . . . . . . . . . . . . 16.74 16.53 16.06 15.59
Market value (period-end) bid . . . . . . . . . . . . . . 29 25 1/4 24 1/2 26 1/4
Market value (bid):
High. . . . . . . . . . . . . . . . . . . . . . . . . . $ 31 $ 26 3/4 $ 27 3/4 $ 26 1/4
Low . . . . . . . . . . . . . . . . . . . . . . . . . . 24 1/2 23 3/4 24 1/4 22 1/2
As Previously Reported:
Net interest income . . . . . . . . . . . . . . . . . . . $ 50,423 $ 56,909 $ 48,731 $ 45,137
Net income. . . . . . . . . . . . . . . . . . . . . . . . 12,360 17,481 15,236 10,460
Net income applicable to common
and common equivalent shares . . . . . . . . . . . . . . 10,610 15,731 13,486 9,759
Fully diluted earnings per common share . . . . . . . . . .49 .63 .58 .44
</TABLE>
The quarterly price range of the Company's common stock is the
closing bid price, as reported by the NASDAQ national market system.
Such over-the-counter market quotations reflect inter-dealer prices
without retail markup, markdown, or commission and may not necessarily
represent actual transactions.
Information for previously reported quarters has been restated to
reflect acquisitions accounted for as poolings of interests.
EXHIBITS INDEX
Exhibit
No. Description
-------
3.01 - Restated Articles of Incorporation and
amendments (Exhibit 3.01 to Form 10-Q for the
quarter ended June 30, 1992, previously filed
by Registrant).*
3.02 - Certificate of Designation (Exhibit 3.02 to
Form 10-K for year ended December 31, 1991,
previously filed by Registrant (the "1991 10-
K")).*
3.03 - Form of Deposit Agreement (Exhibit 3.03 to
1991 10-K).*
3.04 - Form of Depositary Receipt (Exhibit 3.04 to
1991 10-K).*
3.05 - Bylaws.
10.01 - Amended and Restated Fourth Financial
Corporation 1981 Incentive Stock Option Plan
(Exhibit 4(a) to Post-Effective Amendment
No. 2 to Form S-8, Regis. No. 2-80907,
previously filed by Registrant).*
10.02 - Amended and Restated Fourth Financial
Corporation 1986 Incentive Stock Option Plan
(Exhibit 10.02 to Form 10-K for the year ended
December 31, 1990, previously filed by
Registrant).*
10.03 - Revolving Credit and Term Loan Agreement,
dated as of July 1, 1987, between Chemical
Bank and Registrant (Exhibit 10.04 to Form 10-
K for the year ended December 31, 1987,
previously filed by Registrant).*
10.04 - First Amendment dated as of July 1, 1989, to
Revolving Credit and Term Loan Agreement
(Exhibit 10.04 to Form 10-K for the year ended
December 31, 1989, previously filed by
Registrant).*
10.05 - Second Amendment dated as of November 15,
1989, to Revolving Credit and Term Loan
Agreement (Exhibit 10.05 to Form 10-K for the
year ended December 31, 1989, previously filed
by Registrant).*
10.06 - Third Amendment, dated as of March 29, 1991,
to Revolving Credit and Term Loan Agreement
(Exhibit 10.06 to 1991 10-K).*
10.07 - Fourth Financial Corporation 1993 Employee
Stock Purchase Plan.
10.08 - Fourth Financial Corporation 1993 Incentive
Stock Option Plan.
10.09 - Fourth Financial Corporation Amended and
Restated Non-Employee Directors Deferred Fee
Plan.
10.10 - Fourth Financial Corporation Non-Employee
Directors Stock Option Plan.
10.11 - Agreement and Plan of Reorganization, dated as
of October 12, 1993, between Fourth Financial
Corporation and Great Southern Bancorp, Inc.
(Exhibit 2.1 to Form 8-K, dated October 12,
1993).*
10.12 - Stock Purchase Agreement, dated as of January
31, 1994, between BANK IV Kansas, National
Association, and Emprise Financial
Corporation.
10.13 - Agreement and Plan of Reorganization, dated as
of February 2, 1994, among Fourth Financial
Corporation, First Dodge City Bancshares,
Inc., First National Bancshares of Dodge City,
Inc., Metro Bancshares, Inc., Metro Bank of
Broken Arrow, First National Bank and Trust
Company in Dodge City, and the stockholders of
First Dodge City Bancshares, Inc.
10.14 - Stock Purchase Agreement, dated as of February
9, 1994, among Fourth Financial Corporation,
LSB Industries, and Prime Financial
Corporation.
10.15 - $35,000,000 line of credit agreement, dated as
of June 21, 1993, between Fourth Financial
Corporation and Continental Bank N.A.
22 - Subsidiaries of Registrant.
24.01 - Consent of Ernst & Young.
24.02 - Consent of Arthur Andersen & Co.
24.03 - Consent of Sartain Fischbein & Co.
24.04 - Consent of GRA, Thompson, White & Co, P.A.
24.05 - Consent of Grant Thornton.
24.06 - Consent of Deloitte & Touche.
Exhibits 10.01, 10.02, 10.07, 10.08, 10.09, 10.10, and 10.13 are
compensation plans required to be filed as exhibits pursuant to
Item 14(c).
___________
* Document has been previously filed with the Securities and Exchange
Commission and is incorporated by reference and made a part hereof.
EXHIBIT 3.05
BY-LAWS
FOURTH FINANCIAL CORPORATION
Table of Contents
PART I - MEETINGS OF SHAREHOLDERS
Section 1.01 Annual Meetings
Section 1.02 Postponed Election of Directors
Section 1.03 Special Meetings
Section 1.04 Notice of Shareholders' Meetings
Section 1.05 Nomination for Election to the Board of
Directors
Section 1.06 Quorum
Section 1.07 Organization of Shareholders' Meetings
Section 1.08 Voting Rights at Shareholders' Meetings
Section 1.09 Proxies
Section 1.10 Records of Voting at Meetings
Section 1.11 Adjourned Meetings and Notice Thereof
PART II - DIRECTORS
Section 2.01 Powers of Board of Directors
Section 2.02 Number of Directors
Section 2.03 Term of Office
Section 2.04 Acceptance of Office
Section 2.05 Vacancies
Section 2.06 Organization Meeting of Board
Section 2.07 Regular Meetings
Section 2.08 Special Meetings
Section 2.09 Quorum
Section 2.10 Vote of Directors; Proxies
Section 2.11 Fees
PART III - OFFICERS AND EMPLOYEES
Section 3.01 Officers and Employees
Section 3.02 Terms of Office
Section 3.03 Surety Bonds
Section 3.04 The Chairman of the Board
Section 3.05 President
Section 3.06 Vice Presidents
Section 3.07 Treasurer
Section 3.08 Controller
Section 3.09 Secretary
Section 3.10 Officers Pro Tempore
Table of Contents (Continued)
PART IV - COMMITTEES
Section 4.01 Appointment and Organization of
Committees
Section 4.02 Executive Committee
Section 4.03 Audit and Examination Committee
Section 4.04 Compensation and Personnel Committee
Section 4.05 Asset, Liability and Investments Committee
PART V - SEAL
Section 5.01 Form
Section 5.02 Authority to Use Seal
PART VI - STOCK
Section 6.01 Form of Stock Certificates
Section 6.02 Transfer of Stock
Section 6.03 Determining Shareholders of Record
Section 6.04 Registered Stockholders
Section 6.05 Registrars and Transfer Agents
Section 6.06 General Authority
Section 6.07 Control Share Acquisitions
PART VII - MISCELLANEOUS
Section 7.01 Execution of Instruments
Section 7.02 Waiver of Notice
Section 7.03 Meeting by Conference Telephone
Section 7.04 Emergencies
Section 7.05 Action Without a Meeting
PART VIII - INDEMNIFICATION
Section 8.01 Indemnification
PART IX - CHANGES IN BY-LAWS
Section 9.01 Amendments
BY-LAWS
FOURTH FINANCIAL CORPORATION
PART I - MEETINGS OF SHAREHOLDERS
Section 1.01 Annual Meetings
- ----------------------------
The regular annual meeting of the shareholders of the Corporation
for determining the number and electing members of the Board of
Directors for the ensuing year, receiving and acting upon reports
of officers as to acts, appointments, and transactions during the
preceding year, and transacting such other business relative to
the management of the Corporation as may lawfully come before it,
shall be held at its main office on the third Thursday of April
each year, or on such other date or at such other place as the
Board of Directors may in any year or years designate.
Section 1.02 Postponed Election of Directors
- --------------------------------------------
If, for any cause, the annual election of directors is not held
on the date fixed by these By-Laws, the Board of Directors shall
order an election to be held on some other day, of which special
notice shall be given in accordance with the Articles of
Incorporation and these By-Laws.
Section 1.03 Special Meetings
- -----------------------------
Special meetings of the shareholders of the Corporation, for any
purpose or purposes, may be called by the Board of Directors.
Any call for a special meeting shall state the purpose of the
meeting. The business transacted at a special meeting shall be
limited to that stated in the call for the meeting, but the call
for the meeting may state that any proper corporate business may
be transacted at the meeting, in which case any proper corporate
business may be transacted.
Section 1.04 Notice of Shareholders' Meetings
- ---------------------------------------------
Except in specific instances where other notice is required by
law or by the Articles of Incorporation, notice of any annual or
special meeting of the shareholders, stating the time, place, and
purpose of the meeting, shall be sufficient if mailed by first-
class mail, postage prepaid, to each shareholder of record at the
address shown upon the books of the Corporation, not less than
ten days nor more than 50 days prior to the date set for such
meeting.
Section 1.05 Nomination for Election to the Board of Directors
- --------------------------------------------------------------
No person shall be eligible for election to the Board of
Directors at any shareholders' meeting unless such person is
nominated as provided herein. Nominations for election to the
Board of Directors by shareholders may be made by the Board of
Directors or by any shareholder of any outstanding class of
capital stock of the Corporation entitled to vote for the
election of directors.
Nominations, other than those made by the Board of Directors,
shall be made in writing and shall be delivered or mailed to the
President of the Corporation not less than 14 days nor more than
50 days prior to any meeting of shareholders called for the
election of directors; provided, however, that if less than 21
days' notice of the meeting is given to shareholders, such
nomination shall be mailed or delivered to the President of the
Corporation not later than the close of business on the seventh
day following the day on which the notice of meeting was mailed.
Such notification shall contain the following information to the
extent known to the notifying shareholder:
1. The name and address of each proposed nominee.
2. The principal occupation of each proposed nominee.
3. The total number of shares of capital stock of the
Corporation that to the knowledge of the notifying
shareholder will be voted for each of the proposed
nominees.
4. The name and residence address of the notifying
shareholder.
5. The number of shares of capital stock of the Corporation
owned by the notifying shareholder.
In the event that any person so nominated shall at any time prior
to any such meeting become ineligible or unable to serve as a
director because of death, disability or incapacity, or shall
withdraw as a nominee, the Board of Directors or the shareholder
who nominated such nominee may nominate a substitute by
delivering a written nomination to the President of the
Corporation.
Nominations not made in accordance herewith may, in the
Chairman's discretion, be disregarded by the Chairman of the
meeting, and upon the Chairman's instructions, the vote tellers
may disregard all votes cast for each such nominee.
Section 1.06 Quorum
- -------------------
A majority of the outstanding capital stock represented in person
or by proxy shall constitute a quorum at any meeting of
shareholders unless otherwise provided by law. Less than a
quorum may adjourn any meeting from time to time.
Section 1.07 Organization of Shareholders' Meetings
- ---------------------------------------------------
The holders of a majority of the outstanding shares entitled to
vote and represented at any meeting of the shareholders may
choose persons to act as chairman and as secretary of the
meeting. However, in the absence of such choice the Chairman of
the Board of Directors, or in the Chairman's absence the
President of the Corporation, shall act as chairman of the
meeting. The Secretary of the Board of Directors, or in the
Secretary's absence a person appointed by the chairman of the
meeting, shall act as secretary of the meeting.
Section 1.08 Voting Rights at Shareholders' Meetings
- ----------------------------------------------------
In all elections of directors, each shareholder shall have the
right to vote the number of shares owned by such shareholder for
as many persons as there are directors to be elected, or to
cumulate such shares and give one candidate as many votes as the
number of directors multiplied by the number of such
shareholder's shares shall equal, or to distribute them on the
same principle among as many candidates as such shareholder shall
think fit. In deciding all other questions at meetings of the
shareholders, each shareholder shall be entitled to one vote on
each share of stock owned by such shareholder. A majority of the
votes cast shall decide every question or matter submitted to the
shareholders at any meeting at which a quorum is present, unless
otherwise provided by law or by the Articles of Incorporation.
Section 1.09 Proxies
- --------------------
Shareholders may vote at any meeting of the shareholders by
proxies duly authorized in writing, but no officer or employee of
the Corporation shall act as proxy. Proxies shall be valid only
for one meeting, to be specified therein, and any adjournments of
such meeting. Proxies shall be dated and shall be filed with the
records of the meeting.
Section 1.10 Records of Voting at Meetings
- ------------------------------------------
In the case of any meeting of the shareholders, a record shall be
made showing the names of the shareholders present and the number
of shares held by each, the names of shareholders represented by
proxy and the number of shares held by each, and the names of the
proxies. This record also shall show the number of shares voted
on each action taken, including the number of shares voted for
each candidate for director. This record shall be included in
the minute book of the Corporation.
Section 1.11 Adjourned Meetings and Notice Thereof
- --------------------------------------------------
Any meeting of the shareholders, whether or not a quorum is
present, may be adjourned from time to time by the vote of a
majority of the shares present in person or represented by proxy,
but in the absence of a quorum no other business may be
transacted by such meeting. If any meeting of the shareholders
is adjourned for more than 30 days, or if after the adjournment a
new record date is fixed for the adjourned meeting, notice of the
adjourned meeting shall be given as in the case of an original
meeting. Otherwise, it shall not be necessary to give any notice
of an adjournment or of the business to be transacted at an
adjourned meeting other than by announcement at the meeting at
which such adjournment is taken.
PART II - DIRECTORS
Section 2.01 Powers of Board of Directors
- -----------------------------------------
The Board of Directors shall have power to manage and administer
the business and affairs of the Corporation. Except as expressly
limited by law, all corporate powers of the Corporation shall be
vested in and may be exercised by the Board of Directors.
Section 2.02 Number of Directors
- --------------------------------
As prescribed by the Articles of Incorporation, the Board of
Directors shall consist of not less than three nor more than 25
persons, who need not be shareholders.
Section 2.03 Term of Office
- ---------------------------
As provided in the Articles of Incorporation, each director shall
serve for a term ending on the date of the third annual meeting
following the annual meeting at which such director was elected.
Section 2.04 Acceptance of Office
- ---------------------------------
Each person elected or appointed a director of the Corporation
must file with the Secretary a written acceptance of the office
before exercising the functions thereof.
Section 2.05 Vacancies
- ----------------------
Any vacancy occurring in the Board of Directors shall be filled
by the majority vote of the remaining directors of the class in
which such vacancy occurs or by the sole remaining director of
that class if only one such director remains, or by the majority
vote of the remaining members of the other two classes if there
be no remaining member of the class in which the vacancy occurs.
A director so elected to fill a vacancy shall serve for the
remainder of the then present term of office of the class to
which he or she was elected.
Section 2.06 Organization Meeting of Board
- -------------------------------------------
Following the annual meeting of the shareholders, the chairman or
the secretary of the meeting shall promptly notify the directors-
elect of their election, and they shall meet promptly for the
purpose of organizing the new Board of Directors, appointing
committees of the Board and officers, fixing salaries for the
ensuing year, and transacting such other business as may properly
come before the organization meeting.
Section 2.07 Regular Meetings
- -----------------------------
The regular meetings of the Board of Directors may be held on
call of the Chairman of the Board, the President, or the
Secretary at the main office of the Corporation on such dates as
the Board of Directors may from time to time by resolution
establish. When any regular meeting of the Board falls upon a
holiday, the meeting shall be held on the next business day
unless the Board designates some other day. Regular meetings of
the Board of Directors may also be held at such other times and
places, within or without the State of Kansas, as the Board
itself may from time to time determine. There shall be mailed to
each director at least ten days prior to any regular meeting a
written notice of the time and place thereof.
Section 2.08 Special Meetings
- -----------------------------
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President of the Corporation, or at
the request of three or more directors. Each director shall be
given at least two days' notice of the time, place, and purpose
of any special meeting, which notice may be given in person, by
telephone, by mail, by telegraph, or by any other effective
method.
Section 2.09 Quorum
- -------------------
A majority of the directors shall constitute a quorum at any
meeting unless otherwise provided by law. Less than a quorum may
adjourn any meeting, from time to time, and the meeting may be
held, as adjourned, without further notice.
Section 2.10 Vote of Directors; Proxies
- ---------------------------------------
A majority of those directors present and voting at any meeting
of the Board of Directors at which a quorum is present shall
decide each matter considered unless otherwise provided by law or
by the Articles of Incorporation. A director cannot vote by
proxy or otherwise act by proxy at a meeting of the Board of
Directors.
Section 2.11 Fees
- -----------------
Each director shall receive such annual fee, such fee for each
Board meeting attended, and such fee for each meeting of any
Board committee attended as the Board shall fix from time to
time.
PART III - OFFICERS AND EMPLOYEES
Section 3.01 Officers and Employees
- -----------------------------------
The officers of the Corporation shall be a Chairman of the Board
of Directors, a President, one or more Vice Presidents, a
Treasurer, a Controller, a Secretary, and such other officers as
from time to time in the judgment of the Board may be required
for the prompt and orderly transaction of the business of the
Corporation. The Chairman of the Board and the President shall
be members of the Board of Directors; other officers may, but
need not, be members of the Board of Directors. Two or more
offices may be held by the same individual, but no individual may
hold at the same time the offices of Vice President, Secretary,
and Treasurer. All officers shall be elected, appointed or
employed and their duties prescribed by the Board of Directors.
Nevertheless, the Board of Directors may delegate to the
President the authority to prescribe the duties of other officers
of the Corporation not inconsistent with law, the Articles of
Incorporation and these By-Laws, and to appoint other employees,
prescribe their duties and dismiss them.
Section 3.02 Terms of Office
- ----------------------------
The Chairman of the Board of Directors, the President, and any
other officer who is a member of the Board of Directors shall
hold office until the next organization meeting of the Board of
Directors unless in the meantime such officer shall resign, be
disqualified, or be removed from office. Any vacancy occurring
in the office of Chairman of the Board of Directors or President
shall be filled promptly by the remaining members of the Board of
Directors. Each other officer and employee shall hold office or
employment at the pleasure of the Board of Directors; provided,
however, that the Board of Directors may delegate to the
Chairman, the President, and such other officers as it deems
appropriate the Board's authority to remove and to dismiss such
other officers and employees.
Section 3.03 Surety Bonds
- -------------------------
Each officer and employee of the Corporation shall give bond of
suitable amount with security to be approved by the Board of
Directors, conditioned for the honest and faithful discharge of
such officer's or employee's duties. At the discretion of the
Board, such bonds may be schedule or blanket form and the
premiums shall be paid by the Corporation. The amount of such
bonds, the form of coverage, and the name of the company
providing the surety therefor shall be reviewed by the Board of
Directors annually.
Section 3.04 The Chairman of the Board
- ---------------------------------------
The Chairman of the Board shall preside at all meetings of the
Board of Directors. The Chairman shall be the Chief Executive
Officer of the Corporation unless such duty is delegated to the
President. The Chairman shall have general executive powers as
well as the specific powers conferred by law, by the Articles of
Incorporation, and by these By-Laws, and shall supervise the
carrying out of the policies adopted or approved by the Board of
Directors. The Chairman shall also perform such other duties and
have such other powers as may be assigned from time to time by
the Board of Directors.
Section 3.05 President
- ----------------------
The President shall, in the absence of the Chairman of the Board,
preside at meetings of the Board of Directors. The President
shall have general executive powers as well as the specific
powers conferred by law, by the Articles of Incorporation, and by
these By-Laws, and shall have the powers and duties usually
incident to the office of President. The President shall also
perform such other duties and have such other powers as may be
assigned from time to time by the Board of Directors.
Section 3.06 Vice Presidents
- ----------------------------
Each Vice President shall have such powers and duties as may be
assigned by the Board of Directors.
Section 3.07 Treasurer
- ----------------------
The Treasurer shall be responsible for the funding of the
activities of the Corporation and its subsidiaries and for
managing the investment of the funds of the Corporation and its
subsidiaries.
Section 3.08 Controller
- -----------------------
The Controller shall keep proper records of all transactions of
the Corporation, cause all duly authorized expenses of the
Corporation to be paid, and prepare complete financial reports
for each regular meeting of the Board of Directors.
Section 3.09 Secretary
- ----------------------
The Secretary shall be responsible for the minute book of the
Corporation. In this minute book the Secretary shall record the
proceedings of all regular and special meetings of the Board of
Directors and the shareholders and the reports of the committees
and directors. The minutes of all meetings of the Corporation
shall be signed by the Secretary and the presiding officer. The
Secretary shall also maintain and properly preserve the
organization papers of the Corporation, the returns of elections,
the Articles of Incorporation, the By-Laws and any amendments
thereto. The Secretary shall also maintain proper records of all
contracts of the Corporation.
Section 3.10 Officers Pro Tempore
- ---------------------------------
The Board of Directors may, during the absence or disability of
any officer, or upon the refusal of any officer to act, delegate
such officer's powers and duties to any other officer, or to any
director, for the time being.
PART IV - COMMITTEES
Section 4.01 Appointment and Organization of Committees
- -------------------------------------------------------
The Board of Directors shall appoint, at its annual organization
meeting, the committees specifically provided for in these By-
Laws and shall designate the chairman of each committee. The
Board of Directors may appoint other committees from time to time
and assign them such powers and duties as it deems desirable.
The Chairman of the Board of Directors and the President of the
Corporation shall be ex-officio members of the Executive
Committee and may be members of such other committees (other than
the Audit and Examination Committee and the Compensation and
Personnel Committee) as the Board of Directors directs. Each
committee member shall serve until the next annual organization
meeting of the Board of Directors and until a successor is
appointed. The Board of Directors may increase or decrease the
membership of any committee and appoint additional members to any
committee. The Chairman of the Board of Directors may designate
a person to serve in place of any committee member who becomes
unable to serve because of death, resignation, incapacity, or
absence.
Unless these By-Laws otherwise require or the Board of Directors
otherwise specifies, each committee may adopt rules of procedure,
designate the time and place of its meetings, and specify the
number of members (not less than a majority) which constitutes a
quorum. Each committee shall keep minutes of its meetings and
shall make reports of its activities at each regular meeting of
the Board of Directors.
Section 4.02 Executive Committee
- ---------------------------------
There shall be an Executive Committee consisting of at least five
directors. The committee's responsibilities shall include (1)
advising executive management as may be required on significant
matters of strategy, policy, and business direction and (2)
making recommendations to the Board of Directors as to the
payment of dividends on the Corporation's securities. In
addition, the committee may exercise, and by this By-Law is
granted authority to exercise, all powers of the Board of
Directors except those powers that the entire Board of Directors
alone may exercise.
Section 4.03 Audit and Examination Committee
- --------------------------------------------
There shall be an Audit and Examination Committee consisting of
at least four independent directors of the Corporation and at
least one independent director of each of the Corporation's
subsidiary banks. At least two members of the committee shall
have banking or related financial management experience. No
member of the committee shall be a large customer, as determined
by the Board of Directors, or shall be an active officer or
employee of the Corporation or of any of the Corporation's
subsidiaries. The committee's responsibilities shall include (1)
serving as, and performing all functions required to be performed
by, the Audit Committee of each of the Corporation's subsidiary
banks, (2) recommending to the Board of Directors the selection
of the Corporation's independent auditors and overseeing the
scope and performance of their services, (3) reviewing the
Corporation's accounting policies, significant accounting
estimates, and financial reporting, (4) reviewing the adequacy of
internal controls and reporting thereon as required by applicable
laws and regulations, (5) overseeing the Corporation's internal
audit and compliance activities, (6) monitoring compliance with
laws and regulations and reviewing reporting thereon, (7)
monitoring compliance with policies of the Board of Directors,
(8) regularly assessing the adequacy of the allowance for credit
losses at each of the Corporation's subsidiary banks, and (9)
reviewing the results of regulatory examinations, the responses
thereto, and the corrective actions taken. The committee shall
have access to outside legal counsel of its own choosing.
Section 4.04 Compensation and Personnel Committee
- -------------------------------------------------
There shall be a Compensation and Personnel Committee consisting
of at least five directors, none of whom shall be an active
officer or employee of the Corporation or of any of the
Corporation's subsidiaries. The Committee's responsibilities
shall include making recommendations to the Board of Directors
concerning (1) the election, promotion, and compensation of the
officers of the Corporation, (2) the nomination of candidates for
election to the Board of Directors, (3) management succession
planning, and (4) the Corporation's compensation and benefits
programs and policies. The Committee shall also perform the
functions prescribed for the administrative committee under such
employee benefit plans as the Corporation may from time to time
adopt.
Section 4.05 Asset, Liability and Investments Committee
- -------------------------------------------------------
There shall be an Asset, Liability and Investments Committee
consisting of at least four directors of the Corporation and at
least one director of each of the Corporation's subsidiary banks.
The Committee's responsibilities shall include (1) monitoring
compliance with the Asset and Liability Management and Investment
Policies of the Corporation and its subsidiary banks, (2)
reviewing the composition and performance of, and transactions
in, the investment portfolios of the Corporation and its
subsidiary banks, (3) monitoring the liquidity of the Corporation
and its subsidiary banks and reviewing their funding plans, and
(4) reviewing risks associated with interest-rate movements and
hedging activities.
PART V - SEAL
Section 5.01 Form
- -----------------
The following is an impression of the seal adopted by the Board
of Directors of this Corporation:
Section 5.02 Authority to Use Seal
- ----------------------------------
The President, any Vice President, the Secretary, and any other
officer designated by the Board of Directors shall have authority
to affix the seal to any document requiring it and to attest the
Corporation's execution of such document.
PART VI - STOCK
Section 6.01 Form of Stock Certificates
- ---------------------------------------
Certificates of stock of the Corporation shall be numbered and
shall be entered on the books of the Corporation and its
registrars and transfer agents as they are issued. They shall
exhibit the holder's name and number of shares, the name of the
Corporation and the state of its incorporation, the par value of
shares represented thereby, and the total number of shares of
stock which the Corporation is authorized to issue. They shall
bear the signature of the Chairman of the Board, President or
Vice President (which may be engraved, printed, or impressed) and
shall be signed manually or by facsimile process by the
Secretary, Treasurer, or any other officer appointed by the Board
of Directors for that purpose, to be known as an Authorized
Officer, and the seal of the Corporation shall be engraved
thereon. Each certificate shall recite on its face that the
stock represented thereby is transferable only upon the books of
the Corporation properly endorsed.
Section 6.02 Transfer of Stock
- ------------------------------
The stock of the Corporation shall be assignable and transferable
only on the books of the Corporation upon surrender of the
certificate representing such stock properly endorsed by the
holder named on such certificate or by an agent appointed in
writing by such holder. A transfer book shall be kept in which
all assignments and transfers of stock shall be made. Every
person becoming a shareholder by such transfer shall, in
proportion to such shares, succeed to all rights of the prior
holder of such shares.
Section 6.03 Determining Shareholders of Record
- -----------------------------------------------
The Board of Directors may close the stock transfer books of the
Corporation for a period of not less than ten days and not more
than 60 days preceding the date of any meeting of shareholders,
or the date for payment of any dividend, or the date for the
allotment of rights, or the date when any change, conversion or
exchange of capital stock shall go into effect, or in connection
with obtaining the consent of shareholders for any purpose. As
an alternative, the Board of Directors may fix in advance a
record date, not less than ten days and not more than 60 days
preceding the date of any such event, for the purpose of
determining the shareholders entitled to receive notice of and to
vote at any such meeting, or to receive payment of any such
dividend, or to receive any such allotment of rights, or to
exercise rights in respect to any such change, conversion or
exchange of capital stock, or to give such consent,
notwithstanding any transfer of any stock on the books of the
Corporation after such record date. However, in no event shall
the record date fixed by the Board of Directors be prior to the
date of the meeting of the Board of Directors at which the record
date is fixed.
Section 6.04 Registered Stockholders
- ------------------------------------
The Corporation may treat the holder of record of any share or
shares of stock as the holder in fact thereof, and accordingly
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 the Corporation has express or other
notice thereof, except as expressly provided by law.
Section 6.05 Registrars and Transfer Agents
- -------------------------------------------
The Board of Directors may, by resolution, appoint such
registrars and transfer agents as it deems convenient for the
conduct of the affairs of the Corporation and may prescribe the
powers and duties of such registrars and transfer agents. The
Board of Directors may change such registrars and transfer agents
at its pleasure.
Section 6.06 General Authority
- ------------------------------
The Board of Directors may make all such rules and regulations as
it may deem expedient concerning the issue, transfer, and
registration of certificates for shares of the capital stock of
the Corporation and concerning the replacement of lost, stolen,
or destroyed certificates.
Section 6.07 Control Share Acquisitions
- ---------------------------------------
The Kansas Control Share Acquisition Act (Chapter 93, 1988
Session Laws of Kansas) shall not apply to control share acqui-
sitions of shares of the Corporation, nor shall the Corporation
have the right provided by Section 10 of such act to call for
redemption shares acquired in a control share acquisition, nor
shall an objecting stockholder have the dissenters' rights
provided for by Section 11 of such act.
PART VII - MISCELLANEOUS
Section 7.01 Execution of Instruments
- -------------------------------------
All agreements, indentures, mortgages, deeds, conveyances,
transfers, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies, and other
instruments or documents may be signed, executed, acknowledged,
verified, delivered or accepted in behalf of the Corporation by
the Chairman of the Board, the President, any Vice President,
the Treasurer, the Controller, or the Secretary. Any such
instruments may also be signed, executed, acknowledged, verified,
delivered, or accepted in behalf of the Corporation in such other
manner and by such other officers or employees as the Board of
Directors may from time to time direct.
Section 7.02 Waiver of Notice
- -----------------------------
Whenever these By-Laws require or permit notice to be given to
any director, officer, or shareholder, such person may sign a
written waiver of such notice which shall be in all respects
tantamount to notice.
Section 7.03 Meeting by Conference Telephone
- --------------------------------------------
Any meeting of the Board of Directors or of any committee may be
held by conference telephone or similar communications equipment
by means of which all persons participating in the meeting can
hear each other simultaneously. Participating in any meeting so
conducted shall constitute presence at the meeting in person by
all persons so participating.
Section 7.04 Emergencies
- ------------------------
In the event of an emergency declared by the President of the
United States or the person performing the functions of the
President of the United States, the officers and employees of the
Corporation will, to the extent possible and subject to
applicable governmental directives during the emergency, continue
to conduct the affairs of the Corporation under such guidance
from the directors as may be available, except as to matters
which by statute require specific approval of the Board of
Directors.
In the event of a state of emergency or disaster of sufficient
severity to prevent the conduct and management of the affairs and
business of the Corporation by its directors and officers as
contemplated by these By-Laws, any two available members of the
then incumbent Executive Committee shall constitute a quorum of
that committee for the full conduct and management of the affairs
and business of the Corporation. In the event of the
unavailability, at such time, of a minimum of two members of the
then incumbent Executive Committee, any three available directors
shall constitute the Executive Committee for the full conduct and
management of the affairs and business of the Corporation, in
accordance with the foregoing provisions of this section. This
By-Law shall be subject to implementation by resolutions of the
Board of Directors passed from time to time for that purpose, and
any provisions of these By-Laws (other than this section) and any
resolutions which are contrary to the provisions of this section
or to the provisions of any such implementing resolutions shall
be suspended until it is determined by the interim Executive
Committee acting under this section that it is to the advantage
of the Corporation to resume the conduct and management of its
affairs and business under all the provisions of these By-Laws.
Section 7.05 Action Without a Meeting
- -------------------------------------
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 notice and without a meeting if all members of the Board
of Directors or committee, as the case may be, consent in writing
to the proposed action and if such written consent is filed in
the minutes of proceedings of the Board of Directors or
committee, as the case may be. Any action so taken by unanimous
written consent shall have the same force and effect as action
taken at a meeting of the Board of Directors or committee, as the
case may be, by unanimous vote of all members.
PART VIII - INDEMNIFICATION
Section 8.01 Indemnification
- ----------------------------
The Corporation shall (a) indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending, or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, or employee of the
Corporation or of a subsidiary of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
or employee of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit, and (b)
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the
Corporation), by reason of the fact that he is or was a director,
officer, or employee of the Corporation or of a subsidiary of the
Corporation or is or was serving at the request of the
Corporation as a director, officer, or employee of another
corporation, partnership, joint venture, trust, or other
enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with any such action,
suit or proceeding. Indemnification shall be afforded to the
fullest extent permissible under the Kansas General Corporation
Code or the indemnification provisions of any successor statute,
and not further, and shall be subject to any applicable
procedural requirements and standards of conduct on the part of
the persons to be indemnified prescribed by that statute. The
foregoing right of indemnification shall in no way be exclusive
of any other rights of indemnification to which any such person
may be entitled under any by-law, agreement, vote of stockholders
or disinterested directors or otherwise, and shall inure to the
benefit of the heirs, executors, and administrators of such a
person. The Corporation may, but shall not be required to,
purchase liability insurance indemnifying the directors,
officers, and employees of the Corporation and its subsidiaries.
PART IX - CHANGES IN BY-LAWS
Section 9.01 Amendments
- -----------------------
These By-Laws may be amended upon vote of the holders of a
majority of the shares of stock of the Corporation represented at
a meeting of the shareholders at which a quorum is present.
These By-Laws may also be amended upon vote of a majority of the
entire Board of Directors at any meeting of the Board, provided
ten days' notice of the proposed amendment has been given to each
member of the Board of Directors, but the authority of the Board
of Directors to amend these By-Laws shall at all times be subject
to the superior authority of the shareholders. In the case of
any By-Law the provisions of which are prescribed by law or by
the Articles of Incorporation, no amendment may be made unless
the By-Law, as amended, is consistent with the requirements of
law and of the Articles of Incorporation.
EXHIBIT 10.07
Fourth Financial Corporation
and Subsidiaries
1993 EMPLOYEE STOCK PURCHASE PLAN
1993 FOURTH FINANCIAL CORPORATION AND SUBSIDIARIES
EMPLOYEE STOCK PURCHASE PLAN
TABLE OF CONTENTS
Page
----
1. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Change of Control . . . . . . . . . . . . . . . . . . . . 1
Committee . . . . . . . . . . . . . . . . . . . . . . . . 1
Common Stock. . . . . . . . . . . . . . . . . . . . . . . 2
Compensation. . . . . . . . . . . . . . . . . . . . . . . 2
Employee. . . . . . . . . . . . . . . . . . . . . . . . . 2
Exercise Date . . . . . . . . . . . . . . . . . . . . . . 2
Offering Date . . . . . . . . . . . . . . . . . . . . . . 2
Price . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . 2
Termination Date. . . . . . . . . . . . . . . . . . . . . 2
Total Compensation. . . . . . . . . . . . . . . . . . . . 2
3. Eligibility . . . . . . . . . . . . . . . . . . . . . . . 3
4. Offering Dates. . . . . . . . . . . . . . . . . . . . . . 4
5. Participation . . . . . . . . . . . . . . . . . . . . . . 4
6. Granting of Option. . . . . . . . . . . . . . . . . . . . 4
7. Exercise of Option. . . . . . . . . . . . . . . . . . . . 5
8. Payment and Delivery. . . . . . . . . . . . . . . . . . . 5
9. Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 5
10. Administration. . . . . . . . . . . . . . . . . . . . . . 6
11. Restrictions on Transferability . . . . . . . . . . . . . 6
12. Changes in Capitalization . . . . . . . . . . . . . . . . 7
13. Merger; Change of Control . . . . . . . . . . . . . . . . 7
14. Termination of Employee's Rights of Participation . . . . 8
15. Amendment or Termination. . . . . . . . . . . . . . . . . 8
16. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 8
17. Stockholder Approval. . . . . . . . . . . . . . . . . . . 9
18. Application of Funds. . . . . . . . . . . . . . . . . . . 9
19. Governing Law . . . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
FOURTH FINANCIAL CORPORATION
1993 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The purpose of this stock purchase plan
(the "Plan") is to provide eligible Employees of Fourth Financial
Corporation (the "Company") and its subsidiaries an opportunity to
acquire a proprietary interest in the Company through the purchase
of Common Stock and to encourage such Employees to remain in the
employ of the Company or its subsidiaries. It is further intended
that this Plan shall qualify as an "employee stock purchase plan"
under Section 423 of the Internal Revenue Code of 1986 as now in
effect and as may hereafter from time to time be amended (the
"Code"). The provisions of the Plan shall, accordingly, be
construed so as to extend and limit participation in a manner
consistent with the requirements of Section 423 of the Code.
2. DEFINITIONS. Unless the context clearly requires a
different meaning, the following words shall have the following
meanings when used herein:
(a) "Change of Control" means the acquisition by any
person, entity, or group (as such term is defined in the Securities
Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission adopted thereunder) of
Common Stock in a transaction or series of transactions that
results in such person, entity, or group owning beneficially 50% or
more of the outstanding Common Stock; provided, that a merger or
consolidation of the Company with or into another corporation shall
not be deemed to be a Change of Control if, by reason of such
merger or consolidation, the holders of Common Stock receive in
exchange for their shares of Common Stock voting common stock of
the surviving or resulting corporation that is registered under the
Securities Exchange Act of 1934, as amended, and is either listed
for trading on a national securities exchange or a security for
which bid and asked quotations are reported in an automated
quotations system operated by a national securities association.
(b) "Committee" means the Committee established pursuant
to Paragraph 10 hereof.
(c) "Common Stock" means common stock, par value $5.00
per share, of the Company.
(d) "Compensation" means all wages, salaries, bonuses,
incentive pay, supplemental pay, commissions, and other forms of
direct cash remuneration received by an Employee on account of
service performed for the Company or any of its Subsidiaries,
except that Compensation will not include any indirect or imputed
remuneration, e.g., imputed income from life insurance, car
allowances, etc.
(e) "Employee" means any person, including an officer of
the Company, who is customarily employed for more than 20 hours per
week and more than five months in a calendar year by the Company or
by the Company and one or more of its Subsidiaries, or by one or
more Subsidiaries of the Company.
(f) "Exercise Date" means the Termination Date.
(g) "Offering Date" means the first day of a one-year
offering period.
(h) "Price" means the fair market value of the Common
Stock as of a particular day, which value shall be determined by
the Committee in such manner as may be consistent with the
applicable Treasury regulations used by the Internal Revenue
Service for determining stock valuations as of or on a specified
day.
(i) "Subsidiary" means any corporation of which the
Company owns 80% or more of each class of outstanding equity
securities, but does not include any subsidiary of a Subsidiary
unless provided otherwise by the Committee.
(j) The "Termination Date" of any offering under the
Plan shall be the last day of a one-year offering period, e.g., the
Termination Date of an offering having an Offering Date of May 1,
1993, would be April 30, 1994.
(k) "Total Compensation" means the sum of all
Compensation received by an Employee from the Company and each of
its Subsidiaries.
3. ELIGIBILITY. (a) Any Employee who shall have been
continuously employed by the Company, by the Company and one or
more of its Subsidiaries, or by one or more of the Subsidiaries of
the Company for a period of one or more years as of the Offering
Date and who is employed by the Company and/or one of its
Subsidiaries on the date his or her participation in any offering
to be made under the Plan is to become effective shall be eligible
to participate in offerings under the Plan made on or subsequent to
his or her being so employed for one year, subject to the
limitations imposed by Section 423(b) of the Code and to the
limitations contained herein. For purposes of the one-year period
referred to above, no credit shall be given for employment during
any period of time during which the Subsidiary was not a Subsidiary
of the Company.
(b) Any provision of the Plan to the contrary
notwithstanding, no Employee shall be granted an option hereunder:
(i) if, immediately after the grant, such Employee
would own shares of stock, and/or hold outstanding
options to purchase shares of stock, possessing 5% or
more of the total combined voting power or value of all
classes of stock of the Company or of any Subsidiary of
the Company. For purposes of this paragraph, the rules
of Section 424(d) of the Code shall apply in determining
the stock ownership of an individual; or
(ii) which permits his or her rights to purchase
shares under all employee stock purchase plans of the
Company and its Subsidiaries to accrue at a rate which
exceeds $25,000 of fair market value of the shares
(determined at the time such option is granted) for each
calendar year in which such stock option is outstanding
at any time. For purposes of this paragraph 3(b)(ii),
(A) the right to purchase stock under an option accrues
when the option (or any portion thereof) first becomes
exercisable, (B) the right to purchase stock under an
option accrues at the rate provided in the option but in
no case may such rate exceed $25,000 of fair market value
of such stock (determined at the time the option is
granted) for any one calendar year, and (C) a right to
purchase stock which has accrued under one option granted
under the Plan may not be carried over to any other
option.
4. OFFERING DATES. It is contemplated that the Plan
will be implemented by annual twelve-month offerings which shall be
consecutively numbered. Offering No. 1 shall commence on May 1,
1993, and shall end on April 30, 1994. Each succeeding offering,
if authorized by the Board of Directors of the Company (or by the
Committee in the event the Board of Directors of the Company shall
by resolution delegate such authority to the Committee), shall
commence on such date as the Board (or the Committee if so
authorized) may determine, and shall continue for twelve months.
Only one offering may be in effect at any one time. Participation
in any offering under the Plan shall neither limit nor require
participation in any other offering.
5. PARTICIPATION. Participation in the Plan shall be
limited to eligible Employees as defined above. All eligible
Employees shall be given notice of each offering within a
reasonable time after a determination to make such offering has
been made by the Board of Directors or the Committee as the case
may be.
6. GRANTING OF OPTION. (a) Each eligible Employee
shall be granted an option to purchase that number of whole shares
(rounded down to the nearest whole share) of Common Stock
determined by dividing 10% of the Total Compensation earned by the
participant during the preceding calendar year by 85% of the Price
of the stock on the Offering Date for such offering.
(b) The option price of shares in any offering to be
made hereunder shall be the lower of:
(i) 85% of the Price of the Common Stock on the
Offering Date for such offering; or
(ii) 85% of the Price of the Common Stock on the
Termination Date for such offering;
provided, however, that in no event shall the option price be less
than the par value of the Common Stock.
In the event either an Offering Date or a Termination
Date shall fall on a weekend, holiday, or any other day for which
published Price quotations for the Common Stock are not available,
the weighted average of the Prices for the next trading day
immediately preceding and the next trading day immediately
following such date for which such quotations are available shall
be used.
7. EXERCISE OF OPTION. A participant may only exercise
his or her option for the purchase of shares on or before 5:00 p.m.
on the Exercise Date for the number of full shares covered by the
grant of the option or any lesser number of full shares; provided,
that such lesser number shall not be less than ten shares. Options
shall be exercised only on forms supplied by the Company. No
option under the Plan shall be exercised prior to the Termination
Date of the offering with respect to which such option was granted
and any option exercise form received prior to such date shall be
effective at the close of business on the Termination Date.
8. PAYMENT AND DELIVERY. The option price shall be
payable in United States dollars upon the exercise of the option
and shall be payable by check only. Payment shall be made on or
before the seventh day following the Exercise Date. The Company
will deliver to each participant a certificate evidencing the
shares purchased upon the exercise of his or her option. Any
participant who fails to pay in full for any shares being purchased
under the Plan shall forfeit his or her option with respect to any
shares for which full payment has not then been made.
9. STOCK. (a) The shares to be sold to participants
under the Plan may, at the election of the Company, be either
Treasury shares or shares to be originally issued for such purpose.
The maximum number of shares which shall be made available for sale
under the Plan during all offerings under the Plan shall be 750,000
shares, subject to adjustment upon changes in capitalization of the
Company as provided in Paragraph 12 hereof. If the total number of
shares for which options are to be granted on any date in
accordance with Paragraph 6 exceeds the number of shares then
available under the Plan (after deduction of all shares for which
options have been exercised or are then outstanding), the Company
shall make a pro rata allocation of the shares remaining available
in as nearly a uniform manner as shall be practicable and as it
shall determine to be equitable. The Company shall give written
notice of such reduction to each Employee affected thereby.
(b) No participant shall have any interest in shares
covered by his or her option until such option has been exercised,
the shares have been fully paid for, and shall have been issued by
the Company.
(c) Shares to be delivered to a participant under the
Plan will be registered in the name of the participant, or, if the
participant so directs by written notice to the Company prior to
the Termination Date of the pertinent offering, in the name of the
participant and one such other person as may be designated, as
joint tenants with rights of survivorship, to the extent permitted
by applicable law.
(d) In no event shall any certificates for fractional
shares be issued under the Plan.
10. ADMINISTRATION. (a) The Plan shall be administered
by the Committee which shall be appointed by the Board of Directors
of the Company and shall consist of not fewer than three members of
the Board of Directors. No member of the Committee shall be an
officer or Employee of the Company or of any of its Subsidiaries or
eligible to participate in the Plan. All members of the Committee
shall serve at the pleasure of the Board of Directors of the
Company which may, from time to time, remove members from, or add
members to, the Committee.
(b) The acts of a majority of the members of the
Committee attending a meeting at which a quorum is present, or acts
reduced to or approved in writing by a majority of the members of
the Committee, shall be the valid acts of the Committee.
(c) The Committee shall be vested with full authority to
make, administer, and interpret such rules and regulations and to
promulgate such forms as it deems necessary to administer the Plan,
and any determination, decision, or action of the Committee in
connection with the construction, interpretation, administration,
or application of the Plan shall be final, conclusive, and binding
upon all participants and any and all persons claiming under or
through any participant.
11. RESTRICTIONS ON TRANSFERABILITY. No participant may
sell, assign, pledge, encumber, transfer, or otherwise hypothecate
any option or right to purchase shares under the Plan. No
participant may sell, assign, pledge, encumber, transfer, or
otherwise hypothecate any of the shares purchased under the Plan
until the expiration of two years from the Offering Date of the
offering in which such shares are issued, nor until the expiration
of one year after the issuance of any shares to him or her;
provided, however, this restriction shall terminate upon the
occurrence of a Change of Control or other transaction described in
Paragraph 13. All stock certificates issued under the Plan shall
bear a conspicuous notation of such restriction.
12. CHANGES IN CAPITALIZATION. In the event of
reorganization, recapitalization, stock split, stock dividend,
combination of shares, offerings of rights, or any other change in
the structure of the common shares of the Company except merger or
consolidation, the Committee may make such adjustment, if any, as
it may deem appropriate in the number, kind, and the option price
of shares available for purchase under the Plan, and in the number
of shares which an Employee is entitled to purchase.
13. MERGER; CHANGE OF CONTROL. (a) If the Company shall
be the surviving or resulting corporation in any merger or
consolidation, each then outstanding option granted hereunder shall
pertain to and apply to the same number and type of shares of stock
which a holder of the same number of shares of Common Stock subject
to such option was entitled to receive by reason of such merger or
consolidation.
(b) Subject to Paragraph 3(b), the holder of an option
granted hereunder shall have the right to exercise such option, in
whole or in part, (i) during the period beginning with the
commencement of a tender offer or exchange offer (other than a
tender or exchange offer by the Company) which by its terms could
result in a Change of Control of the Company and ending ten days
after the first purchase of stock pursuant to such tender offer or
exchange offer, (ii) during the 30-day period following a Change of
Control of the Company, and (iii) during the 30-day period
commencing on the date of approval by the stockholders of the
Company of an agreement of merger or reorganization of the Company
in which the Company will not survive as an independent, publicly-
owned corporation, of a plan of dissolution or disposition of
substantially all of the assets of the Company. For the purpose of
determining the purchase price to be paid for shares purchased
pursuant to this subparagraph (b), the Termination Date shall be
deemed to be the date the holder of an option exercises his or her
option (or, in the event public trading in the Common Stock of the
Company ceases prior to such date, the last date the Common Stock
is traded in the over-the-counter market).
(c) At any time after the occurrence of a Change of
Control, the Company shall have the right to cancel all outstanding
options granted hereunder by making cash payment to each holder of
a then outstanding option with respect to each share of Common
Stock covered by such option, of the difference between the
greatest per share amount of cash (and the fair market value of any
other form of consideration) paid to the public stockholders of the
Company in the transaction or transactions resulting in the Change
of Control and the amount of cash that would have been paid by the
option holder to exercise such option if the Termination Date of
the offering had been the date such Change of Control occurred (or,
in the event public trading in the Common Stock ceases prior to
such date, the last date the Common Stock is traded in the over-
the-counter market). The Company may not exercise any rights under
this subparagraph (c) if the effect of such exercise would be to
subject an option holder to any liability under Section 16 of the
Securities Exchange Act of 1934, as amended.
14. TERMINATION OF EMPLOYEE'S RIGHTS OF PARTICIPATION.
An Employee's rights to participate in the Plan shall terminate
upon the termination of such Employee's employment by the Company
or a subsidiary of the Company for any reason including death or
retirement.
15. AMENDMENT OR TERMINATION. The Board of Directors of
the Company may at any time terminate, withdraw, suspend, modify,
or amend the Plan. No such termination can affect options
previously granted, nor may an amendment make any change in any
option theretofore granted which would adversely affect the rights
of any participant, nor may an amendment be made without the prior
approval of the stockholders of the Company if such amendment
requires the sale of more shares than are authorized under
Paragraph 9 of the Plan. No amendment to any provision of this
Plan relating to the amount and price of securities to be offered
or which specifies the timing of the granting of options under this
Plan, or which sets forth a formula that determines the amount,
price, and timing of options to be awarded under this Plan may be
amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act,
or the rules thereunder. The Plan will terminate in any event on
April 30, 1998, and no offering hereunder will be commenced after
May 1, 1997. Although it is presently contemplated that offerings
will be made under the Plan each year during the term of the Plan,
the Company shall not be obligated to any Employee or other person
whatsoever to make any offering under the Plan, or having made any
offering or offerings, to make any further offering or offerings
under the Plan.
16. NOTICES. All notices, exercises of options, payment
for stock, or other communications by a participant to the Company
under or in connection with the Plan shall be deemed to have been
duly given only when received by the Employee Benefits Office of
the Company or when received in the form specified by the Company
at the location, or by the person, designated by the Company for
the receipt thereof.
17. STOCKHOLDER APPROVAL. The Plan has been adopted by
the Board of Directors of the Company on March 8, 1993, and is
subject to the approval of the holders of a majority of the issued
and outstanding Common Stock within 12 months after its adoption by
the Board of Directors.
18. APPLICATION OF FUNDS. All proceeds received by the
Company from the sale of stock under the Plan will be used for
general corporate purposes.
19. GOVERNING LAW. This Plan and all agreements entered
into under the Plan shall be construed in accordance with and shall
be governed by the laws of the State of Kansas except as provided
in Paragraph 1 hereof.
EXHIBIT 10.08
FOURTH FINANCIAL CORPORATION
1993 INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of this l993 Incentive Stock
Option Plan (the "Plan") is to encourage ownership in the Common
Stock of Fourth Financial Corporation (the "Company") by key
personnel of the Company and its subsidiaries and to provide an
additional incentive for them to continue in the employ of the
Company and its subsidiaries and to promote the success of the
Company's business.
2. Stock Subject to the Plan. The maximum number of
shares which may be issued upon exercise of Options granted under
the Plan ("Options") shall be 1,000,000 shares of Common Stock, par
value $5.00 per share, of the Company ("Common Stock"). Such
shares may be either issued shares of Common Stock which shall have
been reacquired by the Company or authorized but unissued shares of
Common Stock as the Board of Directors of the Company (the "Board")
shall from time to time determine. If any outstanding Option under
the Plan for any reason expires or is terminated without having
been exercised in full, the shares allocable to the unexercised
portion of such Option shall again become available for option
pursuant to the Plan.
3. Participation in the Plan. (a) Options may be
granted only to employees (including officers) of the Company or of
any subsidiary of the Company who shall be selected as provided in
Section ll hereof. A director of the Company or of a subsidiary
who shall not at the time also be an employee of the Company or of
a subsidiary thereof shall not be eligible to receive an Option
under the Plan. An employee who shall have been granted an Option
under the Plan may be granted one or more additional Options. The
term "subsidiary" as used in this Plan means a bank or other
corporation more than 50% of the voting stock of which shall at the
time be owned directly or indirectly by the Company.
(b) No Option shall be granted to an individual who
owns Common Stock possessing more than ten percent of the total
combined voting power of all classes of common stock of the Company
or of its parent or subsidiary corporations.
(c) To the extent the aggregate fair market value
(determined as of the time the Option is granted) of the Common
Stock for which any employee may be granted Options which are
exercisable for the first time by such employee during any calendar
year under the Plan and any other "Incentive Stock Option Plan"
within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), of the Company and its parent and
subsidiary corporations exceeds $100,000, such Options shall be
treated as Options which are not incentive stock options. Nothing
in this Plan shall be construed to give anyone the right to be
granted an Option, and neither the Plan nor the granting of an
Option or the taking of any other action under the Plan shall
constitute or be any evidence of any agreement or understanding,
express or implied, that the Company or any of its subsidiaries
will employ an Option holder for any period of time or in any
position or at any particular rate of compensation.
4. Option Prices. The purchase price of the Common
Stock covered by each Option shall be not less than l00% of the
fair market value of the Common Stock at the time of granting the
Option. Such fair market value shall be determined by the Board
(or any committee to which the Board shall have delegated pursuant
to Section ll hereof power in that regard) but shall not be less
than the mean between the reported bid and asked prices of the
Common Stock on the date the Option is granted as reported by the
NASDAQ quotation system. Notwithstanding the foregoing, the price
at which Options may be exercised shall in all events be determined
in a manner consistent with any regulations that may hereafter be
promulgated from time to time by the Internal Revenue Service with
respect to Section 422 of the Code.
5. Term of Options. The term of each Option shall be
not more than ten years from the date of granting thereof and may
be less than ten years. Each Option shall be subject to earlier
termination as herein provided.
6. Exercise of Options. An Option may be exercised in
accordance with its terms at any time or from time to time after
the granting thereof and the approval of this Plan by the
stockholders of the Company in accordance with Paragraph l2 of the
Plan. The purchase price of the shares purchased upon exercise of
an Option shall be paid in full in cash at the time of the
exercise, but the Board of Directors may (but shall not be required
to) determine that shares may be purchased in whole or in part upon
the exercise of Options with Common Stock of the Company. The
Board of Directors may (but shall not be required to) permit the
payment for Common Stock purchased under the Plan by means of a
loan from the Company or from one of its subsidiaries for all or a
portion of the purchase price, upon such terms and conditions as
the Board may from time to time determine. Except as provided in
Paragraph 8 hereof, an Option may not be exercised in whole or in
part unless the holder thereof shall then be an employee of the
Company or of a subsidiary of the Company. The holder of an Option
shall not have any of the rights of a stockholder with respect to
the shares covered by his Option until and except to the extent
that the Option shall have been duly exercised.
7. Nontransferability of Options. An Option shall not
be transferable otherwise than by will or the laws of descent and
distribution, and an Option may be exercised during the lifetime of
the employee only by him. No Option or interest therein may be
transferred, assigned, pledged, or hypothecated by the Optionee
during his lifetime, by operation of law or otherwise, or be made
subject to execution, attachment, or similar process.
8. Termination of Employment. All rights of an
employee in an Option, to the extent it has not been exercised,
shall terminate upon the death of the employee (except as
hereinafter provided) or the termination of his employment for any
reason other than disability or retirement because of age. In the
case of termination by reason of disability, such rights shall
terminate twelve months from the date of termination of employment
and, in the case of retirement, three months from the date thereof.
An Option shall not be affected by any temporary change of duties
or position of the holder or any temporary leave of absence granted
to him by the employing corporation. In the event of the death of
the holder of an Option prior to termination of employment for any
other reason, the unexercised portion of such Option may be
exercised at any time within twelve months from the date of the
holder's death, by his executor, administrator, personal
representative, or other person who has acquired the right to
exercise the Option by bequest or inheritance, but in no event may
any Option be exercised after the expiration of the terms of the
Option as set forth in Paragraph 5 of this Plan.
9. Adjustments Upon Changes in Capitalization.
Notwithstanding any other provisions of this Plan, in the event of
any change in the outstanding Common Stock of the Company by reason
of a stock dividend, stock split, merger, consolidation, splitup,
combination or exchange of shares, reorganization, liquidation, or
the like, the aggregate number and class of shares of Common Stock
available under the Plan and the number and class of shares subject
to each outstanding Option and the option prices shall be
appropriately adjusted by the Board, whose determination shall be
conclusive.
10. Termination and Amendment of the Plan. Unless the
Plan shall be previously terminated as hereinafter provided, no
Option shall be granted under the Plan after ten years from the
date the Plan is adopted by the Board of Directors. The Board of
Directors may at any time prior to that date suspend or terminate
the Plan and shall have the right to alter or amend the Plan or any
part thereof at any time and from time to time as it may deem
proper and in the best interest of the Company and to alter or
amend the Plan in order that Options granted under the Plan shall
qualify as "Incentive Stock Options" under Section 422 of the Code
or qualify under similar or successor provisions of the Code as
amended from time to time, or conform with any change in applicable
law or regulations or rulings of administrative agencies. Any
termination, suspension, alteration or amendment of the Plan
effected pursuant to this Paragraph l0 may be made by the Board of
Directors without further action on the part of the stockholders of
the Company; provided, that no such termination, suspension,
alteration, or amendment shall (a) impair, without the consent of
the Option holder, any Option theretofore granted to him under the
Plan or deprive him of any Common Stock which he may have acquired
under the Plan, or (b) unless approved by the stockholders of the
Company, (i) increase the total number of shares of Common Stock
which may be purchased under the Plan except as provided in
Paragraph 9 hereof, (ii) extend the time during which Options may
be granted under the Plan, (iii) change the class of employees
eligible to receive Options under the Plan, or (iv) change the
manner of determining the Option price except to change the manner
of determining the fair market value of the Common Stock. Any
Option outstanding at the time of termination of the Plan shall
remain in effect subject to the provisions of this Plan until the
Option shall have been exercised or shall have expired.
11. Administration of Plan. (a) The Plan shall be
administered under the general direction and control of the Board
of Directors which may from time to time issue orders or adopt
resolutions not inconsistent with the provisions of the Plan, to
interpret the provisions and supervise the administration of the
Plan. Subject to the provisions of the Plan, the Board of
Directors shall have the plenary authority, in its discretion, to
determine the time or times at which, and the employees of the
Company and its subsidiaries to whom, Options shall be granted, the
purchase price, and the number of shares of Common Stock to be
covered by each Option, and when each Option may be exercised.
(b) The Board of Directors shall appoint a
committee (the "Committee") consisting of not fewer than three
directors, none of whom shall be officers of the Company or
eligible to participate in the Plan while members of the Committee,
and who shall serve at the pleasure of the Board. The Board of
Directors may, from time to time, remove members from or add
members to the Committee and shall fill all vacancies on the
Committee. The Board of Directors may delegate to the Committee
full power and authority to take any action required or permitted
to be taken by the Board of Directors under the Plan, except that
the Committee shall not have the power to terminate, suspend,
alter, or amend the Plan. The Options granted by such Committee
may contain such terms and provisions as the Committee, in its
discretion, deems desirable and appropriate, provided, however,
that such additional terms shall not be inconsistent with any
provision of the Plan or cause the Plan or the Options granted
thereunder not to be classified as an Incentive Stock Option Plan
and/or an Incentive Stock Option.
(c) A majority of the Committee shall constitute a
quorum, and the action of a majority of the members present at any
meeting at which a quorum is present, or action authorized or
approved in writing by a majority of the Committee, shall be deemed
the action of the Committee.
12. Effective Date of the Plan. The Plan shall be
effective from the date of its adoption by the Board of Directors,
and Options may be granted immediately after such adoption, but no
Option may be exercised under the Plan unless and until the Plan
has been approved by the stockholders of the Company at a meeting
held within twelve months after the date of such adoption. The
Plan shall terminate if it is not approved by the stockholders of
the Company within twelve months from the date of its adoption by
the Board of Directors.
13. Government and Other Regulations. The obligations of
the Company to sell and deliver shares of Common Stock shall be
subject to all applicable laws, rules and regulations and such
approvals by any governmental agencies as may be required,
including, without limitation, the effectiveness of a registration
statement under the Securities Act of l933, as deemed necessary or
appropriate by counsel for the Company.
14. Nonexclusivity of the Plan. Neither the adoption of
the Plan by the Board of Directors nor the submission of the Plan
for approval of the stockholders of the Company shall be construed
as creating any limitations on the power of the Board of Directors
to adopt such other incentive arrangements as it may deem
desirable, including without limitation, the granting of stock
options otherwise than under the Plan.
15. Merger; Change of Control. (a) If the Company shall
be the surviving or resulting corporation in any merger or
consolidation, each then outstanding Option granted hereunder shall
pertain to and apply to the same number and type of shares of stock
which a holder of the same number of shares of Common Stock subject
to such Option was entitled to receive by reason of such merger or
consolidation.
(b) The holder of an Option granted hereunder shall
have the right to exercise such Option, in whole or in part, (i)
during the period beginning with the commencement of a tender offer
or exchange offer (other than a tender offer or exchange offer by
the Company) which by its terms could result in a Change of Control
of the Company and ending ten days after the first purchase of
stock pursuant to such tender offer or exchange offer, (ii) during
the 30-day period following a Change of Control of the Company, and
(iii) during the 30-day period commencing on the date of approval
by the stockholders of the Company of an agreement of merger or
reorganization of the Company in which the Company will not survive
as an independent, publicly-owned corporation, or of a plan of
dissolution or disposition of substantially all of the assets of
the Company.
(c) At any time after the occurrence of a Change of
Control, the Company shall have the right to cancel all outstanding
Options granted hereunder by making cash payment to each holder of
a then outstanding Option, with respect to each share of Common
Stock covered by such Option, of the difference between the
greatest per share amount of cash (and the fair market value of any
other form of consideration) paid to the public stockholders of the
Company in the transaction or transactions resulting in the Change
of Control and the amount of cash that would have been paid by the
Option holder to exercise such Option. The Company may not
exercise any rights under this subparagraph (c) if the effect of
such exercise would be to subject an Option holder to any liability
under Section 16 of the Securities Exchange Act of 1934, as
amended.
(d) "Change of Control" means the acquisition by
any person, entity, or group (as such term is defined in the
Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission adopted
thereunder) of Common Stock in a transaction or series of
transactions that results in such person, entity, or group owning
beneficially 50% or more of the outstanding Common Stock; provided,
that a merger or consolidation of the Company with or into another
corporation shall not be deemed to be a Change of Control if, by
reason of such merger or consolidation, the holders of Common Stock
receive in exchange for their shares of Common Stock voting common
stock of the surviving or resulting corporation that is registered
under the Securities Exchange Act of 1934, as amended, and is
either a security listed for trading on a national securities
exchange or a security for which bid and asked quotations are
reported in an automated quotations system operated by a national
securities association.
EXHIBIT 10.09
FOURTH FINANCIAL CORPORATION
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTORS DEFERRED FEE PLAN
FOURTH FINANCIAL CORPORATION
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTORS DEFERRED FEE PLAN
Table of Contents
Page
PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . 2
ARTICLE II PARTICIPATION . . . . . . . . . . . . . . . . . . 4
Section 2.1. Participation . . . . . . . . . . . . . . 4
ARTICLE III DEFERRED FEE ACCOUNTS . . . . . . . . . . . . . 5
Section 3.1. Crediting Amounts to Deferred Fee
Accounts . . . . . . . . . . . . . . . . . . . . . 5
Section 3.2. Vesting of Deferred Fee Accounts . . . . 5
Section 3.3. Increases/Decreases of Account . . . . . 6
Section 3.4. Statement of Accounts . . . . . . . . . . 6
Section 3.5. Investment Direction . . . . . . . . . . 6
Section 3.6. Benefits Payable in Stock or Cash . . . . 7
Section 3.7. Dividend Reinvestment . . . . . . . . . . 8
Section 3.8. Number of Dividend Reinvestment Shares . 8
Section 3.9. Prior Deferral Agreements . . . . . . . . 8
Section 3.10. Administration of Prior Deferrals . . . . 9
ARTICLE IV DEATH BENEFITS . . . . . . . . . . . . . . . . . 9
Section 4.1. General . . . . . . . . . . . . . . . . . 9
Section 4.2. Beneficiary Designations . . . . . . . . 9
Section 4.3. Lump Sum Option . . . . . . . . . . . . . 10
ARTICLE V BENEFITS . . . . . . . . . . . . . . . . . . . . . 10
Section 5.1. Termination of Service . . . . . . . . . 10
ARTICLE VI SOURCE OF BENEFITS . . . . . . . . . . . . . . . 10
Section 6.1. Benefits Payable from General Assets . . 10
Section 6.2. Investments to Facilitate Payment of
Benefits . . . . . . . . . . . . . . . . . . . . . 11
Section 6.3. Ownership of Insurance Contracts . . . . 11
Section 6.4. Company Obligation . . . . . . . . . . . 11
Section 6.5. Multiple Companies . . . . . . . . . . . 11
ARTICLE VII ADMINISTRATION OF THIS PLAN . . . . . . . . . . 12
Section 7.1. Plan Appointment of Committee . . . . . . 12
Section 7.2. Committee Action . . . . . . . . . . . . 12
Section 7.3. Committee Rules and Plan Powers--
General . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.4. Reliance on Certificates, Etc . . . . . . 13
Section 7.5. Information to Committee . . . . . . . . 13
ARTICLE VIII AMENDMENT AND TERMINATION . . . . . . . . . . . 13
Section 8.1. Amendment . . . . . . . . . . . . . . . . 13
Section 8.2. Termination or Partial Termination of
the Plan . . . . . . . . . . . . . . . . . . . . . 13
Section 8.3. Liquidation or Reorganization of
Company . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.4. Overriding Limitation . . . . . . . . . . 15
ARTICLE IX RESTRICTIONS ON ALIENATION OF BENEFITS . . . . . 15
ARTICLE X CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . 15
Section 10.1. Initiation of Claim . . . . . . . . . . . 15
Section 10.2. Announcement of Initial Decision . . . . 15
Section 10.3. Review Appeal of Initial Decision . . . . 16
Section 10.4. Conduct of Appeal and Decision . . . . . 16
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . 16
Section 11.1. Execution of Receipts and Releases . . . 16
Section 11.2. No Guarantee of Interests . . . . . . . . 16
Section 11.3. Company Records . . . . . . . . . . . . . 17
Section 11.4. Evidence . . . . . . . . . . . . . . . . 17
Section 11.5. Notice . . . . . . . . . . . . . . . . . 17
Section 11.6. Change of Address . . . . . . . . . . . . 17
Section 11.7. Effect of Provisions . . . . . . . . . . 17
Section 11.8. Severability Clause . . . . . . . . . . . 17
Section 11.9. Minors and Incompetents . . . . . . . . . 17
Section 11.10. Indemnification . . . . . . . . . . . . 18
Section 11.11. Headings . . . . . . . . . . . . . . . . 18
Section 11.12. Governing Law . . . . . . . . . . . . . 18
FOURTH FINANCIAL CORPORATION
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTORS DEFERRED FEE PLAN
WHEREAS, Fourth Financial Corporation has heretofore adopted
the Fourth Financial Corporation Amended and Restated Non-
Employee Directors Deferred Fee Plan; and
WHEREAS, it has become necessary and desirable to amend the
Plan in so many particulars that it is desirable to amend and
restate each and every section thereof.
NOW, THEREFORE, the previous Plan is hereby amended and
restated effective as of July 1, 1993, subject to shareholder
approval, which Plan shall be known as the Fourth Financial
Corporation Amended and Restated Non-Employee Directors Deferred
Fee Plan; and the rights, privileges, and obligations shall be
governed by the terms of this Plan from and after such effect
date.
PURPOSE
-------
The purpose of the Fourth Financial Corporation Amended and
Restated Non-Employee Directors Deferred Fee Plan shall be to
provide specified benefits for Directors of Fourth Financial
Corporation and its Subsidiary Banks. It is the intention of
Fourth Financial Corporation that this program be administered as
an unfunded employee benefit plan established and maintained
primarily for the purpose of providing deferred compensation for
a select group of management or highly-compensated employees
within the meaning of Section 201(2) of the Employee Retirement
Income Security Act of 1974.
ARTICLE I DEFINITIONS
For purposes of this Plan, the following phrases or terms
shall have the indicated meanings unless otherwise clearly
apparent from the context:
Beneficiary--means the person, persons, entity, or entities
entitled to receive any benefits under this Plan pursuant to the
designation of the Participant (or in default of such designation
as provided in ARTICLE IV hereof).
Change of Control--means the acquisition by any person,
entity, or group (as defined in the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Securities
and Exchange Commission adopted thereunder) of Common Stock of
the Company in a transaction or series of transactions which
results in such person, entity, or group owning beneficially 50%
or more of the outstanding Common Stock.
Code--means the Internal Revenue Code of 1986, as amended.
Committee--means the Committee described in ARTICLE VII
which is the named fiduciary with respect to this Plan. The
Committee shall manage and administer the Plan in accordance with
the provisions of said Article and as otherwise provided in this
Plan.
Common Stock--means Fourth Financial Corporation Common
Stock, par value $5.00 per share.
Company--means Fourth Financial Corporation and any of its
Subsidiary Banks. For purposes of this Plan, the term
"Subsidiary Bank" means a bank more than fifty percent (50%) of
the voting stock of which shall at the time be owned directly or
indirectly by the Company.
Credited Interest--means interest credited at a rate that is
the greater of (1) the rate of interest established by the
Committee prior to the beginning of the Plan Year to be credited
to a Participant's Credited Interest Account, or (2) the Prime
Interest Rate minus one percentage point. The rate in (2) above
shall be adjusted and determined as of the first business day of
each Plan Year quarter. It is intended that the two rates shall
be compared on a quarterly basis for purposes of determining the
rate of interest to be credited to a Participant's Credited
Interest Account for the upcoming Plan Year quarter. In the
event the Committee fails to establish a rate of interest prior
to the beginning of the Plan Year, the rate of interest last
established by the Committee shall apply.
Credited Interest Account--means the account established by
the Company in the name of a Director which utilizes the accrual
of Credited Interest as the method of computing gains
attributable to such account.
Deferred Fee Accounts--means a Director's Credited Interest
Account and Phantom Stock Account. The Deferred Fee Accounts are
the book entries established for each Director, which entries
represent the Company's unsecured and unfunded promise to pay the
amounts represented thereby.
Director--means (i) any active member of the Board of
Directors of Fourth Financial Corporation or (ii) any active or
advisory member of the Board of Directors of a Subsidiary Bank,
who is not otherwise an employee of the Company.
Fee or Fees--means any compensation earned by a Director for
services performed as a Director.
Participant--means a Director who elects to participate in
this Plan.
Phantom Stock Account--means the account established by the
Company in the name of a Director which utilizes the value of the
Common Stock, and any dividends attributable thereto, as the
method of computing the earnings or losses attributable to such
account.
Phantom Stock Units or Units--means a book entry
representing the Participant's right to receive benefits based
upon the performance of the Common Stock and any dividends
attributable thereto, with each Unit being equivalent, for
purposes of measuring performance, to one share of the Common
Stock.
Plan--means, unless the context otherwise requires, this
document, any amendment(s) hereto, and the participation
agreement of each Participant entered into pursuant to ARTICLE
II.
Plan Year--means the calendar year.
Prime Interest Rate--means the rate per annum announced by
Chemical Bank, N.A. from time to time as its prime rate in effect
at its principal office in the City of New York.
ARTICLE II PARTICIPATION
Section 2.1. Participation.
A. General. A Director may participate in this
Plan for a Plan Year by executing a participation agreement
providing for a deferral of 100% of his or her Fees earned
during the Plan Year and returning such agreement to the
Committee not later than the June 30th preceding the Plan
Year to which such agreement relates. Notwithstanding the
foregoing, a Director may elect to participate in this Plan
for the period beginning July 1, 1993 and ending December
31, 1993 by executing a participation agreement providing
for the deferral of 100% of his or her Fees earned during
such period and by returning it to the Committee during the
ten business-day period beginning on the third day after the
Company's release of its financial information for the first
quarter of 1993. A participation agreement made pursuant to
this exception shall be irrevocable during such period and
shall continue in effect after the expiration of such period
as provided in subsection B hereof.
B. Other Conditions of the Agreement. A
participation agreement shall be irrevocable during the Plan
Year following its delivery to the Committee. A
participation agreement shall be effective for the Plan Year
specified in the agreement and for each subsequent Plan Year
unless prior to the June 30th preceding a Plan Year the
Participant revokes said agreement, with such revocation to
become effective as of the beginning of the subsequent Plan
Year. Revocation shall occur by giving written notice to
the Committee. Notwithstanding any other provision of this
Plan to the contrary, an agreement made under this Section
shall automatically terminate upon the termination of this
Plan under ARTICLE VIII, or upon a Director's termination of
service.
C. Investment Election. When a Director first
elects to defer Fees under Section 2.1.A, the Director shall
also irrevocably elect (in accordance with Section 3.5)
whether all future amounts which are deferred shall be
credited 100% to his or her Credited Interest Account, 100%
to his or her Phantom Stock Account, or 50% to each such
Account.
ARTICLE III DEFERRED FEE ACCOUNTS
Section 3.1. Crediting Amounts to Deferred Fee Accounts.
A. Credited Interest Account. When a Director
elects under Section 2.1.A to have deferred Fees credited to
his or her Credited Interest Account, the Company shall
credit the Participant's Credited Interest Account with the
amount of such deferred Fees as of the day such deferred
Fees would have been paid to the Director were they not
deferred under the Plan.
B.1. Phantom Stock Account. When a Director elects
under Section 2.1.A to have deferred Fees credited to his or
her Phantom Stock Account, the Company shall credit the
Participant's Phantom Stock Account with a number of Units
as of the day such deferred Fees would have been paid to the
Director were they not deferred under the Plan. The number
of Units credited to the Participant's Phantom Stock Account
shall be the quotient of (1) the amount of deferred Fees to
be credited to the Participant's Phantom Stock Account
divided by (2) the Fair Market Value of the Common Stock on
such date. No partial Units will be credited to the
Participant's Phantom Stock Account. All sums attributable
to partial Units will instead be credited to the Director's
Credited Interest Account.
B.2. Fair Market Value. For purposes of the Plan,
the term Fair Market Value means the mean between the
reported closing bid and asked prices of the Common Stock as
reported by the NASDAQ system.
B.3. Limitation on Investment Directions. If the
General Counsel of the Company, in his or her sole
discretion, determines that the Company is in possession of
material, undisclosed information about the Company, then a
Participant's election to modify his or her investment
direction pursuant to Section 3.5 shall not be effective
until the second day after public dissemination of such
information, and the price for Units to be credited to the
Director's Phantom Stock Account shall be determined by
reference to such later date.
Section 3.2. Vesting of Deferred Fee Accounts. A
Participant shall be 100% vested in his or her Deferred Fee
Accounts.
Section 3.3. Increases/Decreases of Account. A
Participant's Deferred Fee Accounts shall be increased or
decreased as follows:
A. Credited Interest Account. The Company shall
credit each Participant's Credited Interest Account with (1)
any Fees which are deferred by the Director under Section
2.1.A and directed into the Credited Interest Account
pursuant to Section 2.1.C; (2) any Prior Deferral Amounts
(other than such amounts which the Director elects to have
transferred to his or her Phantom Stock Account) pursuant to
Section 3.10; and (3) any Credited Interest. Credited
Interest shall be credited to each Director's Account, as of
the end of each calendar quarter. Interest shall be
credited during each quarter that a Director has any amount
credited to his or her Credited Interest Account under the
Plan.
B. Phantom Stock Account. The Company shall
credit each Participant's Phantom Stock Account with (1)
Units attributable to Fees which are deferred by the
Director under Section 2.1.A and directed into the Phantom
Stock Account under Section 2.1.C, (2) Units attributable to
Prior Deferral Amounts which the Director elects to have
transferred to the Phantom Stock Account pursuant to Section
3.10, and (3) Units attributable to dividends on Common
Stock under Section 3.7.
The Participant's Deferred Fee Accounts shall be decreased
by the amount of any distributions therefrom.
Section 3.4. Statement of Accounts. The Committee shall
submit to each Participant, within 120 days after the close of
each Plan Year, a statement in such form as the Committee
reasonably deems appropriate, setting forth the balances to the
credit of such Participant in his or her Deferred Fee Accounts.
Section 3.5. Investment Direction.
A. One-Time Election for Future Deferrals. A
Director may, as provided in 2.1.C, enter into a one-time
irrevocable election to invest his or her future deferred
Fees as follows:
(1) 100% in his or her Credited Interest
Account;
(2) 100% in his or her Phantom Stock
Account; or
(3) 50% in his or her Credited Interest
Account and 50% in his or her Phantom Stock
Account.
Except as provided in subsection B and Sections 3.9 and 3.10
with respect to Prior Deferral Amounts and the exception
provided under Section 2.1.A, no such election shall affect
amounts deferred in the calendar year in which the election
is executed or any prior year. The election shall be made
within the time period set forth in Section 2.1 and shall be
effective for all following calendar years in which the
Participant elects to defer Fees under the Plan. If a
Participant ceases to defer Fees into the Plan for any
reason, and if the Participant subsequently elects (pursuant
to Section 2.1) to enter into a participation agreement and
again defer Fees into the Plan, such Participant's one-time
irrevocable investment election shall continue to govern the
allocations of all amounts deferred under the Plan.
B. Prior Deferral Amounts. A Director who has
Prior Deferral Amounts (as described in Section 3.9) may
enter into a one-time irrevocable election, during the ten
business-day period beginning on the third day after the
Company's release of its financial information for the first
quarter of 1993, to have either all or 50% of such Amounts
converted into Units and transferred to his or her Phantom
Stock Account. Such election shall be made on a form
provided by the Company which shall specify the amount or
percentage authorized for transfer. The number of Units
credited to a Participant's Phantom Stock Account as a
result of such a transfer shall be the quotient of (1) the
amounts to be transferred divided by (2) the Fair Market
Value of the Common Stock on July 1, 1993.
C. Limitation on Investment Directions. If the
General Counsel of the Company, in his or her sole
discretion, determines that the Company is in possession of
material, undisclosed information about the Company, then a
Participant's investment election shall not be effective
until the second day after public dissemination of such
information, and the price shall be determined by reference
to such later date.
Section 3.6. Benefits Payable in Stock or Cash. Amounts
distributable under this Plan shall be paid at the time, and in
the manner, provided in Articles IV and V. The amounts
distributable under this Plan shall be the sum of the
Participant's Credited Interest Account and the value of the
Participant's Phantom Stock Account. The value of a
Participant's Phantom Stock Account is determined by multiplying
the number of Phantom Stock Units credited to such Account by the
Fair Market Value of the Common Stock at the end of the business
day next preceding the date of distribution.
Amounts distributable under this Plan shall, at the
recipient's election, be paid in cash, shares of Common Stock, or
a combination of the two. In the event a Participant elects to
receive all or a portion of his or her benefits in the form of
Common Stock, no partial shares will be issued and the
Participant shall receive a cash payment equal to the value of
the partial shares. The Committee shall have authority, in its
sole discretion, to approve or disapprove such Participant's
election, and the election shall be made on the first business
day following the expiration of the six month period which begins
on the last date that the Participant acquired any Phantom Stock
Units ("Election Date"). If a Participant fails to make a timely
election, the amounts due shall be paid in cash, provided,
however, that no amounts shall be payable under this Plan until
the Election Date has passed. To the extent that a Participant
elects to receive his or her benefits in the form of the Common
Stock, the number of shares of Common Stock which will be
distributable to such Participant shall be the quotient of (1)
the amount of benefits payable to the Participant which the
Participant has elected to receive in the form of shares of
Common Stock divided by (2) the Fair Market Value of the Common
Stock at the end of the business day next preceding the date of
distribution.
Section 3.7. Dividend Reinvestment. Additional Units
shall be credited to each Director's Phantom Stock Account, as of
each payment date for dividends on the Common Stock. The number
of additional Units shall be determined pursuant to Section 3.8,
on the basis of the number of Units credited to the Director's
Phantom Stock Account on the record date for such dividends.
Additional Units shall be credited for each record date that a
Director has any amount credited to his or her Phantom Stock
Account under the Plan.
Section 3.8. Number of Dividend Reinvestment Shares. The
number of additional Units credited to a Director's Phantom Stock
Account as of any dividend payment date shall be the quotient of
(1) the product of the number of Units credited to the Director's
Phantom Stock Account on the dividend record date for such
dividend multiplied by the per share dividend rate on the Common
Stock divided by (2) the Fair Market Value of the Common Stock on
the dividend payment date.
Section 3.9. Prior Deferral Agreements. Some Directors
have deferred their Fees earned prior to the effective date of
this Plan pursuant to participation agreements with the Company.
Such agreements are hereinafter referred to as "Prior Deferral
Agreements." Any Prior Deferral Agreements in effect on the
effective date of this Plan shall terminate as of such effective
date with respect to Fees earned thereafter. A Director desiring
to defer Fees earned after the effective date of this Plan shall
enter into a new participation agreement as provided in Section
2.1. However, the provisions of Prior Deferral Agreements
concerning the time and method of distribution of amounts
previously deferred ("Prior Deferral Amounts"), shall remain
fully effective with respect to such Amounts and shall also
govern all of the Participant's future deferrals under the Plan.
Section 3.10. Administration of Prior Deferrals. For
purposes of administration, Prior Deferral Amounts shall be
treated as a part of this Plan. Any Director who has Prior
Deferral Amounts shall be permitted to make a one-time
irrevocable election to have either all or 50% of such Amounts
converted into Units and credited to his or her Phantom Stock
Account in accordance with Section 3.5.B. Except to the extent
that a Director makes such an election, a Participant's Prior
Deferral Amounts shall be credited to his or her Credited
Interest Account.
ARTICLE IV DEATH BENEFITS
Section 4.1. General. In the event of a Participant's
death while a Director, the value of Participant's Deferred Fee
Accounts shall be paid to the Beneficiary or Beneficiaries of the
Participant. Unless the lump sum settlement option has been
elected under Section 4.3, and subject to the limitations of
Section 3.6, benefits shall be payable in five annual
installments with the first payment commencing as soon as
administratively practicable following the date specified in
Section 3.6; provided, that, if the value of a Participant's
Deferred Fee Accounts is $50,000 or less at the time payment is
to commence, a lump sum distribution shall be made.
Section 4.2. Beneficiary Designations. The Beneficiary or
Beneficiaries of a Participant shall be the person, persons,
entity, or entities designated by the Participant on a
Beneficiary Designation provided by the Committee. If more than
one Beneficiary is named, the shares and/or precedence of each
Beneficiary shall be indicated. A Participant shall have the
right to change the Beneficiary by submitting to the Committee a
change of Beneficiary on forms provided by the Committee;
provided, however, that no change of Beneficiary shall be
effective until received by the Committee. If a Participant
fails to file a Beneficiary Designation with the Committee (or
revokes a Designation without providing a new one) or if the
Beneficiary (should only one be designated) predeceases or ceases
to exist or all Beneficiaries designated predecease or cease to
exist or cannot be found upon the death of Participant, then and
in such events the amounts otherwise payable to such Beneficiary
or Beneficiaries shall be paid to Participant's estate. If the
Committee has any doubt as to the proper Beneficiary to receive
payments hereunder, the Committee shall have the right to
withhold such payments until the matter is finally adjudicated or
is otherwise resolved. Any payment made by the Committee in good
faith and in accordance with the provisions of this Plan and the
Participant's Beneficiary Designation Form shall fully discharge
the Company, the Committee, and all Employers from all further
obligations with respect to such payments.
Section 4.3. Lump Sum Option. A Participant may, on
delivery of his or her participation agreement to the Committee,
prior to the first Plan Year in which that Participant elects to
participate in this Plan, elect to have Death Benefits payable in
one lump sum to the Participant's Beneficiary. The Participant
shall make this election in his or her participation agreement
and said election shall be irrevocable from and after delivery of
that agreement. The failure to make an election by the time
prescribed shall require payment to be made over the regular
five-year period.
ARTICLE V BENEFITS
Section 5.1. Termination of Service.
A. General. A Participant who ceases to be a
member of the Board of Directors shall become entitled to
receive the value of the Participant's Deferred Fee
Accounts. Unless the lump sum option has been elected under
Section 5.1.B, benefits shall be payable in ten annual
installments with the first payment commencing as soon as
administratively practicable after the date specified in
Section 3.6, provided, that, if the value of a Participant's
Deferred Fee Accounts is $50,000 or less at the time payment
is to commence, a lump sum distribution shall be made.
B. Lump Sum Option. A Participant may, on
delivery of his or her participation Agreement to the
Committee, prior to the first Plan Year in which that
Participant elects to have fee reductions made under this
Plan, elect to have benefits payable in one lump sum. The
Participant shall make this election in his or her
participation agreement, and said election shall be
irrevocable from and after delivery of that agreement. The
failure to make an election by the time prescribed shall
require payment to be made over the regular ten-year period.
ARTICLE VI SOURCE OF BENEFITS
Section 6.1. Benefits Payable from General Assets.
Amounts payable hereunder shall be paid exclusively from the
general assets of the relevant Company, and no person entitled to
payment hereunder shall have any claim, right, security interest,
or other interest in any fund, trust, account, insurance
contract, or asset of the relevant Company which may be looked to
for such payment. The relevant Company's liability for the
payment of benefits hereunder shall be evidenced only by this
Plan and each participation agreement entered into between the
relevant Company and a Participant. All Fees deferred hereunder
shall at all times remain an unrestricted asset of the relevant
Company, and Participants are general unsecured creditors of the
relevant Company to the extent of their benefits under this Plan.
Section 6.2. Investments to Facilitate Payment of
Benefits. Although the Company is not obligated to invest in any
specific asset or fund, or purchase any insurance contract, in
order to provide the means for the payment of any liabilities
under this Plan, the Company may elect to do so and, in such
event, no Participant shall have any interest whatever in such
asset, fund, or insurance contract. In the event the Company
elects to purchase insurance contracts on the life of a
Participant as a means for making, offsetting, or contributing to
any benefits, which may become due and payable by the Company
under this Plan, such Participant agrees to cooperate in the
securing of life insurance on his or her life by furnishing such
information as the Company and the insurance carrier may require,
including the results and reports of previous employer and other
insurance carrier physical examinations, taking such additional
physical examinations as may be requested, and taking any other
action which may be requested by the Company and the insurance
carrier to obtain such insurance coverage. If a Participant does
not cooperate in the securing of such life insurance, the Company
shall have no further obligation to such Participant under this
Plan and may terminate such individual's participation in this
Plan as provided in Section 2.1.
Section 6.3. Ownership of Insurance Contracts. In the
event the Company elects to purchase insurance, the Company shall
be the sole owner of any insurance contract(s) acquired on the
life of a Participant, with all incidents or ownership therein,
including, but not limited to, the right to cash and loan values,
dividends, if any, death benefits, and the right of termination
thereof, and a Participant shall have no interest whatsoever in
such contract(s) and shall exercise none of the incidents of
ownership thereof.
Section 6.4. Company Obligation. Except as otherwise
expressly provided herein, the Company shall have no obligation
of any nature to a Participant under this Plan.
Section 6.5. Multiple Companies. In furtherance of the
provisions of Section 6.1, in the event that a single Participant
enters into participation agreements under Section 2.1 with more
than one Company while a Participant in this Plan, the liability
for payment of such Participant's benefits under this Plan shall
be apportioned among the Companies based upon a formula that the
Committee shall develop to equitably apportion the cost of the
benefits based upon the years of participation with each Company
and the amounts of deferrals made while the Participant was a
Director of that Company. The apportionment of benefits between
Companies shall be set forth in writing and delivered to the
Director, and the Director and all Companies shall be bound by
the apportionment. In no event, will the Companies be jointly
and severally liable for any amount. A Participant may only
receive benefits under the Plan from the Company to whom the
Committee has apportioned liability for the benefits.
Notwithstanding the foregoing, in the event that a Participant
consents, a Company may transfer to the accepting Company such
assets as the accepting Company will require in exchange for the
acceptance by the accepting Company of the full liability for
payment of the transferred Director's full benefits. Thereafter
the Participant shall look solely to the accepting Company for
payment of all benefits under this Plan (unless and until a
further transfer occurs, in which case, the provisions of this
Section shall apply following such transfer).
ARTICLE VII ADMINISTRATION OF THIS PLAN
Section 7.1. Plan Appointment of Committee. This Plan
shall be administered by a Committee of the Board of Directors of
Fourth Financial Corporation. All members of the Committee shall
serve at the pleasure of the Board of Directors of Fourth
Financial Corporation, which may, from time to time, remove
members from, or add members to, the Committee.
Section 7.2. Committee Action. All acts of a majority of
the members of the Committee attending a meeting at which a
quorum is present, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts
of the Committee.
Section 7.3. Committee Rules and Plan Powers--General.
Subject to the provisions of this Plan, the Committee shall from
time to time establish rules, forms, and procedures for the
administration of this Plan. Except as herein otherwise
expressly provided, the Committee, in its sole discretion, shall
have the exclusive right to interpret this Plan and to decide any
and all matters arising thereunder or in connection with the
administration of this Plan, and it shall endeavor to act,
whether by general rules or by particular decisions, so as not to
discriminate in favor of or against any person. Such decisions,
actions, and records of the Committee shall be conclusive and
binding upon the Company, Directors, and all persons having or
claiming to have any right or interest in or under this Plan.
The Committee shall also have the power to employ or solicit
assistance from any individual who, in the opinion of the
Committee, is necessary or helpful in assisting the Committee in
the proper administration of this Plan. In addition, the
Committee shall have the power to delegate to the appropriate
officers of Fourth Financial Corporation such items as may be
necessary or appropriate under the circumstances, including the
computation and certification of the amount and form of benefits
payable to Participants (Beneficiaries) under the terms of this
Plan.
Section 7.4. Reliance on Certificates, Etc. The members
of the Committee and the officers and directors of the Company
shall be entitled to rely on all certificates and reports made by
any duly appointed accountants and on all opinions given by any
duly appointed legal counsel. Such legal counsel may be counsel
for the Company.
Section 7.5. Information to Committee. To enable the
Committee to perform its functions, the Company shall supply full
and timely information to the Committee on all matters relating
to the Fees of all Directors, their retirements, deaths, or other
causes for termination, and such other pertinent facts as the
Committee may require.
ARTICLE VIII AMENDMENT AND TERMINATION
Section 8.1. Amendment. The Board of Directors of Fourth
Financial Corporation reserves the right (on behalf of all
participating Companies) to amend this Plan at will and at any
time and from time to time; provided, that, no amendment will
reduce the benefits to which a Participant is then entitled or
modify or change the manner or rate of crediting interest set
forth herein without the express written consent of the
Participant affected. This power to amend shall include, but
shall not be limited to, the right to make retroactive any
amendments necessary to keep this Plan an unfunded employee
benefit plan described in Section 201(2) of ERISA or to preserve
or obtain anticipated tax consequences for Participants (subject
to the proviso of the first sentence of this Section). An
amendment revising the price, date of purchase, or number of
Units which are the subject of this Plan shall not be made more
frequently than every six months unless necessary to comply with
the Internal Revenue Code of 1986, as amended, or with the
Employer Retirement Income Security Act of 1974, as amended.
Section 8.2. Termination or Partial Termination of the
Plan. In addition to all other rights granted the Board of
Directors of Fourth Financial Corporation under this Plan, the
Board of Directors of Fourth Financial Corporation shall possess
the right to terminate, in whole or in part, this Plan at any
time. Such right to terminate shall be exercised by the Board of
Directors of Fourth Financial Corporation (and with Board of
Directors' permission by any other Company as to that Company's
Directors, a partial termination) subject to the following
limitations:
A. No action to terminate or partially terminate
this Plan shall be taken except upon written notice to each
Participant to be affected thereby, which notice shall be
given not less than 30 days prior to the effective date of
such termination;
B. In terminating the Plan, the Committee shall
determine in a uniform and consistent manner when affected
Participants shall be paid their benefits from this Plan,
including the possibility that payment shall be delayed
until the Participant's termination of service as a
Director.
In all events, the Committee, in the event of a termination
or partial termination, shall have substantial discretion in
making all necessary determinations.
Section 8.3. Liquidation or Reorganization of Company.
A. Complete Liquidation. If the stockholders of a
Company, other than Fourth Financial Corporation, adopt a
plan of complete liquidation (other than a plan which is
part of a plan or reorganization described in Subsection B
hereof), the Plan shall be deemed to have been terminated as
to that Company as of the date the plan of liquidation is
adopted. The adoption of a plan of complete liquidation by
Fourth Financial Corporation will be deemed effective to
terminate this Plan as to all Companies. The rights of
affected Participants upon such a liquidation under this
Subsection A shall be determined under provisions of Section
8.2 relative to a complete termination.
B. Change in Control and Reorganizations. At any
time after the occurrence of a Change in Control, or if
Company effectuates a merger, consolidation, or other
transition constituting a reorganization with another
corporation or corporations pursuant to which the shares of
common stock of Company will be surrendered for stock of
another corporation without any provision having been made
for the continuance of this Plan, then this Plan shall be
deemed to be terminated. If, however, provisions are made
for the continuance of this Plan which expressly provide
that:
(1) this Plan shall be continued; and
(2) the rights of each Participant in this
Plan will continue in accordance with the terms
hereof;
then, in that event, the Plan shall not be terminated, but
shall continue in accordance with the terms hereof and the
terms of the reorganization plans and agreement(s), and all
Participants and the surviving corporation shall be bound
thereby.
Section 8.4. Overriding Limitation. In the event of any
amendment or termination under Sections 8.1, 8.2, or 8.3, all
Participants and Beneficiaries shall be bound by the good faith
determinations of the Board as to the benefits to be received
which are attributable to the period prior to such amendment or
termination.
ARTICLE IX RESTRICTIONS ON ALIENATION OF BENEFITS
Section 9.1. Benefits Not Assignable. No right or benefit
under this Plan shall be subject to anticipation, alienation,
sale, assignment, transfer, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, assign, transfer,
pledge, encumber, or charge the same shall be void. No right or
benefit hereunder shall in any manner be liable for or subject to
the debts, contracts, liabilities, engagements, or torts of the
person entitled to such benefit, and, to the extent permitted by
law, the rights of any Participant or Beneficiary shall not be
subject in any manner to attachment of other legal process for
the debts of such Participant or Beneficiary.
ARTICLE X CLAIMS PROCEDURE
Section 10.1. Initiation of Claim. In the event that any
Participant or Beneficiary disagrees with any decision (including
any claim for benefits) made by the Committee or other agent of
the Plan, the Participant or Beneficiary may make a written
request for a redetermination under this Plan. This written
claim shall be mailed or delivered to the Committee. The claim
shall be considered by the Committee.
Section 10.2. Announcement of Initial Decision. If the
claim is denied, in full or in part, the Committee shall provide
a written notice within 90 days of receipt of the written claim
setting forth the specific reasons for denial, specific reference
to the provisions of this Plan upon which the denial is based,
and any additional information necessary to perfect the claim,
and an explanation of why such material or information is
necessary, and appropriate information and explanation of the
steps to be taken if a review of the denial is desired. If the
claim is granted, the decision shall also be communicated to the
Participant or Beneficiary within 90 days of receipt.
Section 10.3. Review Appeal of Initial Decision. If the
claim is denied, in whole or in part, and a review is desired,
the Participant or Beneficiary shall notify the Committee in
writing within 60 days (a claim shall be deemed denied if the
Committee does not take any action within the aforesaid 60-day
period) after receipt of the written notice of denial. In
requesting a review, the Participant or Beneficiary may request a
review of the Plan document and other pertinent documents with
regard to the Plan, may submit any written issues and comments,
may request an extension of time for such written submission of
issues and comments (of not more than 60 days) and may request
that a hearing be held. If a hearing is held, the Participant or
Beneficiary shall have the right to be represented by counsel of
his or her choice and to have them participate at the hearing.
Section 10.4. Conduct of Appeal and Decision. The decision
on the review of the denied claim shall be rendered by the
Committee within 60 days after receipt of the request for review
is received or if a hearing is held, the hearing shall be held
within 60 days after review is requested. In the latter event,
the decision shall be rendered within 60 days after the hearing
is held. The decision shall be written stating the specific
reasons for the decision and shall include reference to specific
provisions of the Plan on which the decision is based.
ARTICLE XI MISCELLANEOUS
Section 11.1. Execution of Receipts and Releases. Any
payment to any Participant, a Participant's legal representative,
or Beneficiary in accordance with the provisions of this Plan
shall, to the extent thereof, be in full satisfaction of all
claims hereunder against the relevant Company. The Company may
require such Participant, legal representative, or Beneficiary,
as a condition precedent to such payment, to execute a receipt
and release therefor in such form as it may determine.
Section 11.2. No Guarantee of Interests. Neither the
Committee nor any of its members may guarantee the payment of any
amounts which may be or becomes due to any person or entity under
this Plan. The liability of the Participant's relevant Company
to make any payment under this Plan is limited to the then
available assets of the Company.
Section 11.3. Company Records. Records of the Company as
to a Participant's service so a Director, and Director's Fees
paid by the Company shall be conclusive as to all persons and
entities, unless determined to be incorrect.
Section 11.4. Evidence. Evidence required of anyone under
this Plan may be by certificate, affidavit, document, or other
information which the person or entity acting on it considers
pertinent and reliable, and signed, made, or presented by the
proper party or parties.
Section 11.5. Notice. Any notice which shall be or may be
given under this Plan shall be in writing and shall be mailed by
United States mail, postage prepaid. If notice is to be given to
any Company, such notice shall be addressed to the Company at
Fourth Financial Center, Wichita, Kansas 67202, marked to the
attention of Manager of Human Resources, Fourth Financial
Corporation Amended and Restated Non-Employee Directors Deferred
Fee Plan; or, if notice to a Participant, addressed to the
address shown on such Participant's latest participation
agreement.
Section 11.6. Change of Address. Any party may, from time
to time, change the address to which notices shall be mailed by
giving written notice of such new address.
Section 11.7. Effect of Provisions. The provisions of
this Plan shall be binding upon the Company and its successors
and assigns, and upon a Participant, his or her Beneficiary,
assigns, heirs, executors, and administrators.
Section 11.8. Severability Clause. If any provision of
this Plan is held to be invalid or unenforceable, this
determination shall not affect the validity of this Plan or the
other provisions of this Plan. In such event, this Plan shall be
construed and endorsed as if such provision had not been included
therein; provided, that, nothing shall increase the Company's
liability for payment of benefits in any amount beyond the
amounts specified in this Plan.
Section 11.9. Minors and Incompetents. If any person to
whom a benefit is payable is legally incompetent, either by
reason of age or by reason of mental or physical disability,
Company (and the Committee hereunder) is authorized to cause the
payments becoming due to such person to be made to another for
his or her benefit without responsibility of the Company, the
Committee, or any fiduciary of this Plan to see to the
application of such payments. Payments made pursuant to this
authority shall constitute a complete discharge of Company's and
Committee's duty.
Section 11.10. Indemnification. The Company shall indemnify
and save harmless each member of the Board of Directors, each
member of the Committee, and employees of the Company or any of
its subsidiaries from and against any loss resulting from
liability which they may be subjected by reason of any act or
conduct (except wilful or wanton misconduct) in their official
capacities in the administration of this Plan. Expenses shall
include the amount of any settlement or judgment, costs, counsel
fees, and related charges reasonably incurred in connection with
a claim asserted, or a proceeding brought in settlement thereof.
The foregoing right of indemnification shall be in addition to
any other rights to which any such person may be entitled as a
matter of law.
Section 11.11. Headings. The titles and heading of Articles
and Sections are included for convenience of reference only and
are not to be considered in the construction of the provisions of
this Plan.
Section 11.12. Governing Law. All questions arising with
respect to this Plan shall be determined by reference to the laws
of the State of Kansas.
Section 11.13. Government and Other Regulations. The
obligations of the Company to permit a Participant to invest in
Phantom Stock Units or to provide benefits by delivering shares
of Common Stock shall be subject to all applicable laws, rules,
and regulations and such approvals by any governmental agencies
as may be required, including, without limitation, the
effectiveness of a registration statement under the Securities
Act of 1933, as deemed necessary or appropriate by counsel for
the Company.
Section 11.14. Compliance with SEC Regulations. It is the
Company's intent that this Plan comply in all respects with Rule
16b-3 of the Securities Exchange Act of 1934, as amended, and any
successor thereto. If any provision of this Plan is found not to
be in compliance with such Rule, the provisions thereof shall be
null and void. All elections to invest in Phantom Stock Units or
receive benefits under the Plan in the form of Company Common
Stock shall be made and executed in compliance with the
provisions of Section 16 of the Securities Exchange Act of 1934,
as amended, and any regulations promulgated thereunder.
Adopted, subject to stockholder approval, as of this ______
day of __________________, 1993.
FOURTH FINANCIAL CORPORATION
By
-------------------
/s/ Darrell G. Knudson
Chairman of the Board
ATTEST:
----------------
/s/ John C. Maloney
Senior Vice President,
Secretary, and General Counsel
EXHIBIT 10.10
FOURTH FINANCIAL CORPORATION
1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1. Purpose. The purposes of this l993 Non-Employee
Directors Stock Option Plan (the "Plan") are: (1) to provide for
the fair compensation of non-employee Directors of the Company and
its subsidiaries, (2) to encourage ownership in the Common Stock of
Fourth Financial Corporation (the "Company") by non-employee
Directors of the Company and its subsidiaries, (3) to provide an
additional incentive for them to continue in the service of the
Company and its subsidiaries, so as to promote the success of the
Company's business. It is anticipated that the Plan will assist
the Company in attracting and retaining non-employee Directors who
are capable of making valuable contributions to the long-term
success of the Company and its subsidiaries.
2. Stock Subject to the Plan. The maximum number of
shares which may be issued upon exercise of Options granted under
the Plan ("Options") shall be 500,000 shares of the Company's
Common Stock, par value $5.00 per share ("Common Stock"). Such
shares may be either issued shares of Common Stock which shall have
been reacquired by the Company or authorized but unissued shares of
Common Stock as the Board of Directors of the Company (the "Board")
shall from time to time determine. If any outstanding Option under
the Plan for any reason expires or is terminated without having
been exercised in full, the shares allocable to the unexercised
portion of such Option shall again become available for option
pursuant to the Plan.
3. Participation in the Plan. All non-employee
Directors of the Company and its subsidiaries ("Non-Employee
Directors") are eligible for, and shall automatically participate
in, the Plan. A Director of the Company who is an employee of the
Company, or of a subsidiary thereof, shall not be eligible to
receive an Option under the Plan nor shall advisory directors be
eligible to participate in the Plan. A Non-Employee Director who
shall have been granted an Option under the Plan may be granted one
or more additional Options if such Director continues to be
eligible to receive Options. The term "subsidiary" as used in this
Plan means a bank or other corporation more than 50% of the voting
stock of which shall at the time be owned directly or indirectly by
the Company.
4. Annual Grant of Options and Option Prices.
(a) Each year on the first Monday following the
Company's Annual Meeting of Stockholders, every Non-Employee
Director of the Company who is eligible to receive options under
the Plan shall automatically be granted an option to purchase 2,000
shares of the Company's Common Stock and each Non-Employee Director
of a subsidiary who is eligible to receive options under the Plan
shall automatically be granted an option to purchase 1,000 shares
of the Company's Common Stock.
(b) The purchase price of the Common Stock covered
by each Option shall be the higher of (i) the mean between the
reported bid and asked prices of the Common Stock on the date the
Option is granted as reported on the NASDAQ National Market
quotation system or (ii) the price of the last sale of Common Stock
on such date as so reported.
(c) If, on what would otherwise be a day on which
Options would be granted, the General Counsel of the Company, in
his or her sole discretion, determines that the Company is in
possession of material, undisclosed information about the Company
which would prohibit the Company from issuing securities without
making a disclosure thereof, then the annual grant of Options shall
be deferred until the second day after public dissemination of such
information, and the price and option period shall be determined by
reference to such later date.
(d) If Common Stock is not publicly traded on any
date a grant would otherwise be awarded, then the grant shall be
made the next day thereafter on which Common Stock is so traded.
5. Term of Options. Except as is otherwise provided in
Section 8 hereof, an Option shall expire at 5:00 P.M., Central time
on the date which is ten years after the date such Option is
granted.
6. Exercise of Options. An Option may be exercised in
accordance with its terms at any time or from time to time after
the granting thereof and the approval of this Plan by the
stockholders of the Company. The purchase price of the shares
purchased upon exercise of an Option shall be paid in full in cash
at the time of the exercise. The Company shall have the right to
require, prior to the issuance or delivery of any stock
certificates, payment by an optionee of any taxes or other moneys
required by law with respect to the issuance or delivery of shares
of Common Stock. The holder of an Option shall not have any of the
rights of a stockholder with respect to the shares covered by his
or her Option until and except to the extent that the Option shall
have been duly exercised.
7. Nontransferability of Options. An Option shall not
be transferable otherwise than by will or the laws of descent and
distribution, and an Option may be exercised during the lifetime of
the optionee only by the optionee. No Option or interest therein
may be transferred, assigned, pledged, or hypothecated by an
optionee during his or her lifetime, by operation of law or
otherwise, or be made subject to execution, attachment, or similar
process.
8. Termination of Service. All rights of a Non-
Employee Director in an Option, to the extent it has not been
exercised, shall terminate three months after the date that such
Non-Employee Director ceases to be a Non-Employee Director, except
in the case of the Non-Employee Director's termination of service
on account of death or disability. In the case of termination by
reason of disability, such rights shall terminate twelve months
from the date of termination of service. In the event of the death
of the optionee, the unexercised portion of such Option may be
exercised at any time within twelve months. In no event may any
Option be exercised after the expiration of the terms of the Option
as set forth in Paragraph 5 of this Plan.
9. Adjustments Upon Changes in Capitalization.
Notwithstanding any other provisions of this Plan, in the event of
any change in the outstanding Common Stock of the Company by reason
of a stock dividend, stock split, merger, consolidation, splitup,
combination or exchange of shares, reorganization, liquidation, or
the like, the aggregate number and class of shares of Common Stock
available under the Plan and the number and class of shares subject
to each outstanding Option and the option prices shall be
appropriately adjusted by the Board, whose determination shall be
conclusive.
10. Termination and Amendment of the Plan. Unless the
Plan shall be previously terminated as hereinafter provided, no
Option shall be granted under the Plan after ten years from the
date the Plan is adopted by the Board of Directors. The Board of
Directors may at any time prior to that date suspend or terminate
the Plan and shall have the right to alter or amend the Plan or any
part thereof at any time and from time to time as it may deem
proper and in the best interest of the Company. Any termination,
suspension, alteration, or amendment of the Plan effected pursuant
to this Paragraph l0 may be made by the Board of Directors without
further action on the part of the stockholders of the Company;
provided, that no such termination, suspension, alteration, or
amendment shall (a) impair, without the consent of the Option
holder, any Option theretofore granted to him under the Plan or
deprive him of any Common Stock which he may have acquired under
the Plan, or (b) unless approved by the stockholders of the
Company, (i) increase the total number of shares of Common Stock
which may be purchased under the Plan except as provided in
Paragraph 9 hereof, (ii) extend the time during which Options may
be granted under the Plan, (iii) change the class of Directors
eligible to receive Options under the Plan, or (iv) change the
manner of determining the Option price except to change the manner
of determining the fair market value of the Common Stock. An
amendment revising the price, date of exercise, option period, or
number of shares which are the subject of an Option shall not be
made more frequently than every six months unless necessary to
comply with the Internal Revenue Code of 1986, as amended, or with
the Employer Retirement Income Security Act of 1974, as amended.
Any Option outstanding at the time of termination of the Plan shall
remain in effect subject to the provisions of this Plan until the
Option shall have been exercised or shall have expired.
11. Administration of Plan. The Plan shall be
administered under the general direction and control of the Board
of Directors which may from time to time issue orders or adopt
resolutions not inconsistent with the provisions of the Plan, to
interpret the provisions and supervise the administration of the
Plan.
12. Effective Date of the Plan. The Plan shall be
effective from the date of its approval by the stockholders of the
Company.
13. Government and Other Regulations. The obligations of
the Company to sell and deliver shares of Common Stock shall be
subject to all applicable laws, rules, and regulations and such
approvals by any governmental agencies as may be required,
including, without limitation, the effectiveness of a registration
statement under the Securities Act of l933, as deemed necessary or
appropriate by counsel for the Company.
14. Nonexclusivity of the Plan. Neither the adoption of
the Plan by the Board of Directors nor the submission of the Plan
for approval of the stockholders of the Company shall be construed
as creating any limitations on the power of the Board of Directors
to adopt such other incentive arrangements as it may deem
desirable, including without limitation, the granting of stock
options otherwise than under the Plan.
15. Compliance with SEC Regulations. It is the
Company's intent that this Plan comply in all respects with Rule
16b-3 of the Securities Exchange Act of 1934, as amended, and any
successor thereto. If any provision of this Plan is found not to
be in compliance with such Rule, the provisions thereof shall be
null and void. All grants and exercises of Options under this Plan
shall be made and executed in compliance with the provisions of
Section 16 of the Securities Exchange Act of 1934, as amended, and
any regulations promulgated thereunder.
16. No Right to Continued Service. Nothing in the Plan
or in any agreement entered into pursuant to the Plan shall confer
upon any Non-Employee Director any right to continued service as
director of the Company or any subsidiary or affect any right of
the Company or a subsidiary, acting through their Boards of
Directors or stockholders to remove any Non-Employee Director.
17. Kansas Law Governs. To the extent not otherwise
preempted, the laws of Kansas shall govern the resolution of all
questions and disputes which arise with respect to this Plan.
EXHIBIT 10.12
STOCK PURCHASE AGREEMENT
between
BANK IV KANSAS, NATIONAL ASSOCIATION,
as Purchaser
and
EMPRISE FINANCIAL CORPORATION,
as Seller
Dated as of January 31, 1994
TABLE OF CONTENTS
Page #
------
ARTICLE I. Definitions . . . . . . . . . . . . . . . . . . .1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . .1
Section 1.2 Accounting Terms. . . . . . . . . . . . . . . . .8
Section 1.3 Use of Defined Terms. . . . . . . . . . . . . . .8
ARTICLE II. Sale and Transfer of Stock; Closing . . . . . . .8
Section 2.1 Sale of the Shares. . . . . . . . . . . . . . . .8
Section 2.2 Purchase Price. . . . . . . . . . . . . . . . . .8
Section 2.3 Closing . . . . . . . . . . . . . . . . . . . . .8
Section 2.4 Closing Deliveries. . . . . . . . . . . . . . . .8
ARTICLE III. Agreements of the Parties . . . . . . . . . . . .9
Section 3.1 Agreements of BANK IV . . . . . . . . . . . . . .9
Section 3.2 Agreements of Seller. . . . . . . . . . . . . . 10
Section 3.3 Section 338(h)(10) Election;
Payment of Income Taxes . . . . . . . . . . . . 15
Section 3.4 Software and Copyrighted Materials. . . . . . . 15
ARTICLE IV. Representations and Warranties. . . . . . . . . 16
Section 4.1 Representations and Warranties of
Seller. . . . . . . . . . . . . . . . . . . . . 16
Section 4.2 Representations and Warranties of
BANK IV . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V. Book Value Adjustments. . . . . . . . . . . . . 28
Section 5.1 Mutual Agreement. . . . . . . . . . . . . . . . 28
Section 5.2 Expenses Caused by BANK IV. . . . . . . . . . . 28
ARTICLE VI. Closing Conditions. . . . . . . . . . . . . . . 28
Section 6.1 Conditions to Obligations of BANK IV. . . . . . 28
Section 6.2 Conditions to Obligations of Seller . . . . . . 30
ARTICLE VII Termination of Agreement. . . . . . . . . . . . 31
Section 7.1 Mutual Consent; Termination Date. . . . . . . . 31
Section 7.2 Election by BANK IV . . . . . . . . . . . . . . 31
Section 7.3 Election by Seller. . . . . . . . . . . . . . . 31
Section 7.4 Effect of Termination . . . . . . . . . . . . . 32
ARTICLE VIII. Indemnification . . . . . . . . . . . . . . . . 32
Section 8.1 Closing; Survival of Representations and
Warranties. . . . . . . . . . . . . . . . . . . 32
Section 8.2 Indemnification . . . . . . . . . . . . . . . . 32
Section 8.3 Procedure . . . . . . . . . . . . . . . . . . . 33
Section 8.4 Agreement as to Particular Contingent
Liabilities . . . . . . . . . . . . . . . . . . 33
ARTICLE IX. Miscellaneous . . . . . . . . . . . . . . . . . 34
Section 9.1 Expenses. . . . . . . . . . . . . . . . . . . . 34
Section 9.2 Notices . . . . . . . . . . . . . . . . . . . . 34
Section 9.3 Time. . . . . . . . . . . . . . . . . . . . . . 35
Section 9.4 Law Governing . . . . . . . . . . . . . . . . . 35
Section 9.5 Entire Agreement; Amendment . . . . . . . . . . 35
Section 9.6 Successors and Assigns. . . . . . . . . . . . . 35
Section 9.7 Cover, Table of Contents, and
Headings. . . . . . . . . . . . . . . . . . . . 35
Section 9.8 Counterparts. . . . . . . . . . . . . . . . . . 35
Section 9.9 Non-Competition . . . . . . . . . . . . . . . . 35
EXHIBITS
Exhibit "A" Form of Morris, Laing, Evans, Brock & Kennedy,
Chartered legal opinion
Exhibit "B" Form of Noncompetition Agreement--W. A. Michaelis,
Jr.
Exhibit "C" Form of Noncompetition Agreement--M. D. Michaelis
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of January 31, 1994,
between BANK IV KANSAS, NATIONAL ASSOCIATION, a national banking
association ("BANK IV"), and EMPRISE FINANCIAL CORPORATION, a
Kansas corporation ("Seller").
W I T N E S S E T H: That,
-------------------
WHEREAS, BANK IV desires to acquire all, and not less
than all, of the issued and outstanding capital stock of all
classes of Emprise Bank, National Association, Hutchinson, Kansas
(the "Bank") subject to and pursuant to the terms of this
Agreement; and
WHEREAS, Seller owns all of the issued and outstanding
capital stock of all classes of the Bank other than 1,200
directors' qualifying shares all of which it has the right to
acquire; and
WHEREAS, each party hereto believes that the proposed
acquisition by BANK IV of Bank pursuant to the terms and conditions
of this Agreement would be desirable and in their respective best
interests;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. The following terms as used in this
Agreement shall have the following meanings unless the context
otherwise requires.
"This Agreement" refers to this Stock Purchase Agreement
and all amendments hereto.
"Bank" means Emprise Bank, National Association, a
national banking association organized under the laws of the United
States.
"BANK IV" means BANK IV Kansas, National Association, a
national banking association organized under the laws of the United
States.
"Bank Holding Company Act" means the federal Bank Holding
Company Act of 1956, as amended (12 U.S.C. Section 1841 et seq.), or any
successor federal statute, and the rules and regulations of the
Board promulgated thereunder, all as the same may be in effect at
the time.
"Bank Stock" means common stock of the Bank, par value
$10.00 per share.
"Board" means the Board of Governors of the Federal
Reserve System or any successor governmental entity which may be
granted powers currently exercised by the Board of Governors.
"Book Value of the Bank" means the aggregate consolidated
book value of the Bank, calculated in accordance with GAAP, except
excluding:
(a) any adjustments otherwise required by
Financial Accounting Standard No. 115 to reflect changes
in the Bank's securities portfolio to adjust to market
value;
(b) any accounting adjustments to
(i) the "push-down" accounting on the Bank
and bank acquisitions by Bank;
(ii) accrue for vacation pay, sick leave,
and float holidays of employees not now
reflected on the financial statements of
Bank and which will not be reflected at the
time of closing, notwithstanding that BANK
IV will agree to cause such accrued employee
benefits to be paid in accordance with past
practices;
(iii) the accounting treatment of intangible
assets for goodwill, core deposit
intangibles, covenants not to compete, and
credit life agency shown on the daily
statements of Bank, except that adjustments
will be made for normal amortization of the
assets in accordance with past practices of
Bank;
(iv) accrue for the litigation against Bank
in Reno County District Court, Case No. 91 C
522, brought by Bruce Dierking, et al, if no
final judgment has been rendered in the case
at the time of Closing;
(c) any other accounting adjustments, even though
agreed upon by the parties, except in the amount that all
such adjustments in the aggregate exceed the sum of
$200,000, and
(d) the cost to the Bank of discharging its
remaining obligations under its discontinued pension
plan;
but including:
(a) the effect of all dividends and bonuses
permitted by this Agreement, whether or not otherwise
properly accruable, which have not been accounted for in
the Book Value of the Bank; and
(b) adjustments, if any, to the loan loss
reserves or investment portfolios as provided herein and
as agreed by the parties.
"Closing" means the event at which the purchase and sale
agreed upon in this Agreement is consummated by payment of the
Purchase Price by BANK IV and assignment of the Shares by Seller as
provided in this Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder, all
as the same may be in effect at the time.
"Comptroller" means the United States Comptroller of the
Currency or any successor governmental agency which may be granted
powers currently exercised by the Comptroller of the Currency.
"Corporations" refers collectively to the Bank and
Emprise Building Corp.-Hutchinson, and "Corporation" refers to any
one of them.
"Disclosure Statement" means the Disclosure Statement
prepared by Seller and delivered by Seller to BANK IV prior to the
execution and delivery of this Agreement by BANK IV.
"Effective Time" means the date and time on which the
Closing occurs.
"Environmental, Health, and Safety Liabilities" means any
loss, cost, expense, claim, demand, liability, or obligation of
whatever kind or otherwise, based upon Environmental Law relating
to:
(i) any environmental, health, or safety matter
or conditions, including, but not limited to, on-site or
off-site contamination, occupational safety and health,
and regulation of chemical substances or products;
(ii) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings,
damages, losses, claims, demands, and response, remedial
or inspection costs and expenses arising under
Environmental Laws;
(iii) financial responsibility under any
Environmental Law for cleanup costs or corrective
actions, including for any removal, remedial or other
response actions, and for any natural resource damage;
and
(iv) any other compliance, corrective, or
remedial action required under any Environmental Law.
"Environmental Law" means any provision of past or
present Law relating to any environmental, health, or safety
matters or conditions, Hazardous Materials, pollution, or
protection of the environment, including, but not limited to, on-
site and off-site contamination, occupational safety and health,
and regulation of chemical substances or products, emissions,
discharges, release, or threatened release of contaminants,
chemicals or industrial, toxic, radioactive, or Hazardous Materials
or wastes into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Materials,
pollutants, contaminants, chemicals, or industrial, toxic,
radioactive, or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated
thereunder, all as the same may be in effect at the time.
"Facilities" means any real property, leaseholds, or
other interests in real property owned by the Bank or any of the
Corporations and/or any buildings, plants, structures, or equipment
of any of the Corporations.
"FDIC" means the Federal Deposit Insurance Corporation or
any successor agency.
"Federal Deposit Insurance Act" means the Federal Deposit
Insurance Act, as amended, and the rules and regulations
promulgated thereunder, all as the same may be in effect at the
time.
"Financial Statements" refers to all of the financial
statements described in clause i of Section 4.1 of this Agreement.
"GAAP" means generally accepted accounting principles,
applied on a consistent basis, set forth in Opinions of the
Accounting Principles Board of the American Institute of Certified
Public Accountants and/or in statements of the Financial Accounting
Standards Board and/or their successors which are applicable in the
circumstances in question; and the requisite that such principles
be applied on a consistent basis means that the accounting
principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
"Hazardous Materials" means and includes: (i) any
hazardous substance or toxic material (excluding any lawful product
in customary quantities for use in the Bank's ordinary course of
business which contains such substance or material), pollutant,
contaminant, toxic material, or hazardous waste as defined in any
state, federal, or local Environmental Law; (ii) waste oil and
petroleum products; and (iii) any asbestos, asbestos containing
material, urea formaldehyde or material which contains it.
"Indemnifying Losses" shall have the meaning set forth in
Section 8.2 of this Agreement.
"Indemnitee" and "Indemnitees" shall have the meanings
set forth in Section 8.2 of this Agreement.
"Law" or "Laws" means all applicable statutes, laws,
ordinances, regulations, orders, writs, injunctions, or decrees of
the United States of America, any state or commonwealth, or any
subdivision thereof, or of any court or governmental department,
agency, commission, board, bureau, or other instrumentality.
"Litigation" means any proceeding, claim, lawsuit, and/or
investigation being conducted or, to the best of the knowledge of
the person or corporation making the representation, threatened
before any court or other tribunal, including, but not limited to,
proceedings, claims, lawsuits, and/or investigations, under or
pursuant to any occupational safety and health, banking, antitrust,
securities, tax, or other Laws, or under or pursuant to any
contract, agreement, or other instrument.
"Permitted Contract" means a contract or agreement,
written or oral, between the Bank or another of the Corporations,
on the one hand, and a person other than a customer of the Bank or
another financial institution, on the other hand, which (i) was
entered into in the ordinary course of business, (ii) may be
terminated by BANK IV after the Effective Time on no more than 30
days' prior notice, (iii) provides for a payment of no more than
$1,000 in any calendar month by the Bank or a Corporation, and (iv)
provides for no payment upon termination in excess of $1,000.
"Permitted Encumbrances" means with respect to any asset:
(a) liens for taxes not past due;
(b) mechanics' and materialmen's liens for
services or materials for which payment is not past due;
and
(c) minor defects, encumbrances, and
irregularities in title which do not, in the aggregate,
materially diminish the value of an asset or materially
impair the use of an asset for the purposes for which it
is or may reasonably be expected to be used.
"Purchase" means the purchase at the Closing of the
Shares from Seller by BANK IV pursuant to this Agreement.
"Purchase Price" has the meaning set forth in Section 2.2
of this Agreement.
"Required Approvals" means the approval, consent, or non-
objection, as the case may be, of the Board, the Comptroller, and
all other governmental or self-governing agencies, boards,
departments, and bodies whose approval, consent or non-action is
required in order to consummate the Purchase, the merger of the
Bank into BANK IV and the retention by BANK IV of all of the Bank's
Subsidiaries in substantially their present form, which approvals,
consents, and non-objections shall have become final and
nonappealable without any appeal or other form of review having
been initiated and as to which all required waiting periods shall
have expired.
"Seller" means Emprise Financial Corporation, a Kansas
corporation.
"Shares" means collectively all of the 500,000 shares of
Bank Stock being purchased and sold pursuant to this Agreement.
"Subsidiary" means any corporation fifty percent or more
of the common stock or other form of equity of which shall be
owned, directly or indirectly, by another corporation.
"Valuation Date" means the last day of the month which
immediately precedes the Effective Time.
1.2. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP consistent with that applied in the preparation of the
financial statements submitted pursuant to this Agreement, and all
financial statements submitted pursuant to this Agreement shall be
prepared in all material respects in accordance with such
principles subject to exceptions described in this Agreement.
1.3. Use of Defined Terms. All terms defined in this
Agreement shall have the defined meanings when used in any other
agreement, document, or certificate made or delivered pursuant to
this Agreement, unless the context otherwise requires.
ARTICLE II
SALE AND TRANSFER OF STOCK; CLOSING
2.1. Sale of the Shares. Subject to the terms and
conditions of this Agreement, at the Closing, Seller shall sell,
transfer, and deliver to BANK IV, and BANK IV shall purchase, all
500,000 of the Shares for the Purchase Price.
2.2. Purchase Price. The total Purchase Price for all
of the Shares shall be the sum of:
(i) the Book Value of the Bank at the Valuation
Date; and
(ii) $8,909,000.
2.3. Closing. The Closing shall take place at the
offices of Foulston & Siefkin, 700 Fourth Financial Center,
Wichita, Kansas, at 10:00 a.m., or at such other time or place as
the parties may agree, on a date selected by BANK IV upon giving
reasonable notice to Seller, which, unless otherwise agreed, shall
be the end of the month in which the final Required Approval is
obtained and in which the last required waiting periods shall
expire. The parties agree to exert their best efforts to cause the
Closing to occur on or before April 30, 1994.
2.4. Closing Deliveries. At the Closing:
a. Seller shall deliver to BANK IV:
(i) certificates representing all of the
Shares, endorsed for transfer to BANK IV, free
and clear of all encumbrances, liens, security
interests, claims, and equities whatsoever;
(ii) such other documents, including
officers' certificates, as may be required by
this Agreement or reasonably requested by BANK
IV; and
(iii) the opinion of Morris, Laing, Evans,
Brock & Kennedy, Chartered, counsel to Seller and
the Bank, substantially in the form of Exhibit
"A" hereto.
b. BANK IV shall deliver to Seller
immediately available funds in the total amount
of the Purchase Price, less that amount necessary
to pay in full the present loan from BANK IV to
Seller which is secured by a security interest in
the Shares owned by Seller and which amount of
the total Purchase Price shall be applied in
payment and satisfaction of such loan.
c. BANK IV and W. A. Michaelis, Jr., and
M. D. Michaelis shall execute and deliver non-
competition agreements substantially in the form
of Exhibits "B" and "C" hereto, respectively.
ARTICLE III
AGREEMENTS OF THE PARTIES
3.1. Agreements of BANK IV.
Prior to the Effective Time, BANK IV, shall use
its best efforts in good faith to take or cause to be
taken as promptly as practicable all such steps as shall
be necessary to obtain all of the Required Approvals.
All such steps, including all proceedings before
governmental bodies, shall be at the sole cost and
expense of BANK IV, but Seller shall fully cooperate and
shall cause the Corporations to cooperate fully with BANK
IV in obtaining all Required Approvals.
3.2. Agreements of Seller.
a. Prior to the Closing, Seller shall not permit
any of the Corporations to, except with the prior written
consent of BANK IV or as otherwise provided in this
Agreement:
(1) Amend its articles or certificate of
incorporation, bylaws, or other charter
documents, make any change in its authorized,
issued, or outstanding capital stock, grant any
stock options or right to acquire shares of any
class of its capital stock or any security
convertible into any class of capital stock,
purchase, redeem, retire, or otherwise acquire
(otherwise than in a fiduciary capacity) any
shares of any class of its capital stock or any
security convertible into any class of its
capital stock, or agree to do any of the
foregoing;
(2) Except for quarterly cash dividends in
the maximum amount of $350,000 each payable by
the Bank at the same time or times as has been
done in the past, declare or pay any dividend or
other distribution in respect of any class of its
capital stock;
(3) Adopt, enter into, or amend materially
any employment contract or any bonus, stock
option, profit sharing, pension, retirement,
incentive, or similar employee benefit program or
arrangement or grant any bonus, salary, or wage
increase, except (a) normal individual bonuses or
increases in compensation to employees in
accordance with established employee procedures
of the Corporations; and (b) normal severance pay
on termination of any employee in accordance with
past practices and employee termination
guidelines;
(4) Incur any indebtedness for borrowed
money (except for federal funds, repurchase
agreements entered into in the ordinary and usual
course of business, deposits received by the
Bank, endorsement for collection or deposit of
negotiable instruments received in the ordinary
and usual course of business, and issuance of
letters of credit by the Bank in the ordinary and
usual course of business), assume, guarantee,
endorse, or otherwise as an accommodation become
liable or responsible for obligations of any
other individual, firm, or corporation;
(5) Pay or incur any obligation or
liability, absolute or contingent, other than
liabilities incurred in the ordinary and usual
course of business of the Corporations;
(6) Except for transactions in the ordinary
and usual course of business of the Bank,
mortgage, pledge, or subject to lien or other
encumbrance any of its properties or assets;
(7) Except for transactions in the ordinary
and usual course of business of the Bank
(including, without limitation, sales of assets
acquired by the Bank in the course of collecting
loans), sell or transfer any of its properties or
assets or cancel, release, or assign any
indebtedness owed to it or any claims held by it;
(8) Make any investment of a capital nature
in excess of $25,000 for any one item or group of
similar items either by the purchase of stock or
securities (not including bonds or collateralized
mortgage obligations purchased in the ordinary
and usual course of business by the Bank),
contributions to capital, property transfers, or
otherwise, or by the purchase of any property or
assets of any other individual, firm, or
corporation;
(9) Enter into any other agreement not in
the ordinary and usual course of business;
(10) Merge or consolidate with any other
corporation, acquire any stock (except in a
fiduciary capacity), solicit any offers for any
Bank Stock, or a substantial portion of the
assets of either of the Corporations or, except
in the ordinary course of business, acquire any
assets of any other person, corporation, or other
business organization, or enter into any
discussions with any person concerning, or agree
to do, any of the foregoing; or
(11) Enter into any transaction or take any
action which would, if effected prior to the
Effective Time, constitute a breach of any of the
representations, warranties, or covenants
contained in this Agreement; provided, that
transactions and other dealings with affiliated
banks which are made to separate their respective
affairs shall not constitute a breach of any of
the covenants contained in this subparagraph (a).
b. Prior to the Effective Time, Seller shall
cause each of the Corporations to conduct its respective
business in the ordinary and usual course as heretofore
conducted and to use its best efforts (1) to preserve its
business and business organization intact, (2) to keep
available to BANK IV the services of the present officers
and employees of the Bank, except Seller reserves the
right to hire Patrick W. Michaelis, Diana Fisher, Cynthia
Fleming, Steve Onken, Roy Doonan, and Keith Moyer, (3) to
preserve the good will of customers and others having
business relations with the Bank, (4) to maintain its
properties in customary repair, working order and
condition (reasonable wear and tear excepted), (5) to
comply with all Laws applicable to it and the conduct of
its businesses, (6) to keep in force at not less than
their present limits all existing policies of insurance,
(7) except as provided in this Agreement, to make no
material changes in the customary terms and conditions
upon which it does business, (8) to duly and timely file
all reports, tax returns, and other documents required to
be filed with federal, state, local, and other
authorities, and (9) unless it is contesting the same in
good faith and has established reasonable reserves
therefor, to pay when required to be paid all taxes
indicated by tax returns so filed or otherwise lawfully
levied or assessed upon it or any of its properties and
to withhold or collect and pay to the proper governmental
authorities or establish separate liability accounts for
such payment all taxes and other assessments which it
believes in good faith to be required by law to be so
withheld or collected.
c. Prior to the Effective Time, Seller shall
cause the Corporations, to the extent permitted by Law,
to give BANK IV and its counsel and accountants full
access, during normal business hours and upon reasonable
notice, to their respective properties, books, and
records, and to furnish BANK IV during such period with
all such information concerning their affairs as BANK IV
may reasonably request. Except for matters expressly
disclosed in the Disclosure Statement, the availability
or actual delivery of information about the Corporations
to BANK IV shall not affect the covenants,
representations, and warranties of Seller contained in
this Agreement. Except for information disclosed in the
course of obtaining governmental approvals, BANK IV shall
treat as confidential all such information in the same
manner as BANK IV treats similar confidential information
of its own and, if this Agreement is terminated, BANK IV
shall continue to treat all such information obtained in
such investigation and not otherwise known to BANK IV, or
already in the public domain, as confidential and shall
return such documents theretofore delivered by Seller to
BANK IV as Seller shall request.
d. Seller acknowledges that BANK IV will merge
the Bank into BANK IV at the Effective Time.
Accordingly, Seller agrees to take all such action and to
cause the Bank to take all such action as BANK IV may
reasonably request in order for such a merger to occur
contemporaneous with the Effective Time. Any such
request shall be in writing and mailed, faxed, served, or
delivered to either Mr. L. Thomas Veatch, as Senior Vice
President and Chief Financial Officer of Seller, or
Ralph R. Brock, as attorney for Seller.
e. Seller agrees not to sell, pledge, encumber
or otherwise hypothecate or transfer any shares of Bank
Stock prior to the Effective Time.
f. Upon request, Seller shall furnish or cause
to be furnished to BANK IV copies of title insurance
policies, title opinions of attorneys, or other title
evidence presently in the possession of Seller or
Corporations covering or pertaining to the title of
Corporations to any real properties owned by them. Any
additional title evidence desired by BANK IV shall be
obtained by it at its expense. Seller may, but shall not
be obligated to, perform any curative title work in event
the title to any of such real properties contains a
defect other than Permitted Encumbrances. If Seller
declines to perform any such curative work, then BANK IV
may, but shall not be obligated to, undertake such
curative work, in which event Seller shall fully
cooperate with BANK IV in such work which shall then be
at the cost and expense of BANK IV.
g. BANK IV shall have the right at any time
prior to Closing at its cost and expense to make such
environmental inspections and surveys of the property of
the Corporations and to obtain such environmental
assessment reports as BANK IV may deem advisable and
appropriate. BANK IV, its agents and consultants, shall
have access to the properties at all reasonable times and
may take such soil or other tests as may be reasonable,
and Seller and Corporations shall cooperate fully with
BANK IV with reference to such environmental surveys and
assessments.
h. Seller shall permit and cause Corporations to
permit BANK IV at all reasonable times within 45 days
from the date hereof to have any of the Facilities of
Corporations surveyed by a duly licensed surveyor of BANK
IV's choice. Any such surveys shall be made and obtained
at the cost and expense of BANK IV, but Seller and
Corporations shall cooperate fully with BANK IV in
obtaining any such survey.
i. From the date hereof through the Effective
Time, Seller shall cause the Bank to give BANK IV one
business day's advance notice by telephone or facsimile
to Thomas A. Page, President-Community Banking of BANK
IV, of all proposed securities purchases or sales
involving an aggregate price of $250,000 or more. If no
objection is received within such period of one business
day, then Bank may proceed to make the proposed purchases
or sales.
j. Seller, in consultation with BANK IV, shall
cause the Bank to exert its best efforts to fully
discharge all of its remaining liabilities under its
discontinued pension plan.
3.3. Section 338(h)(10) Election; Payment of Income
Taxes. Seller and BANK IV agree to make a joint election under
Section 338(h)(10) of the Code in accordance with applicable Law.
At Closing, BANK IV shall pay to Seller an amount equal to all
amounts that are included at the Valuation Date in the "Accrued
Federal Income Tax," "Accrued Privilege Tax," "Deferred Federal
Income Tax," "Deferred Privilege Tax," and any other accounts of
Corporations containing a liability for income and privilege taxes,
including any accounting adjustments and/or corrections agreed upon
by Seller and BANK IV through the Valuation Date, plus the
estimated liability of the Corporations for all such taxes for the
period from the Valuation Date through the Effective Time, and plus
the amount of any reimbursements for such taxes, if any, received
by Corporations during such period, less the amount of such taxes,
if any, paid by Corporations during such period. If any of such
accounts have debit (negative) balances at the Valuation Date, they
will offset the credit balances, and only the net amount will be
paid to Seller. All liability for such taxes of the Corporations
during the period from the Valuation Date through the Effective
Time shall be estimated by using a per-day accrual for that period
based on the average daily income of the Corporations for the
preceding three months and a 39% combined tax rate, with the
calculation of such average daily income to be made without regard
to any accounting adjustments or adjustments to loan loss reserves
or investment portfolios resulting from the transactions
contemplated by this Agreement. Seller will pay all state and
federal income taxes attributable to the Corporations' operations
through the Effective Time. BANK IV will promptly pay over to
Seller any refunds it may receive for overpayments, carrybacks,
credits, or otherwise arising which are attributable to either or
both of the Corporations for the period through the Effective Time.
3.4. Software and Copyrighted Materials. At Closing
Seller shall assign to BANK IV all licenses owned by Seller of
software or other copyrighted property and the licensed software
and property presently being used by Bank sufficient to permit BANK
IV to continue using such property if Bank paid for its right to
use such property, such licenses can be assigned without the
consent or approval of the licensors or any third party, and BANK
IV desires to continue to use such property. If assignment of any
such license or right to use such property requires the consent or
approval of the licensor or another party, Seller agrees to use its
best efforts to obtain such consent or approval or to obtain a
separate license or right to use the property for BANK IV on such
terms and for such price, royalty, or other consideration, if any,
required by the licensor or other party as may be satisfactory to
BANK IV, which shall pay such consideration. Any license or right
to use such property and the software and property licensed will
not be assigned to BANK IV or obtained for it if BANK IV does not
desire to continue the use of such property or if any required
consent to such assignment or right to use such property cannot be
obtained on terms satisfactory to BANK IV. If any such rights or
right to use such property is owned by Bank and BANK IV desires to
continue to use such property, but will not have the right to do so
after the merger without the consent of the licensor or a third
party, Seller likewise will use its best efforts to obtain such
consent or approval the same as though the license was owned by
Seller. If any such license or right to use such property is owned
by Bank and BANK IV does not desire to continue the use of such
property, but Seller desires to acquire the same, then at Closing
Bank shall assign to Seller such license or right to use such
property and the property licensed if such license or right to use
such property can be assigned without the consent or approval of
the licensor or another party or if any required consent or
approval can be obtained on terms and for such price, royalty, or
other consideration, if any, required by the licensor or another
party, as may be satisfactory to Seller, which shall pay such
consideration. Any software or other licensed or copyrighted
materials presently utilized by Bank and which BANK IV will not
have the right to use after Closing shall at Closing be returned or
delivered to Seller or the licensor who is entitled to it, as the
case may be, and BANK IV covenants and agrees after Closing not to
use, disclose, reveal, or permit others to use, disclose, or reveal
such property or materials in violation of any license or other
agreement pertaining thereto, or any copyright or other law, or
rule of law pertaining to trade secrets or proprietary or
confidential information, which violation could subject Seller to
a claim or payment of damages or other legal remedies for such
violation. Notwithstanding the foregoing, however, it is
understood and agreed that any software or hardware techniques or
methods devised or developed by the Data Processing Center or
personnel of Seller shall be retained by Seller as its trade
secrets and proprietary information, and after Closing Bank shall
have no further right to use the same.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of Seller. Except
as disclosed in the Disclosure Statement, Seller represents and
warrants to BANK IV as follows:
a. Organization, Good Standing, and Authority.
Seller is a bank holding company duly registered pursuant
to the Bank Holding Company Act. Each of the
Corporations is a corporation or bank duly organized,
validly existing, and in good standing under the laws of
the jurisdiction of its incorporation.
b. Authority. Each of the Corporations has all
requisite corporate power and authority to conduct its
business as it is now conducted, to own its properties
and assets, and to lease properties used in its business.
Neither of the Corporations is in violation of its
charter documents or bylaws, or of any applicable Law in
any material respect, or in default in any material
respect under any material agreement, indenture, lease,
or other document to which it is a party or by which it
is bound. The deposits of the Bank are insured by the
FDIC to the extent provided by the Federal Deposit
Insurance Act and the Bank has paid all assessments and
filed all reports required to be filed under the Federal
Deposit Insurance Act.
c. Binding Obligations; Due Authorization. This
Agreement constitutes the valid and binding obligation of
Seller, enforceable against it in accordance with the
terms hereof, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar
laws and equitable principles affecting creditors' rights
generally.
d. Absence of Default. The execution and the
delivery of this Agreement, the sale of the Shares, and
the consummation of the other transactions contemplated
hereby, and the fulfillment of the terms hereof will not
(1) conflict with, or result in a breach of the terms,
conditions, or provisions of, or constitute a default
under the organizational documents or bylaws of any of
the Corporations or under any agreement or instrument
under which either of the Corporations or the Seller is
obligated, or (2) violate any Law to which either of the
Corporations or the Seller is or will be subject prior to
the Closing, but Seller makes no representation or
warranty as to the proposed merger of the Bank into BANK
IV or as to any aspect of any Law peculiar to BANK IV or
Fourth Financial Corporation.
e. Subsidiaries. The only Subsidiary of the
Bank is Emprise Building Corp.-Hutchinson.
f. Capitalization; Ownership of Shares. The
Bank is authorized to issue 500,000 shares of capital
stock, par value $10 per share, all of which is duly
issued and outstanding. Seller is the owner, free and
clear of all encumbrances, liens, security interests, and
claims whatsoever, except a security interest to secure
a loan from BANK IV, of all 500,000 shares of Bank Stock,
except for 1,200 directors' qualifying shares. As
provided herein, the loan will be repaid from the total
Purchase Price at Closing. The directors' qualifying
shares will be reacquired by Seller and will be sold and
transferred to BANK IV at the Closing. Emprise Building
Corp.-Hutchinson is authorized to issue 100,000 shares of
common stock, par value $1 per share, of which 30,000
shares are issued and outstanding and are owned, free and
clear of all liens, security interests, and claims
whatsoever, by the Bank.
g. Charter Documents. True and correct copies
of the charter documents and bylaws of both of the
Corporations, with all amendments thereto, are included
in the Disclosure Statement as Exhibits "G-1" to "G-4."
h. Options, Warrants, and Other Rights. None of
the Corporations has outstanding any options, warrants,
or rights of any kind requiring it to sell or issue to
anyone any capital stock of any class and none of the
Corporations has agreed to issue or sell any additional
shares of its capital stock.
i. Financial Statements. Included in the
Disclosure Statement as Exhibits "I-1," et seq. are true
and complete copies of the following financial
statements, all of which are true and complete in all
material respects and have been prepared in all material
respects in accordance with GAAP and all applicable
regulatory accounting principles consistently followed
throughout the periods indicated, subject in the case of
interim financial statements, to normal recurring year-
end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse)
and the absence of notes (which if presented would not
differ materially from those included in the most recent
year-end financial statements):
(1) Unaudited Consolidated Financial
Statements of the Bank as of December 31, 1992,
and 1991, and for the fiscal years then ended
with accountants' compilation report thereon and
notes thereto, which have been compiled by Grant
Thornton, independent certified public
accountants; and
(2) Consolidated Reports of Condition and
Income, as of March 31, June 30, and
September 30, 1993, as filed by the Bank with the
FDIC.
As soon as practicable between the date hereof and the
Effective Time, Seller will deliver to BANK IV copies of
monthly operating statements and monthly securities
inventory reports of the Bank and of all reports filed by
either of the Corporations with any regulatory agencies.
The books of account of each of the Corporations and each
of the Financial Statements fairly and correctly reflect
and, when delivered, will reflect in all material
respects in accordance with GAAP and all applicable rules
and regulations of regulatory agencies applied on a
consistent basis, the respective incomes, expenses,
assets, and liabilities, except contingent liabilities
disclosed in the Disclosure Statement, of each of the
Corporations (except for the absence in the monthly
operating statements of the Bank of certain information
and footnotes normally included in financial statements
prepared in accordance with GAAP and except the
exceptions listed in the definition of Book Value of the
Bank in Section 1.1 of this Agreement). There have been,
and prior to the Effective Time there will be, no
material changes in the financial condition of the Bank
from December 31, 1992, other than changes made in the
usual and ordinary conduct of the businesses of the
Corporations, none of which has been or will be
materially adverse and all of which have been or will be
recorded in the books of account of the Corporations,
except possible contingent liabilities disclosed in
Exhibit "I-_" of the Disclosure Statement; and except as
specifically permitted by this Agreement, there have
been, and prior to the Effective Time there will be, no
substantial changes in the respective businesses, assets,
properties, or liabilities, absolute or contingent, of
any of the Corporations, or in their respective
condition, financial or otherwise, from the date of the
most recent of the Financial Statements that has been
delivered to BANK IV on the date hereof other than
changes occurring in the usual and ordinary conduct of
the business of the Corporations, none of which has been
or will be materially adverse and all of which have been
or will be recorded in the respective books of account of
the Corporations. Neither of the Corporations has any
contingent liabilities, other than letters of credit and
similar obligations of the Bank incurred in the ordinary
course of business, asserted or which have a reasonable
likelihood of being asserted, that are not disclosed in
the Financial Statements listed above or that have not
otherwise been disclosed to BANK IV in the Disclosure
Statement. Seller also agrees to use reasonable efforts
to have the accountants of Bank prepare and deliver to
BANK IV prior to Closing a copy of Bank's compiled
consolidated financial statements as of December 31,
1993, and for the year then ended, with accountant's
compilation report thereon and notes thereto, but makes
no warranty that such financial statements can or will be
available prior to Closing, particularly if Closing
occurs prior to April 1, 1994.
j. Real Properties. Exhibit "J" to the
Disclosure Statement is a complete list of all real
estate owned or leased by either of the Corporations.
Each Corporation has good and marketable title in fee
simple to all lands and buildings described in the
Disclosure Statement as being owned by it, free and clear
of all liens, encumbrances, and charges, except for
Permitted Encumbrances. All leases of real property to
which either of the Corporations is a party as lessee,
true and complete copies of each of which with all
amendments thereto are included in Exhibit "J" to the
Disclosure Statement, are each valid and enforceable in
accordance with their respective terms except as
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar Laws and equitable
principles affecting creditors' rights generally, and
there has been no material default by any party thereto.
No zoning ordinance prohibits, interferes with, or
materially impairs the usefulness of any of the real
property and buildings thereon owned or used by any
Corporation for the purposes for which it is now being
used; and all the premises owned or leased by either of
the Corporations are in good operating condition and
repair, normal wear and tear excepted.
k. Personal Property. Except for the personal
property listed on Exhibit "K" to the Disclosure
Statement, each of the Corporations has good and
marketable title to all of the machinery, equipment,
materials, supplies, and other property of every kind,
tangible or intangible, contained in its offices and
other facilities or shown as assets in its records and
books of account, free and clear of all liens,
encumbrances, and charges. All leases of personal
property to which either of the Corporations is a party
as lessee are valid and enforceable in accordance with
their terms, and there has been no material default by
any party thereto. All of such personal property owned
or leased by either of the Corporations is in good
operating condition, normal wear and tear excepted.
l. Taxes. The Corporations have filed all tax
returns and reports required to be filed with the United
States Government and with all states and political
subdivisions thereof where any such returns or reports
are required to be filed and where the failure to file
such return or report would subject any of the
Corporations to any material liability or penalty. All
taxes imposed by the United States, or by any foreign
country, or by any state, municipality, subdivision, or
instrumentality of the United States or of any foreign
country, or by any other taxing authority, which are due
and payable by either of the Corporations have been paid
in such amounts and at such times as not to be delinquent
or have been adequately provided for by reserves shown in
the records and books of account of the Corporations and
in the Financial Statements. No extension of time for
the assessment of deficiencies for any years is in
effect. Except for the potential claim by the State of
Kansas for additional privilege taxes described in
Exhibit "L" to the Disclosure Statement, neither Seller
nor any of the Corporations has any knowledge of any
unassessed tax deficiency proposed or threatened against
any of them.
m. Contracts. Other than Permitted Contracts
and agreements with customers of the Bank and with
financial institutions entered into by the Bank in the
ordinary course of its banking business, attached to the
Disclosure Statement as Exhibit "M" is a list of all
material contracts and other agreements and arrangements,
both written and oral, to which either of the
Corporations is a party and which involve $10,000 or
more, which affect or pertain to the operation of their
respective businesses. To the best knowledge of Seller,
all parties thereto have in all material respects
performed, and are in good standing with respect to, all
the material obligations required to be performed under
all such contracts and other agreements and arrangements,
and no obligation with respect thereto is overdue. All
of the material agreements of the Corporations, including
without limitation the agreements disclosed in writing
pursuant to this clause (m), are valid, binding, and
enforceable in accordance with their terms, except as
limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws and equitable
principles affecting creditors' rights generally. Except
as otherwise noted in Exhibit "M" to the Disclosure
Statement, no contract, lease, or other agreement or
arrangement to which either of the Corporations is a
party or as to which any of their assets is subject
requires the consent of any third party in connection
with this Agreement. Except as described in Exhibit "M"
to the Disclosure Statement, neither any Corporation nor
Seller has any knowledge of any threatened cancellation
of, any outstanding disputes or default under, or of any
basis for any claim of breach or default of, any lease,
contract, or other agreement or arrangement to which
either of the Corporations is a party. Except for
Permitted Contracts and except as set forth in Exhibit
"M" to the Disclosure Statement, neither the Bank nor the
Corporations is a party to:
(1) Any contract for the purchase or sale
of any materials, or supplies which contains any
escalator, renegotiation, or redetermination
clause or which commits it for a fixed term;
(2) Any contract of employment with any
officer or employee not terminable at will
without liability on account of such termination;
(3) Any management or consultation
agreement not terminable at will without
liability on account of such termination;
(4) Any license, royalty, or union
agreement, or loan agreement in which any of the
Corporations is the borrower;
(5) Any contract, accepted order, or
commitment for the purchase or sale of materials,
services, or supplies having a total remaining
contract price in excess of $10,000;
(6) Any contract containing any
restrictions on any party thereto competing with
either of the Corporations, or any other person;
(7) Any other agreement which materially
affects the business, properties, or assets of
either of the Corporations, or which was entered
into other than in the ordinary and usual course
of business; or
(8) Any letter of credit or commitment to
make any loan or group of loans to related
parties in an amount in excess of $250,000.
n. Labor Relations; Employees; ERISA. Neither
of the Corporations is a party to or affected by any
collective bargaining agreement, nor is any Corporation
a party to any pending or, to the best knowledge of
Seller, threatened labor dispute, organizational efforts,
or labor negotiations. Each of the Corporations has
complied in all material respects with all applicable
Laws relating to the employment of labor, including, but
not limited to, the provisions thereof relating to wages,
hours, collective bargaining, payment of social security
taxes, and equal employment opportunity, the violation of
which would have a materially adverse impact on their
respective businesses. Neither of the Corporations is
liable for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing. Except
for the Bank's profit sharing plan (the "Profit Sharing
Plan"), true and complete copies of which with all
amendments thereto are Exhibit "N" to the Disclosure
Statement, neither of the Corporations has any written or
oral retirement, pension, profit sharing, stock option,
bonus, or other employee benefit plan or practice other
than group health and accident insurance and employee
bonuses for country club dues and year-end employee
incentive awards. The Profit Sharing Plan is in material
compliance with ERISA and the Code and is a "qualified
plan" within the meaning of Section 401(a) of the Code
and is the subject of a currently effective written
determination of the Internal Revenue Service to such
effect and to the further effect that the trust
thereunder is a trust exempt from taxation under Section
501 of the Code. Neither Seller nor either of the
Corporations knows of any facts or circumstances that
could adversely affect the status of such plan as such a
plan or such trust as such a trust. All accrued
contributions and other payments to be made by the Bank
under the Profit Sharing Plan have been made or reserves
adequate for such purposes have been set aside therefor.
Neither of the Corporations has violated any of the
provisions of ERISA, and neither of them has engaged in
any "prohibited transactions" as such term is defined in
Section 406 of ERISA. Each of the Corporations has
complied with all applicable notice requirements and has
provided group health care continuation coverage under
Section 4980B of the Code and/or any other applicable
Laws. There is no employee of either of the Corporations
whose employment is not terminable at will without
severance pay or other penalty or compensation other than
as described in Exhibit "N." All employment contracts
with employees are oral and are terminable at will.
o. Government Authorizations. Each of the
Corporations has all permits, charters, licenses, orders,
and approvals of every federal, state, local, or foreign
governmental or regulatory body required in order to
permit it to carry on its business substantially as
presently conducted. All such licenses, permits,
charters, orders, and approvals are in full force and
effect, and, to the knowledge of the Corporations and
Seller, no suspension or cancellation of any of them is
threatened and neither Seller nor any of the Corporations
knows of any fact or circumstance that will interfere
with or adversely affect the renewal of any of such
licenses, permits, charters, orders, or approvals; and
none of such permits, charters, licenses, orders, and
approvals will be affected by the consummation of the
transactions contemplated by this Agreement, except as
they may be affected by the merger contemplated by BANK
IV.
p. Insurance. Exhibit "P" to the Disclosure
Statement is a complete list of all insurance policies
presently in effect and in effect during the past three
years. All the insurance policies and bonds currently
maintained by any of the Corporations are in full force
and effect.
q. Litigation. Exhibit "Q" to the Disclosure
Statement contains a true and complete list and brief
description of all pending or, to the knowledge of either
of the Corporations or Seller, threatened, Litigation to
which either of the Corporations is or would be a party
or to which any of their assets is or would be subject.
Except as described on Exhibit "Q" to the Disclosure
Statement, neither of the Corporations is a party to any
Litigation other than routine litigation commenced by the
Bank to enforce obligations of borrowers in which no
counterclaims for any material amounts of money have been
asserted or, to the knowledge of the Corporations or
Seller, threatened.
r. Brokers or Finders. No broker, agent,
finder, consultant, or other party (other than legal and
accounting advisors) has been retained by Seller or
either of the Corporations or is entitled to be paid
based upon any agreements, arrangements, or
understandings made by Seller or either of the
Corporations in connection with any of the transactions
contemplated by this Agreement.
s. Environmental Compliance. Each of the
Corporations is in material compliance with all relevant
Environmental Laws and neither of the Corporations has
any material Environmental, Health, and Safety
Liabilities. None of the Facilities is now being used
or, to the best of Seller's knowledge, at any time in the
past has ever been used by any of the Corporations, or to
the knowledge of Seller without investigation, by third
parties, for the storage (whether permanent or
temporary), disposal, or handling of any Hazardous
Materials, nor are any Hazardous Materials located in,
on, under, or at any of the Facilities. Neither Seller
nor either of the Corporations has received any notice of
material violation of any Environmental Law, or any
notice of any material potential Environmental, Health,
and Safety Liabilities with respect to any of the
Facilities or to any other properties and assets in which
either of the Corporations has had an interest.
t. Employment of Aliens. Each of the
Corporations is in material compliance with the
Immigration Reform and Control Act of 1986.
u. Notes and Leases. All promissory notes and
leases owned by the Bank at the Effective Time will
represent bona fide indebtedness or obligations to the
Bank and are and will be fully enforceable in accordance
with their terms without valid set-offs or counterclaims,
except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws and equitable
principles affecting creditors' rights generally;
provided, however, no representation or warranty is made
in this Agreement as to the collectibility of such notes
and leases.
v. No Misrepresentations. Neither this
Agreement, the Disclosure Statement, nor the Financial
Statements, when considered in conjunction with all other
information and documents contained therein, contains or
will contain any misstatement of a material fact or omits
or will omit to state a material fact necessary to make
the statements contained herein or therein not
misleading.
w. Updating of Representations and Warranties.
Between the date hereof and the Effective Time, Seller
will promptly disclose to BANK IV in writing any
information of which it has actual knowledge (1)
concerning any event that would render any material
representation or warranty of Seller untrue if made as to
the date of such event, (2) which renders any information
set forth in this Agreement or the Disclosure Statement
no longer correct in all material respects, or (3) which
arises after the date hereof and which would have been
required to be included in this Agreement or Disclosure
Statement if such information had existed on the date
hereof.
x. True at Effective Time. Except as otherwise
specifically provided in this Agreement, all of the
representations and warranties set forth above will be
true and correct at the Effective Time with the same
force and effect as though such representations and
warranties had been made at the Effective Time.
4.2. Representations and Warranties of BANK IV. BANK
IV represents and warrants to Seller as follows:
a. Organization, Good Standing, and Authority.
BANK IV is a bank duly organized, validly existing, and
in good standing under the laws of the United States, and
has all requisite corporate power and authority to
conduct its business as it is now conducted, to own its
properties and assets, and to lease properties used in
its business. BANK IV is not in violation of its charter
documents or bylaws, or of any applicable Law in any
material respect, or in default in any material respect
under any material agreement, indenture, lease, or other
document to which it is a party or by which it is bound.
b. Binding Obligations; Due Authorization. This
Agreement constitutes the valid and binding obligations
of BANK IV, enforceable against it in accordance with its
terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar
laws and equitable principles affecting creditors' rights
generally. The execution, delivery, and performance of
this Agreement and the transactions contemplated hereby
have been duly authorized by the board of directors of
BANK IV.
c. Absence of Default. None of the execution or
the delivery of this Agreement, the consummation of the
transactions contemplated hereby, or the fulfillment of
the terms hereof, will (1) conflict with, or result in a
breach of the terms, conditions, or provisions of, or
constitute a default under the charter documents or
bylaws of BANK IV or under any agreement or instrument
under which BANK IV is obligated, or (2) violate any Law
to which it is subject.
d. Brokers or Finders. No broker, agent,
finder, consultant, or other party (other than legal and
accounting advisors) has been retained by BANK IV or is
entitled to be paid based upon any agreements,
arrangements, or understandings made by BANK IV in
connection with any of the transactions contemplated by
this Agreement.
ARTICLE V
BOOK VALUE ADJUSTMENTS
5.1. Mutual Agreement. The parties agree that no
adjustments to the Book Value of the Bank shall be made for any of
those items excluded from adjustment in the definition of Book
Value of the Bank contained in Section 1.1 of this Agreement. No
adjustments shall be made for loan loss reserves, investment
portfolios, or accounting adjustments unless such accounting
adjustments are in excess of $200,000 in the aggregate, without the
mutual consent of both parties to this Agreement. With reference
to loan loss reserves, BANK IV acknowledges that it has reviewed
the loan loss reserves as of October 31, 1993, finds that they are
adequate as of that time, and agrees not to request adjustments to
the amount of the loan loss reserves as of that date for the loans
of Bank existing on that date in the absence of material adverse
changes subsequent to that date in the financial condition of a
borrower or borrowers or in the absence of receipt after that date
of additional financial information concerning a borrower or
borrowers which justifies a higher risk reclassification of the
loans of such borrower or borrowers. In event Seller and BANK IV
are unable to agree on any accounting adjustment, adjustment to the
loan loss reserves or investment portfolio, or to any adjustment
which would cause an adjustment in Book Value of the Bank after
good faith negotiations, then this Agreement shall terminate.
5.2. Expenses Caused by BANK IV. The amount of any out
of pocket expense incurred by the Bank on or before Closing as a
result of due diligence efforts undertaken by BANK IV or in
preparation for assuming control of Corporations, including without
limitation but by way of illustration, additional payroll costs
resulting from attendance by employees at seminars to become
familiar with BANK IV methods and procedures, shall be paid by BANK
IV to Bank at Closing or, if this Agreement is terminated without
closing other than by reason of Seller's breach or pursuant to
Section 5.1, to Corporations in reimbursement of such expenses.
ARTICLE VI
CLOSING CONDITIONS
6.1. Conditions to Obligations of BANK IV. The
obligations of BANK IV to purchase the Shares shall be subject to
the following conditions which may, to the extent permitted by Law,
be waived by BANK IV at its option:
a. Absence of Litigation. No order, judgment,
or decree shall be outstanding restraining or enjoining
consummation of the purchase of the Shares; and no
Litigation shall be pending or threatened in which it is
sought to restrain or prohibit the purchase of the Shares
or obtain other substantial monetary or other relief
against one or more of the parties hereto in connection
with this Agreement.
b. Regulatory Approvals. All Required Approvals
shall have been procured (and shall continue to be in
effect) and all other requirements prescribed by Law
shall have been satisfied.
c. Minimum Net Worth of Bank. The Book Value of
the Bank as of the Valuation Date, computed in accordance
with GAAP, except as provided in this Agreement, shall be
not less than $20,000,000.
d. Opinion of Counsel. BANK IV shall have
received the opinion of Morris, Laing, Evans, Brock &
Kennedy, Chartered, counsel to the Corporations and
Seller, substantially in the form of Exhibit "A" hereto.
e. Representations and Warranties; Covenants.
The representations and warranties of Seller contained in
Section 4.1 of this Agreement shall have been true and
correct in all material respects on the date made and
shall be true and correct in all material respects at the
Effective Time as though made at such time, excepting any
changes occurring in the ordinary course of business,
none of which shall have been materially adverse, and
excepting any changes contemplated or permitted by this
Agreement. Seller shall have performed all of its
obligations under this Agreement.
f. Certificates. Seller shall have delivered to
BANK IV a certificate, in form and substance satisfactory
to BANK IV, dated the Effective Time and signed by the
chief executive officer and chief financial officer of
each of Seller and Bank, certifying in such detail as
BANK IV may reasonably request the fulfillment of the
foregoing conditions; provided, that none of the
certifications contained therein shall survive the
Closing except to the extent they pertain to
representations and warranties that survive the Closing
as expressly provided in Section 8.1 of this Agreement.
g. Resignations. Seller shall have delivered to
BANK IV the written resignations, effective at the
Effective Time, of those directors of the Corporations as
BANK IV shall have requested at least five business days
prior to the Effective Time.
h. Delivery of Noncompetition Agreements. The
parties shall have executed and delivered Noncompetition
Agreements substantially in the form of Exhibits "B" and
"C" hereto.
6.2. Conditions to Obligations of Seller. The
obligation of Seller to sell the Shares and to consummate the
transactions contemplated hereby shall be subject to the following
conditions which may, to the extent permitted by Law, be waived by
Seller at its option:
a. General. Each of the conditions specified in
clauses a and b of Section 6.1 shall have occurred and be
continuing.
b. Representations and Warranties; Covenants.
The representations and warranties of BANK IV contained
in Section 4.2 of this Agreement shall have been true and
correct in all material respects on the date made and
shall be true and correct in all material respects at the
Effective Time as though made at such time. BANK IV
shall have duly performed all of its obligations under
this Agreement.
c. Delivery of Noncompetition Agreements. The
parties shall have executed and delivered Noncompetition
Agreements substantially in the form of Exhibits "B" and
"C" hereto.
ARTICLE VII
TERMINATION OF AGREEMENT
7.1. Mutual Consent; Termination Date. This Agreement
shall terminate at any time when the parties hereto mutually agree
in writing. This Agreement may also be terminated at the election
of either Seller or BANK IV, upon written notice from the party
electing to terminate this Agreement to the other party if, without
fault on the part of the party electing to terminate this
Agreement, there has been a denial of a Required Approval. Unless
extended by written agreement of the parties, this Agreement shall
terminate if all conditions to the obligations of the parties
hereto have not occurred on or before May 31, 1994.
7.2. Election by BANK IV. This Agreement shall
terminate at BANK IV's election, upon written notice from BANK IV
to Seller if any one or more of the following events shall occur
and shall not have been remedied to the satisfaction of BANK IV
within 30 days after written notice is delivered to Seller: (a)
there shall have been any material breach of any of the
obligations, covenants, or warranties of the Seller hereunder; or
(b) there shall have been any written representation or statement
furnished by the Seller hereunder which at the time furnished is
false or misleading in any material respect in relation to the size
and scope of the transactions contemplated by this Agreement. BANK
IV shall also have the right to terminate this Agreement without
such 30 days' written notice if the parties are unable to agree as
to adjustments to Book Value of Bank as provided in Section 5.1 of
this Agreement.
7.3. Election by Seller. This Agreement shall
terminate at the election of Seller upon written notice from Seller
to BANK IV if any one or more of the following events shall occur
and shall not have been remedied to its satisfaction within 30 days
after written notice is delivered to BANK IV: (a) there shall have
been any material breach of any of the obligations, covenants, or
warranties of BANK IV hereunder; or (b) there shall have been any
written representation or statement furnished by BANK IV hereunder
which at the time furnished is false or misleading in any material
respect in relation to the size and scope of the transactions
contemplated by this Agreement. Seller shall also have the right
to terminate this Agreement without such 30 days' written notice if
the parties are unable to agree as to adjustments to Book Value of
Bank as provided in Section 5.1 of this Agreement.
7.4. Effect of Termination. If either party commits a
material breach of its obligations, covenants, or representations
which gives the other party the right to elect to terminate as
provided in this Article VII, termination shall be the sole remedy
of the other party prior to Closing absent a willful breach of such
obligations, covenants, warranties, or representations. Upon
termination of this Agreement for any reason as provided in this
Article VII, this Agreement shall become null and void and of no
further force and effect, except that BANK IV shall keep
confidential information acquired by it through its due diligence
investigation, whether performed before or after execution of this
Agreement, shall destroy all memoranda, summaries, or other
writings based upon such information, and shall upon Seller's
request return all documents or instruments obtained through such
due diligence investigation, and shall not use any such information
to compete against Bank for loans or other transactions or
relationships or for Bank's customers, and shall reimburse
Corporations for any expenses as provided in Section 5.2 of this
Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1. Closing; Survival of Representations and
Warranties. Notwithstanding any rule of law or provision of this
Agreement to the contrary, upon Closing all representations,
warranties, and obligations of the parties under this Agreement
shall be deemed to be true and fulfilled and shall not survive the
Closing, except that the representations and warranties of Seller
contained in subparagraphs (a), (c), (d), (f), (l), and (r), of
Section 4.1 of this Agreement and the provisions of Sections 8.4
and 9.9 of this Agreement shall survive the Closing.
8.2. Indemnification. Seller shall be liable for, and
shall defend, save, indemnify, and hold harmless BANK IV, the
Corporations, and their respective successors, officers, directors,
employees, and agents, and each of them (hereinafter individually
referred to as an "Indemnitee" and collectively as "Indemnitees")
against and with respect to any losses, liabilities, claims,
diminution in value, litigation, demands, damages, costs, charges,
reasonable legal fees, suits, actions, proceedings, judgments,
expenses, or any other losses (herein collectively referred to as
"Indemnifying Losses") that may be sustained, suffered, or incurred
by, or obtained against, any Indemnitee arising from or by reason
of the breach or nonfulfillment of any of the warranties,
agreements, or representations made by the Seller in subparagraphs
(a), (c), (d), (f), (l), and (r) of Section 4.1 of this Agreement.
8.3. Procedure. If any claim or demand shall be made
or liability asserted against any Indemnitee, or if any Litigation,
suit, action, or administrative or legal proceedings shall be
instituted or commenced in which any Indemnitee is involved or
shall be named as a defendant either individually or with others,
and if such Litigation, claim, demand, liability, suit, action, or
proceeding, if successfully maintained, will result in any
Indemnifying Losses as defined in Section 8.2, BANK IV shall give
Seller written notice thereof within 20 days after it acquires
knowledge thereof. If, within 20 days after the giving of such
notice, BANK IV receives written notice from Seller stating that
Seller disputes or intends to defend against such claim, demand,
liability, suit, action, or proceeding, then Seller shall have the
right to select counsel of its choice and to dispute or defend
against or settle such claim at its expense, and the Indemnitees
shall fully cooperate with Seller in such dispute or defense or
settlement so long as Seller is conducting such dispute or defense
diligently and in good faith. If no such notice of intent to
dispute or defend is received by BANK IV within the aforesaid 20-
day period, of if such diligent and good faith defense is not
being, or ceases to be, conducted, BANK IV shall have the right,
directly or through one or more of the Indemnitees, to dispute and
defend against the claim, demand, or other liability at the cost
and expense of Seller, to settle such claim, demand, or other
liability, together with interest or late charges thereon, and in
either event to be indemnified as provided in this Agreement so
long as BANK IV conducts such defense diligently and in good faith.
If any event shall occur that would entitle Indemnitees to a right
of indemnification hereunder, any loss, damage, or expense subject
to indemnification shall be the after-tax net loss to the
Indemnitees after due allowance for the income tax effect, if any,
of amounts to be received by the Indemnitees hereunder, insurance,
or offsetting income or assets resulting therefrom.
8.4. Agreement as to Particular Contingent Liability.
If at or after the Effective Time any claim, demand, suit, or
cross-claim against Bank is pending and unresolved or any claim or
demand is made or suit or cross-claim is filed against Bank arising
or alleged to have arisen in any manner out of any act, error, or
omission done, made, or omitted by the Bank performing trust
services in connection with Satco, Ltd., including without
limitation, any claim, liability, or judgment arising in any manner
out of Case No. 88 C 438, entitled City of South Hutchinson, Kansas
and Hutchinson National Bank and Trust Company v. Satco Ltd., et
al., pending in the District Court of Reno County, Kansas, and any
subsequent claims or legal proceedings with respect to the Bank's
relationship with Satco, Ltd., whether based on the Bank's services
as trustee, as purchaser of industrial revenue bonds, as lender, or
otherwise, BANK IV shall defend or cause Bank to defend against
such claims, demands, suit, or cross-claim as BANK IV may deem
advisable and appropriate. BANK IV shall have the right to select
and employ counsel of its choice for such defense and shall have
full control of such defense, including the power and authority to
enter into any settlement or compromise as it may deem advisable,
but shall keep Seller reasonably advised of all negotiations,
actions, and proceedings in such defense. Seller shall fully
cooperate with BANK IV in such defense, and may at Seller's expense
employ counsel to monitor such defense, but such counsel shall have
no right to conduct such defense or participate therein. All costs
and expenses, including attorneys' fees, in conducting such defense
shall be paid by BANK IV or Bank, but any money awarded or paid to
the claimant or claimants, whether resulting from a judgment or a
settlement and compromise, shall be paid 50% by Seller and 50% by
BANK IV or Bank.
ARTICLE IX
MISCELLANEOUS
9.1. Expenses. Whether or not the Purchase is
effected, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense, except as provided in Section
5.2.
9.2. Notices. All notices or other communications
required or permitted hereunder, except as otherwise provided in
this Agreement, shall be sufficiently given if personally delivered
or if sent by certified or registered mail, postage prepaid, return
receipt requested, addressed as follows: (a) If to BANK IV,
addressed to K. Gordon Greer, Chairman of the Board, Post Office
Box 4, Wichita, KS 67201; and (b) if to the Seller, addressed to
W. A. Michaelis, Jr., Chairman of the Board of Emprise Financial
Corporation, P. O. Box 247, Wichita, KS 67201, with a copy to
Ralph R. Brock, attorney-at-law, Fourth Floor, 200 West Douglas,
Wichita, KS 67202, or to such other person or such other address
as shall have been furnished in writing in the manner provided
herein for giving notice.
9.3. Time. Time is of the essence of this Agreement.
9.4. Law Governing. This Agreement shall, except to
the extent federal law is applicable, be construed in accordance
with and governed by the laws of the State of Kansas, without
regard to the principles of conflicts of laws thereof.
9.5. Entire Agreement; Amendment. This Agreement and
the agreements expressly provided for herein together contain and
incorporate the entire agreement and understanding of the parties
hereto with respect to the subject matter hereof and supersede all
prior negotiations, agreements, letters of intent, and
understandings. This Agreement may only be amended by an
instrument in writing duly executed by BANK IV and Seller and all
attempted oral waivers, modifications, and amendments shall be
ineffective.
9.6. Successors and Assigns. The rights and
obligations of the parties hereto shall inure to the benefit of and
shall be binding upon the successors and permitted assigns of each
of them; provided, however, that this Agreement or any of the
rights, interests, or obligations hereunder may not be assigned by
either of the parties hereto without the prior written consent of
the other party hereto.
9.7. Cover, Table of Contents, and Headings. The
cover, table of contents, and the headings of the sections and
subsections of this Agreement are for convenience of reference only
and shall not be deemed to be a part hereof or thereof or taken
into account in construing this Agreement.
9.8. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original
but which together shall constitute but one agreement.
9.9. Non-Competition. For a period of five years from
the Effective Time, Seller will not, within Reno, Pratt, Meade,
Finney, or McPherson Counties in Kansas, directly or indirectly,
own, manage, operate, or otherwise be connected with the ownership,
management, operation or control of any business engaged in the
business of commercial banking, of making consumer or commercial
loans, or of accepting deposits; provided, however, that after 30
months from the Effective Time, the restriction contained herein
pertaining to McPherson County, Kansas shall be reduced to comprise
an area within a radius of five miles of Lindsborg, Kansas. It is
understood that any banking business conducted by banks that are at
such time Subsidiaries of Seller which does not breach the
covenants in the Noncompetition Agreements of W. A. Michaelis, Jr.
and M. D. Michaelis, Exhibits "B" and "C" hereto, shall not
constitute a breach of the restrictive covenant contained in this
Section 9.9. If, at any time during the period the restrictions
described in the preceding sentence are in effect, all of the
issued and outstanding capital stock of Seller is sold to, or
Seller is merged into, a wholly unrelated and unaffiliated third
party not controlled by any one or more of Seller's former
stockholders, all of such restrictions shall terminate except that
such purchaser shall not use the name "Emprise Bank" or a variation
thereof within the area described in the preceding sentence during
the remainder of such period. Seller agrees that, in addition to
all other remedies otherwise available to BANK IV and the Bank,
BANK IV and the Bank shall each have the right to injunctive relief
to restrain and enjoin any actual or threatened breaches of this
provision and that if in any litigation that might arise over the
provisions contained in this Section a court should determine that
the restrictions contained in this Section are too broad, or too
long in duration, or too broad in geographic scope to be
enforceable in equity, such provisions as such court might find
unenforceable are amended only so much as shall be necessary in
order for the restrictions contained herein to be enforceable and,
as so amended, shall be enforced by such court.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed.
BANK IV KANSAS, NATIONAL ASSOCIATION
By
--------------------------
/s/K. Gordon Greer,
Chairman of the Board
"BANK IV"
[signatures continued]
EMPRISE FINANCIAL CORPORATION
By
---------------------------
"Seller"
AGREEMENT TO MERGE
between
BANK IV KANSAS, NATIONAL ASSOCIATION,
and
EMPRISE BANK, NATIONAL ASSOCIATION
under the charter of
BANK IV KANSAS, NATIONAL ASSOCIATION
under the title of
BANK IV KANSAS, NATIONAL ASSOCIATION
THIS AGREEMENT made among BANK IV Kansas, National
Association (hereinafter referred to as "BANK IV"), a banking
association organized under the laws of the United States, being
located at 100 North Broadway, City of Wichita, County of Sedgwick,
in the State of Kansas, with a capital of $356,457,292.74 divided
into 9,254,200 shares of common stock, each of $5.00 par value, and
surplus of $218,601,457.92 and undivided profits, including capital
reserves, of $91,584,834.82 as of December 31, 1993, and Emprise
Bank, National Association, a national banking association
organized under the laws of the United States (hereinafter referred
to as "Emprise") being located at 20 West Second, Hutchinson,
County of Reno, in the State of Kansas, with a capital of
$5,000,000, divided into 500,000 shares of common stock, each of
$10.00 par value, and surplus of $_________ and undivided profits,
including capital reserves, of $_________ as of December 31, 1993,
each acting pursuant to a resolution of its board of directors,
adopted by the vote of a majority of its directors, pursuant to the
authority given by and in accordance with the provisions of the Act
of November 7, 1918, as amended (12 USC Section 215a).
W I T N E S S E T H: That,
Section 1. Emprise shall be merged into BANK IV under
the charter of the latter.
Section 2. The name of the receiving association
(hereinafter referred to as the "Association") shall be BANK IV
Kansas, National Association.
Section 3. The business of the Association shall be that
of a national banking association. This business shall be
conducted by the Association at its main office which shall be
located at 100 North Broadway, Wichita, Kansas, and at its legally
established branches.
Section 4. At the time the merger shall be effective,
the amount of capital stock of the Association shall be
$361,457,292.74, divided into 10,254,200 shares of common stock,
each of $5.00 par value, the Association shall have a surplus of
$___________, and undivided profits, including capital reserves,
which when combined with the capital and surplus will be equal to
the combined capital structures of the merging banks as stated in
the preamble of this Agreement, adjusted, however, for normal
earnings and expenses (and if applicable, purchase accounting
adjustments) between December 31, 1993, and the effective time of
the merger. The amount of capital stock of the Association and its
surplus and undivided profits at the time the merger becomes
effective shall also be adjusted to reflect the effect of all
mergers of other banks into the Association, if any, between
December 31, 1993 and the effective time of the merger.
Section 5. All assets as they exist at the effective
time of the merger shall pass to and vest in the Association
without any conveyance or other transfer. The Association shall be
responsible for all of the liabilities of every kind and
description, including liabilities arising from the operation of a
trust department, of each of the merging entities existing as of
the effective time of the merger.
Section 6. Of the capital stock of the Association, the
presently outstanding 9,254,200 shares of common stock, each of
$5.00 par value, the holder of it, Fourth Financial Corporation,
shall retain its present rights. In addition, Fourth Financial
Corporation shall receive an additional 1,000,000 shares of common
stock of the Association by reason of the merger. Upon the merger
becoming effective, all of the issued and outstanding shares of
capital stock of Emprise shall be cancelled.
Section 7. Except as expressly permitted in a Stock
Purchase Agreement dated as of January 31, 1994, between BANK IV
and Emprise Financial Corporation (the "Stock Purchase agreement"),
Emprise shall not (i) declare or pay any dividend to its
shareholders, (ii) dispose of any of its assets in any other manner
except in the normal course of business and for adequate value, or
(iii) take any other action which would violate the terms of the
Stock Purchase Agreement.
Section 8. The present board of directors and officers
of BANK IV shall continue to serve as the board of directors and
officers of the Association until the next annual meeting or until
such time as their successors have been elected and have qualified.
Section 9. The merger shall be effective immediately
following the Purchase as such term is defined in the Stock
Purchase Agreement. Effective as of the time this merger shall
become effective as specified in the merger approval to be issued
by the Comptroller of the Currency, the articles of association of
BANK IV as then in effect shall be the articles of association of
the resulting bank.
Section 10. This Agreement may be terminated as provided
in the Stock Purchase Agreement. Notwithstanding the approval of
this Agreement by any stockholder group, this Agreement shall
automatically terminate upon the termination of the Stock Purchase
Agreement for any reason, and in no event shall the merger of
Emprise into BANK IV occur prior to the consummation of the
Purchase as such term is defined in the Stock Purchase Agreement.
Section 11. This Agreement shall be ratified and
confirmed by the affirmative vote of stockholders of each of the
merging banks owning at least two-thirds of its capital stock
outstanding, at a meeting to be held on the call of the directors;
and the merger shall become effective at the time specified in a
merger approval to be issued by the Comptroller of the Currency of
the United States.
WITNESS, the signatures and seals of said merging
entities as of the ___ day of _______ 1994, each set by its
chairman of the board, president, or a vice president and attested
to by its cashier or secretary, pursuant to a resolution of its
board of directors, acting by a majority:
BANK IV KANSAS,
NATIONAL ASSOCIATION
Attest:
By
--------------------------
- ------------------------- /s/K. Gordon Greer,
/s/John C. Maloney, Secretary Chairman of the Board
and President
[Seal of Bank]
EMPRISE BANK, NATIONAL
ASSOCIATION
By
---------------------------
________________, President
Attest:
_______________________
______________, Secretary
[Seal of Bank]
STATE OF KANSAS )
) SS:
SEDGWICK COUNTY )
On this ____ day of _______, 1994, before me, a notary
public for this state and county, personally came K. Gordon Greer,
as chairman of the board and president, and John C. Maloney, as
secretary, of BANK IV Kansas, National Association, a national
banking association, and each in his capacity acknowledged this
instrument to be the act and deed of the association and the seal
affixed to it to be its seal.
WITNESS my official seal and signature this day and year.
--------------------
Notary Public
My Appointment Expires:
- -----------------------
STATE OF KANSAS )
) SS:
RENO COUNTY )
On this ___ day of _______, 1994, before me, a notary
public for this state and county, personally came ________________
as president, and ______________ as secretary of Emprise Bank,
National Association, a national banking association, and each in
his/her capacity acknowledged this instrument to be the act and
deed of the bank and the seal affixed to it to be its seal.
WITNESS my official seal and signature this day and year.
--------------------
Notary Public
My Appointment Expires:
- -----------------------
EXHIBIT "A"
_______, 1994
Board of Directors
BANK IV Kansas, National Association
100 North Broadway
Wichita, Kansas 67202
Gentlemen:
We have acted as counsel to Emprise Financial Corporation
("Seller") in connection with the preparation of the Stock Purchase
Agreement, dated as of January 31, 1994, between BANK IV Kansas,
National Association and Seller (the "Agreement"). This Opinion
Letter is provided to you at the request of Seller pursuant to
Section 6.1(d) of the Agreement. Except as otherwise indicated
herein, capitalized terms used in this Opinion Letter are defined
in the Agreement or the Accord described below.
This Opinion Letter is governed by, and shall be
interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the ABA Section of Business Law (1991). As a
consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and
this Opinion Letter should be read in conjunction therewith. The
law covered by the opinions expressed herein is limited to the
Federal Law of the United States and the Law of the State of
Kansas.
For purposes of this Opinion Letter, we have relied upon
factual representations made by Seller in Section 4.1 of the
Agreement. In addition, the opinions as to (a) due organization of
the Seller and the Corporations in Paragraph 1 of this Opinion
Letter, (b) capitalization of the Corporation and lack of
encumbrances, liens, and security interests relating to the Bank
Stock owned by Seller in Paragraph 4 of this Opinion Letter, and
(c) options of the Corporation in Paragraph 5 of this Opinion
Letter, are based solely on our review of the Constituent
Documents, minute books, and stock records of the Corporations
furnished to us by representatives of Seller.
Based upon and subject to the foregoing, we are of the
opinion that:
1. Organization, Good Standing, and Authority.
Seller is a bank holding company duly registered pursuant
to the Bank Holding Company Act. Seller and the
Corporations are each a corporation or bank duly
organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation.
2. Binding Obligations. The Agreement is
enforceable against the Seller.
3. Absence of Default. None of the execution or
the delivery of the Agreement, the consummation of the
Purchase, or the fulfillment of the terms thereof, will
(1) violate the Constituent Documents of either of the
Corporations or of Seller or any agreement or instrument
under which Seller is obligated, or (2) violate
applicable provisions of any order or understandings
issued to or entered into by Seller or by any of the
Corporations by any governmental agency or body having
regulatory authority over their business or affairs.
4. Capitalization. The Bank is authorized to
issue 500,000 shares of common stock, par value $10 per
share, all of which are validly issued and outstanding.
Emprise Building Corp.-Hutchinson is authorized to issue
100,000 shares of common stock, par value $1 per share,
of which 30,000 shares are validly issued and outstanding
and owned by the Bank. Seller is the owner, free and
clear of all encumbrances, liens, and security interests
whatsoever, of all issued and outstanding shares of Bank
Stock, except that the Shares are subject to a security
interest of BANK IV given to secure a loan from BANK IV
to Seller.
5. Options. To our Actual Knowledge, neither of
the Corporations has outstanding any options, warrants,
or rights of any kind requiring it to sell or issue to
anyone any capital stock of any class and neither of the
Corporations has agreed to sell any shares of its capital
stock.
6. Governmental Approvals. The execution,
delivery, and performance of the Agreement by Seller do
not require any approval, authorization, consent,
exemptions, notices of intent not to disapprove, or other
action of any regulatory body, administrative agency, or
any other governmental body or any filing with any
governmental body to which Seller or either Corporation
is subject, other than approvals of or filing with the
Board and the Comptroller. All such requisite approvals,
authorizations, consents, exemptions, and notices have
been taken by the appropriate governmental body.
We hereby confirm to you that to our Actual Knowledge
there are no actions or proceedings against either Corporation,
pending or overtly threatened in writing, before any court,
governmental agency or arbitrator which (i) seek to affect the
enforceability of the Agreement or (ii) seek damages in excess of
$25,000, except as described in the Disclosure Statement. In this
connection, we also confirm to you that we do not ordinarily
represent either Corporation in actions or proceedings in which
they are or may be involved or in the conduct of their legal
affairs.
The phrase "Primary Lawyer Group", as used in the Accord,
is hereby modified and, for the purposes of applying the Accord to
this Opinion Letter, the Primary Lawyer Group means only the
lawyers in this firm who have given substantive legal attention to
representation of Seller and the Corporations in connection with
the Transaction.
This Opinion Letter may be relied upon by you only in
connection with the Transaction and may not be used or relied upon
by you or any other person for any purpose whatsoever, except to
the extent authorized in the Accord, without in each instance our
prior written consent.
Very truly yours,
/s/Morris, Laing, Evans, Brock &
Kennedy, Chartered
EXHIBIT "B"
NONCOMPETITION AGREEMENT
------------------------
THIS AGREEMENT, made and entered into on the ___ day of
____________, 1994, by and between BANK IV KANSAS, NATIONAL
ASSOCIATION, a national banking association, hereinafter referred
to as "BANK IV"; and W. A. MICHAELIS, JR., hereinafter referred to
as "Michaelis."
W I T N E S S E T H: That,
- - - - - - - - - -
WHEREAS, contemporaneous with the execution and delivery
of this Agreement BANK IV is purchasing all of the issued and
outstanding capital stock ("Bank Stock") of Emprise Bank, National
Association, Hutchinson, Kansas (the "Bank") from Emprise Financial
Corporation ("Seller") pursuant to a Stock Purchase Agreement dated
as of January 31, 1994 (the "Agreement"); and
WHEREAS, Michaelis, as a substantial stockholder of
Seller, will receive substantial benefits from the sale of the Bank
Stock to BANK IV; and
WHEREAS, Michaelis holds senior management level
positions with Seller and has held senior management level
positions with Bank; and
WHEREAS, Seller owns and may hereafter acquire other
banks (which banks, whether now or hereafter acquired, are
hereinafter referred to as "Other Banks") located and doing
business in the State of Kansas over which Michaelis has control;
and
WHEREAS, the Agreement provides that the parties hereto
will enter into this Noncompetition Agreement;
NOW THEREFORE, in consideration of the premises and the
covenants contained herein and the payments to be made to Michaelis
pursuant to this Agreement and the Agreement, the parties hereto
agree as follows:
1. Consideration. Contemporaneous with the execution
and delivery of this Agreement, BANK IV has paid Michaelis
$400,000, receipt of which is hereby acknowledged by Michaelis.
2. Relationship, Confidence, and Trust. Michaelis
acknowledges that during the period Seller owned the Bank and he
held a senior management level position, he acquired valuable and
confidential information, trade secrets, and relationships with
respect to the Bank's successful business practices and operations,
including, by way of illustration and not of limitation, knowledge
of the Bank's customers, prices, costs, and future plans
(collectively "Proprietary Information"). As a consequence of the
foregoing, Michaelis occupied a position of trust and confidence
with respect to the Bank's affairs. In view of the foregoing and
in consideration of the consideration paid to him, Michaelis agrees
that it is reasonable and necessary for the protection of the
goodwill and business of the Bank and BANK IV that he make the
covenants contained in Paragraphs 3 and 4 regarding his conduct,
and that BANK IV and the Bank will suffer irreparable injury if he
engages in conduct prohibited thereby. The covenants contained in
Paragraphs 3 and 4 shall each be construed to be a separate
agreement independent of any other provision of this Agreement, and
the existence of any claim or cause of action of Michaelis against
BANK IV or the Bank, predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by BANK IV or the
Bank of any of said covenants.
3. Disclosure of Proprietary Information. Michaelis
recognizes and acknowledges that the Proprietary Information and
all other information as to the business affairs of the Bank not
generally known to the public, as the same may exist from time to
time, are confidential information and are valuable, special, and
unique assets of BANK IV's and the Bank's business. Michaelis
therefore agrees that he will never disclose any of the Proprietary
Information, or any other information as to the business affairs of
the Bank to any person, firm, corporation, association, or other
entity for any reason or purpose whatsoever; provided, that
Michaelis may make use of such information in managing the Other
Banks. In the event of a breach or threatened breach by Michaelis
of the provisions of this paragraph, the Bank and BANK IV shall
each be entitled to injunctive or other equitable relief enjoining
and restraining him from disclosing, in whole or in part, any such
Proprietary Information. Nothing herein shall be construed as
prohibiting BANK IV or the Bank from pursuing any other remedies
available to BANK IV or the Bank for such breach or threatened
breach.
4. Restrictive Covenant. For a period of five years
from the date of this Agreement, Michaelis will not, within Reno,
Pratt, Meade, Finney, or McPherson Counties in Kansas, without the
prior written consent of BANK IV, directly or indirectly, own,
manage, operate, consult with, be employed by, or be connected with
the ownership, management, operation, or control of any business
engaged in the business of commercial banking, of making consumer
or commercial loans, or of accepting deposits; provided, however,
that after 30 months from the date hereof, the restriction
contained herein pertaining to McPherson County, Kansas shall be
reduced to comprise an area within a radius of five miles of
Lindsborg, Kansas. Without limiting the generality of the
foregoing, Michaelis will not, directly or indirectly through
Seller or any Other Bank or entity while owned or controlled by
him, solicit during the above five-year or 30-month periods any
customers of Bank in the above prohibited areas for loans or
deposits or other banking business; provided, however, that loans,
deposits, or other banking business may be conducted with such
customers if they voluntarily on their own initiative without such
solicitation choose to conduct banking business with Other Banks;
and provided, further, that Other Banks conducting any banking
business with customers of Bank who are also customers of Other
Banks or who were referred to Bank by an Other Bank shall not
constitute a violation of this Agreement. It is also understood
that newspaper, magazine, regional telephone directories, radio,
television, or other advertising by Other Banks, although published
to target customers and to develop business in areas other than the
above prohibited areas, may also be received, delivered, or
otherwise reach the prohibited areas, and the fact that such
advertising may reach the prohibited areas likewise shall not
constitute a violation of this Agreement.
5. Remedies on Breach. Michaelis agrees that, in
addition to all other remedies otherwise available to BANK IV and
the Bank, BANK IV and the Bank shall each have the right to
injunctive relief to restrain and enjoin any actual or threatened
breaches of this provision and that if in any litigation that might
arise over the provisions contained in this paragraph a court
should determine that the restrictions contained in this paragraph
are too broad, or too long in duration, or too broad in geographic
scope to be enforceable in equity, such provisions as such court
might find unenforceable are amended only so much as shall be
necessary in order for the restrictions contained herein to be
enforceable and, as so amended, shall be enforced by such court.
6. Notices. Any notices required or permitted to be
given under this Agreement shall be sufficient if in writing, and
if sent by registered or certified mail to his or her last known
residence in the case of Michaelis, or to its principal office in
the case of BANK IV.
7. Waiver of Breach. The waiver of a breach of any
provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
8. Assignment. The rights and obligations of BANK IV
under this Agreement shall inure to the benefit of, and shall be
binding upon, BANK IV, the Bank, and their respective successors
and assigns. Obligations of Michaelis contained herein are
obligations personal to and binding only on Michaelis, and
Michaelis shall not have the right to assign any of the rights or
obligations contained in this Agreement.
9. Entire Agreement. This instrument contains the
entire agreement of the parties. It may not be changed orally but
only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, or
discharge is sought.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the day, month, and year first above written.
BANK IV Kansas, National
Association
By____________________________
/s/K. Gordon Greer, Chairman of
the Board
"BANK IV"
______________________________
/s/W. A. Michaelis, Jr.
"Michaelis"
EXHIBIT "C"
NONCOMPETITION AGREEMENT
------------------------
THIS AGREEMENT, made and entered into on the ___ day of
____________, 1994, by and between BANK IV KANSAS, NATIONAL
ASSOCIATION, a national banking association, hereinafter referred
to as "BANK IV"; and M. D. MICHAELIS, hereinafter referred to as
"Michaelis."
W I T N E S S E T H: That,
- - - - - - - - - -
WHEREAS, contemporaneous with the execution and delivery
of this Agreement BANK IV is purchasing all of the issued and
outstanding capital stock ("Bank Stock") of Emprise Bank, National
Association, Hutchinson, Kansas (the "Bank") from Emprise Financial
Corporation ("Seller") pursuant to a Stock Purchase Agreement dated
as of January 31, 1994 (the "Agreement"); and
WHEREAS, Michaelis, as a substantial stockholder of
Seller, will receive substantial benefits from the sale of the Bank
Stock to BANK IV; and
WHEREAS, Michaelis holds senior management level
positions with Seller and has held senior management level
positions with Bank; and
WHEREAS, Seller owns and may hereafter acquire other
banks (which banks, whether now or hereafter acquired, are
hereinafter referred to as "Other Banks") located and doing
business in the State of Kansas over which Michaelis has control;
and
WHEREAS, the Agreement provides that the parties hereto
will enter into this Noncompetition Agreement;
NOW THEREFORE, in consideration of the premises and the
covenants contained herein and the payments to be made to Michaelis
pursuant to this Agreement and the Agreement, the parties hereto
agree as follows:
1. Consideration. Contemporaneous with the execution
and delivery of this Agreement, BANK IV has paid Michaelis
$600,000, receipt of which is hereby acknowledged by Michaelis.
2. Relationship, Confidence, and Trust. Michaelis
acknowledges that during the period Seller owned the Bank and he
held a senior management level position with Bank, he acquired
valuable and confidential information, trade secrets, and
relationships with respect to the Bank's successful business
practices and operations, including, by way of illustration and not
of limitation, knowledge of the Bank's customers, prices, costs,
and future plans (collectively "Proprietary Information"). As a
consequence of the foregoing, Michaelis occupied a position of
trust and confidence with respect to the Bank's affairs. In view
of the foregoing and in consideration of the consideration paid to
him, Michaelis agrees that it is reasonable and necessary for the
protection of the goodwill and business of the Bank and BANK IV
that he make the covenants contained in Paragraphs 3 and 4
regarding his conduct, and that BANK IV and the Bank will suffer
irreparable injury if he engages in conduct prohibited thereby.
The covenants contained in Paragraphs 3 and 4 shall each be
construed to be a separate agreement independent of any other
provision of this Agreement, and the existence of any claim or
cause of action of Michaelis against BANK IV or the Bank,
predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by BANK IV or the Bank of any of said
covenants.
3. Disclosure of Proprietary Information. Michaelis
recognizes and acknowledges that the Proprietary Information and
all other information as to the business affairs of the Bank not
generally known to the public, as the same may exist from time to
time, are confidential information and are valuable, special, and
unique assets of BANK IV's and the Bank's business. Michaelis
therefore agrees that he will never disclose any of the Proprietary
Information, or any other information as to the business affairs of
the Bank to any person, firm, corporation, association, or other
entity for any reason or purpose whatsoever; provided, that
Michaelis may make use of such information in managing the Other
Banks. In the event of a breach or threatened breach by Michaelis
of the provisions of this paragraph, the Bank and BANK IV shall
each be entitled to injunctive or other equitable relief enjoining
and restraining him from disclosing, in whole or in part, any such
Proprietary Information. Nothing herein shall be construed as
prohibiting BANK IV or the Bank from pursuing any other remedies
available to BANK IV or the Bank for such breach or threatened
breach.
4. Restrictive Covenant. For a period of five years
from the date of this Agreement, Michaelis will not, within Reno,
Pratt, Meade, Finney, or McPherson Counties in Kansas, without the
prior written consent of BANK IV, directly or indirectly, own,
manage, operate, consult with, be employed by, or be connected with
the ownership, management, operation, or control of any business
engaged in the business of commercial banking, of making consumer
or commercial loans, or of accepting deposits; provided, however,
that after 30 months from the date hereof, the restriction
contained herein pertaining to McPherson County, Kansas shall be
reduced to comprise an area within a radius of five miles of
Lindsborg, Kansas. Without limiting the generality of the
foregoing, Michaelis will not, directly or indirectly through
Seller or any Other Bank or entity while owned or controlled by
him, solicit during the above five-year or 30-month periods any
customers of Bank in the above prohibited areas for loans or
deposits or other banking business; provided, however, that loans,
deposits, or other banking business may be conducted with such
customers if they voluntarily on their own initiative without such
solicitation choose to conduct banking business with Other Banks;
and provided, further, that Other Banks conducting any banking
business with customers of Bank who are also customers of Other
Banks or who were referred to Bank by an Other Bank shall not
constitute a violation of this Agreement. It is also understood
that newspaper, magazine, regional telephone directories, radio,
television, or other advertising by Other Banks, although published
to target customers and to develop business in areas other than the
above prohibited areas, may also be received, delivered, or
otherwise reach the prohibited areas, and the fact that such
advertising may reach the prohibited areas likewise shall not
constitute a violation of this Agreement.
5. Remedies on Breach Michaelis agrees that, in
addition to all other remedies otherwise available to BANK IV and
the Bank, BANK IV and the Bank shall each have the right to
injunctive relief to restrain and enjoin any actual or threatened
breaches of this provision and that if in any litigation that might
arise over the provisions contained in this paragraph a court
should determine that the restrictions contained in this paragraph
are too broad, or too long in duration, or too broad in geographic
scope to be enforceable in equity, such provisions as such court
might find unenforceable are amended only so much as shall be
necessary in order for the restrictions contained herein to be
enforceable and, as so amended, shall be enforced by such court.
6. Notices. Any notices required or permitted to be
given under this Agreement shall be sufficient if in writing, and
if sent by registered or certified mail to his or her last known
residence in the case of Michaelis, or to its principal office in
the case of BANK IV.
7. Waiver of Breach. The waiver of a breach of any
provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
8. Assignment. The rights and obligations of BANK IV
under this Agreement shall inure to the benefit of, and shall be
binding upon, BANK IV, the Bank, and their respective successors
and assigns. Obligations of Michaelis contained herein are
obligations personal to and binding only on Michaelis, and
Michaelis shall not have the right to assign any of the rights or
obligations contained in this Agreement.
9. Entire Agreement. This instrument contains the
entire agreement of the parties. It may not be changed orally but
only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, or
discharge is sought.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the day, month, and year first above written.
BANK IV Kansas, National
Association
By____________________________
/s/K. Gordon Greer, Chairman of
the Board
"BANK IV"
______________________________
/s/M. D. Michaelis
"Michaelis"
EXHIBIT 10.13
AGREEMENT AND PLAN OF REORGANIZATION
among
FOURTH FINANCIAL CORPORATION,
FIRST DODGE CITY BANCSHARES, INC.,
FIRST NATIONAL BANCSHARES OF DODGE CITY, INC.,
METRO BANCSHARES, INC.,
METRO BANK OF BROKEN ARROW,
FIRST NATIONAL BANK AND TRUST COMPANY IN DODGE CITY
and
THE STOCKHOLDERS OF
FIRST DODGE CITY BANCSHARES, INC.
Dated as of February 2, 1994
TABLE OF CONTENTS
Page No.
--------
ARTICLE I. Definitions . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . 2
Section 1.2 Accounting Terms. . . . . . . . . . . . . . . . 9
Section 1.3 Use of Defined Terms. . . . . . . . . . . . . . 9
ARTICLE II. Plan of Reorganization. . . . . . . . . . . . . 9
Section 2.1 Tax-Free Reorganizations. . . . . . . . . . . . 9
Section 2.2 Agreements of Fourth. . . . . . . . . . . . . . 10
Section 2.3 Agreements of First Dodge, FNB, MBI, the Banks,
and the Stockholders. . . . . . . . . . . . . . 12
Section 2.4 The Mergers . . . . . . . . . . . . . . . . . . 17
Section 2.5 Conversion and Exchange of Shares . . . . . . . 19
Section 2.6 Advance Preparations for Bank Mergers . . . . . 22
ARTICLE III. Representations and Warranties. . . . . . . . . 22
Section 3.1 Representation and Warranties of First Dodge,
FNB, MBI, the Banks, and the Stockholders . . . 22
Section 3.2 Representations and Warranties of
Fourth. . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IV. Securities Laws Matters . . . . . . . . . . . . 37
Section 4.1 Registration Statement and Proxy
Statement . . . . . . . . . . . . . . . . . . . 37
Section 4.2 State Securities Laws . . . . . . . . . . . . . 38
Section 4.3 Affiliates. . . . . . . . . . . . . . . . . . . 38
ARTICLE V. Closing Conditions. . . . . . . . . . . . . . . 39
Section 5.1 Conditions to Obligations of Fourth,
BANK IV Kansas, and BANK IV Oklahoma. . . . . . 39
Section 5.2 Conditions to Obligations of First Dodge,
FNB, MBI, the Banks, and the Stockholders . . . 41
ARTICLE VI. Effective Time. . . . . . . . . . . . . . . . . 42
ARTICLE VII. Termination of Agreement. . . . . . . . . . . . 43
Section 7.1 Mutual Consent; Absence of Stockholder
Approval; Termination Date. . . . . . . . . . . 43
Section 7.2 Election by Fourth. . . . . . . . . . . . . . . 43
Section 7.3 Election by First Dodge . . . . . . . . . . . . 44
ARTICLE VIII.Indemnification . . . . . . . . . . . . . . . . . 44
Section 8.1 Effect of Closing . . . . . . . . . . . . . . . 44
Section 8.2 General Indemnification . . . . . . . . . . . . 45
Section 8.3 Procedure . . . . . . . . . . . . . . . . . . . 45
Section 8.4 Survival of Representations and
Warranties. . . . . . . . . . . . . . . . . . . 46
Section 8.5 Several Liability of Stockholders . . . . . . . 46
Section 8.6 Indemnification Payments. . . . . . . . . . . . 47
ARTICLE IX. Miscellaneous . . . . . . . . . . . . . . . . . 47
Section 9.1 Expenses. . . . . . . . . . . . . . . . . . . . 47
Section 9.2 Affiliates' Agreements. . . . . . . . . . . . . 47
Section 9.3 Notices . . . . . . . . . . . . . . . . . . . . 47
Section 9.4 Stockholders' Agreements. . . . . . . . . . . . 47
Section 9.5 Power of Attorney . . . . . . . . . . . . . . . 48
Section 9.6 Time. . . . . . . . . . . . . . . . . . . . . . 49
Section 9.7 Law Governing . . . . . . . . . . . . . . . . . 49
Section 9.8 Entire Agreement; Amendment . . . . . . . . . . 49
Section 9.9 Successors and Assigns. . . . . . . . . . . . . 49
Section 9.10 Cover, Table of Contents, and
Headings. . . . . . . . . . . . . . . . . . . . 49
Section 9.11 Counterparts. . . . . . . . . . . . . . . . . . 49
EXHIBITS
Exhibit "A" . . . . . Form of BANK IV Kansas Merger Agreement
Exhibit "B" . . . . . Form of BANK IV Oklahoma Merger
Agreement
Exhibit "C" . . . . . Form of Fourth Merger
Agreement
Exhibit "D" . . . . . Form of Mangan, Dalton, Trenkle, Rebein
& Doll, Chartered legal opinion
Exhibit "E" . . . . . Form of Consulting and Marketing
Agreement
Exhibit "F" . . . . . Form of Foulston & Siefkin legal
opinion
Exhibit "G" . . . . . Form of Affiliate's Agreement
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of
February 2, 1994, among FOURTH FINANCIAL CORPORATION, a Kansas
corporation ("Fourth"); FIRST DODGE CITY BANCSHARES, INC., a Kansas
corporation ("First Dodge"); FIRST NATIONAL BANCSHARES OF DODGE
CITY, INC., a Kansas corporation ("FNB"); METRO BANCSHARES, INC.,
an Oklahoma corporation ("MBI"); FIRST NATIONAL BANK AND TRUST
COMPANY IN DODGE CITY, a national banking association ("First
National"); METRO BANK OF BROKEN ARROW, an Oklahoma banking
corporation ("Metro Bank"); and the stockholders of First Dodge
("Stockholders").
W I T N E S S E T H: That,
-------------------
WHEREAS, Fourth is a bank holding company engaged in the
business of owning and operating banks located in the States of
Kansas and Oklahoma; and
WHEREAS, Fourth desires to acquire all, and not less than
all, of the assets of First Dodge and MBI and all of the issued and
outstanding capital stock of all classes of First Dodge's and MBI's
direct and indirect subsidiaries, subject to and pursuant to the
terms of this Agreement; and
WHEREAS, each party hereto believes that the proposed
acquisition by Fourth of First Dodge, MBI, and their subsidiaries
pursuant to the terms and conditions of this Agreement would be
desirable and in their respective best interests and those of their
respective stockholders;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. The following terms as used in this
Agreement shall have the following meanings unless the context
otherwise requires:
"Affiliate" has the same meaning as in Rules 145 and 405
adopted under the Securities Act by the SEC, as the same may be
amended from time to time.
"This Agreement" refers to this Agreement and Plan of
Reorganization and all amendments hereto.
"BANK IV Kansas" means BANK IV Kansas, National
Association, a national banking association.
"BANK IV Kansas Merger" means the merger of First
National into BANK IV Kansas pursuant to the BANK IV Kansas Merger
Agreement.
"BANK IV Kansas Merger Agreement" means the Agreement to
Merge, substantially in the form of Exhibit "A" hereto, pursuant to
which the BANK IV Kansas Merger will be effected.
"BANK IV Oklahoma" means BANK IV Oklahoma, National
Association, a national banking association.
"BANK IV Oklahoma Merger" means the merger of Metro Bank
into BANK IV Oklahoma pursuant to the BANK IV Oklahoma Merger
Agreement.
"BANK IV Oklahoma Merger Agreement" means the Agreement
to Merge, substantially in the form of Exhibit "B" hereto, pursuant
to which the BANK IV Oklahoma Merger will be effected.
"Bank Holding Company Act" means the federal Bank Holding
Company Act of 1956, as amended (12 U.S.C. Section 1841 et seq.),
or any successor federal statute, and the rules and regulations of
the Board promulgated thereunder, all as the same may be in effect
at the time.
"Bank Mergers" refers collectively to the BANK IV Kansas
Merger and the BANK IV Oklahoma Merger.
"Bank Merger Agreements" refers collectively to the BANK
IV Kansas Merger Agreement and the BANK IV Oklahoma Merger
Agreement.
"Banks" refers collectively to First National and Metro
Bank and "Bank" refers to either one of them.
"Best Efforts" does not include those actions which are
not commercially reasonable under the circumstances.
"Board" means the Board of Governors of the Federal
Reserve System or any successor governmental entity which may be
granted powers currently exercised by the Board of Governors.
"Closing" means the consummation of the Mergers as
provided in this Agreement.
"Closing Price" means the closing price of Fourth Stock
on the trading day two trading days prior to the Effective Time as
reported in the Southwest Edition of The Wall Street Journal.
"Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder, all
as the same may be in effect at the time.
"Comptroller" means the United States Comptroller of the
Currency or any successor governmental agency which may be granted
powers currently exercised by the Comptroller of the Currency.
"Corporations" refers collectively to First Dodge, FNB,
MBI, the Banks, and their respective Subsidiaries.
"Disclosure Statement" means the Disclosure Statement
prepared by First Dodge, FNB, MBI, the Banks, and the Stockholders
and delivered by them to Fourth prior to the execution and delivery
of this Agreement by Fourth.
"Effective Time" means the date and time on which the
Mergers are effective as more fully defined in this Agreement.
"Environmental, Health, and Safety Liabilities" means any
loss, cost, expense, claim, demand, liability, or obligation of
whatever kind or otherwise, based upon any Environmental, Health,
and Safety Law relating to:
(i) any environmental, health, or safety matter
or conditions, including, but not limited to, on-site or
off-site contamination, occupational safety and health,
and regulation of chemical substances or products;
(ii) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings,
damages, losses, claims, demands, and response, remedial
or inspection costs and expenses arising under any
Environmental, Health, and Safety Law;
(iii) financial responsibility under any
Environmental Law for cleanup costs or corrective
actions, including for any removal, remedial or other
response actions, and for any natural resource damage;
and
(iv) any other compliance, corrective, or remedial
action required under any Environmental, Health, and
Safety Law.
"Environmental, Health, and Safety Law" means any
provision of past or present Law relating to any environmental,
health, or safety matters or conditions, Hazardous Materials,
pollution, or protection of the environment, including, but not
limited to, on-site and off-site contamination, occupational safety
and health, and regulation of chemical substances or products,
emissions, discharges, release, or threatened release of
contaminants, chemicals or industrial, toxic, radioactive, or
Hazardous Materials or wastes into the environment, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of Hazardous
Materials, pollutants, contaminants, chemicals, or industrial,
toxic, radioactive, or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated
thereunder, all as the same may be in effect at the time.
"Federal Deposit Insurance Act" means the Federal Deposit
Insurance Act, as amended, and the rules and regulations
promulgated thereunder, all as the same may be in effect at the
time.
"FDIC" means the Federal Deposit Insurance Corporation or
any successor agency.
"Financial Statements" refers to all of the financial
statements described in clause g of Section 3.1 of this Agreement
and clause i of Section 2.3 of this Agreement.
"First Dodge" means First Dodge City Bancshares, Inc., a
Kansas corporation and a party to this Agreement.
"First Dodge Stock" means the common stock, par value
$1.00 per share, of First Dodge.
"First National" means First National Bank and Trust
Company in Dodge City, a national banking association and a party
to this Agreement.
"First National Stock" means the common stock of First
National, par value $100 per share.
"FNB" means First National Bancshares of Dodge City,
Inc., a Kansas corporation and a party to this Agreement.
"FNB Common Stock" means the common stock of FNB, par
value $1.00 per share.
"FNB Preferred Stock" means the preferred stock of FNB,
par value $1.00 per share.
"Fourth" means Fourth Financial Corporation, a Kansas
corporation and a party to this Agreement.
"Fourth Merger" means the merger of First Dodge, MBI, and
FNB into Fourth pursuant to the Fourth Merger Agreement.
"Fourth Merger Agreement" means the Agreement of Merger,
substantially in the form of Exhibit "C" hereto, pursuant to which
the Fourth Merger will be effected.
"Fourth Stock" means the common stock of Fourth, par
value $5 per share.
"GAAP" means generally accepted accounting principles,
applied on a consistent basis, set forth in Opinions of the
Accounting Principles Board of the American Institute of Certified
Public Accountants and/or in statements of the Financial Accounting
Standards Board and/or their successors which are applicable in the
circumstances in question; and the requisite that such principles
be applied on a consistent basis means that the accounting
principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
"Hazardous Materials" means and includes: (i) any
hazardous substance or toxic material (excluding any lawful product
for use in the ordinary course of such Bank's business which
contains such substance or material), pollutant, contaminant, toxic
material, or hazardous waste as defined in any federal, state, or
local environmental Law; (ii) waste oil and petroleum products; and
(iii) any asbestos, asbestos containing material, urea formaldehyde
or material which contains it.
"Law" or "Laws" means all applicable statutes, laws,
ordinances, regulations, orders, writs, injunctions, or decrees of
the United States of America, any state or commonwealth, or any
subdivision thereof, or of any court or governmental department,
agency, commission, board, bureau, or other instrumentality.
"Litigation" means any proceeding, claim, lawsuit, and/or
investigation being conducted or, to the best of the knowledge of
the person or corporation making the representation, threatened
before any court or other tribunal, including, but not limited to,
proceedings, claims, lawsuits, and/or investigations, under or
pursuant to any occupational safety and health, banking, antitrust,
securities, tax, or other Laws, or under or pursuant to any
contract, agreement, or other instrument.
"MBI" means Metro Bancshares, Inc., an Oklahoma
corporation and a party to this Agreement.
"MBI Common Stock" means the common stock of MBI, par
value $.10 per share.
"MBI Preferred Stock" means the preferred stock of MBI,
par value $1.00 per share.
"Merger Agreements" collectively refers to the three
merger agreements provided for in this Agreement pursuant to which
all of the three Mergers will be accomplished.
"Mergers" collectively refers to all three of the mergers
provided for in this Agreement.
"Metro Bank" means Metro Bank of Broken Arrow, an
Oklahoma banking corporation and a party to this Agreement.
"Metro Stock" means the common stock of Metro Bank, par
value $2.50 per share.
"Occupied Properties" means the parcels of real property
owned or leased by a Bank on which such Bank conducts or has
conducted operations, all of which are described in Schedule H to
the Disclosure Statement under the caption "Bank Occupied
Properties".
"Permitted Contract" means a contract or agreement,
written or oral, between a Bank, on the one hand, and a person
other than a customer of such Bank or another financial
institution, on the other hand, which (i) was entered into in the
ordinary course of business, (ii) may be terminated by Fourth or
BANK IV Kansas or BANK IV Oklahoma, as the case may be, after the
Effective Time on no more than 30 days prior notice, (iii) provides
for a payment of no more than $5,000 in any calendar month by such
Bank, and (iv) provides for no payment upon termination in excess
of $5,000.
"Permitted Encumbrances" mean with respect to any asset:
(a) liens for taxes not past due;
(b) mechanics' and materialmen's liens for
services or materials for which payment is not past due;
and
(c) minor defects, encumbrances, and
irregularities in title which do not, in the aggregate,
materially diminish the value of a property or materially
impair the use of a property for the purposes for which
it is or may reasonably be expected to be held.
"Proxy Statement" means the joint proxy statement to be
used in connection with the special stockholders' meetings of First
Dodge, First National, and MBI to be called for the purpose of
considering and voting upon the Mergers.
"Registration Statement" means the registration statement
on Form S-4 to be filed by Fourth with the SEC pursuant to the
Securities Act in connection with the registration of the shares of
Fourth Stock to be issued in connection with the Fourth Merger and
the BANK IV Kansas Merger.
"Required Approvals" means the approval, consent, or non-
objection, as the case may be, of the Board, the Comptroller, and
all other governmental or self-governing agencies, boards,
departments, and bodies whose approval, consent, or non-action is
required in order to consummate the Mergers, and each of them, and
the retention of all of the Banks' Subsidiaries in substantially
their present form, which approvals, consents, and non-objections
shall have become final and nonappealable without any appeal or
other form of review having been initiated and as to which all
required waiting periods shall have expired.
"SEC" means the United States Securities and Exchange
Commission or any other governmental entity which may be granted
powers currently being exercised by the Securities and Exchange
Commission.
"Securities Act" means the federal Securities Act of
1933, as amended, or any successor federal statute, and the rules
and regulations promulgated thereunder, all as the same shall be in
effect at the time.
"Stockholders" refers collectively to the three persons
executing this Agreement as "Stockholders", and "Stockholder"
refers to any one of them.
"Subsidiary" means any corporation fifty percent or more
of the common stock or other form of equity of which shall be
owned, directly or indirectly, by another corporation.
1.2. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP consistent with that applied in the preparation of the
financial statements submitted pursuant to this Agreement, and all
financial statements submitted pursuant to this Agreement shall be
prepared in all material respects in accordance with such
principles.
1.3. Use of Defined Terms. All terms defined in this
Agreement shall have the defined meanings when used in the Merger
Agreements, or any other agreement, document, or certificate made
or delivered pursuant to this Agreement, unless the context
otherwise requires.
ARTICLE II
PLAN OF REORGANIZATION
2.1. Tax-Free Reorganizations. It is the intention of
the parties that the Mergers contemplated by this Agreement and the
Merger Agreements shall qualify as tax-free reorganizations under
Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Code.
2.2. Agreements of Fourth.
a. Fourth shall cause BANK IV Kansas and BANK IV
Oklahoma to execute and deliver the Bank Merger Agreement
to which it is a party. Fourth has approved and adopted
this Agreement and the Fourth Merger Agreement in
accordance with the applicable Laws of the United States
of America and the State of Kansas. Fourth, as sole
shareholder of BANK IV Kansas, shall vote all of the
stock of BANK IV Kansas in favor of the BANK IV Kansas
Merger Agreement and, together with its wholly owned
subsidiary, shall vote or cause to be voted all of the
stock of BANK IV Oklahoma in favor of the approval and
adoption of the Bank IV Oklahoma Merger Agreement.
Subject to the terms and conditions contained in this
Agreement, upon receipt of all of the Required Approvals,
Fourth shall cause BANK IV Kansas and BANK IV Oklahoma to
perform the Bank Merger Agreements.
b. Fourth shall cause all necessary action to be
taken to authorize the issuance of the number of shares
of Fourth Stock to be issued in the Fourth Merger and the
BANK IV Kansas Merger.
c. Prior to the Effective Time, Fourth,
separately and with the other parties hereto, shall use,
and cause BANK IV Kansas and BANK IV Oklahoma to use,
their Best Efforts in good faith to take or cause to be
taken as promptly as practicable all such steps as shall
be necessary to obtain all of the Required Approvals, and
shall do any and all acts and things reasonably deemed by
Fourth or the Corporations to be necessary or appropriate
in order to cause the Mergers to be consummated on the
terms provided herein and in the Merger Agreements as
promptly as practicable.
d. On or prior to the Effective Time, as
appropriate for the transactions contemplated hereby,
Fourth, BANK IV Kansas, and BANK IV Oklahoma shall
execute and deliver the Merger Agreements and the other
closing documents provided for in this Agreement, shall
take all such other actions as are required or desirable
to effect the Mergers, and shall utilize their Best
Efforts to cause all of the conditions described in
Section 5.2 of this Agreement to occur and be continuing,
and to consummate all of the other transactions
contemplated hereby.
e. Prior to the Effective Time, Fourth shall, to
the extent permitted by Law and outstanding
confidentiality agreements, give First Dodge and its
counsel and accountants full access, during normal
business hours and upon reasonable notice, to its
respective properties, books, and records, and shall
furnish First Dodge during such period with all such
information concerning its affairs as First Dodge may
reasonably request. The availability or actual delivery
of information about Fourth to First Dodge shall not
affect the covenants, representations, and warranties of
Fourth contained in this Agreement; provided, that First
Dodge shall promptly disclose to Fourth any apparent
breaches of such covenants, representations, or
warranties discovered by it prior to the Effective Time.
Except for information disclosed in the Registration
Statement or as otherwise required to be disclosed in the
course of obtaining governmental approvals, First Dodge
shall treat as confidential all such information in the
same manner as First Dodge treats similar confidential
information of its own and, if this Agreement is
terminated, First Dodge shall continue to treat all such
information obtained in such investigation and not
otherwise known to First Dodge from a source not known to
First Dodge to be under a confidential relationship with
Fourth, or already in the public domain, as confidential
and shall return such documents theretofore delivered by
Fourth to First Dodge as Fourth shall request.
f. On or before the Effective Time, BANK IV
Kansas shall replace and refinance First Dodge's existing
credit facilities with Commerce Bank, N.A. on terms no
less favorable to First Dodge than those currently
provided by Commerce Bank.
g. On or before the Effective Time, Thomas P.
Shirley and John V. Harding may each purchase from First
Dodge the policies of life insurance on their respective
lives for a cash purchase price equal to the then current
cash surrender value of the policy or policies being
purchased.
h. Fourth shall provide directors' and officers'
liability insurance coverage for the directors and
officers of the Corporations substantially similar to
that currently in effect, or continue such insurance, for
a period of two years from the Effective Time.
2.3. Agreements of First Dodge, FNB, MBI, the Banks,
and the Stockholders.
a. Prior to the consummation of the Mergers,
none of the Corporations shall, except with the prior
written consent of Fourth or as otherwise provided in
this Agreement or the Merger Agreements:
(1) Amend its articles of association,
articles of incorporation, bylaws, or other
charter documents, or make any change in its
authorized, issued, or outstanding capital stock,
grant any stock options or right to acquire
shares of any class of its capital stock or any
security convertible into any class of capital
stock, purchase, redeem, retire, or otherwise
acquire any shares of any class of its capital
stock or any security convertible into any class
of its capital stock, or agree to do any of the
foregoing;
(2) Declare, set aside, or pay any
dividend or other distribution in respect of any
class of its capital stock, except that First
Dodge, MBI, and First National shall each pay
cash dividends in an aggregate per share amount
equal to the product of (a) the cash dividends
paid on a share of Fourth Stock to Fourth
stockholders of record between November 15, 1993
and the Effective Time multiplied by (b) the
number of shares of Fourth Stock to be issued per
share of common stock of First Dodge, MBI, and
First National, respectively, in the Fourth
Merger and BANK IV Kansas Merger;
(3) Adopt, enter into, or amend materially
any employment contract or any bonus, stock
option, profit sharing, pension, retirement,
incentive, or similar employee benefit program or
arrangement or grant any salary or wage increase
except (a) normal individual increases in
compensation to employees in accordance with
established employee procedures of the
Corporations; and (b) the Fourth Financial
Corporation Acquisition Severance Schedule
previously furnished to First Dodge;
(4) Incur any indebtedness for borrowed
money (except for federal funds, repurchase
agreements entered into in the ordinary and usual
course of business, deposits received by a Bank,
endorsement, for collection or deposit, of
negotiable instruments received in the ordinary
and usual course of business, and issuance of
letters of credit by a Bank in the ordinary and
usual course of business), assume, guarantee,
endorse, or otherwise as an accommodation become
liable or responsible for obligations of any
other individual, firm, or corporation;
(5) Pay or incur any obligation or
liability, absolute or contingent, other than
liabilities incurred in the ordinary and usual
course of business of the Corporations;
(6) Except for transactions in the
ordinary and usual course of business of the
Banks or for Permitted Encumbrances, mortgage,
pledge, or subject to lien or other encumbrance
any of its properties or assets;
(7) Except for transactions in the
ordinary and usual course of business of the
Banks (including, without limitation, sales of
assets acquired by a Bank in the course of
collecting loans) sell or transfer any of its
properties or assets or cancel, release, or
assign any indebtedness owed to it or any claims
held by it;
(8) Make any investment of a capital
nature in excess of $25,000 for any one item or
group of similar items either by the purchase of
stock or securities (not including bonds
purchased in the ordinary and usual course of
business by the Banks), contributions to capital,
property transfers, or otherwise, or by the
purchase of any property or assets of any other
individual, firm, or corporation;
(9) Enter into any other agreement not in
the ordinary and usual course of business;
(10) Merge or consolidate with any other
corporation, acquire any stock (except in a
fiduciary capacity), solicit any offers for any
class of its capital stock or a substantial
portion of the assets of any of the Corporations
or, except in the ordinary course of business,
acquire any assets of any other person,
corporation, or other business organization, or
enter into any discussions with any person
concerning, or agree to do, any of the foregoing;
or
(11) Enter into any transaction or take any
action which would, if effected prior to the
Effective Time, constitute a breach of any of the
representations, warranties, or covenants
contained in this Agreement.
b. Prior to the Effective Time, each of the
Corporations shall conduct its respective business in the
ordinary and usual course as heretofore conducted,
including maintaining its current policies and procedures
regarding the review, approval, and collection of loans,
and, each of the Corporations shall use its best efforts
(1) to preserve its business and business organization
intact, (2) to keep available to Fourth, BANK IV Kansas,
and BANK IV Oklahoma the services of its present officers
and employees, (3) to preserve the good will of customers
and others having business relations with it, (4) to
maintain its properties in customary repair, working
order, and condition (reasonable wear and tear excepted),
(5) to comply with all Laws applicable to it and the
conduct of its business, (6) to keep in force at not less
than their present limits all existing policies of
insurance, (7) to make no material changes in the
customary terms and conditions upon which it does
business, (8) to duly and timely file all reports, tax
returns, and other documents required to be filed with
federal, state, local, and other authorities, and (9)
unless it is contesting the same in good faith and has
established reasonable reserves therefor, to pay when
required to be paid all taxes indicated by tax returns so
filed or otherwise lawfully levied or assessed upon it or
any of its properties and to withhold or collect and pay
to the proper governmental authorities or hold in
separate bank accounts for such payment all taxes and
other assessments which it believes in good faith to be
required by law to be so withheld or collected.
c. Prior to the Effective Time, the Corporations
shall, to the extent permitted by Law, give Fourth and
its counsel and accountants full access, during normal
business hours and upon reasonable notice, to their
respective properties, books, and records, and shall
furnish Fourth during such period with all such
information concerning their affairs as Fourth may
reasonably request. The availability or actual delivery
of information about the Corporations to Fourth shall not
affect the covenants, representations, and warranties of
the Corporations and the Stockholders contained in this
Agreement or the Merger Agreements except as provided in
Section 8.1 hereof; provided, that Fourth shall promptly
disclose to First Dodge and the Stockholders any apparent
breaches of such covenants, representations, or
warranties discovered by it prior to the Effective Time.
Except for confidential information disclosed in the
Registration Statement or as otherwise required to be
disclosed in the course of obtaining governmental
approvals, Fourth shall treat as confidential all
confidential information in the same manner as Fourth
treats similar confidential information of its own and,
if this Agreement is terminated, Fourth shall continue to
treat all such information obtained in such investigation
and not otherwise known to Fourth from a source not known
to Fourth to be under a confidential relationship with
the Corporations, or already in the public domain, as
confidential and shall return such documents theretofore
delivered by the Corporations to Fourth as the
Corporations shall request.
d. First Dodge, MBI, FNB, and the Banks shall
each cause this Agreement and the Merger Agreements to be
submitted promptly to their respective stockholders for
approval, adoption, ratification, and confirmation at
meetings to be called and held in accordance with the
applicable Law and their respective articles of
incorporation or association and bylaws. The respective
boards of directors of First Dodge, FNB, MBI, and the
Banks shall at all times prior to the Effective Time,
recommend that the Merger Agreements be approved,
ratified, and confirmed, and as of the date hereof, by
authorizing the execution of this Agreement, the boards
of directors of First Dodge, FNB, MBI, and the Banks do
hereby recommend such approval, adoption, ratification,
and confirmation.
e. First Dodge, FNB, MBI, and the Banks shall
separately and jointly with each other and with Fourth,
BANK IV Kansas, and BANK IV Oklahoma, each use its Best
Efforts in good faith to take or cause to be taken as
promptly as practicable all such steps as shall be
necessary to obtain all of the Required Approvals, and
shall do any and all acts and things reasonably deemed by
Fourth or the Corporations to be necessary or appropriate
in order to cause the Mergers to be consummated on the
terms provided herein and in the Merger Agreements as
promptly as practicable.
f. On or prior to the Effective Time, as
appropriate for the transactions contemplated hereby,
First Dodge, FNB, MBI, and the Banks shall each execute
and deliver the Merger Agreements and the other closing
documents provided for in this Agreement, shall take all
such other actions required or desirable in order to
effect the Mergers, and shall utilize their best efforts
to cause all of the conditions described in Section 5.1
of this Agreement to occur and be continuing, and to
consummate all of the other transactions contemplated
hereby.
g. On or prior to the Effective Time, First
Dodge shall exert its Best Efforts to cause First
National to enter into a contract with John V. Harding
substantially in the form of Exhibit "E" hereto.
h. The Corporations shall cooperate with Fourth
in Fourth's efforts to obtain current title evidence or
insurance, environmental assessment reports, and surveys
on such of the Corporations' real estate as Fourth may
desire.
i. First Dodge shall engage an independent
auditing firm to audit the 1993 consolidated financial
statements of First Dodge and shall deliver a copy of
same to Fourth upon its completion but no later than
February 10, 1994.
j. From the date hereof through the Effective
Time, Metro Bank and First National shall give Robert W.
Peterson, Assistant Vice President, BANK IV Kansas (or
such other person as may be designated by Fourth in
writing) at least one business day advance oral notice of
all proposed securities purchases or sales involving an
aggregate price of $250,000 or more.
2.4. The Mergers.
a. At the Effective Time, the BANK IV Kansas
Merger, the BANK IV Oklahoma Merger, and the Fourth
Merger shall occur simultaneously pursuant to the Merger
Agreements. The BANK IV Kansas Merger Agreement, the
BANK IV Oklahoma Merger Agreement, and the Fourth Merger
Agreement shall be substantially in the form of Exhibits
"A", "B", and "C" to this Agreement, respectively, with
such immaterial changes thereto as may be required or
desirable in order to obtain the required governmental
approvals and with all blanks properly completed.
b. As the result of the BANK IV Kansas Merger,
the separate existence of First National shall cease and
BANK IV Kansas, as the surviving association, shall
continue its corporate existence under the laws of the
United States; the existing articles of association of
BANK IV Kansas and the bylaws of BANK IV Kansas shall be
the articles of association and bylaws of the merged
bank; the directors and officers of BANK IV Kansas
immediately preceding the BANK IV Kansas Merger shall be
the directors and officers of the merged bank; BANK IV
Kansas shall possess all the rights, privileges, powers,
and franchises of First National; all property, real,
personal, and mixed, belonging to First National shall be
vested in and belong to BANK IV Kansas; and all rights of
creditors and depositors of First National shall continue
unimpaired.
c. As the result of the BANK IV Oklahoma Merger,
the separate existence of Metro Bank shall cease and BANK
IV Oklahoma, as the surviving association, shall continue
its corporate existence under the laws of the United
States; the existing articles of association of BANK IV
Oklahoma and the bylaws of BANK IV Oklahoma shall be the
articles of association and bylaws of the merged bank;
the directors and officers of BANK IV Oklahoma
immediately preceding the BANK IV Oklahoma Merger shall
be the directors and officers of the merged bank; BANK IV
Oklahoma shall possess all the rights, privileges,
powers, and franchises of Metro Bank; all property, real,
personal, and mixed, belonging to Metro Bank shall be
vested in and belong to BANK IV Oklahoma; and all rights
of creditors and depositors of Metro Bank shall continue
unimpaired.
d. As the result of the Fourth Merger, the
separate existence of First Dodge, FNB, and MBI shall
cease, and Fourth, as the surviving corporation, shall
continue its corporate existence under the laws of the
State of Kansas; the articles of incorporation and the
bylaws of Fourth in effect at the Effective Time shall be
the articles of incorporation and bylaws of the surviving
corporation until further amended as provided by Law; the
directors and officers of Fourth immediately preceding
the Fourth Merger shall be the directors and officers of
the surviving corporation; Fourth shall possess all the
rights, privileges, powers, and franchises of a public as
well as of a private nature of First Dodge, MBI, and FNB;
all property, real, personal, and mixed, belonging to
First Dodge, FNB, and MBI shall be vested in and belong
to Fourth; and all rights of creditors of First Dodge,
MBI, and FNB shall continue unimpaired.
e. From time to time as and when requested by
Fourth, BANK IV Kansas, or BANK IV Oklahoma, their
respective successors or assigns, the officers and
directors of the Banks, First Dodge, FNB, and MBI last in
office shall execute and deliver such deeds and other
instruments and shall take or cause to be taken such
other actions as shall be necessary or desirable to vest
or perfect in or to confirm of record or otherwise BANK
IV Kansas's, BANK IV Oklahoma's, or Fourth's title to,
and possession of, all the property, interests, assets,
rights, privileges, immunities, powers, franchises, and
authority of the Banks, First Dodge, FNB, MBI, or any of
them, and otherwise to carry out the purposes of this
Agreement; provided, that no such officer or director
shall thereby incur any expense or liability.
2.5. Conversion and Exchange of Shares.
a. Fourth Merger. The manner of converting or
exchanging the shares of capital stock of First Dodge,
FNB, and MBI outstanding at the Effective Time shall be
as follows:
(1) The Fourth Merger shall effect no
change in any of the then issued and outstanding
shares of Fourth Stock and none of Fourth's then
issued and outstanding shares of Fourth Stock
shall be converted or exchanged as the result of
the Fourth Merger.
(2) At the Effective Time, upon
consummation of the Fourth Merger, each issued
and outstanding share of First Dodge Stock and
each issued and outstanding share of MBI Common
Stock not owned by First Dodge shall cease to be
an issued and existing share, and each such share
shall automatically be converted into and
exchanged for a number of shares of Fourth Stock
as is set forth in the following table:
No. of Shares
Class of Stock of Fourth Stock
-------------- ---------------
First Dodge Stock 112.42
MBI Common Stock 0.30
(3) No separate amounts are being paid
with respect to the FNB Common Stock or MBI
Preferred Stock (all of which is owned by First
Dodge) or the MBI Common Stock owned by First
Dodge as their respective values are fully
reflected in the number of shares of Fourth Stock
being issued with respect to First Dodge Stock in
the Fourth Merger.
b. Bank Mergers. The manner of converting or
exchanging the shares of capital stock of the Banks into
capital stock of BANK IV Kansas or BANK IV Oklahoma, par
value $5 per share, shall be as follows:
(1) At the Effective Time, upon
consummation of the Bank Mergers each issued and
outstanding share of First National Stock shall
cease to be an issued and existing share, and
each such share not owned of record by FNB shall
automatically be converted into and exchanged for
the right to receive 95.92 shares of Fourth
Stock.
(2) No separate payment will be made with
respect to First National Stock owned by FNB or
to Metro Bank Stock, all of which is owned by
MBI, as their values are fully reflected in the
number of shares of Fourth Stock being issued
with respect to First Dodge Stock and MBI Stock
in the Fourth Merger.
(3) The 6,000 shares of First National
Stock issued and outstanding at the Effective
Time (consisting of 733 shares to be issued to
replace the shares being cancelled pursuant to
clause (l) above and the 5,267 shares then owned
of record by FNB) shall automatically be and
become an aggregate of 120,000 shares of capital
stock of BANK IV Kansas, par value $5 per share,
all of which shall be issued to and owned by
Fourth.
(4) The 305,000 shares of Metro Stock
issued and outstanding at the Effective Time,
shall automatically be and become an aggregate of
152,500 shares of capital stock of BANK IV
Oklahoma, par value $5 per share, all of which
shall be issued to and owned by Fourth.
c. Adjustment for Changes in Fourth's
Capitalization. In the event that between the date of
this Agreement and the Effective Time Fourth shall take
any action to subdivide its outstanding shares of common
stock into a greater number of shares, or to combine its
outstanding shares of common stock into a smaller number
of shares, or to declare a stock dividend on its
outstanding common stock, or to effect a reclassification
of its common stock, then the number and kind of shares
of Fourth Stock which the stockholders of First Dodge,
First National, and MBI shall be entitled to receive in
the Mergers shall be adjusted equitably to prevent
dilution or enlargement of the proportionate common stock
interests in Fourth to be received by them.
d. Stock Certificates. After the Effective Time
and until surrendered for exchange, each outstanding
stock certificate which prior to the Effective Time
represented First Dodge Stock, MBI Common Stock not owned
by First Dodge, or First National Stock not owned of
record by FNB, shall be deemed for all corporate purposes
to represent the right to receive the number of shares of
Fourth Stock into which the shares of stock have been so
converted; provided, that in any matters relating to the
shares represented by such stock certificates, Fourth,
BANK IV Kansas, and BANK IV Oklahoma may rely exclusively
upon the record of stockholders maintained by First
Dodge, MBI, or First National containing the names and
addresses of all stockholders of record at the Effective
Time. Unless and until such outstanding stock
certificates formerly representing such shares are so
surrendered, no dividend payable to holders of Fourth
Stock, as of any date on or subsequent to the Effective
Time, shall be paid to the holder of such outstanding
certificates in respect thereof. Upon surrender of such
outstanding certificates (or, in case of lost
certificates, upon receipt of a surety bond or other form
of indemnification which is satisfactory to Fourth),
however, the former First Dodge, MBI, or First National
stockholder shall receive a certificate evidencing the
shares of Fourth Stock to which such stockholder is
entitled plus the accrued dividends on such stock from
the Effective Time, without interest.
e. Fractional Shares. No fractional shares of
Fourth Stock will be issued. Instead, upon surrender of
First Dodge, MBI, or First National stock certificates
(or in the case of lost certificates, a surety bond or
other form of indemnification which is satisfactory to
Fourth), Fourth will pay, or cause to be paid, to the
holder thereof the value of the fractional interest to
which the holder thereof would otherwise be entitled,
based upon the Closing Price.
f. Exchange Procedure. Promptly after the
Effective Time, Fourth will send a notice and transmittal
form to each record holder of outstanding certificates
that immediately prior to the Effective Time evidenced
shares of First Dodge Stock, MBI Common Stock not owned
of record by First Dodge, or First National Stock not
owned of record by FNB, advising such stockholder of the
effectiveness of the Mergers and the procedures for
surrendering to Fourth such certificates in exchange for
certificates representing the number of shares of Fourth
Stock into which the shares of such capital stock
represented by such certificates shall have been
converted.
2.6. Advance Preparations for Bank Mergers. The
parties acknowledge that Fourth anticipates it will be desirable to
take various actions immediately following the Effective Time to
maximize the future profitability of BANK IV Kansas and BANK IV
Oklahoma, and that, as future stockholders of Fourth, the First
Dodge, MBI, FNB, and Bank stockholders will all benefit from such
actions to the extent they are successful. Accordingly, First
National and Metro Bank agree to cooperate with Fourth in making
advance plans and preparations for post-closing operations,
including, without limitation cooperation with employees of Fourth
in planning for post-closing operations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of First Dodge,
FNB, MBI, the Banks, and the Stockholders. Except as expressly
disclosed in the Disclosure Statement, First Dodge, FNB, MBI, the
Banks, and the Stockholders jointly and severally represent and
warrant to Fourth as follows:
a. Organization, Good Standing, and Authority.
Each of First Dodge, FNB, and MBI is a bank holding
company duly registered pursuant to the Bank Holding
Company Act. Each of the Corporations is a corporation
or bank duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation, and each has all requisite corporate power
and authority to conduct its business as it is now
conducted, to own its properties and assets, and to lease
properties used in its business. The only Subsidiaries
of First National are First Ag Credit Corporation and
Southwest, Inc., both of which are Kansas corporations.
The only Subsidiary of FNB is First National which has
the two Subsidiaries described above. Metro Bank has no
Subsidiaries. The only Subsidiary of MBI is Metro Bank.
The only Subsidiaries of First Dodge are FNB and its
Subsidiaries and MBI and its Subsidiary. None of the
Corporations is in violation of its charter documents or
bylaws, or of any applicable Law in any material respect.
The deposits of both of the Banks are insured by the
Federal Deposit Insurance Corporation to the extent
provided by the Federal Deposit Insurance Act and each of
the Banks has paid all assessments and filed all reports
required to be filed under the Federal Deposit Insurance
Act.
b. Binding Obligations; Due Authorization. This
Agreement constitutes, and the Merger Agreements will
upon execution and delivery constitute, subject only to
the approval and adoption thereof by the stockholders of
First Dodge, FNB, MBI, and the Banks, valid and binding
obligations of First Dodge, FNB, MBI, each of the Banks,
and each Stockholder, enforceable against each of such
parties in accordance with the respective terms of such
documents, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar
Laws and equitable principles affecting creditors' rights
generally. The execution, delivery, and performance of
this Agreement, the Merger Agreements, and the
transactions contemplated by all such agreements have
been duly authorized by the respective boards of
directors of First Dodge, FNB, MBI, and each Bank.
c. Absence of Default. None of the execution or
the delivery of this Agreement and the Merger Agreements,
the consummation of the transactions contemplated hereby
or thereby, or the fulfillment of the terms hereof or
thereof, will (1) conflict with, or result in a breach of
the terms, conditions, or provisions of, or constitute a
default under the charter documents or bylaws of any of
the Corporations or under any agreement or instrument
under which any of the Corporations or any of the
Stockholders is obligated, or (2) violate any Law to
which any of the Corporations or any of the Stockholders
is subject.
d. Capitalization. First Dodge is authorized to
issue 100,000 shares of First Dodge Stock, par value
$1.00 per share, of which 5,254.5 shares are validly
issued and outstanding. FNB is authorized to issue: (i)
100,000 shares of FNB Common Stock, par value $1.00 per
share, of which 5,254.50 shares are validly issued and
outstanding; and (ii) 1,500,000 shares of FNB Preferred
Stock, par value $1.00 per share, none of which is issued
and outstanding. MBI is authorized to issue: (i)
1,000,000 shares of MBI Common Stock, par value $.10 per
share, of which 905,000 are validly issued, 904,795
shares are validly issued and outstanding, and 205 shares
are held as treasury shares; and (ii) 3,000,000 shares of
MBI Preferred Stock, par value $1.00 per share, of which
1,915,333 shares are validly issued and outstanding.
Metro Bank is authorized to issue 340,000 shares of Metro
Stock, par value $2.50 per share, of which 305,000 shares
are validly issued and outstanding. First National is
authorized to issue 6,000 shares of First National Stock,
par value $100 per share, all of which are validly issued
and outstanding. First Dodge owns all of the issued and
outstanding FNB Common Stock and MBI Preferred Stock and
900,795 shares of MBI Common Stock, all of which are free
and clear of all encumbrances, liens, security interests,
and claims whatsoever except for the pledge of such
shares to Commerce Bank, N.A. FNB owns 5,267 shares of
First National Stock, free and clear of all encumbrances,
liens, security interests, and claims whatsoever. MBI
owns all of the issued and outstanding shares of Metro
Stock, free and clear of all encumbrances, liens,
security interests, and claims whatsoever.
e. Charter Documents. True and correct copies
of the charter documents and bylaws of each of the
Corporations, with all amendments thereto, are included
in the Disclosure Statement as Exhibits "E-1" to "E-14."
f. Options, Warrants, and Other Rights. None of
the Corporations has outstanding any options, warrants,
or rights of any kind requiring it to sell or issue to
anyone any capital stock of any class and none of the
Corporations has agreed to issue, sell, or purchase any
additional shares of any class of its capital stock.
g. Financial Statements. Included in the
Disclosure Statement as Exhibits "G-1" through "G-4" are
true and complete copies of the following financial
statements, all of which have been prepared in accordance
with GAAP and all applicable regulatory accounting
principles consistently followed throughout the periods
indicated and fairly present in all material respects the
financial condition of the Corporations as of the dates
and for the periods indicated, subject in the case of
interim financial statements, to normal recurring year-
end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse)
and the absence of notes (which if presented would not
differ materially from those included in the most recent
year-end financial statements):
(1) Audited Consolidated Financial
Statements of First National as of December 31,
1992 and 1991, and for the fiscal years then
ended, with auditors' report thereon and notes
thereto, which have been examined by Smoll,
Banning & Neier, Chtd, independent certified
public accountants;
(2) Unaudited financial statements of each
of the Corporations, as of September 30, 1993 and
1992 and for the periods then ended;
(3) Consolidated Reports of Condition and
Income as of March 31, June 30, September 30,
and December 31, 1993, as filed by the Banks with
the Comptroller and the FDIC; and
(4) Annual Reports on Form FR Y-9 filed by
First Dodge, FNB, and MBI with the Board for the
years ended December 31, 1992 and 1991.
As soon as practicable between the date hereof and
the Effective Time, the Corporations will deliver to
Fourth copies of monthly operating statements and monthly
securities inventory reports of the Banks and of all
reports filed by either of them with any regulatory
agencies. The books of account of each of the
Corporations and each of the Financial Statements fairly
and correctly reflect and, when delivered, will reflect
in all material respects in accordance with GAAP and all
applicable rules and regulations of regulatory agencies
applied on a consistent basis, the respective incomes,
expenses, assets, and liabilities, absolute or
contingent, of each of the Corporations (except for the
absence in the monthly operating statements of the Banks
of certain information and footnotes normally included in
financial statements prepared in accordance with GAAP
which in the aggregate would not be materially adverse).
There have been no material adverse changes in the
financial condition of any of the Corporations from
December 31, 1992, other than changes made in the usual
and ordinary conduct of the businesses of the
Corporations, none of which has been or will be
materially adverse and all of which have been or will be
recorded in the books of account of the Corporations; and
except as specifically permitted by this Agreement, there
have been no material adverse changes in the respective
businesses, assets, properties, or liabilities, absolute
or contingent, of any of the Corporations, or in their
respective condition, financial or otherwise, from the
date of the most recent of the Financial Statements that
has been delivered to Fourth on the date hereof other
than (i) changes occurring in the usual and ordinary
conduct of the business of the Corporations, none of
which has been or will be materially adverse and all of
which have been or will be recorded in the respective
books of account of the Corporations, and (ii) resulting
from action required or permitted by this Agreement to be
taken by any of the Corporations. To the extent required
by GAAP, all contingent liabilities of any of the
Corporations, other than letters of credit and similar
obligations of the Banks incurred in the ordinary course
of business, are described in or reserved against in the
Financial Statements listed above.
h. Properties. First Dodge, FNB, MBI, and First
National's Subsidiaries do not own or lease any real
property. Exhibit "H" to the Disclosure Statement is a
complete list of all real estate owned or leased by
either Bank. Each Bank has good and marketable title in
fee simple to all of the real property shown on its book
as being owned by it, free and clear of all liens,
encumbrances, and charges, except for those exceptions
described on Exhibit "H" to the Disclosure Statement and
Permitted Encumbrances. All leases of real property to
which a Bank is a party as lessee, a true and complete
copy of each of which with all amendments thereto is
included in Exhibit "H" to the Disclosure Statement, are
valid and enforceable in accordance with their respective
terms except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar Laws
and equitable principles affecting creditors' rights
generally, and there has been no material default by any
party thereto. No zoning ordinance prohibits, interferes
with, or materially impairs the usefulness of the
Occupied Properties; and all the premises on the Occupied
Properties or leased by a Bank are in good operating
condition and repair, normal wear and tear excepted.
i. Personal Property. Either First National or
Metro Bank has good and merchantable title to all of the
machinery, equipment, materials, supplies, and other
property of every kind, tangible or intangible, contained
in its offices and other facilities or shown as assets in
its records and books of account, free and clear of all
liens, encumbrances, and charges except for leasehold
improvements to leased premises and for personal property
held under the leases described on Exhibit "I" to the
Disclosure Statement. Exhibit "I" to the Disclosure
Statement is a complete list of all leases of personal
property to which either of the Banks is a party. All
leases of personal property to which either of the Banks
is a party as lessee, true and complete copies of each
which with all amendments thereto are included in Exhibit
"I" to the Disclosure Statement, are valid and
enforceable in accordance with their terms, and there has
been no material default by any party thereto. All of
such personal property owned or leased by either of the
Banks is in good operating condition, normal wear and
tear excepted.
j. Taxes. The Corporations have all filed all
tax returns and reports required to be filed with the
United States Government and with all states and
political subdivisions thereof where any such returns or
reports are required to be filed and where the failure to
file such return or report would subject any of the
Corporations to any material liability or penalty. All
taxes imposed by the United States, or by any foreign
country, or by any state, municipality, subdivision, or
instrumentality of the United States or of any foreign
country, or by any other taxing authority, which are due
and payable by any of the Corporations have been paid in
full or adequately provided for by reserves shown in the
records and books of account of the Corporations and in
the Financial Statements. No extension of time for the
assessment of deficiencies for any years is in effect.
None of the Corporations has any knowledge of any
unassessed tax deficiency proposed or threatened against
any of them.
k. Contracts. Other than Permitted Contracts
and agreements with customers of the Banks and with
financial institutions entered into by the Banks in the
ordinary course of their banking businesses, attached to
the Disclosure Statement as Exhibit "K" is a list of all
material contracts and other agreements and arrangements,
both written and oral, to which any of the Corporations
is a party, which affect or pertain to the operation of
their respective businesses, and which involve future
payments by any of the Corporations of $10,000 or more
(the "Scheduled Agreements"). All parties to the
Scheduled Agreements have in all material respects
performed, and are in good standing with respect to, all
the material obligations required to be performed under
all such contracts and other agreements and arrangements,
and no obligation with respect thereto is overdue. All
of the agreements of the Corporations, including without
limitation the agreements disclosed in writing pursuant
to this clause k, are valid, binding, and enforceable in
accordance with their terms, except as limited by
applicable bankruptcy, insolvency, reorganization,
moratorium, or similar Laws and equitable principles
affecting creditors' rights generally. Except as
otherwise noted in Exhibit "K" to the Disclosure
Statement, no contract, lease, or other agreement or
arrangement to which any of the Corporations is a party
or as to which any of any of their assets is subject
requires the consent of any third party in connection
with this Agreement or any of the Mergers. The
Corporations are not in default under any of the
Scheduled Agreements; the Corporations are not aware of
any default by any other party to any of the Scheduled
Agreements or any claim by any other party that the
Corporations are in default under any of the Scheduled
Agreements. Except for Permitted Contracts and except as
set forth in Exhibit "K" to the Disclosure Statement,
none of the Corporations is a party to:
(1) Any contract for the purchase or sale
of any materials, services, or supplies which
contains any escalator, renegotiation, or
redetermination clause or which commits it for a
fixed term;
(2) Any contract of employment with any
officer or employee not terminable at will
without liability on account of such termination;
(3) Any management or consultation
agreement not terminable at will without
liability on account of such termination;
(4) Any license, royalty, or union
agreement, or loan agreement in which a
Corporation is the borrower;
(5) Any contract, accepted order, or
commitment for the purchase or sale of materials,
services, or supplies having a total remaining
contract price in excess of $10,000;
(6) Any contract containing any
restrictions on any party thereto competing with
any Corporation or any other person;
(7) Any other agreement which materially
affects the business, properties, or assets of
any of the Corporations, or which was entered
into other than in the ordinary and usual course
of business; or
(8) Any letter of credit or commitment to
make any loan or group of loans to related
parties in an amount in excess of $100,000.
None of the Corporations' agreements described in this
clause k other than loans made in the ordinary course is
reasonably anticipated by any of the Corporations or any
Stockholder to result in a material loss to any of the
Corporations.
l. Labor Relations; Employees; ERISA. None of
the Corporations is a party to or affected by any
collective bargaining agreement or employment agreement,
nor is any Corporation a party to any pending or
threatened labor dispute, organizational efforts, or
labor negotiations. Each of the Corporations has
complied with all applicable Laws relating to the
employment of labor, including, but not limited to, the
provisions thereof relating to wages, hours, collective
bargaining, payment of social security taxes, and equal
employment opportunity, the violation of which would have
a materially adverse impact on their respective
businesses. None of the Corporations is liable for any
arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing. Except for First
National's profit sharing plan (the "Profit Sharing
Plan"), and Metro Bank's 401K Plan (the "401K Plan") true
and complete copies of each of which together with all
amendments thereto are attached as Exhibits L-1 and L-2,
respectively, to the Disclosure Statement, none of the
Corporations has any written or oral retirement, pension,
profit sharing, stock option, bonus, or other employee
benefit plan or practice other than group health, life,
and accident insurance. The Profit Sharing Plan and the
401K Plan are both in material compliance with ERISA and
the Code and each is a "qualified plan" within the
meaning of Section 401(a) of the Code and each is the
subject of a currently effective written determination of
the Internal Revenue Service to such effect and to the
further effect that the trust thereunder is a trust
exempt from tax under Section 501 of the Code. The
Corporations know of no facts or circumstances that could
adversely affect the status of either such plan as such
a plan or such trust as such a trust. All accrued
contributions and other payments to be made by First
National under the Profit Sharing Plan or by Metro Bank
under the 401K Plan have been made or reserves adequate
for such purposes have been set aside therefor. None of
the Corporations has violated any of the provisions of
ERISA, and none of them has engaged in any "prohibited
transactions" as such term is defined in Section 406 of
ERISA. Each of the Corporations has complied with all
applicable notice requirements and has provided group
health care continuation coverage under Section 4980B of
the Code and/or any other applicable Laws. There is no
employee of any of the Corporations whose employment is
not terminable at will without severance pay or other
penalty or compensation.
m. Government Authorizations. Each of the
Corporations has all permits, charters, licenses, orders,
and approvals of every federal, state, local, or foreign
governmental or regulatory body required in order to
permit it to carry on its business substantially as
presently conducted. All such licenses, permits,
charters, orders, and approvals are in full force and
effect, and none of the Corporations knows of any
threatened suspension or cancellation of any of them and
none of the Corporations knows of any fact or
circumstance that will interfere with or adversely affect
the renewal of any of such licenses, permits, charters,
orders, or approvals; and none of such permits, charters,
licenses, orders, and approvals will be affected by the
consummation of the transactions contemplated by this
Agreement.
n. Insurance. Exhibit "N" to the Disclosure
Statement is a complete list of all insurance policies
presently in effect and in effect during the past three
years. All the insurance policies and bonds currently
maintained by any of the Corporations are in full force
and effect.
o. Litigation. Exhibit "O" to the Disclosure
Statement contains a true and complete list and brief
description of all pending or, to the knowledge of any of
the Corporations or Stockholders, threatened Litigation
to which any of the Corporations is or would be a party
or to which any of their assets is or would be subject.
Except as described on Exhibit "O" to the Disclosure
Statement, none of the Corporations is a party to any
Litigation other than routine litigation commenced by a
Bank to enforce obligations of borrowers in which no
counterclaims for any material amounts of money have been
asserted or, to the knowledge of any of the Corporations,
threatened.
p. Brokers or Finders. No broker, agent,
finder, consultant, or other party (other than legal,
accounting, and financial advisors) has been retained by
any of the Corporations or any Stockholder or is entitled
to be paid based upon any agreements, arrangements, or
understandings made by any of the Corporations or any
Stockholder in connection with any of the transactions
contemplated by this Agreement or the Merger Agreements.
q. SEC Filings To Be Accurate. The information
pertaining to the Corporations and Stockholders which has
been or will be furnished to Fourth by or on behalf of
any of the Corporations or Stockholders for inclusion in
the Registration Statement or the Proxy Statement, and
the information pertaining to any of the Corporations or
Stockholders which will appear in the Registration
Statement or the Proxy Statement, in the form filed with
the SEC, will not contain any untrue statement of any
material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which
they are made, not misleading. The Corporations and
Stockholders shall promptly advise Fourth in writing if
prior to the Effective Time any of them shall obtain
knowledge of any fact that would make it necessary to
amend the Registration Statement or the Proxy Statement,
or to supplement the prospectus contained in the
Registration Statement, in order to make the statements
therein not misleading or to comply with applicable Law.
r. Stockholder Matters. Exhibit "R" to the
Disclosure Statement accurately sets forth after the name
of each Stockholder the number of shares of First Dodge
Stock, MBI Common Stock, and First National Stock
beneficially owned by such Stockholder, in each case free
and clear of all liens, encumbrances, claims, and
equities which would impair the right of the record owner
to vote such shares in favor of the Fourth Merger or the
BANK IV Kansas Merger, and the number of shares of Fourth
Stock to be received in the Fourth Merger and the BANK IV
Kansas Merger; provided, however, that no Stockholder
makes any warranty as to the shares owned by any other
Stockholder. None of the Corporations is a party and
none of the Stockholders is a party to any agreement
which in any way restricts the right of any stockholder
of any of the Corporations to vote on this Agreement or
the Merger Agreements or consummate the transactions
contemplated therein. There is no plan or intention by
the Stockholders, and to the best of the knowledge of
First Dodge, FNB, MBI, Metro Bank or First National,
there is no plan or intention on the part of the
remaining stockholders of MBI or First National to sell,
exchange, or otherwise dispose of a number of shares of
Fourth Stock received in any of the Mergers that would
reduce the First Dodge, MBI, and First National
stockholders' ownership of Fourth Stock to a number of
shares having a value, as of the Effective Time, of less
than 50 percent of the value of all of the capital stock
of all of such corporations outstanding immediately
prior to the Effective Time. Solely for purposes of the
preceding sentence, an amount of Fourth Stock equal to
(i) the value of First Dodge Stock, First National Stock,
and MBI Common Stock surrendered by persons exercising
dissenters' rights, (ii) the value of stock surrendered
for cash in lieu of fractional shares of Fourth Stock,
and (iii) the value of shares of Fourth Stock held by
stockholders prior to the Mergers and otherwise sold,
redeemed, or disposed of prior or subsequent to the
Effective Time, shall be deemed received by such
stockholders in the Mergers and sold, exchanged, or
disposed of immediately thereafter.
s. Environmental Compliance. Each of the Banks
is in material compliance with all relevant
Environmental, Health, and Safety Laws and none of the
Corporations has any material Environmental, Health, and
Safety Liabilities. Except as described in Exhibit "S"
to the Disclosure Statement, none of the Occupied
Properties and, to the knowledge of First Dodge, FNB,
MBI, and the Banks, no real or personal property owned or
leased by either Bank at any time is now being used or
has at any time in the past ever been used for the
storage (whether permanent or temporary), disposal, or
handling of any Hazardous Materials, nor are any
Hazardous Materials located in, on, under, or at any
real or personal property owned, leased, or used by a
Bank. Neither Stockholders nor any of the Corporations
have received any notice of a material violation of any
Environmental, Health, and Safety Law, or any notice of
any material potential Environmental, Health, and Safety
Liabilities with respect to any properties or assets in
which any of the Corporations has or has had any
interest.
t. Employment of Aliens. The Banks are in
material compliance with the Immigration and Control Act
of 1986.
u. Notes and Leases. All promissory notes and
leases owned by the Banks at the Effective Time will
represent bona fide indebtedness or obligations to such
Bank and are and will be fully enforceable in accordance
with their terms without valid set-offs or counterclaims,
except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws and equitable
principles affecting creditors' rights generally;
provided, however, no representation or warranty is made
in this Agreement as to the collectibility of any such
note or lease.
v. No Misrepresentations. Neither this
Agreement, the Financial Statements, nor any other
letter, certificate, statement, or document furnished or
to be furnished to Fourth by or on behalf of the
Corporations, the Stockholders, or any of them, pursuant
to or in connection with this Agreement and the
transactions contemplated hereby, when considered in
conjunction with all other information and documents
furnished to Fourth hereunder, contains or will contain
any misstatement of a material fact or omits or will omit
to state a material fact necessary to make the statements
contained herein or therein not misleading.
w. Updating of Representations and Warranties.
Between the date hereof and the Effective Time, First
Dodge, FNB, MBI, the Banks, and the Stockholders will
promptly disclose to Fourth in writing any information of
which any of them has actual knowledge (1) concerning any
event that would render any of their representations or
warranties contained in this Agreement untrue if made as
to the date of such event, (2) which renders any
information set forth in this Agreement or the Disclosure
Statement no longer correct in all material respects, or
(3) which arises after the date hereof and which would
have been required to be included in this Agreement or
the Disclosure Statement if such information had existed
on the date hereof.
3.2. Representations and Warranties of Fourth. Fourth
represents and warrants to First Dodge, FNB, MBI, the Banks, and
the Stockholders, and each of them, as follows:
a. Organization, Good Standing, and Authority.
Fourth is a bank holding company duly registered pursuant
to the Bank Holding Company Act. Fourth and each of its
banking Subsidiaries is a corporation or bank duly
organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation, and
each has all requisite corporate power and authority to
conduct its business as it is now conducted, to own its
properties and assets, and to lease properties used in
its business. None of Fourth or any of its banking
Subsidiaries is in violation of its charter documents or
bylaws, or of any applicable Law in any material respect,
or in default in any material respect under any material
agreement, indenture, lease, or other document to which
it is a party or by which it is bound. All of Fourth's
issued and outstanding equity securities are duly
registered under the Federal Securities Exchange Act of
1934, as amended. Shares of Fourth Stock are eligible
for trading in the National Market System of NASDAQ.
b. Binding Obligations; Due Authorization. This
Agreement constitutes, and the Merger Agreements will
upon execution and delivery constitute, valid and binding
obligations of Fourth and, in the case of the Bank Merger
Agreements, BANK IV Oklahoma and BANK IV Kansas, as the
case may be, enforceable against them in accordance with
the terms of such documents, except as limited by
applicable bankruptcy, insolvency, reorganization,
moratorium, or other similar laws and equitable
principles affecting creditors' rights generally. The
execution, delivery, and performance of this Agreement
and the Merger Agreements, and the transactions
contemplated by all such agreements have been duly
authorized by the respective boards of directors of
Fourth, BANK IV Kansas, and BANK IV Oklahoma. No
approval of the holders of outstanding Fourth Stock or
other voting securities of Fourth is necessary to
consummate the Mergers.
c. Absence of Default. None of the execution or
the delivery of this Agreement and the Merger Agreements,
the consummation of the transactions contemplated hereby
or thereby, or the fulfillment of the terms hereof or
thereof, will (1) conflict with, or result in a breach of
the terms, conditions, or provisions of, or constitute a
default under the charter documents or bylaws of Fourth
or any of its banking Subsidiaries or under any agreement
or instrument under which Fourth or any of its banking
Subsidiaries is obligated, or (2) violate any Law to
which any of them is subject.
d. Disclosure Materials Delivered by Fourth.
Fourth has previously delivered to First Dodge its Annual
Report on Form 10-K for the year ended December 31, 1992,
and its Quarterly Reports on Form 10-Q for the quarters
ended March 31, June 30, and September 30, 1993, in each
case with exhibits thereto, as filed with the SEC, and a
copy of the definitive proxy statement used by Fourth in
connection with its 1993 annual stockholders' meeting.
All of the financial statements contained in such
documents have been prepared in accordance with GAAP
applied on a consistent basis. The books of account of
Fourth and each of its banking Subsidiaries fairly and
correctly reflect, in accordance with GAAP applied on a
consistent basis, the respective incomes, expenses,
assets, and liabilities, absolute and contingent, of
Fourth and each of its banking Subsidiaries. There have
been no material adverse changes in the consolidated
financial condition of Fourth from September 30, 1993.
e. Brokers or Finders. No broker, agent,
finder, consultant, or other party (other than legal and
accounting advisors) has been retained by Fourth or is
entitled to be paid based upon any agreements,
arrangements, or understandings made by Fourth in
connection with any of the transactions contemplated by
this Agreement or the Merger Agreements.
f. SEC Filings to be Accurate. The information
pertaining to Fourth which has been or will be furnished
by or on behalf of Fourth and its banking Subsidiaries or
its management for inclusion in the Registration
Statement or the Proxy Statement, and the information
pertaining to Fourth which will appear in the
Registration Statement or the Proxy Statement, in the
form filed with the SEC, will contain no untrue statement
of any material fact and will not omit to state any
material fact required to be stated therein or necessary
to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
Fourth shall promptly advise First Dodge in writing if
prior to the Effective Time it shall obtain knowledge of
any fact that would make it necessary to amend the
Registration Statement or the Proxy Statement, or to
supplement the prospectus contained in the Registration
Statement, in order to make the statements therein not
misleading or to comply with applicable Law.
g. No Misrepresentations. Neither this
Agreement, the disclosure documents described in clause
"d" of this Section 3.2, nor any other letter,
certificate, statement, or document furnished or to be
furnished to First Dodge, FNB, MBI, the Banks, or the
Stockholders by or on behalf of Fourth pursuant to or in
connection with this Agreement and the transactions
contemplated hereby contains or will contain any
misstatement of a material fact or omits or will omit to
state a material fact necessary to make the statements
contained herein or therein not misleading.
h. Capitalization. Fourth is authorized to
issue (i) 50,000,000 shares of common stock, par value $5
per share, of which 26,352,215 shares were issued and
outstanding on December 31, 1993, (ii) 250,000 shares of
Class A 7% Cumulative Convertible Preferred Stock, par
value $100 per share, all of which are issued and
outstanding, and (iii) 5,000,000 shares of Class B
Preferred Stock, without par value, none of which have
been issued. The shares of Fourth Stock to be issued in
the Mergers will be duly and validly issued, fully paid,
and nonassessable, and not issued in violation of any
preemptive rights or any Laws applicable thereto.
i. Updating of Representations and Warranties.
Between the date hereof and the Effective Time, Fourth
will promptly disclose to First Dodge and the
Stockholders in writing any information of which it has
actual knowledge (1) concerning any event that would
render any representation or warranty of Fourth untrue if
made as of the date of such event, (2) which renders any
information set forth in this Agreement no longer correct
in all material respects, or (3) which arises after the
date hereof and which would have been required to be
included in the Agreement if such information had existed
on the date hereof.
ARTICLE IV
SECURITIES LAWS MATTERS
4.1. Registration Statement and Proxy Statement.
Fourth shall as soon as practicable prepare and file the
Registration Statement under and pursuant to the Securities Act for
the purpose of registering the shares of Fourth Stock to be issued
in the Mergers. First Dodge, FNB, MBI, and the Banks shall each
provide promptly to Fourth such information concerning its
respective business, financial condition, and affairs as may be
required or appropriate for inclusion in the Registration Statement
or the Proxy Statement and each shall cause its counsel and
auditors to cooperate with the other's counsel and auditors in the
preparation and filing of the Registration Statement and the Proxy
Statement. Fourth and First Dodge shall use their Best Efforts to
have the Registration Statement declared effective under the
Securities Act as soon as may be practicable and thereafter First
Dodge, MBI, and First National shall each distribute the Proxy
Statement to its respective stockholders in accordance with
applicable Laws not fewer than 20 business days prior to the date
on which the Fourth Merger Agreement and the Bank Merger Agreements
are to be submitted to the stockholders for voting thereon. If
necessary, in light of developments occurring subsequent to the
distribution of the Proxy Statement to stockholders, First Dodge,
MBI, and First National shall each mail or otherwise furnish to its
respective stockholders such amendments to the Proxy Statement or
supplements to the Proxy Statement as may, in the opinion of Fourth
or First Dodge, be necessary so that the Proxy Statement, as so
amended or supplemented, will contain no untrue statement of any
material fact and will not omit to state any material fact required
to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, or as may be necessary to comply with applicable Law.
Fourth shall not be required to maintain the effectiveness of the
Registration Statement for the purpose of resale of Fourth Stock by
any person.
4.2. State Securities Laws. Fourth shall prepare and
file and the parties hereto shall cooperate in making any filings
required under the securities laws of any State in order either to
qualify or register the Fourth Stock so it may be offered and sold
lawfully in such State in connection with the Mergers or to obtain
an exemption from such qualification or registration.
4.3. Affiliates. Certificates representing shares of
Fourth Stock issued to Affiliates of First Dodge, MBI, or First
National pursuant to the Fourth Merger Agreement or the Bank Merger
Agreements may be subjected to stop transfer orders and may bear a
restrictive legend in substantially the following form:
The shares of common stock represented by this
certificate have been issued or transferred to the
registered holder as the result of a transaction to which
Rule 145 under the Securities Act of 1933, as amended
(the "Act"), applies. Such shares may not be sold,
pledged, transferred, or assigned, and the issuer shall
not be required to give effect to any attempted sale,
pledge, transfer, or assignment, except (i) pursuant to
a then current effective registration under the Act, (ii)
in a transaction permitted by Rule 145 as to which the
issuer has, in the reasonable opinion of its counsel,
received reasonably satisfactory evidence of compliance
with Rule 145, or (iii) in a transaction which, in the
opinion of counsel satisfactory to the issuer or as
described in a "no-action" or interpretive letter from
the staff of the Securities and Exchange Commission, is
not required to be registered under the Act. Transfer of
the shares represented by this certificate is further
restricted by an Affiliate's Agreement dated as of
__________, 1994, between the issuer and the registered
holder to which reference is hereby made.
ARTICLE V
CLOSING CONDITIONS
5.1. Conditions to Obligations of Fourth, BANK IV
Kansas, and BANK IV Oklahoma. The obligations of Fourth to effect
the Mergers and to issue any Fourth Stock and the obligation of
BANK IV Kansas and BANK IV Oklahoma to effect the Bank Mergers
shall be subject to the following conditions which may, to the
extent permitted by Law, be waived by Fourth at its option:
a. Stockholder Approvals. The approval,
ratification, and confirmation of this Agreement and the
Bank Merger Agreements and the Fourth Merger Agreement by
the respective stockholders of each Bank and First Dodge,
FNB, and MBI shall have been duly obtained as required by
Law.
b. Absence of Litigation. No order, judgment,
or decree shall be outstanding restraining or enjoining
consummation of any of the Mergers; and no Litigation
shall be pending or threatened in which it is sought to
restrain or prohibit any of the Mergers or obtain other
substantial monetary or other relief against one or more
of the parties hereto in connection with this Agreement.
c. Securities Laws. The Registration Statement
shall have become effective under the Securities Act and
Fourth shall have received all state securities laws
permits or other authorizations or confirmation of the
availability of exemption from registration requirements
necessary to issue the Fourth Stock in the Mergers.
Neither the Registration Statement nor any such permit,
authorization, or confirmation shall be subject to a
stop-order or threatened stop-order or similar proceeding
or order by the SEC or any state securities authority.
d. Regulatory Approvals. All Required Approvals
shall have been procured and shall continue to be in
effect.
e. Limit on Dissent. The holders of an aggre-
gate amount of the then issued and outstanding First
Dodge Stock, MBI Common Stock, and First National Stock
which shall be convertible into an amount of Fourth Stock
issuable in the Mergers equal to not more than five
percent of the total amount of Fourth Stock issuable in
the Mergers shall have validly exercised their rights as
dissenting stockholders.
f. Minimum Net Worths of the Banks. Fourth
shall be reasonably satisfied that the stockholders'
equity of the Metro Bank and the consolidated
stockholders' equity of First National as of the end of
the month immediately preceding the Effective Time,
computed in accordance with GAAP, are not less than
$3,500,000 and $9,000,000, respectively.
g. Opinion of Counsel. Fourth shall have
received the opinion of Mangan, Dalton, Trenkle, Rebein
& Doll, Chartered, counsel to the Corporations and the
Stockholders, substantially in the form of Exhibit "D"
hereto.
h. Representations and Warranties; Covenants.
The representations and warranties of First Dodge, FNB,
MBI, the Banks, and the Stockholders contained in Section
3.1 of this Agreement shall have been true and correct in
all material respects on the date made and shall be true
and correct in all material respects at the Effective
Time as though made at such time, excepting: (i) any
changes occurring in the ordinary course of business,
none of which shall have been materially adverse, and
(ii) any changes contemplated or permitted by this
Agreement. First Dodge, FNB, MBI, the Banks, and the
Stockholders shall each have performed in all material
respects all of their obligations under this Agreement.
i. Certificates. First Dodge, FNB, MBI, and the
Banks shall each have delivered to Fourth a certificate,
in form and substance satisfactory to Fourth, dated the
Effective Time and signed by its chief executive officer
and chief financial officer certifying in such detail as
Fourth may reasonably request the fulfillment of
conditions a, b, e, f, and h above and m below.
j. Affiliates' Agreements. Fourth shall have
received all of the agreements of Affiliates of First
Dodge, MBI, and First National substantially in the form
of Exhibit "G" hereto.
k. Pooling of Interests. Fourth shall have
received a letter from its independent public
accountants, dated the Effective Time, to the effect that
the Mergers can each properly be treated for accounting
purposes as a "pooling of interests" under GAAP.
l. Employment Agreement. John V. Harding shall
have executed and delivered an agreement substantially in
the form of Exhibit "E" hereto.
m. Material Adverse Changes. Since the date of
this Agreement there shall not have occurred any material
adverse change in the condition (financial or otherwise)
business, liabilities (contingent or otherwise),
properties, or assets of any of the Corporations.
n. Satisfactory Environmental Reports. Fourth
shall have received environmental assessment reports
covering all of the Corporations' real estate, in form
and substance reasonably satisfactory to Fourth, which do
not cause Fourth reasonably to conclude that there are
any material Environmental, Health, and Safety
Liabilities associated with any of such real estate.
5.2. Conditions to Obligations of First Dodge, FNB,
MBI, the Banks, and the Stockholders. The obligations of First
Dodge, FNB, MBI, the Banks, and the Stockholders to effect the
Mergers and to consummate the transactions contemplated hereby
shall be subject to the following conditions which may, to the
extent permitted by Law, be waived by it at its option:
a. General. Each of the conditions specified in
clauses a, b, c, and d of Section 5.1 of this Agreement
shall have occurred and be continuing.
b. Representations and Warranties; Covenants.
The representations and warranties of Fourth contained in
Section 3.2 of this Agreement shall have been true and
correct in all material respects on the date made and
shall be true and correct in all material respects at the
Effective Time as though made at such time, excepting any
changes occurring in the ordinary course of business,
none of which shall have been materially adverse, and
excepting any changes contemplated or permitted by this
Agreement. Fourth shall have duly performed in all
material respects all of its obligations under this
Agreement.
c. Certificate. Fourth shall have delivered to
First Dodge a certificate, in form and substance
satisfactory to First Dodge, dated the Effective Time and
signed by its chief executive officer and chief financial
officer on behalf of Fourth, certifying in such detail as
First Dodge may reasonably request as to the fulfillment
of the foregoing conditions except for the conditions set
forth in clauses a and d of Section 5.1 of this
Agreement.
d. Opinion of Counsel. First Dodge shall have
received the opinion of Foulston & Siefkin, counsel to
Fourth, addressed to First Dodge, FNB, MBI, the Banks and
their stockholders, satisfactory in form and substance to
First Dodge, substantially in the form of Exhibit "F"
hereto.
e. Material Adverse Change. Since the date of
this Agreement there shall not have occurred any material
adverse change in the condition (financial or otherwise),
business, properties, liabilities (contingent or
otherwise), or assets of Fourth.
ARTICLE VI
EFFECTIVE TIME
The consummation of the Mergers and the delivery of the
certificates and other documents called for by this Agreement, and
the consummation of all other transactions contemplated by this
Agreement shall take place at such time and place in Wichita,
Kansas, as the parties may mutually agree which, unless otherwise
agreed, shall be not later than the last day of the month in which
the final regulatory approval required to effect the Mergers is
received and the latest required waiting period expires. The
parties agree that they shall exert their reasonable best efforts
to cause the Effective Time to be on or before June 30, 1994.
ARTICLE VII
TERMINATION OF AGREEMENT
7.1. Mutual Consent; Absence of Stockholder Approval;
Termination Date. This Agreement and the Merger Agreements shall
terminate at any time when the parties hereto mutually agree in
writing. This Agreement and the Merger Agreements may also be
terminated at the election of either First Dodge or Fourth, as the
case may be, upon written notice from the party electing to
terminate this Agreement and the Merger Agreements to the other
party if, without fault on the part of the party electing to
terminate this Agreement and the Merger Agreements, the Merger
Agreements are not ratified and approved by the stockholders of
First Dodge, FNB, MBI, Metro Bank or First National by the
requisite vote or if there has been a denial of a Required Approval
except upon compliance with terms reasonably deemed onerous by
Fourth. Unless extended by written agreement of the parties, this
Agreement and the Merger Agreements shall terminate if all
conditions to the obligations of the parties hereto have not
occurred on or before June 30, 1994.
7.2. Election by Fourth. Notwithstanding the approval
of the Merger Agreements by the stockholders of BANK IV Kansas and
BANK IV Oklahoma, this Agreement and the Merger Agreements shall
terminate at Fourth's election, upon written notice from Fourth to
First Dodge, if any one or more of the following events shall occur
and shall not have been remedied to the satisfaction of Fourth
within 30 days after written notice is delivered to First Dodge:
(a) there shall have been any material breach of any of the
material obligations, covenants, or warranties of First Dodge, FNB,
MBI, First National, Metro Bank, or the Stockholders hereunder; or
(b) there shall have been any written representation or statement
furnished by First Dodge, FNB, MBI, First National, Metro Bank, or
the Stockholders hereunder which at the time furnished is false or
misleading in any material respect in relation to the size and
scope of the transactions contemplated by this Agreement.
7.3. Election by First Dodge. Notwithstanding the
approval of the Merger Agreements by the stockholders of First
Dodge, FNB, MBI, First National, or Metro Bank, this Agreement and
the Merger Agreements shall terminate at the election of First
Dodge, upon written notice from First Dodge to Fourth, if any one
or more of the following events shall occur and shall not have been
remedied to their satisfaction within 30 days after written notice
is delivered to Fourth: (a) there shall have been any material
breach of any of the material obligations, covenants, or warranties
of Fourth hereunder; or (b) there shall have been any written
representation or statement furnished by Fourth hereunder which at
the time furnished is false or misleading in any material respect
in relation to the size and scope of the transactions contemplated
by this Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1. Effect of Closing. Except as provided in this
Section, closing of the transactions contemplated by this Agreement
shall not prejudice any claim for damages which any of the parties
hereto may have hereunder in law or in equity, due to a material
default in observance or the due and timely performance of any of
the covenants and agreements herein contained or for the material
breach of any warranty or representation hereunder, unless such
observance, performance, warranty, or representation is
specifically waived in writing by the party making such claim. In
the event any warranty or representation contained herein is or
becomes untrue or breached (other than by reason of any fraudulent
misrepresentation or fraudulent breach of warranty or any willful
breach of a covenant) and such breach or misrepresentation is
promptly communicated by First Dodge to Fourth in writing prior to
the Effective Time, Fourth shall have the right, at its sole
option, either to waive such misrepresentation or breach in writing
or to terminate this Agreement, but in either such event, neither
First Dodge, FNB, MBI, either Bank, nor any of the Stockholders
shall be liable to Fourth for any such damages, costs, expenses, or
otherwise by reason of such breach or misrepresentation. In the
event Fourth elects to close the transactions contemplated by this
Agreement notwithstanding the written communication of such breach
or misrepresentation to Fourth by First Dodge, Fourth shall be
deemed to have waived such breach or misrepresentation in writing.
8.2. General Indemnification. Subject to the
limitations on the liability of Stockholders contained in this
Article VIII, Stockholders shall be liable for, and shall defend,
save, indemnify, and hold harmless Fourth, BANK IV Kansas, BANK IV
Oklahoma, and their respective officers, directors, employees, and
agents, and each of them (hereinafter individually referred to as
an "Indemnitee" and collectively as "Indemnitees") against and with
respect to any losses, liabilities, claims, diminution in value,
litigation, demands, damages, costs, charges, legal fees, suits,
actions, proceedings, judgments, expenses, or any other losses
(including without limitation any income tax consequences of the
receipt of any indemnification payment) (herein collectively
referred to as "Indemnifying Losses") that may be sustained,
suffered, or incurred by, or obtained against, any Indemnitee
arising from or by reason of the breach or nonfulfillment of any of
the warranties, agreements, or representations made by the
Stockholders, or any of them, in this Agreement; provided, however
that the liability of Stockholders to defend, save, indemnify, and
hold harmless any of the Indemnitees for any liabilities, claims,
or demands indemnified under this Agreement, shall be limited to
the amount by which all such Indemnifying Losses exceed $240,000 in
the aggregate, net of income tax effect and after taking into
account all available insurance proceeds. It is agreed that the
indemnification obligations of the Stockholders shall be solely for
the benefit of the Indemnitees and may not be enforced by any
insurer under any subrogation or similar agreement or arrangement
or by any governmental agency except as a receiver for any
Indemnitee.
8.3. Procedure. If any claim or demand shall be made
or liability asserted against any Indemnitee, or if any litigation,
suit, action, or administrative or legal proceedings shall be
instituted or commenced in which any Indemnitee is involved or
shall be named as a defendant either individually or with others,
and if such Litigation, claim, demand, liability, suit, action, or
proceeding, if successfully maintained, will result in any
Indemnifying Losses as defined in Section 8.2, Fourth shall give
Stockholders written notice thereof within 20 days after it
acquires knowledge thereof. If, within 20 days after the giving of
such notice, Fourth receives written notice from Stockholders (by
the Agents, as defined in Section 9.5, acting for all Stockholders
jointly) stating that Stockholders dispute or intend to defend
against such claim, demand, liability, suit, action, or proceeding,
then Stockholders shall have the right to select counsel of their
choice and to dispute or defend against or settle such claim at
their expense, and the Indemnitees shall fully cooperate with
Stockholders in such dispute or defense or settlement so long as
Stockholders are conducting such dispute or defense diligently and
in good faith. If no such notice of intent to dispute or defend is
received by Fourth within the aforesaid 20-day period, of if such
diligent and good faith defense is not being, or ceases to be,
conducted, Fourth shall have the right, directly or through one or
more of the Indemnitees, to dispute and defend against the claim,
demand, or other liability at the cost and expense of Stockholders,
to settle such claim, demand, or other liability, together with
interest or late charges thereon, and in either event to be
indemnified as provided in this Agreement so long as Fourth
conducts such defense diligently and in good faith; provided,
notice of any proposed settlement shall be given to Stockholders as
far in advance as practicable under the circumstances and, if
Stockholders shall timely object to the terms of such proposed
settlement, they may assume the defense in accordance with the
terms of this Section 8.3. If any event shall occur that would
entitle Indemnitees to a right of indemnification hereunder, any
loss, damage, or expense subject to indemnification shall be
subject to the limitations otherwise set forth in this Article
VIII.
8.4. Survival of Representations and Warranties.
Notwithstanding any rule of law or provision of this Agreement to
the contrary, the representations and warranties of Stockholders
contained in this Agreement and not waived pursuant to the terms of
this Agreement shall survive the Mergers and the closing of the
transactions described in this Agreement; provided, however, that
no claim by an Indemnitee for indemnification or breach of warranty
under this Agreement shall be valid unless an Indemnitee shall have
given written notice of its assertion or claim to Stockholders on
or prior to the date on which Fourth files or is required to file
with the SEC its Annual Report on Form 10-K for the year ended
December 31, 1994, whichever is earlier.
8.5. Several Liability of Stockholders. The liability
of the Stockholders under this Agreement shall not be joint, but
rather shall be several in proportion to the aggregate amount of
Fourth Stock each such Stockholder receives for the stock being
exchanged pursuant to this Agreement and the Merger Agreements as
compared to the total amount of Fourth Stock being received by all
First Dodge, MBI, and First National stockholders. The liability
of each such Stockholder under this Agreement shall be limited to
the sum of the value of Fourth Stock and cash for fractional
shares, if any, received by such Stockholder under this Agreement
and the Merger Agreements. For the purposes of this Section 8.5,
the Fourth Stock received by Stockholders shall be deemed to have
the same value as the reported closing price thereof in the NASDAQ
quotation system on the date in which the Effective Time occurs.
8.6. Indemnification Payments. All indemnification
obligations of the Stockholders under this Article VIII shall be
satisfied by payment in Fourth Stock which will be deemed to have
the same value as the reported closing price thereof in the NASDAQ
quotation system on the date in which the Effective Time occurs.
ARTICLE IX
MISCELLANEOUS
9.1. Expenses. Whether or not the Mergers are
effected, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
9.2. Affiliates' Agreements. Prior to the Effective
Time, First Dodge shall deliver to Fourth a list, reviewed by its
counsel, identifying all of the stockholders who are, in its
opinion, Affiliates of First Dodge, MBI, or First National. First
Dodge, MBI, and First National shall each use its Best Efforts to
cause each of its stockholders who is identified by it as being an
Affiliate to execute a written agreement, on or before the
Effective Time, in a form substantially similar to the form of
Affiliate's Agreement attached hereto as Exhibit "G". Fourth shall
not be obligated to deliver any shares of Fourth Stock to any
person who is named as an Affiliate on such list prior to receipt
of such an agreement.
9.3. Notices. All notices or other communications
required or permitted hereunder shall be sufficiently given if
personally delivered or if sent by certified or registered mail,
postage prepaid, return receipt requested, addressed as follows:
(a) if to Fourth, addressed to Darrell G. Knudson, Chairman of the
Board, Post Office Box 4, Wichita, Kansas 67201; and (b) if to
First Dodge, FNB, MBI, First National, Metro Bank, and the
Stockholders, addressed to John V. Harding, 619 Second Avenue,
Dodge City, Kansas 67801, or to such other address as shall have
been furnished in writing in the manner provided herein for giving
notice.
9.4. Stockholders' Agreements. Each Stockholder agrees
not to sell, pledge, encumber, or otherwise hypothecate or transfer
any shares of capital stock of any class of any of the Corporations
prior to the Effective Time unless the transferee or pledgee agrees
with Fourth in writing to be bound by this Agreement and to vote
all shares of such stock owned by him or her in favor of approval
of this Agreement and the Merger Agreements.
9.5. Power of Attorney. Each Stockholder irrevocably
appoints each of the other Stockholders, jointly (the "Agents"),
the agents and attorneys-in-fact of such Stockholder for the
purposes of acting in the name and stead of such Stockholder in:
(i) giving and receiving all notices permitted or required by this
Agreement; (ii) agreeing with Fourth, BANK IV Kansas, and BANK IV
Oklahoma as to any amendments to this Agreement and the Merger
Agreements which the Agents may deem necessary or advisable,
including but not limited to the extension of time in which to
consummate the transactions contemplated by this Agreement, and the
waiver of any closing conditions; (iii) employing legal counsel;
(iv) paying any legal and any other fees and expenses incurred by
the Agents in consummating the transactions contemplated by this
Agreement; and (v) making, executing, acknowledging, and delivering
all such contracts, orders, receipts, notices, requests,
instructions, certificates, letters, and other writings, and in
general doing all things and taking all actions which the Agents,
in their sole discretion, may consider necessary or proper in
connection with or to carry out the terms of this Agreement, as
fully as if such Stockholders were personally present and acting.
This power of attorney and all authority conferred hereby is
granted and conferred subject to the interests of Fourth, BANK IV
Kansas, BANK IV Oklahoma, First Dodge, FNB, MBI, the Banks, and the
other Stockholders who are parties to this Agreement, and in
consideration of those interests and for the purpose of completing
the transactions contemplated hereby, this power of attorney and
all authority conferred hereby shall be irrevocable and shall not
be terminated by any Stockholder or by operation of law, whether by
the death, incompetency, or incapacity of the Stockholders, or any
of them, or by the occurrence of any other event. If any
Stockholder should die or become incompetent or incapacitated, or
any other event should occur before the consummation of the
transactions contemplated by this Agreement, all actions taken by
the Agents pursuant to this Agreement shall be as valid as if such
death, incompetence, or incapacity or other event had not occurred,
regardless of whether Fourth, BANK IV Kansas, BANK IV Oklahoma,
First Dodge, FNB, MBI, First National, Metro Bank, or the Agents,
or any of them, shall have received notice of such death,
incompetence, incapacity, or other event. Each Stockholder agrees
to hold the Agents, and each of them, free and harmless from any
and all loss, damage, expense, or liability which they, he, or she
may sustain or incur as a result of any action taken or not taken
in good faith hereunder. Any Agent shall have the power to act
alone hereunder.
9.6. Time. Time is of the essence of this Agreement.
9.7. Law Governing. This Agreement shall, except to
the extent federal law is applicable, be construed in accordance
with and governed by the laws of the State of Kansas, without
regard to the principles of conflicts of laws thereof.
9.8. Entire Agreement; Amendment. This Agreement
contains and incorporates the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof and
supersedes all prior negotiations, agreements, letters of intent,
and understandings. This Agreement may only be amended by an
instrument in writing duly executed by all corporate parties hereto
and the Stockholders (by the Agents acting for all Stockholders
jointly), and all attempted oral waivers, modifications, and
amendments shall be ineffective.
9.9. Successors and Assigns. The rights and
obligations of the parties hereto shall inure to the benefit of and
shall be binding upon the successors and permitted assigns of each
of them; provided, however, that this Agreement, the Merger
Agreements, or any of the rights, interests, or obligations
hereunder or thereunder may not be assigned by any of the parties
hereto without the prior written consent of the other parties
hereto.
9.10. Cover, Table of Contents, and Headings. The
cover, table of contents, and the headings of the sections and
subsections of this Agreement and the Merger Agreements are for
convenience of reference only and shall not be deemed to be a part
hereof or thereof or taken into account in construing this
Agreement or the Merger Agreements.
9.11. Counterparts. This Agreement and the Merger
Agreements may be executed in one or more counterparts, each of
which shall be deemed an original but which together shall
constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed.
FOURTH FINANCIAL CORPORATION FIRST DODGE CITY
BANCSHARES, INC.
By By
-------------------------- --------------------------
/s/Darrell G. Knudson
Chairman of the Board Chairman of the Board
"Fourth" "First Dodge"
FIRST NATIONAL BANCSHARES METRO BANCSHARES, INC.
OF DODGE CITY, INC.
By__________________________ By____________________________
"FNB" "MBI"
METRO BANK OF BROKEN ARROW FIRST NATIONAL BANK AND TRUST
COMPANY IN DODGE CITY
By______________________ By__________________________
"Metro Bank" "First National"
[signatures continued]
_______________________________ __________________________
/s/Thomas P. Shirley /s/John V. Harding
VIDA EBNER REVOCABLE TRUST
By________________________
/s/Vida Ebner, Trustee
"Stockholders"
EXHIBIT "A"
AGREEMENT TO MERGE
between
BANK IV KANSAS, NATIONAL ASSOCIATION,
and
FIRST NATIONAL BANK AND TRUST COMPANY IN DODGE CITY
under the charter of
BANK IV KANSAS, NATIONAL ASSOCIATION
under the title of
BANK IV KANSAS, NATIONAL ASSOCIATION
THIS AGREEMENT made among BANK IV Kansas, National
Association (hereinafter referred to as "BANK IV"), a banking
association organized under the laws of the United States, being
located at 100 North Broadway, City of Wichita, County of
Sedgwick, in the State of Kansas, with a capital of
$356,457,292.74 divided into 9,254,200 shares of common stock,
each of $5.00 par value, and surplus of $218,601,457.92 and
undivided profits, including capital reserves, of $91,584,834.82
as of December 31, 1993, and First National Bank and Trust
Company in Dodge City, a national banking association organized
under the laws of the United States (hereinafter referred to as
"First National") being located at 619 Second, Dodge City, County
of Ford, in the State of Kansas, with a capital of $600,000,
divided into 6,000 shares of common stock, each of $100.00 par
value, and surplus of $_________ and undivided profits, including
capital reserves, of $_________ as of December 31, 1993, each
acting pursuant to a resolution of its board of directors,
adopted by the vote of a majority of its directors, pursuant to
the authority given by and in accordance with the provisions of
the Act of November 7, 1918, as amended (12 USC Section 215a).
W I T N E S S E T H: That,
Section 1. First National shall be merged into BANK IV
under the charter of the latter.
Section 2. The name of the receiving association
(hereinafter referred to as the "Association") shall be BANK IV
Kansas, National Association.
Section 3. The business of the Association shall be
that of a national banking association. This business shall be
conducted by the Association at its main office which shall be
located at 100 North Broadway, Wichita, Kansas, and at its
legally established branches.
Section 4. The amount of capital stock of the
Association shall be $46,871,000, divided into 9,374,200 shares
of common stock, each of $5.00 par value, and at the time the
merger shall become effective, the Association shall have a
surplus of $___________, and undivided profits, including capital
reserves, which when combined with the capital and surplus will
be equal to the combined capital structures of the merging banks
as stated in the preamble of this Agreement, adjusted, however,
for normal earnings and expenses (and if applicable, purchase
accounting adjustments) between December 31, 1993, and the
effective time of the merger. The amount of capital stock of the
Association and its surplus and undivided profits at the time the
merger becomes effective shall also be adjusted to reflect the
effect of all mergers of other banks into the Association, if
any, between December 31, 1993 and the effective time of the
merger.
Section 5. All assets as they exist at the effective
time of the merger shall pass to and vest in the Association
without any conveyance or other transfer. The Association shall
be responsible for all of the liabilities of every kind and
description, including liabilities arising from the operation of
a trust department, of each of the merging entities existing as
of the effective time of the merger.
Section 6. Of the capital stock of the Association,
the presently outstanding 9,254,200 shares of common stock, each
of $5.00 par value, the holder of it, Fourth Financial
Corporation, shall retain its present rights. In addition,
Fourth Financial Corporation shall receive an additional 120,000
shares of common stock of the Association by reason of the
merger. Upon the merger becoming effective, the shares of
capital stock of First National shall no longer be outstanding
and the sole right of the holders thereof, other than Fourth
Financial Corporation, shall be to exchange such shares for 95.92
shares of common stock of Fourth Financial Corporation, par value
$5.00 per share, for each share of capital stock of First
National so exchanged.
Section 7. Except as expressly permitted in an
Agreement and Plan of Reorganization dated as of February 2,
1994, among Fourth Financial Corporation, First National, First
Dodge City Bancshares, Inc., First National Bancshares of Dodge
City, Inc., Metro Bancshares, Inc., Metro Bank of Broken Arrow,
and the stockholders of First Dodge City Bancshares, Inc. (the
"Reorganization Agreement"), First National shall not (i) declare
or pay any dividend to its shareholders, (ii) dispose of any of
its assets in any other manner except in the normal course of
business and for adequate value, or (iii) take any other action
which would violate the terms of the Reorganization Agreement.
Section 8. The present board of directors and officers
of BANK IV shall continue to serve as the board of directors and
officers of the Association until the next annual meeting or
until such time as their successors have been elected and have
qualified.
Section 9. Effective as of the time this merger shall
become effective as specified in the merger approval to be issued
by the Comptroller of the Currency, the articles of association
of BANK IV as then in effect shall be the articles of association
of the resulting bank.
Section 10. This Agreement may be terminated as
provided in the Reorganization Agreement. Notwithstanding the
approval of this Agreement by any stockholder group, this
Agreement shall automatically terminate upon the termination of
the Reorganization Agreement for any reason, and in no event
shall the merger of First National into BANK IV occur prior to
the consummation of the other Mergers as such term is defined in
the Reorganization Agreement.
Section 11. This Agreement shall be ratified and
confirmed by the affirmative vote of stockholders of each of the
merging banks owning at least two-thirds of its capital stock
outstanding, at a meeting to be held on the call of the
directors; and the merger shall become effective at the time
specified in a merger approval to be issued by the Comptroller of
the Currency of the United States.
WITNESS, the signatures and seals of said merging
entities as of the ___ day of February 1994, each set by its
chairman of the board, president, or a vice president and
attested to by its cashier or secretary, pursuant to a resolution
of its board of directors, acting by a majority:
BANK IV KANSAS,
NATIONAL ASSOCIATION
Attest:
By
-------------------------
- ------------------------- /s/K. Gordon Greer,
/s/John C. Maloney, Secretary Chairman of the Board
and President
[Seal of Bank]
FIRST NATIONAL BANK AND TRUST
COMPANY IN DODGE CITY
By
--------------------------
________________, President
Attest:
_______________________
______________, Secretary
[Seal of Bank]
STATE OF KANSAS )
) SS:
SEDGWICK COUNTY )
On this _____ day of February, 1994, before me, a
notary public for this state and county, personally came K.
Gordon Greer, as chairman of the board and president, and John C.
Maloney, as secretary, of BANK IV Kansas, National Association, a
national banking association, and each in his capacity
acknowledged this instrument to be the act and deed of the
association and the seal affixed to it to be its seal.
WITNESS my official seal and signature this day and
year.
----------------------------
Notary Public
My Appointment Expires:
- -----------------------
STATE OF KANSAS )
) SS:
FORD COUNTY )
On this ____ day of February, 1994, before me, a notary
public for this state and county, personally came
________________ as president, and ______________ as secretary of
The First National Bank and Trust Company in Dodge City, a
national banking association, and each in his/her capacity
acknowledged this instrument to be the act and deed of the bank
and the seal affixed to it to be its seal.
WITNESS my official seal and signature this day and
year.
----------------------------
Notary Public
My Appointment Expires:
- -----------------------
EXHIBIT "B"
AGREEMENT TO MERGE
between
BANK IV OKLAHOMA, NATIONAL ASSOCIATION
and
METRO BANK OF BROKEN ARROW
under the charter of
BANK IV OKLAHOMA, NATIONAL ASSOCIATION
under the title of
BANK IV OKLAHOMA, NATIONAL ASSOCIATION
THIS AGREEMENT made between BANK IV Oklahoma, National
Association (hereinafter referred to as "BANK IV"), a banking
association organized under the laws of the United States, being
located at 515 South Boulder, City of Tulsa, County of Tulsa, in
the State of Oklahoma, with a capital of $190,712,286.07 divided
into 5,720,647 shares of common stock, each of $5.00 par value,
and surplus of $133,050,335.55 and undivided profits, including
capital reserves, of $29,058,715.74 as of December 31, 1993, and
Metro Bank of Broken Arrow (hereinafter referred to as "Metro"),
a banking corporation organized under the laws of the State of
Oklahoma, being located at 1800 S. Elm Place, Broken Arrow, Tulsa
County, in the State of Oklahoma, with a capital of $762,500,
divided into 305,000 shares of common stock, each of $2.50 par
value, and surplus and undivided profits of approximately
$__________ as of December 31, 1993, each acting pursuant to a
resolution of its board of directors, adopted by the vote of a
majority of its directors, pursuant to the authority given by and
in accordance with the provisions of the Act of November 7, 1918,
as amended (12 USC 215a).
W I T N E S S E T H: That,
Section 1. Metro shall be merged into BANK IV under
the charter of the latter.
Section 2. The name of the receiving association
(hereinafter referred to as the "Association") shall be BANK IV
Oklahoma, National Association.
Section 3. The business of the Association shall be
that of a national banking association. This business shall be
conducted by the Association at its main office which shall be
located at 515 South Boulder, Tulsa, Oklahoma, and at its legally
established branches.
Section 4. The amount of capital stock of the
Association shall be $29,365,735 divided into 5,873,147 shares of
common stock, each of $5.00 par value, and at the time the merger
shall become effective, the Association shall have a surplus of
$___________, and undivided profits, including capital reserves,
which when combined with the capital and surplus will be equal to
the combined capital structures of the merging banks as stated in
the preamble of this Agreement, adjusted, however, for normal
earnings and expenses (and if applicable, purchase accounting
adjustments) between December 31, 1993, and the effective time of
the merger. The amount of capital stock of the Association and
its surplus and undivided profits at the time the merger becomes
effective shall also be adjusted to reflect the effect of all
mergers of other banks into the Association, if any, between
December 31, 1993 and the effective time of the merger.
Section 5. All assets as they exist at the effective
time of the merger shall pass to and vest in the Association
without any conveyance or other transfer. The Association shall
be responsible for all of the liabilities of every kind and
description, including liabilities arising from the operation of
a trust department, of Metro existing as of the effective time of
the merger.
Section 6. Of the capital stock of the Association,
the presently outstanding 5,720,647 shares of common stock, each
of $5.00 par value, the two holders of it, Fourth Financial
Corporation and IV Commercial Acquisition, Inc., shall retain
their present rights. In addition, Fourth Financial Corporation
shall receive by reason of the merger an additional 152,500
shares of common stock, par value $5.00 per share of the
Association. The sole shareholder of Metro, Metro Bancshares,
Inc. ("MBI"), is a party to an Agreement and Plan of
Reorganization, among Fourth Financial Corporation, MBI, First
Dodge City Bancshares, Inc. ("First Dodge"), Metro, First
National Bancshares of Dodge City, Inc., First National Bank and
Trust Company in Dodge City, and the stockholders of First Dodge,
dated as of February 2, 1994 (the "Reorganization Agreement"),
pursuant to which the stockholders of MBI and First Dodge are
receiving full payment for the value of all of the issued and
outstanding capital stock of MBI and First Dodge, so no separate
consideration is to be paid to Metro or any of its shareholders
in such capacity by reason of the merger effected hereby.
Section 7. Except as expressly permitted in the
Reorganization Agreement, Metro shall not (i) declare or pay any
dividend to its shareholders, (ii) dispose of any of its assets
in any other manner except in the normal course of business and
for adequate value, or (iii) take any other action which would
violate the terms of the Reorganization Agreement.
Section 8. The present board of directors and officers
of BANK IV shall continue to serve as the board of directors and
officers of the Association until the next annual meeting or
until such time as their successors have been elected and have
qualified.
Section 9. Effective as of the time this merger shall
become effective as specified in the merger approval to be issued
by the Comptroller of the Currency, the articles of association
of the resulting bank shall be the Articles of Association of
BANK IV.
Section 10. This Agreement may be terminated as
provided in the Reorganization Agreement. Notwithstanding the
approval of this Agreement by any shareholder group, this
Agreement shall automatically terminate upon the termination of
the Reorganization Agreement for any reason, and in no event
shall the merger of Metro into BANK IV occur prior to the
consummation of the other Mergers as such term is defined in the
Reorganization Agreement.
Section 11. This Agreement shall be ratified and
confirmed by the affirmative vote of shareholders of each of the
merging banks owning at least two-thirds of its capital stock
outstanding, at a meeting to be held on the call of the
directors; and the merger shall become effective at the time
specified in a merger approval to be issued by the Comptroller of
the Currency of the United States.
WITNESS, the signatures and seals of said merging banks
this ___ day of February, 1994, each set by its chairman of the
board, president, or a vice president and attested to by its
cashier or secretary, pursuant to a resolution of its board of
directors, acting by a majority:
BANK IV OKLAHOMA,
NATIONAL ASSOCIATION
Attest:
By
-------------------------
_______________________ Ronald L. Baldwin
Lisa R. Carr, Secretary President
[Seal of Bank]
Metro Bank of Broken Arrow
Attest:
By
----------------------------
___________________________ _______________
_____________, Secretary President
[Seal of Bank]
STATE OF OKLAHOMA )
) SS:
TULSA COUNTY )
On this ____ day of February, 1994, before me, a notary
public for this state and county, personally came Ronald L.
Baldwin, President, and Lisa R. Carr as Secretary, of BANK IV
Oklahoma, National Association, and each in his/her capacity
acknowledged this instrument to be the act and deed of the
association and the seal affixed to it to be its seal.
WITNESS my official seal and signature this day and
year.
----------------------------
My Appointment Expires: Notary
- -----------------------
STATE OF OKLAHOMA )
) SS:
TULSA COUNTY )
On this ___ day of February, 1994, before me, a notary
public for this state and county, personally came _______________
as President, and _____________ as Secretary of Metro Bank of
Broken Arrow, an Oklahoma banking corporation, and each in
his/her capacity acknowledged this instrument to be the act and
deed of the association and the seal affixed to it to be its
seal.
WITNESS my official seal and signature this day and
year.
----------------------------
My Appointment Expires: Notary Public
- -----------------------
APPENDIX "C"
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER, made as of the ____ day of
_______ 1994, among FOURTH FINANCIAL CORPORATION, a Kansas
corporation ("Fourth"); FIRST DODGE CITY BANCSHARES, INC., a
Kansas corporation ("First Dodge"); FIRST NATIONAL BANCSHARES OF
DODGE CITY, INC., a Kansas corporation ("FNB"); and METRO
BANCSHARES, INC., an Oklahoma corporation ("MBI"). Fourth, First
Dodge, FNB, and MBI are hereinafter sometimes referred to as the
"Constituent Corporations;" First Dodge, FNB, and MBI are
hereinafter sometimes referred to as the "Merging Corporations");
and Fourth is hereinafter sometimes called the "Surviving
Corporation."
Recitals
--------
A. The respective Boards of Directors of each of the
four Constituent Corporations have duly adopted resolutions
approving the adoption of an Agreement and Plan of
Reorganization, dated as of February 2, 1994, among Fourth, First
Dodge, FNB, MBI, Metro Bank of Broken Arrow, First National Bank
and Trust Company in Dodge City, and First Dodge's stockholders
(the "Agreement and Plan of Reorganization") and this Agreement
of Merger, subject, among other things, to the approval and
adoption of the Agreement and Plan of Reorganization and this
Agreement of Merger by the holders of at least a majority of the
issued and outstanding capital stock of each class of the Merging
Corporations having voting rights, authorizing the proposed
merger of the Merging Corporations into Fourth upon the terms and
conditions herein set forth.
B. No approval of the stockholders of Fourth of this
Agreement is required by reason of K.S.A. Section 17-6702(e) and 17-
6701(f).
NOW, THEREFORE, Fourth and each of the Merging
Corporations hereby agree that Fourth and the Merging
Corporations shall merge on the terms and conditions hereinafter
provided and in accordance with the following plan:
Plan of Merger
--------------
1. First Dodge, FNB, and MBI shall simultaneously
merge with and into Fourth which shall continue as the Surviving
Corporation and shall be governed by the laws of the State of
Kansas (the "Merger"). At the Effective Time (as defined in
Paragraph 6), the separate existences of each of the Merging
Corporations shall cease. The corporate identity, existence,
purposes, franchises, powers, rights, and immunities of Fourth
shall continue unaffected and unimpaired by the Merger, and the
corporate identity, existence, purposes, franchises, powers,
rights, and immunities of each of the Merging Corporations shall
be merged into Fourth which shall be fully vested therewith. It
is the intention of the parties that the transaction contemplated
by this Agreement of Merger shall qualify as a tax-free
reorganization under Section 368 of the Internal Revenue Code of
1986, as amended.
2. The Articles of Incorporation and Bylaws of
Fourth, as in effect on the Effective Time, shall be and remain
the articles of incorporation and bylaws of the Surviving
Corporation until thereafter amended as provided by law.
3. At the Effective Time:
(a) Fourth shall, without other transfer, succeed
to and possess all the rights, privileges, powers, and
franchises both of a public and private nature and
shall be subject to all the restrictions, disabilities,
debts, liabilities, and duties of each of the
Constituent Corporations.
(b) The rights, privileges, powers, and
franchises of each of the Constituent Corporations and
all property, real, personal and mixed, of and all
debts due or belonging to any of the Constituent
Corporations shall be vested in Fourth; and all
property, rights, privileges, powers, and franchises,
and all and every other interest shall be thereafter as
effectually the property of Fourth as they were of any
of the Constituent Corporations.
(c) Title to any real estate and to any other
property vested by deed or otherwise in any of the
Constituent Corporations shall not revert or be in any
way impaired by reason of the Merger or the statutes
providing therefor; provided, however, that all rights
of creditors and all liens upon the property of any of
the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities, and duties of
all of the Constituent Corporations shall thenceforth
attach to Fourth and may be enforced against it to the
same extent as if they had been incurred or contracted
by Fourth. After the Effective Time, the Constituent
Corporations shall each execute or cause to be executed
such further assignments, assurances, or other
documents as may be necessary or desirable to confirm
title to their respective properties, assets, and
rights in Fourth or to otherwise carry out the purposes
of this Agreement of Merger, and their respective
officers and directors shall do all such acts and
things to accomplish those purposes which Fourth may
reasonably request.
4. At the Effective Time:
(a) Each issued and outstanding share of each
class of capital stock of each of the Merging
Corporations shall cease to be an issued and existing
share.
(b) Each share of common stock of First Dodge and
MBI shall automatically be converted into and exchanged
for shares of common stock of Fourth ("Fourth Stock")
as follows:
No. of Shares
of Fourth Stock
---------------
First Dodge Common Stock,
par value $1 per share . . . . . . . . 112.42
MBI Common Stock, par
value $.10 per share . . . . . . . . . 0.30
(c) No share of Fourth Stock shall be issued in
exchange for any shares of any other class of capital
stock of any of the Merging Corporations, as all of
such shares are owned, directly or indirectly, by First
Dodge and the value of each thereof is fully reflected
in the number of shares being issued with respect to
First Dodge common stock.
(d) Until surrendered for exchange, each
outstanding stock certificate which prior to the
Effective Time represented common stock of First Dodge
or MBI shall be deemed for all corporate purposes to
represent the right to receive the number of shares of
Fourth Stock into which the shares have been so
converted; provided, that in any matters relating to
the shares represented by such certificates, Fourth may
rely conclusively upon the record of stockholders
maintained by First Dodge and MBI containing the names
and addresses of the holders of record of such stock at
the Effective Time. Unless and until such outstanding
stock certificates formerly representing shares of
common stock of First Dodge or MBI are so surrendered,
no dividend payable to the holders of record of Fourth
Stock, as of any date subsequent to the Effective Time,
shall be paid to the holder of such outstanding
certificates in respect thereof. Upon surrender of
such outstanding certificates (or, in the case of lost
certificates, upon receipt of a surety bond or other
form of indemnification satisfactory to Fourth),
however, the former First Dodge or MBI stockholders
shall receive certificates evidencing the shares of
Fourth Stock to which they are entitled plus the
accrued dividends on such stock, without interest.
(e) No fractional shares of Fourth Stock will be
issued. Instead, upon surrender of First Dodge or MBI
common stock certificates (or, in the case of lost
certificates, upon receipt of a surety bond or other
form of indemnification which is satisfactory to
Fourth), Fourth will pay, or cause to be paid, to the
holder thereof the cash value of the fractional
interest to which the holder thereof would otherwise be
entitled, based upon the closing price of Fourth Stock
on the last trading day two trading days prior to the
Effective Time as reported in the Southwest Edition of
The Wall Street Journal.
(f) The Merger shall effect no change in the
rights of the holders of Fourth Stock that is
outstanding immediately before the Effective Time.
5. The officers and directors of Fourth at the
Effective Time shall continue to be the officers and directors of
the Surviving Corporation until their successors are duly elected
and qualified or their earlier death, resignation, or removal.
6. The Merger shall be effected by and be given
effect upon the filing of this Agreement of Merger in the offices
of the Secretary of State of Kansas and the Secretary of State of
Oklahoma. Such date and time of filing is referred to in this
Agreement of Merger as the "Effective Time." This Agreement of
Merger shall also be recorded in accordance with the provisions
of the Kansas General Corporation Code and the Oklahoma General
Corporation Act, but such recording shall not be a condition
precedent to its becoming effective.
7. This Agreement of Merger may be terminated and
abandoned by mutual consent of the Boards of Directors of Fourth
and the Merging Corporations at any time prior to the Effective
Time, or by the Board of Directors of either Fourth Financial or
the Merging Corporations (acting jointly) if the Agreement and
Plan of Reorganization shall have been terminated as therein
provided.
8. This Agreement of Merger may be executed in any
number of counterparts, and each such counterpart hereof shall be
deemed to be an original instrument, but all of such counterparts
together shall constitute but one agreement.
IN WITNESS WHEREOF, pursuant to authority duly given by
its Board of Directors, each of the Constituent Corporations has
caused this Agreement of Merger to be executed by its Chairman of
the Board or President and attested by its Secretary or an
Assistant Secretary as of the date and year first above written.
FOURTH FINANCIAL CORPORATION
By
-------------------------------
/s/Darrell G. Knudson
Chairman of the Board
ATTEST:
By
--------------------------------
/s/John C. Maloney, Secretary
[signatures continued]
FIRST DODGE CITY BANCSHARES, INC.
By_______________________________
ATTEST: _______________________________
Chairman of the Board
By____________________________
, Secretary
FIRST NATIONAL BANCSHARES OF
DODGE
CITY, INC.
ATTEST:
By_______________________________
_______________________________
By____________________________ President
, Secretary
METRO BANCSHARES, INC.
ATTEST:
By_______________________________
_______________________________
By____________________________ President
, Secretary
ACKNOWLEDGMENTS
---------------
STATE OF KANSAS )
) ss:
SEDGWICK COUNTY )
BE IT REMEMBERED that on this ____ day of ________ 1994,
personally came before me, a Notary Public, in and for the county
and state aforesaid, Darrell G. Knudson and John C. Maloney,
Chairman of the Board and Secretary, respectively, of Fourth
CORPORATION, a Kansas corporation, both of whom are personally
known to me and personally known to me to be the said officers of
said corporation, and they each separately duly executed the above
and foregoing Agreement of Merger before me and acknowledged the
said Agreement of Merger to be their act and deed and the act and
deed of said corporation; that the facts stated therein are true;
that the signature of the chairman of the board of said corporation
to the foregoing Agreement of Merger is in the handwriting of said
chairman of the board of said corporation, and that its seal
affixed to said Agreement of Merger, and attested by the secretary
of said corporation, is the corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
of office the day and year aforesaid.
---------------------------------
Notary Public
My Appointment Expires:
- ----------------------
STATE OF KANSAS )
) ss:
FORD COUNTY )
BE IT REMEMBERED that on this _____ day _______, 1994,
personally came before me, a Notary Public, in and for the county
and state aforesaid, ______________________ and ______________,
Chairman of the Board and Secretary, respectively, of FIRST DODGE
CITY BANCSHARES, INC., a Kansas corporation, both of whom are
personally known to me and personally known to me to be the said
officers of said corporation, and they each separately duly
executed the above and foregoing Agreement of Merger before me and
acknowledged the said Agreement of Merger to be their act and deed
and the act and deed of said corporation; that the facts stated
therein are true; that the signature of the chairman of the board
of said corporation to the foregoing Agreement of Merger is in the
handwriting of said chairman of the board of said corporation, and
that its seal affixed to said Agreement of Merger, and attested by
the secretary of said corporation, is the corporate seal of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
of office the day and year aforesaid.
---------------------------------
Notary Public
My Appointment Expires:
- ----------------------
STATE OF KANSAS )
) ss:
FORD COUNTY )
BE IT REMEMBERED that on this _____ day _______, 1994,
personally came before me, a Notary Public, in and for the county
and state aforesaid, ______________________ and ______________,
President and Secretary, respectively, of FIRST NATIONAL BANCSHARES
OF DODGE CITY, INC., a Kansas corporation, both of whom are
personally known to me and personally known to me to be the said
officers of said corporation, and they each separately duly
executed the above and foregoing Agreement of Merger before me and
acknowledged the said Agreement of Merger to be their act and deed
and the act and deed of said corporation; that the facts stated
therein are true; that the signature of the president of said
corporation to the foregoing Agreement of Merger is in the
handwriting of said president of said corporation, and that its
seal affixed to said Agreement of Merger, and attested by the
secretary of said corporation, is the corporate seal of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
of office the day and year aforesaid.
---------------------------------
Notary Public
My Appointment Expires:
- ----------------------
STATE OF OKLAHOMA )
) ss:
TULSA COUNTY )
BE IT REMEMBERED that on this _____ day _______, 1994,
personally came before me, a Notary Public, in and for the county
and state aforesaid, ______________________ and ______________,
President and Secretary, respectively, of METRO BANCSHARES, INC.,
an Oklahoma corporation, both of whom are personally known to me
and personally known to me to be the said officers of said
corporation, and they each separately duly executed the above and
foregoing Agreement of Merger before me and acknowledged the said
Agreement of Merger to be their act and deed and the act and deed
of said corporation; that the facts stated therein are true; that
the signature of the president of said corporation to the foregoing
Agreement of Merger is in the handwriting of said president of said
corporation, and that its seal affixed to said Agreement of Merger,
and attested by the secretary of said corporation, is the corporate
seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
of office the day and year aforesaid.
---------------------------------
Notary Public
My Appointment Expires:
- ----------------------
CERTIFICATES
------------
The undersigned, ______________, Secretary of FIRST DODGE
CITY BANCSHARES, INC., a Kansas corporation, on behalf of said
corporation, hereby certifies, pursuant to K.S.A. Section 17-6702 of the
General Corporation Code of the State of Kansas, that the foregoing
Agreement of Merger to which this Certificate is attached has been
submitted to the stockholders of said corporation at a special meeting
thereof, duly called and held in accordance with the Bylaws of said
corporation and the General Corporation Code of the State of Kansas,
on the ____ day of _______, 1994, and at said meeting said agreement
was duly considered, adopted, and approved by the holders of a
majority of each class of capital stock entitled to vote thereon
pursuant to a vote by ballot in person or by proxy taken for the
adoption or rejection of said Agreement of Merger, and the votes of
the stockholders of said corporation representing _________ shares of
Common Stock, being _____% of the issued and outstanding Common Stock
of said corporation, entitled to vote were for the approval and
adoption of said agreement and voted therefor.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate on the _____ day of ________, 1994.
---------------------------------
______________, Secretary
STATE OF KANSAS )
) ss:
FORD COUNTY )
BE IT REMEMBERED that on this ___ day of ________, 1994,
personally came before me, a Notary Public, in and for the county and
state aforesaid, ______________, Secretary of FIRST DODGE CITY
BANCSHARES, INC., a Kansas corporation, who is personally known to me
and personally known to me to be the said officer of said corporation,
and she duly executed the above and foregoing certificate before me
and acknowledged the said certificate to be her act and deed and the
act and deed of said corporation; that the facts stated therein are
true; that this signature is that of the secretary of said
corporation, and that its seal affixed to said certificate is the
corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of
office the day and year aforesaid.
---------------------------------
Notary Public
My Appointment Expires:
- ----------------------
The undersigned, ______________, Secretary of FIRST NATIONAL
BANCSHARES OF DODGE CITY, INC., a Kansas corporation, on behalf of
said corporation, hereby certifies, pursuant to K.S.A. SECTION 17-6702 of
the General Corporation Code of the State of Kansas, that the
foregoing Agreement of Merger to which this Certificate is attached
has been submitted to the sole stockholder of said corporation and,
by unanimous written consent executed by said sole stockholder on
____________, 1994, in lieu of a special meeting of stockholders in
accordance with the Bylaws of said corporation and the General
Corporation Code of the State of Kansas, said sole stockholder duly
considered, adopted, and approved said Agreement of Merger by voting
all of the 5,254.50 shares of common stock, par value $1 per share,
that were then issued and outstanding in favor thereof.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate on the ___ day of ________, 1994.
---------------------------------
______________, Secretary
STATE OF KANSAS )
) ss:
FORD COUNTY )
BE IT REMEMBERED that on this ___ day of ________, 1994,
personally came before me, a Notary Public, in and for the county and
state aforesaid, ______________, Secretary of FIRST NATIONAL
BANCSHARES OF DODGE CITY, INC., a Kansas corporation, who is
personally known to me and personally known to me to be the said
officer of said corporation, and she duly executed the above and
foregoing certificate before me and acknowledged the said certificate
to be her act and deed and the act and deed of said corporation; that
the facts stated therein are true; that this signature is that of the
secretary of said corporation, and that its seal affixed to said certificate
is the corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of
office the day and year aforesaid.
---------------------------------
Notary Public
My Appointment Expires:
- ----------------------
The undersigned, ______________, Secretary of METRO
BANCSHARES, INC., an Oklahoma corporation, on behalf of said
corporation, hereby certifies, pursuant to the General Corporation Act
of the State of Oklahoma, that the foregoing Agreement of Merger to
which this Certificate is attached has been submitted to the
stockholders of said corporation at a special meeting thereof, duly
called and held in accordance with the Bylaws of said corporation and
the General Corporation Act of the State of Oklahoma, on the ____ day
of _______, 1994, and at said meeting said agreement was duly
considered, adopted, and approved by the holders of a majority of each
class of capital stock entitled to vote thereon pursuant to a vote by
ballot in person or by proxy taken for the adoption or rejection of
said Agreement of Merger, and the votes of the stockholders of said
corporation representing _________ shares of Common Stock, being
_____% of the issued and outstanding Common Stock of said corporation
and _____ shares of Preferred Stock, being ___% of the issued and
outstanding Preferred Stock, entitled to vote were for the approval
and adoption of said agreement and voted therefor.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate on the ____ day of ________, 1994.
---------------------------------
______________, Secretary
STATE OF OKLAHOMA )
) ss:
TULSA COUNTY )
BE IT REMEMBERED that on this ____ day of ________, 1994,
personally came before me, a Notary Public, in and for the county and
state aforesaid, ______________, Secretary of METRO BANCSHARES, INC.,
an Oklahoma corporation, who is personally known to me and personally
known to me to be the said officer of said corporation, and she duly
executed the above and foregoing certificate before me and
acknowledged the said certificate to be her act and deed and the act
and deed of said corporation; that the facts stated therein are true;
that this signature is that of the secretary of said corporation, and
that its seal affixed to said certificate is the corporate seal of
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of
office the day and year aforesaid.
--------------------------------
Notary Public
My Appointment Expires:
- ----------------------
The undersigned, John C. Maloney, Secretary of Fourth
Financial Corporation, a Kansas corporation, on behalf of said
corporation, hereby certifies, in accordance with K.S.A. Section 17-6702(e)
and pursuant to K.S.A. Section 17-6701(f) of the General Corporation Code
of the State of Kansas, that the foregoing Agreement of Merger to
which this Certificate is attached has been duly approved by the board
of directors of Fourth Financial Corporation and has been duly adopted
pursuant to Subsection (f) of said K.S.A. Section 17-6701 in that (i) the
foregoing Agreement of Merger does not amend in any respect the
Articles of Incorporation of Fourth Financial Corporation; (ii) each
share of stock of Fourth Financial Corporation outstanding immediately
prior to the effective date of the merger is to be an identical
outstanding or treasury share of the surviving corporation after the
effective date of the merger; and (iii) the authorized unissued shares
or the treasury shares of common stock of Fourth Financial Corporation
to be issued or delivered under the foregoing Agreement of Merger do
not exceed 20% of the shares of common stock of Fourth Financial
Corporation outstanding immediately prior to the effective date of the
merger.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate on the ___ day of ___, 1994.
_______________________________
/s/John C. Maloney, Secretary
STATE OF KANSAS )
) ss:
SEDGWICK COUNTY )
BE IT REMEMBERED that on this ____ day of _______, 1993,
personally came before me, a Notary Public, in and for the county
and state aforesaid, John C. Maloney, Secretary of FOURTH FINANCIAL
CORPORATION, a Kansas corporation, who is personally known to me
and personally known to me to be the said officer of said
corporation, and he duly executed the above and foregoing
certificate before me and acknowledged the said certificate to be
his act and deed and the act and deed of said corporation; that the
facts stated therein are true; that this signature is that of the
secretary of said corporation, and that its seal affixed to said
certificate is the corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
of office the day and year aforesaid.
---------------------------------
Notary Public
My Appointment Expires:
- ----------------------
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
Pursuant to Section 1082 of the Oklahoma General
Corporation Act, Metro Bancshares, Inc., an Oklahoma Corporation,
was merged into Fourth Financial Corporation, a Kansas corporation
and the surviving corporation. Fourth Financial Corporation agrees
that it may be served with process in Oklahoma in any proceeding
for the enforcement of any obligation of Metro Bancshares, Inc., as
well as for enforcement of any obligation of Fourth Financial
Corporation arising from the aforementioned merger, including any
suit or other proceeding to enforce the right of stockholders as
determined in appraisal proceedings pursuant to the provisions of
Section 1091 of the Oklahoma General Corporation Act, and hereby
irrevocably appoints the Secretary of State of the State of
Oklahoma as its agent to accept service of process in any such suit
or other proceedings.
The Secretary of State of the State of Oklahoma shall
mail any such service of process to the following address:
FOURTH FINANCIAL CORPORATION
100 N. Broadway
Wichita, Kansas 67202
IN WITNESS WHEREOF, Fourth Financial Corporation has
caused these presents to be executed by its Chairman of the Board
and Secretary on this ____ day of ________, 1994.
FOURTH FINANCIAL CORPORATION
By
-------------------------------
/s/Darrell G. Knudson
Chairman of the Board
ATTEST:
By
-------------------------------
/s/John C. Maloney, Secretary
STATE OF KANSAS )
) ss:
SEDGWICK COUNTY )
BE IT REMEMBERED that on this ____ day of ________, 1994,
personally came before me, a Notary Public, in and for the county
and state aforesaid, Darrell G. Knudson and John C. Maloney,
Chairman of the Board and Secretary, respectively, of FOURTH
FINANCIAL CORPORATION, a Kansas corporation, both of whom are
personally known to me and personally known to me to be the said
officers of said corporation, and they each separately duly
executed the above and foregoing agreement before me and
acknowledged the said agreement to be their act and deed and the
act and deed of said corporation; that the facts stated therein are
true; that the signature of the chairman of the board of said
corporation to the foregoing agreement is in the handwriting of
said chairman of the board of said corporation, and that its seal
affixed to said agreement, and attested by the secretary of said
corporation, is the corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
of office the day and year aforesaid.
---------------------------------
Notary Public
My Appointment Expires:
_________________________
EXHIBIT "D"
___________, 1994
Fourth Financial Corporation
Post Office Box 4
Wichita, Kansas 67201-0004
Re: First Dodge City Bancshares, Inc., Metro
Bancshares, Inc., First National Bancshares of
Dodge City, Inc., Metro Bank of Broken Arrow, and
First National Bank and Trust Company in Dodge City
Gentlemen:
We have acted as counsel to First Dodge City Bancshares,
Inc. ("First Dodge"), Metro Bancshares, Inc. ("MBI"), First
National Bancshares of Dodge City, Inc. ("FNB"), Metro Bank of
Broken Arrow ("Metro Bank"), and First National Bank and Trust
Company in Dodge City ("First National") (all of which are
collectively referred to herein as the "Merging Corporations"), in
connection with the merger (the "Fourth Merger") of First Dodge,
FNB, and MBI with Fourth Financial Corporation, a Kansas
corporation ("Fourth"), the merger (the "BANK IV Oklahoma Merger")
of Metro Bank with BANK IV Oklahoma, a national banking association
("BANK IV Oklahoma"), and the merger ("BANK IV Kansas Merger") of
First National into BANK IV Kansas, National Association ("BANK IV
Kansas"), all pursuant to the Agreement and Plan of Reorganization,
dated as of February 2, 1994 (the "Agreement"), among Fourth, the
Merging Corporations, and the stockholders of First Dodge
("Stockholders"), the related ancillary Merger Agreements described
therein, and the related Disclosure Statement prepared by the
Merging Corporations and the Stockholders. We have also acted as
counsel to the Stockholders in connection with these transactions.
This Opinion Letter is provided to you at your request, pursuant to
Section 5.1.g of the Agreement. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to such
terms in the Agreement or in the Accord described below.
This Opinion Letter is governed by, and shall be
interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the ABA Section of Business Law (1991). As a
consequence, it is subject to a number of qualifications,
exceptions, assumptions, definitions, limitations on coverage and
other limitations, all as more particularly described in the
Accord, and this Opinion Letter should be read in conjunction
therewith. The Law covered by the opinions expressed herein is
limited to the federal Law of the United States and the Laws of the
States of Oklahoma and Kansas. The opinion in Paragraph 6 below is
further limited to our Actual Knowledge after interviews with
corporate officers and review of copies of documents relating to
Litigation furnished to us by such officers.
Based upon and subject to the foregoing, we are of the
opinion that:
1. First Dodge, FNB, and MBI are each a bank
holding company duly registered pursuant to the Bank
Holding Company Act. Each of the Corporations is a
corporation or bank duly organized, validly existing, and
in good standing under the Laws of the jurisdiction of
its incorporation, and each has all requisite corporate
power and authority to conduct its business as it is now
conducted, to own its properties and assets and to lease
properties used in its business. None of the
Corporations has any Subsidiaries except as described in
Section 3.1.a of the Agreement.
2. The Agreement and the Merger Agreements are
enforceable against such of the Merging Corporations that
have executed the same, and against each Stockholder.
3. None of the execution or delivery of the
Agreement or the Merger Agreements or the performance by
the Merging Corporations of their agreements therein,
will (a) violate the Constituent Documents of any of the
Merging Corporations or breach or result in a default
under any agreement or instrument of which we have Actual
Knowledge under which any of the Merging Corporations or
the Stockholders is obligated, or (b) violate any Laws to
which any of the Merging Corporations or the Stockholders
is subject.
4. The capitalization of the Corporations and the
ownership by First Dodge of the capital stock of its
Subsidiaries are accurately described in Section 3.1 of
the Agreement.
5. None of the Corporations has outstanding any
options, warrants, or rights of any kind requiring it to
sell or issue to anyone any capital stock of any class
and none of the Corporations has agreed to issue or sell
any additional shares of its capital stock.
6. The Disclosure Statement contains a true and
complete list and brief description of all Litigation
pending or overtly threatened in writing to which any of
the Corporations is or would be a party or to which any
of their assets is or would be subject. Except as set
forth in Exhibit "O" to the Disclosure Statement, none of
the Corporations is a party to any Litigation other than
routine litigation commenced by a Bank to enforce
obligations of borrowers in which no counterclaims for
any material amounts of money have been asserted or
overtly threatened in writing.
7. The execution, delivery, and performance of the
Agreement and the Merger Agreements by the Merging
Corporations do not require any approval, authorization,
consent, exemptions, notices or intent not to disapprove,
or other action of any governmental body or any filing
with any other governmental body to which the Merging
Corporations or the transactions contemplated hereby are
subject, other than approvals of (a) the Board; (b) the
Comptroller; (c) the SEC and the securities commissioners
or similar officers of the several states; and (d) the
Kansas and Oklahoma secretaries of state. All requisite
approvals, authorizations, consents, and exemptions have
been granted by, and all requisite actions have been
taken by, the governmental bodies listed in the foregoing
clauses (a), (b) and (c).
8. Upon the filing of the Fourth Merger Agreement
with the Secretary of State of Oklahoma and the Secretary
of State of Kansas and the payment of all required taxes
and fees, the Fourth Merger will be effected in
compliance with all applicable Laws of the States of
Oklahoma and Kansas and Fourth will succeed to the assets
and liabilities of First Dodge, FNB, and MBI pursuant to
the Oklahoma General Corporation Act and the Kansas
General Corporation Law. Upon the final approval of the
Bank Mergers by the Comptroller, the Bank Mergers will
each be effected in accordance with all applicable Laws
and BANK IV Kansas shall succeed to the assets and
liabilities of First National and BANK IV Oklahoma will
succeed to the assets of Metro Bank.
While we have not verified, do not pass upon, and do not
assume responsibility for, the accuracy, completeness, or fairness
of the factual statements contained in the Registration Statement
or the Proxy Statement, to the extent that we participated in the
preparation of the Proxy Statement used in connection with the
special stockholders' meetings of First Dodge, MBI, and First
National for the purpose of considering and voting upon the Mergers
and the Registration Statement on Form S-4 filed by Fourth with the
SEC in connection with the registration of shares of Fourth Stock
to be issued in connection with the Mergers, and in the course of
such preparation, in conferences with certain officers and
employees of the Corporations, Fourth, BANK IV Kansas, and BANK IV
Oklahoma with respect thereto, our examination of the Proxy
Statement and Registration Statement and discussions in the above-
described conferences did not disclose to us any information which
gave us reason to believe that the Proxy Statement, at the time it
was first mailed to stockholders of First Dodge, MBI, and First
National and at the time of the special stockholders' meetings of
First Dodge, MBI, and First National at which the Mergers were
approved, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (except as
to financial statements and other financial and statistical
information relating to the Corporations, Fourth, BANK IV Kansas,
or BANK IV Oklahoma contained therein and as to all material
relating to or furnished by Fourth, BANK IV Kansas, or BANK IV
Oklahoma, for use in the Proxy Statement or the Registration
Statement, as to all of which we express no opinion).
The phrase "Primary Lawyer Group," as used in the Accord,
is hereby modified and for the purposes of applying the Accord to
this Opinion Letter the Primary Lawyer Group means only the lawyers
in this firm who have given substantive legal attention to
representation of the Merging Corporations and the Stockholders in
connection with the foregoing transactions.
This Opinion Letter may be relied upon by you only in
connection with the foregoing transactions and may not be used or
relied upon by you or any other person for any purpose whatsoever,
except to the extent authorized by the Accord, without in each
instance our prior written consent.
Very truly yours,
MANGAN, DALTON, TRENKLE, REBEIN &
DOLL, CHARTERED
EXHIBIT "E"
CONSULTING AND MARKETING AGREEMENT
THIS AGREEMENT, made and entered into on the __ day of
______, 1994, by and between FIRST NATIONAL BANK AND TRUST COMPANY
IN DODGE CITY, a national banking association, with its principal
place of business at Dodge City, Kansas ("Bank"); FOURTH FINANCIAL
CORPORATION, a Kansas corporation ("Fourth Financial"); and JOHN V.
HARDING, hereinafter referred to as "Executive".
W I T N E S S E T H: That,
- - - - - - - - - -
WHEREAS, Fourth Financial, First Dodge City Bancshares,
Inc. ("First Dodge"), First National Bancshares of Dodge City,
Inc., Metro Bancshares, Inc., Metro Bank of Broken Arrow ("Metro
Bank"), Bank, and the stockholders of First Dodge have heretofore
entered into an Agreement and Plan of Reorganization, dated as of
February 2, 1994 (the "Agreement"); and
WHEREAS, the Agreement provides for the execution and
delivery of this Agreement; and
WHEREAS, upon consummation of the transactions
contemplated by the Agreement, the Bank will be merged into a
wholly owned subsidiary of Fourth Financial, BANK IV Kansas,
National Association ("BANK IV"), who will succeed to this
Agreement;
NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, the parties agree as follows:
1. Resignations. Executive hereby resigns all
directorships and all offices he holds with First Dodge and with
any of its subsidiaries, such resignations to be effective at the
Effective Time as such term is defined in the Agreement (the
"Effective Time").
2. Service as Advisory Director of BANK IV. Executive
hereby agrees to serve as an advisory director of the Dodge City,
Kansas market-based bank of BANK IV at the pleasure of the Board of
Directors of BANK IV. It is recognized that Executive's travel
schedule may prevent his regular attendance at meetings.
3. Consulting and Marketing Agreement. (a) Executive
is hereby retained as an independent consultant for a five-year
period commencing at the Effective Time and ending five years
thereafter. His duties shall consist of: (i) giving such advice
and assistance to management of BANK IV as may reasonably be
requested from time to time; (ii) assisting BANK IV in retaining
the customers and goodwill of the Bank; (iii) upon request of BANK
IV devoting at least 15 consecutive days per calendar quarter on
developing new business for BANK IV's commercial loan and trust
department; and (iv) being involved in economic development
activities in the communities of Broken Arrow or Dodge City. It is
expressly understood that, while Executive is expected to devote
substantial time to performing his duties hereunder, he is not
expected or required to keep regular hours or work full-time.
(b) For all services rendered under this Paragraph 3,
Executive shall receive compensation of $155,000 per year. Such
compensation shall be payable in equal quarterly payments payable
on the first business day of each calendar quarter. Executive will
not be an employee of BANK IV and shall not be eligible to
participate in any of its health insurance, life insurance,
retirement, savings, stock option, or other employee benefit
programs.
(c) The provisions of this Paragraph 3 may only be
terminated by BANK IV in the event of material, intentional breach
by Executive of his duties hereunder after giving Executive written
notice and at least 30 days to cure any default that can be cured
by performance.
(d) If Executive dies during the term hereof, BANK IV's
payment obligations under this Agreement shall terminate as of the
end of the month in which such death occurs.
4. Automobile. At the Effective Time, BANK IV shall
transfer to Executive the Cadillac automobile currently being
furnished to him by the Bank.
5. Relationship of Confidence and Trust. Executive
acknowledges that during his term of employment by the Bank and
First Dodge he has acquired valuable and confidential information,
trade secrets, and relationships with respect to the Bank's and
Metro Bank's successful business practices and operations,
including, by way of illustration and not of limitation, knowledge
of the Bank's and Metro Bank's customers, prices, selling
techniques, costs, and future plans (collectively "Proprietary
Information"). In addition Executive has developed and maintained
on behalf of the Bank and Metro Bank a personal acquaintance with
various persons, including, but not limited to, customers and
suppliers, which acquaintances may constitute the Bank's or Metro
Bank's only contact with such persons. As a consequence of the
foregoing, Executive occupies a position of trust and confidence
with respect to the Bank's and Metro Bank's affairs. In view of
the foregoing and in consideration of the consideration paid to
him, Executive agrees that it is reasonable and necessary for the
protection of the goodwill and business of the Bank, BANK IV, and
BANK IV Oklahoma, National Association ("BANK IV Oklahoma")
(collectively the "Banks"), that he make the covenants contained in
Paragraphs 6 and 7 regarding his conduct, and that the Banks will
suffer irreparable injury if he engages in conduct prohibited
thereby. The covenants contained in Paragraphs 6 and 7 shall each
be construed to be a separate agreement independent of any other
provision of this Agreement, and the existence of any claim or
cause of action of Executive against Fourth Financial or any of the
Banks, predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Banks of any of said
covenants. The covenants contained in Paragraphs 6 and 7 shall
survive the termination of this Agreement for any reason.
6. Disclosure of Proprietary Information. Executive
recognizes and acknowledges that the Proprietary Information and
all other information as to the business affairs of the Banks not
generally known to the public, as the same may exist from time to
time, are confidential information and are valuable, special, and
unique assets of the Banks' businesses. Executive therefore agrees
that he will never disclose any of the Proprietary Information, or
any other information as to the business affairs of either of the
Banks to any person, firm, corporation, association, or other
entity for any reason or purpose whatsoever except as he may be
compelled to do by legal process. In the event of a breach or
threatened breach by Executive of the provisions of this paragraph,
the Banks, or either of them, shall each be entitled to injunctive
or other equitable relief enjoining and restraining him from
disclosing, in whole or in part, any such Proprietary Information.
Nothing herein shall be construed as prohibiting the Banks from
pursuing any other remedies available to either of them for such
breach or threatened breach.
7. Restrictive Covenant. For a five-year period
commencing at the Effective Time and ending on the date of the
termination of this Agreement, Executive will not, within Tulsa or
Wagoner Counties in Oklahoma, or within 100 miles of Dodge City,
Kansas without the prior written consent of BANK IV or BANK IV
Oklahoma, as the case may be, directly or indirectly, own, manage,
operate, consult with, be employed by, or be connected with the
ownership, management, operation, or control of any business
engaged in the business of commercial banking, of making consumer
or commercial loans (other than credit sales), of accepting
deposits, or providing trust services; provided, nothing contained
in this sentence shall prohibit Executive from owning not more than
5% of the outstanding voting stock of any corporation or bank whose
securities are publicly traded. Executive agrees that, in addition
to all other remedies otherwise available to each of the Banks,
each of the Banks shall each have the right to injunctive relief to
restrain and enjoin any actual or threatened breaches of this
provision and that if in any litigation that might arise over the
provisions contained in this paragraph a court should determine
that the restrictions contained in this paragraph are too broad, or
too long in duration, or too broad in geographic scope to be
enforceable in equity, such provisions as such court might find
unenforceable are amended only so much as shall be necessary in
order for the restrictions contained herein to be enforceable and,
as so amended, shall be enforced by such court.
8. Notices. Any notices required or permitted to be
given under this Agreement shall be sufficient if in writing, and
if sent by registered or certified mail to his or her last known
residence in the case of Executive, or to its principal office in
the case of BANK IV or BANK IV Oklahoma.
9. Waiver of Breach. The waiver of a breach of any
provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
10. Assignment. The rights and obligations of BANK IV
and BANK IV Oklahoma under this Agreement shall inure to the
benefit of, and shall be binding upon, BANK IV, BANK IV Oklahoma,
and their respective successors and assigns. Executive shall not
have the right to assign any of the rights or obligations contained
in this Agreement.
11. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an origi-
nal, but which together shall constitute but one agreement.
12. Captions. Captions used in this Agreement are for
convenience of reference only and shall not be deemed a part of
this Agreement nor used in the construction of its meaning.
13. Savings Clause. If any provision of this Agreement
shall be deemed invalid or unenforceable as written, it shall be
construed, to the greatest extent possible, in a manner which shall
render it valid and enforceable and any limitations on the scope or
duration of any such provision shall be deemed to be a part hereof.
No invalidity or unenforceability shall affect any other provision
of this Agreement unless the provision deemed to be so invalid or
unenforceable is a material element of this Agreement, taken as a
whole.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
FOURTH FINANCIAL CORPORATION
By___________________________
Its__________________________
"Fourth Financial"
[signatures continued]
FIRST NATIONAL BANK AND TRUST
COMPANY IN DODGE CITY
By____________________________
Its___________________________
"Bank"
______________________________
/s/John V. Harding
"Executive"
EXHIBIT "F"
___________, 1994
Boards of Directors and Stockholders
First Dodge City Bancshares, Inc.
First National Bancshares of Dodge City, Inc.
Metro Bancshares, Inc.
Metro Bank of Broken Arrow
First National Bank and Trust Company in Dodge City
Gentlemen:
We have acted as counsel to Fourth Financial Corporation
("Fourth"), and BANK IV Oklahoma, National Association ("BANK IV
Oklahoma"), and BANK IV Kansas, National Association ("BANK IV
Kansas") in connection with the preparation of the Agreement and
Plan of Reorganization, dated as of February 2, 1994, among Fourth,
First Dodge City Bancshares, Inc.("First Dodge"), First National
Bancshares of Dodge City, Inc. ("FNB"), Metro Bancshares, Inc.
("MBI"), Metro Bank of Broken Arrow ("Metro Bank"), and First
National Bank and Trust Company in Dodge City ("First National")
and the stockholders of First Dodge (the "Agreement") and the
ancillary Merger Agreements and Registration Statement provided for
therein. This Opinion Letter is provided to you at the request of
Fourth pursuant to Section 5.2.d of the Agreement. Except as
otherwise indicated herein, capitalized terms used in this Opinion
Letter are defined in the Agreement or the Accord described below.
This Opinion Letter is governed by, and shall be
interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the ABA Section of Business Law (1991). As a
consequence, it is subject to a number of qualifications,
exceptions, assumptions, definitions, limitations on coverage and
other limitations, all as more particularly described in the
Accord, and this Opinion Letter should be read in conjunction
therewith. The law covered by the opinions expressed herein is
limited to the federal Law of the United States and the Law of the
State of Kansas.
Based upon and subject to the foregoing, we are of the
opinion that:
1. Organization, Good Standing, and Authority.
Fourth is a bank holding company duly registered pursuant
to the Bank Holding Company Act. Fourth, BANK IV Kansas,
and BANK IV Oklahoma are each a corporation or bank duly
organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation, and
each has all requisite corporate power and authority to
conduct its business as it is now conducted, to own its
properties and assets, and to lease properties used in
its business. Neither Fourth, BANK IV Kansas, nor BANK
IV Oklahoma is in violation of its Constituent Documents.
2. Binding Obligations. The Agreement and the
Merger Agreements are enforceable against such of Fourth,
BANK IV Kansas, and BANK IV Oklahoma as have executed
such agreements.
3. Absence of Default. None of the execution or
the delivery of the Agreement or the Merger Agreements,
or the performance by Fourth, BANK IV Kansas, or BANK IV
Oklahoma of their agreements therein, will (1) violate
the Constituent Documents or breach or result in a
default under any agreement or instrument under which
Fourth, BANK IV Kansas, or BANK IV Oklahoma is obligated
of which we have Actual Knowledge, or (2) violate any
statutory law or regulation to which any of them is
subject.
4. Capitalization. Fourth is authorized to issue
(i) 50,000,000 shares of common stock, par value $5 per
share, of which 26,352,215 shares were issued and
outstanding on December 31, 1993, (ii) 250,000 shares of
Class A Cumulative Convertible Preferred Stock, par value
$100 per share, all of which are issued and outstanding,
and (iii) 5,000,000 shares of Class B Preferred Stock, no
par value, none of which is issued and outstanding. The
shares of Fourth Stock to be issued in the Mergers, when
issued in accordance with the Agreement, will be duly and
validly issued, fully paid, and nonassessable, and will
not be issued in violation of any preemptive rights or
any Laws applicable thereto.
5. Government Authorizations. To our Actual
Knowledge, Fourth, BANK IV Kansas, and BANK IV Oklahoma
have all material permits, charters, licenses, orders,
and approvals of every federal, state, local, or foreign
governmental or regulatory body required in order to
permit them to carry on their respective businesses
substantially as presently conducted.
6. Governmental Approvals. The execution,
delivery, and performance of the Agreement and the Merger
Agreements by Fourth, BANK IV Kansas, and BANK IV
Oklahoma do not require any approval, authorization,
consent, exemptions, notices of intent not to disapprove,
or other action of any regulatory body, administrative
agency, or any other governmental body or any filing with
any governmental body to which Fourth, BANK IV Kansas, or
BANK IV Oklahoma are subject, other than approvals of or
filings with (a) the Board; (b) the Comptroller; (c) the
SEC and the securities commissioner or similar officers
of the several states; and (d) the Kansas and Oklahoma
secretaries of state. All such requisite approvals,
authorizations, consents, exemptions, and notices have
been taken by the appropriate governmental body listed in
the foregoing clauses (a), (b), and (c).
7. Fourth Merger. Upon the filing of the Fourth
Merger Agreement with the Secretary of the State of
Kansas and Secretary of State of the State of Oklahoma
and the payment of all required taxes and fees, the
Fourth Merger shall be effected in compliance with all
applicable laws of the State of Kansas.
While we have not verified, do not pass upon, and do not
assume responsibility for, the accuracy, completeness, or fairness
of the factual statements contained in the Registration Statement
or the Proxy Statement, to the extent we participated in the
preparation and filing of the Proxy Statement and the Registration
Statement with the SEC and, in the course of such preparation, in
conferences with certain officers and employees of the
Corporations, Fourth, BANK IV Kansas, and BANK IV Oklahoma with
respect thereto, our examination of the Proxy Statement and
Registration Statement and discussions in the above-described
conferences did not disclose to us any information which gave us
reason to believe that the Proxy Statement, at the time it was
first mailed to stockholders of First Dodge, FNB, and First
National and at the time of the special stockholders' meetings at
which the Mergers were approved by the stockholders of First Dodge,
FNB, and First National, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading (except as to financial statements and other financial
and statistical information relating to the Corporations, Fourth,
BANK IV Kansas, or BANK IV Oklahoma contained therein and as to all
material relating to or furnished by the Corporations and the
Stockholders for use in the Proxy Statement, as to all of which we
do not express any opinion).
We hereby confirm to you that there are no actions or
proceedings against Fourth or any Subsidiary of Fourth, pending or
overtly threatened in writing, before any court, governmental
agency, or arbitrator (i) which seek to affect the enforceability
of the Agreement or (ii) which seek damages in excess of
$10,000,000 other than Kansas Public Employees Retirement System v.
Peters, Gamm, West & Vincent, et al., Case No. 92 CV 433 in the
Third Judicial District Court, Shawnee County, Kansas.
The phrase "Primary Lawyer Group", as used in the Accord,
is hereby modified and for the purposes of applying the Accord to
this Opinion Letter the Primary Lawyer Group means only the lawyers
in this firm who have given substantive legal attention to
representation of Fourth, BANK IV Kansas, and BANK IV Oklahoma in
connection with the Transaction.
This Opinion Letter may be relied upon by you only in
connection with the Transaction and may not be used or relied upon
by you or any other person for any purpose whatsoever, except to
the extent authorized by the Accord, without in each instance our
prior written consent.
Very truly yours,
FOULSTON & SIEFKIN
EXHIBIT "G"
AFFILIATE'S AGREEMENT
---------------------
THIS AGREEMENT, made and entered into as of the ______ day of
____________, 1994, by and between __________________________
(hereinafter referred to as "Affiliate"), and FOURTH FINANCIAL
CORPORATION, a Kansas corporation (hereinafter referred to as
"Fourth").
W I T N E S S E T H: That;
- - - - - - - - - -
WHEREAS, Fourth, First Dodge City Bancshares, Inc. ("First
Dodge"), First National Bancshares of Dodge City, Inc. ("FNB"), and
Metro Bancshares, Inc. ("MBI") are parties to an Agreement and Plan
of Reorganization, dated as of February 2, 1994 (the "Agreement"),
which provides for, subject to various terms and conditions, the
merger of First Dodge, FNB, and MBI into Fourth (the "Fourth
Merger"), the merger of First National Bank and Trust Company in
Dodge City ("First National") into BANK IV Kansas, National
Association (the "BANK IV Kansas Merger"), and the merger of Metro
Bank of Broken Arrow into BANK IV Oklahoma, National Association
(the "BANK IV Oklahoma Merger") (the Fourth Merger, the BANK IV
Kansas Merger, and the BANK IV Oklahoma Merger being collectively
referred to herein as the "Mergers"); and
WHEREAS, Section 5.1.j of the Agreement provides that a
condition to Fourth's obligation to effect the Mergers is the
execution and delivery by each "affiliate" of First Dodge, MBI, and
First National, as such term is defined in the Agreement (an
"Affiliate"), of an agreement concerning the shares of common
stock, par value $5 per share, of Fourth ("Fourth Stock") to be
received by such Affiliate in the Mergers; and
WHEREAS, the parties desire to effect the Mergers and it is in
the best interests of the undersigned that the Mergers be effected;
NOW, THEREFORE, in consideration of the premises and the
issuance of Fourth Stock to the undersigned in the Mergers, and in
order to induce First Dodge, MBI, and First National and Fourth to
effect the Mergers, the undersigned hereby agree as follows:
1. Securities Act Restriction on Transfer and Sale.
Affiliate hereby agrees not to sell, pledge, offer to sell,
transfer, assign, or otherwise dispose of any of the shares of
Fourth Stock issued to Affiliate in the Mergers in violation of the
Securities Act of 1933, as amended.
2. Pooling of Interests Restriction on Transfer and Sale.
Affiliate hereby agrees not to sell, pledge, offer to sell,
transfer, assign, or otherwise dispose of any shares of Fourth
Stock to be received by Affiliate in the Mergers or in any other
way reduce Affiliate's risk relative to such shares (within the
meaning of Accounting Series Release No. 130) until such time as
financial results covering at least 30 days following the Mergers
have been published.
3. Restrictive Legend. Affiliate hereby acknowledges and
agrees that all certificates evidencing Fourth Stock to be issued
to Affiliate pursuant to the Mergers shall be subject to stop
transfer orders and shall bear a restrictive legend substantially
in the following form:
The shares of common stock represented by this
certificate have been issued or transferred to the
registered holder as the result of a transaction to which
Rule 145 under the Securities Act of 1933, as amended
(the "Act"), applies. Such shares may not be sold,
pledged, transferred, or assigned, and the issuer shall
not be required to give effect to any attempted sale,
pledge, transfer, or assignment, except (i) pursuant to
a then current effective registration under the Act, (ii)
in a transaction permitted by Rule 145 as to which the
issuer has, in the reasonable opinion of its counsel,
received reasonably satisfactory evidence of compliance
under Rule 145, or (iii) in a transaction which, in the
opinion of counsel satisfactory to the issuer or as
described in a "no-action" or interpretive letter from
the staff of the Securities and Exchange Commission, is
not required to be registered under the Act.
Transfer of the shares represented by this certificate is
further restricted by an Affiliate's Agreement dated as
of ____________________, 1994, between the issuer and the
registered holder to which reference is hereby made.
4. Miscellaneous. This Affiliate's Agreement constitutes
the entire agreement and understanding of the parties relating to
the subject matter hereof and may not be amended or modified except
by written instrument duly executed by the parties hereto. This
Affiliate's Agreement shall be governed by the laws of the State of
Kansas and shall be construed in accordance therewith. This
Affiliate's Agreement shall inure to the benefit of, and shall be
binding upon, the heirs, legatees, devisees, successors, trustees,
and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Affiliate's Agreement as of the date first above written.
FOURTH FINANCIAL CORPORATION
By________________________________
/s/Darrell G. Knudson, Chairman of
the Board
"Fourth"
_________________________________
"Affiliate"
EXHIBIT 10.14
STOCK PURCHASE AGREEMENT
among
FOURTH FINANCIAL CORPORATION,
as Purchaser
and
LSB INDUSTRIES, INC.,
and
PRIME FINANCIAL CORPORATION,
as Sellers
Dated as of February 9, 1994
TABLE OF CONTENTS
Page #
------
ARTICLE I. Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . 8
Section 1.3 Use of Defined Terms . . . . . . . . . . . . . . . . . . 8
ARTICLE II. Sale and Transfer of Stock; Closing. . . . . . . . . . . 8
Section 2.1 Sale of the Shares . . . . . . . . . . . . . . . . . . . 8
Section 2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . 8
Section 2.3 Additional Adjustments to Purchase Price . . . . . . . .10
Section 2.4 Post-Closing Adjustments . . . . . . . . . . . . . . . .11
Section 2.5 Closing. . . . . . . . . . . . . . . . . . . . . . . . .11
Section 2.6 Closing Deliveries . . . . . . . . . . . . . . . . . . .12
Section 2.7 Option to Acquire Certain Loans. . . . . . . . . . . . .13
Section 2.8 Retained Assets and Retained Corporations
and Certain Loans. . . . . . . . . . . . . . . . . . . .13
ARTICLE III. Agreements of the Parties. . . . . . . . . . . . . . . .13
Section 3.1 Agreements of Fourth . . . . . . . . . . . . . . . . . .13
Section 3.2 Agreements of Sellers. . . . . . . . . . . . . . . . . .15
ARTICLE IV. Representations and Warranties . . . . . . . . . . . . .20
Section 4.1 Representations and Warranties of Sellers. . . . . . . .20
Section 4.2 Representations and Warranties of Fourth . . . . . . . .30
ARTICLE V. Closing Conditions . . . . . . . . . . . . . . . . . . .32
Section 5.1 Conditions to Obligations of Fourth. . . . . . . . . . .32
Section 5.2 Conditions to Obligations of Sellers . . . . . . . . . .34
ARTICLE VI. Termination of Agreement . . . . . . . . . . . . . . . .35
Section 6.1 Mutual Consent; Termination Date . . . . . . . . . . . .35
Section 6.2 Election by Fourth . . . . . . . . . . . . . . . . . . .35
Section 6.3 Election by Sellers . . . . . . . . . . . . . . . . . .36
ARTICLE VII. Indemnification. . . . . . . . . . . . . . . . . . . . .36
Section 7.1 Effect of Closing. . . . . . . . . . . . . . . . . . . .36
Section 7.2 General Indemnification. . . . . . . . . . . . . . . . .37
Section 7.3 Procedure . . . . . . . . . . . . . . . . . . . . . . .38
Section 7.4 Survival of Representations and Warranties . . . . . . .38
Section 7.5 Special Indemnification. . . . . . . . . . . . . . . . .39
Section 7.6 Separate Indemnification for Environmental
Matters . . . . . . . . . . . . . . . . . . . . . . . .40
Section 7.7 Separate Indemnification for Barki
Litigation . . . . . . . . . . . . . . . . . . . . . . .41
Section 7.8 Director and Officer Indemnification . . . . . . . . . .41
ARTICLE VIII. Miscellaneous. . . . . . . . . . . . . . . . . . . . . .42
Section 8.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . .42
Section 8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . .42
Section 8.3 Time . . . . . . . . . . . . . . . . . . . . . . . . . .43
Section 8.4 Law Governing. . . . . . . . . . . . . . . . . . . . . .43
Section 8.5 Entire Agreement; Amendment. . . . . . . . . . . . . . .43
Section 8.6 Successors and Assigns . . . . . . . . . . . . . . . . .43
Section 8.7 Cover, Table of Contents, and Headings . . . . . . . . .43
Section 8.8 Counterparts . . . . . . . . . . . . . . . . . . . . . .43
Section 8.9 No Third Party Beneficiaries . . . . . . . . . . . . . .43
Section 8.10 Severability . . . . . . . . . . . . . . . . . . . . . .43
EXHIBITS
Exhibit "A" Form of Housley Goldberg & Kantarian, P.C. legal
opinion with attached opinion of David A. Shear
Exhibit "B" Form of Foulston and Siefkin legal opinion
Exhibit "C" Form of Lease - Equity Tower
(OMITTED)
Exhibit "D" Form of Real Estate Contract - Retained Assets
(OMITTED)
Exhibit "E" Form of Bank Merger Agreement
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of February 9, 1994,
among FOURTH FINANCIAL CORPORATION, a Kansas corporation
("Fourth"), LSB INDUSTRIES, INC., a Delaware corporation ("LSB"),
and PRIME FINANCIAL CORPORATION, an Oklahoma corporation ("Prime").
W I T N E S S E T H: That,
-------------------
WHEREAS, Fourth desires to acquire all, and not less than
all, of the issued and outstanding capital stock of all classes of
Equity Bank for Savings, F.A. (the "Bank") and to simultaneously
merge the Bank into Fourth's subsidiary, BANK IV Oklahoma, National
Association ("BANK IV") as permitted by Section 501.1D of the
Oklahoma Banking Code of 1965 as amended, subject to and pursuant
to the terms of this Agreement; and
WHEREAS, LSB owns all of the issued and outstanding
capital stock of all classes of Prime and Prime owns all of the
issued and outstanding capital stock of the Bank; and
WHEREAS, each party hereto believes that the proposed
acquisition by Fourth of Bank and the merger of the Bank into BANK
IV pursuant to the terms and conditions of this Agreement would be
desirable and in their respective best interests;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. The following terms as used in this
Agreement shall have the following meanings unless the context
otherwise requires.
"This Agreement" refers to this Stock Purchase Agreement
and all exhibits hereto and all amendments hereto.
"Bank" means Equity Bank for Savings, F.A., a savings
bank organized under the laws of the United States.
"BANK IV" means BANK IV Oklahoma, National Association,
a national banking association.
"Bank Holding Company Act" means the federal Bank Holding
Company Act of 1956, as amended (12 U.S.C. Section 1841 et seq.), or any
successor federal statute, and the rules and regulations of the
Board promulgated thereunder, all as the same may be in effect at
the time.
"Bank Merger Agreement" means the Agreement to Merge,
substantially in the form of Exhibit "E" hereto, pursuant to which
the Bank will be merged into BANK IV at the Closing simultaneously
with the consummation of the Purchase.
"Bank Stock" means common stock of the Bank, par value
$.01 per share.
"Board" means the Board of Governors of the Federal
Reserve System or any successor governmental entity which may be
granted powers currently exercised by the Board of Governors.
"Closing" shall mean the purchase and sale of the Shares
and the simultaneous consummation of the Merger.
"Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder, all
as the same may be in effect at the time.
"Comptroller" means the United States Comptroller of the
Currency or any successor governmental agency which may be granted
powers currently exercised by the Comptroller of the Currency.
"Corporations" means collectively the Bank and all of the
following of its Subsidiaries: Credit Card Center, Inc., Equity
Financial Service Corp., and United BankCard, Inc.; and
"Corporation" means any one of them.
"Disclosure Statement" means the Disclosure Statement
prepared by Sellers and delivered by Sellers to Fourth prior to the
execution and delivery of this Agreement by Fourth.
"Effective Time" means the date and time on which the
Purchase is effected as more fully defined in this Agreement.
"Environmental Liabilities" means all losses, costs,
expenses, claims, demands, liabilities, or obligations of whatever
kind or otherwise, based upon an Environmental Law relating to:
(i) any environmental matter or condition,
including, but not limited to, on-site or off-site
contamination, and regulation of chemical substances or
products;
(ii) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings,
damages, losses, claims, demands, and response, remedial
or inspection costs and expenses arising under
Environmental Laws;
(iii) financial responsibility under any
Environmental Law for cleanup costs or corrective
actions, including for any removal, remedial or other
response actions, and for any natural resource damage;
and
(iv) any other compliance, corrective, or
remedial action required under any Environmental Law.
"Environmental Law" means any provision of Law relating
to any environmental matters or conditions, Hazardous Materials,
pollution, or protection of the environment, including, but not
limited to, on-site and off-site contamination, and regulation of
chemical substances or products, emissions, discharges, release, or
threatened release of contaminants, chemicals, or industrial,
toxic, radioactive, or Hazardous Materials or wastes into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of Hazardous Materials, pollutants, contaminants,
chemicals, or industrial, toxic, radioactive, or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations promulgated
thereunder, all as the same may be in effect at the time.
"Facilities" means any real property, leaseholds, or
other interests owned by the Bank or any of the Corporations and/or
any buildings, plants, structures, or equipment of any of the
Corporations, but shall not include any real property, leaseholds,
or other interests owned by any of the Retained Corporations nor
any of the Retained Assets other than the Equity Tower.
"Federal Deposit Insurance Act" means the Federal Deposit
Insurance Act, as amended, and the rules and regulations
promulgated thereunder, all as the same may be in effect at the
time.
"FDIC" means the Federal Deposit Insurance Corporation or
any successor agency.
"Financial Statements" refers to all of the financial
statements described in clause h of Section 4.1 and clause h of
Section 5.1 of this Agreement.
"GAAP" means generally accepted accounting principles,
applied on a consistent basis.
"Hazardous Materials" means and includes: (i) any
hazardous substance or toxic material (excluding any lawful product
in customary quantities for use in the Bank's or other occupant's
ordinary course of business which contains such substance or
material), pollutant, contaminant, toxic material, or hazardous
waste as defined in any state, federal, or local Environmental Law;
(ii) waste oil and petroleum products; and (iii) any asbestos,
asbestos containing material, urea formaldehyde or material which
contains urea formaldehyde.
"Indemnifying Losses" has the meaning set forth in
Section 7.2 of this Agreement.
"Indemnitee" and "Indemnitees" shall have the meanings
set forth in Section 7.2 of this Agreement.
"Law" or "Laws" means all applicable statutes, laws,
ordinances, regulations, orders, writs, injunctions, or decrees of
the United States of America, any state or commonwealth, or any
subdivision thereof, or of any court or governmental department,
agency, commission, board, bureau, or other instrumentality.
"Litigation" means any proceeding, claim, lawsuit, and/or
investigation being conducted or, to the best of the knowledge of
the person or corporation making the representation, threatened
before any court or other tribunal, including, but not limited to,
proceedings, claims, lawsuits, and/or investigations, under or
pursuant to any occupational safety and health, banking, antitrust,
securities, tax, or other Laws, or under or pursuant to any
contract, agreement, or other instrument.
"LSB" means LSB Industries, Inc., a Delaware corporation.
"Merger" means the merger of the Bank into BANK IV at the
Closing immediately following the Purchase.
"OREO Properties" means any interest in any real or
personal property owned by the Bank or any other Corporation
acquired through foreclosure or otherwise in connection with
collecting a loan or lease.
"OTS" means the Office of Thrift Supervision of the
United States Treasury and any successor agency which may be
granted powers currently exercised by the Office of Thrift
Supervision.
"Permitted Contract" means a contract or agreement,
written or oral, between the Bank or another of the Corporations,
on the one hand, and a person other than a customer of the Bank or
another financial institution, on the other hand, which (i) was
entered into in the ordinary course of business, (ii) may be
terminated by the Bank after the Effective Time on no more than 60
days' prior notice, (iii) provides for a payment of no more than
$5,000 in any calendar month by the Bank or a Corporation, and (iv)
provides for no payment upon termination in excess of $5,000.
"Permitted Encumbrances" means with respect to any asset:
(a) liens for taxes not past due;
(b) mechanics' and materialmen's liens for
services or materials for which payment is not past due;
and
(c) minor defects, encumbrances, and
irregularities in title which do not, in the aggregate,
materially diminish the value of an asset or materially
impair the use of an asset for the purposes for which it
is or is intended to be used.
"Purchase" means the purchase at the Closing of all of
the Shares from Sellers by Fourth pursuant to this Agreement.
"Purchase Price" has the meaning set forth in Section 2.2
of this Agreement as adjusted in accordance with this Agreement.
"Required Approvals" means the approval, consent, or
non-objection, as the case may be, of the Board, the OTS, the
Comptroller, and all other governmental or self-governing agencies,
boards, departments, and bodies whose approval, consent, or
non-action is required in order to consummate the Purchase and the
Merger and the retention by BANK IV of all of the Corporations
engaged in banking or thrift-related activities and their
operations in substantially their present form except as
specifically otherwise provided in this Agreement, which approvals,
consents, and non-objections shall have become final and
nonappealable without any appeal or other form of review having
been initiated and as to which all required waiting periods shall
have expired.
"Retained Assets" means collectively (i) the loan and all
related rights and agreements on the books of the Bank secured by
the Equity Tower building (the "Equity Tower"), (ii) all OREO
Properties, (iii) receivables sold to the Bank pursuant to various
purchase agreements dated March 8, 1988, and (iv) such other assets
that Sellers elect to acquire from the Bank pursuant to the
provisions of Section 2.7 hereof; and "Retained Asset" means any
one of the Retained Assets.
"Retained Corporations" means all of the following wholly
owned Subsidiaries of the Bank all of the capital stock of each of
which is to be purchased by LSB or Prime prior to the Effective
Time: Northwest Financial Corporation, Northwest Energy
Enterprises, Inc., and Northwest Capital Corporation; and "Retained
Corporation" means any one of them.
"Securities Portfolio" means (i) all equity securities
other than investments in Subsidiaries, (ii) all mortgage-backed
securities (as defined by Section 5(c)(1)(R) of the Home Owners'
Loan Act), (iii) all government securities (as defined by Section
5(c)(1)(F) of the Home Owners' Loan Act), and (iv) all obligations
of or fully insured as to principal and interest by the United
States, owned by the Bank as of the Effective Time, whether held
for sale or otherwise.
"Sellers" means LSB and Prime collectively.
"Shares" means collectively all of the 100,000 shares of
Bank Stock being purchased and sold pursuant to this Agreement.
"Subsidiary" means any corporation fifty percent or more
of the common stock or other form of equity of which shall be
owned, directly or indirectly, by another corporation.
"Tangible Book Value of the Bank" means the aggregate
consolidated stockholders' equity of the Bank, calculated in
accordance with GAAP, less the amounts in the following accounts:
purchased mortgage servicing rights (account number 1797), goodwill
(account number 1799), and United BankCard goodwill (account number
1305), net of accumulated amortization (account number 1310).
"Time Deposits" means all deposit liabilities shown on
the Bank's records as time deposits.
1.2. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP consistent with that applied in the preparation of the
financial statements submitted pursuant to this Agreement, and all
financial statements submitted pursuant to this Agreement shall be
prepared in all material respects in accordance with such
principles.
1.3. Use of Defined Terms. All terms defined in this
Agreement shall have the defined meanings when used in any other
agreement, document, or certificate made or delivered pursuant to
this Agreement, unless the context otherwise requires.
ARTICLE II
SALE AND TRANSFER OF STOCK; CLOSING
2.1. Sale of the Shares. Subject to the terms and
conditions of this Agreement, at the Closing, Sellers shall sell,
transfer, and deliver to Fourth, and Fourth shall purchase, all of
the Shares for the Purchase Price.
2.2. Purchase Price. (a) The Purchase Price for all of
the Shares shall be the sum of:
(i) the Tangible Book Value of the Bank at the
Effective Time;
(ii) $9,300,000 with respect to the Bank's
credit card receivables;
(iii) one percent of the aggregate unpaid
principal balance at the Effective Time of loans secured
by fixed-rate mortgages having fully amortizing original
terms of 15 years or less, excluding loans originated
after October 31, 1993;
(iv) six percent of the aggregate unpaid
principal balance at the Effective Time of loans secured
by fixed-rate mortgages having fully amortizing original
terms of more than 15 years but not more than 30 years,
excluding loans originated after October 31, 1993;
(v) two percent of the aggregate unpaid
principal balance at the Effective Time of loans secured
by variable rate mortgages, excluding loans originated
after October 31, 1993;
(vi) the amount of unamortized discount on the
mortgages included in (iii), (iv), and (v) above;
(vii) 0.65% of the aggregate unpaid principal
balance at the Effective Time of loans serviced by Bank
prior to March 1, 1993 on which the Bank performs
mortgage servicing (other than loans serviced for the
account of Bank), one percent of such balance on such
loans originated on or after March 1, 1993 secured by
fixed or adjustable rate mortgages of fully amortizing
original terms of at least ten but not more than 15
years, and 1.25% of such balance on such loans originated
on or after March 1, 1993, secured by fixed or adjustable
rate mortgages having original fully amortizing terms of
more than 15 but not more than 30 years;
(viii) the remainder obtained by subtracting the
Required Reserve (as hereinafter defined) from the Bank's
actual loan loss reserve account (including its
unallocated loan loss reserve) at the Effective Time.
"Required Reserve" means $2,700,000 as adjusted by the
amount by which the Bank's loan loss reserve account
(including its unallocated loan loss reserve) would have
to be adjusted at the Effective Time under normal prudent
banking practice to reflect aggregate changes of at least
$500,000 occurring subsequent to October 31, 1993 in the
quality of commercial and energy loans held by the Bank
on October 31, 1993 or originated since October 31, 1993
and not reviewed in advance by Fourth; provided, that no
such change in the quality of a loan shall be included in
this calculation to the extent such change has been
reflected in the calculation of the Tangible Book Value
of the Bank at the Effective Time, or if such change is
less than $25,000;
(ix) to the extent not otherwise reflected in
the calculations of the Tangible Book Value of the Bank,
the amount, either positive (if the aggregate fair market
value exceeds book value) or negative (if the aggregate
fair market value is less than book value), by which the
aggregate fair market value of the Bank's Securities
Portfolio at the Effective Time differs from the
aggregate book value of the Securities Portfolio on such
date;
(x) $11,000,000, with respect to the Bank's
deposit balances;
(xi) $10,500,000, with respect to the Bank's
net operating loss carryforward at the Effective Time;
(xii) the difference, positive (in the case of
a rise in the yield curve) or negative (in the case of a
decline in the yield curve), between the aggregate book
value of all of the Bank's Time Deposits at the Effective
Time and the aggregate value of such deposits after
repricing them to the Treasury yield curve at the
Effective Time; and
(xiii) $1,400,000, representing the aggregate
premiums attributable to the Sayre, Clinton, Thomas, and
Beaver branches of the Bank.
2.3. Additional Adjustments to Purchase Price. (a) The
percentages specified in subparagraphs (iii) and (iv) of Section
2.2 were calculated using the following yields and spreads as of
August 31, 1993:
15 year 30 year
Bank's average portfolio yield 7.44% 8.79%
FNMA required 30-day yield 6.19% 6.66%
Spread 1.25% 2.13%
If, at the Effective Time, either of such spreads has fluctuated by
more than 0.25%, the applicable percentages in subparagraphs (iii)
and (iv) of Section 2.2(a) will be adjusted up (if the spread has
widened) or down (if the spread has narrowed) by 1/4 of one percent
for each full 1/8 of one percent change in the spread, in the case
of loans with an original term of 15 years or less, and by 3/8 of
one percent for each full 1/8 of one percent change in the spread,
in the case of loans with an original term of more than 15 but not
more than 30 years.
(b) The amount of the Purchase Price will be increased
by the aggregate amount, if any, the Tangible Book Value of the
Bank at the Effective Time has been reduced by any restructuring
charge or charges that the Bank shall have recorded on its books as
the result of the anticipated effects of the Purchase, none of
which the Bank shall be obligated to take, and all of which shall
have been approved in advance in writing by Fourth to the extent
permitted by Law.
2.4. Post-Closing Adjustments. (a) Unless otherwise
specifically provided herein, each component of the Purchase Price
shall be calculated as of the Effective Time; provided, however,
that if any element of the Purchase Price cannot be calculated
accurately as of the Effective Time, such items shall be calculated
as of the end of the month preceding the Effective Time. Any
element of the Purchase Price so calculated shall be adjusted to
reflect the accurate amount as of the Effective Time and Sellers
and Fourth agree to enter into mutually agreeable arrangements for
the final adjustment and the payment or repayment of the net amount
thereof with interest from the Effective Time at four percent per
year within five business days after Sellers deliver to Fourth a
written statement setting forth in reasonable detail all proposed
price adjustments and the basis of calculating each.
(b) Upon completion of the 1994 consolidated corporate
income tax return of LSB, LSB shall notify Fourth of the amount of
the final net operating loss carryforward of the Bank at the
Effective Time. To the extent any payment shall be owing to Fourth
pursuant to the formula set forth in clause (ii) and the second
sentence of Section 7.5(a) and regardless of whether Sellers
exercise the option referred to in Section 7.5(c), LSB shall make
such payment to Fourth no later than the due date of LSB's 1994
consolidated federal income tax return (including extensions).
2.5. Closing. The Closing shall take place at the
offices of Foulston & Siefkin, 700 Fourth Financial Center,
Wichita, Kansas, at 10:00 a.m., or at such other time or place as
the parties may agree, on a date selected by Fourth upon giving
reasonable notice to Sellers, which, unless otherwise agreed, shall
be on the 15th day (or the closest Friday if the 15th is not a
Friday) of the month in which the final Regulatory Approval is
obtained and in which all required waiting periods expire if such
earliest legal closing date is during the first 15 days of the
month and on the last business day of the month if the earliest
legal closing date occurs after the 15th day of a month. The
parties agree to exert their best efforts to cause the Closing to
occur on or before June 30, 1994.
2.6. Closing Deliveries. At the Closing:
a. Sellers shall deliver to Fourth:
(i) certificates representing all of
the Shares, endorsed for transfer to Fourth, free
and clear of all encumbrances, liens, security
interests, claims, and equities whatsoever;
(ii) such other documents including
officers' certificates as may be required by this
Agreement or reasonably requested by Fourth; and
(iii) the opinion of Housley Goldberg &
Kantarian, P.C., counsel to Sellers and the Bank,
substantially in the form of Exhibit "A" hereto.
b. Fourth shall deliver to Sellers:
(i) immediately available funds in the
total amount of the Purchase Price;
(ii) such documents including officers'
certificates as may be required by this Agreement
or reasonably requested by Sellers; and
(iii) the opinion of Foulston & Siefkin,
counsel to Fourth, substantially in the form of
Exhibit "B" hereto.
c. BANK IV and Northwest Tower Limited
Partnership shall execute and deliver a real estate lease
substantially in the form of Exhibit "C" hereto pursuant
to which Bank will lease from Northeast Tower Limited
Partnership certain first-floor and other space in the
Equity Tower in Oklahoma City for a ten-year term, with
renewal options and options to rent additional space in
such building.
Contemporaneously with the Purchase, the Bank
shall be merged into BANK IV pursuant to the Bank Merger
Agreement.
2.7. Option to Acquire Certain Loans. Sellers shall
have the option, but not the obligation, to acquire any loan owned
by the Bank that has been charged off or written down for a
purchase price equal to the net book value of each loan that has
been written down and for a purchase price of $1.00 in the case of
each loan that has been charged off.
2.8. Retained Assets, Retained Corporations, and
Certain Loans. Subject to all of the closing conditions set forth
in Sections 5.1 and 5.2 having occurred and continuing in effect,
Sellers shall purchase the Retained Assets from the Bank at the
Effective Time for the aggregate book value thereof as of the
Effective Time (or $1.00 in the case of each loan that has been
charged off), and Sellers shall purchase all of the capital stock
of all of the Retained Corporations from the Bank not later than
the business day immediately preceding the Effective Time for the
aggregate book value thereof as of such date. Each such purchase
shall be effected by the payment to the Bank of immediately
available funds. All sales by the Bank of OREO Properties shall be
pursuant to a real estate contract substantially in the form of
Exhibit "D" hereto.
ARTICLE III
AGREEMENTS OF THE PARTIES
3.1. Agreements of Fourth.
a. Prior to the Effective Time, Fourth,
separately and with Sellers, shall use its best efforts
in good faith to take or cause to be taken as promptly as
practicable all such steps as shall be necessary to
obtain all of the Required Approvals.
b. Fourth shall promptly prepare and file all
applications necessary to obtain the Required Approvals
and shall afford Sellers at least four days' opportunity
to review and comment upon the drafts of such
applications prior to the filing thereof.
c. Fourth shall observe the confidentiality
obligations set forth in Section 3.2.c, below.
d. Fourth shall consult with Sellers prior to
issuing any press release or other planned public
statement regarding the subject matter of this Agreement
or the termination thereof as to the contents of such
press release or statement.
e. Fourth agrees to take such action as may be
necessary to cause BANK IV to be well capitalized upon
the consummation of the transactions contemplated by this
Agreement at and immediately following the Effective
Time.
f. Fourth agrees to provide such information as
LSB may reasonably request in connection with the
preparation of material for the conduct of a meeting of
LSB's stockholders to approve this Agreement, and such
information furnished by Fourth will not contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
g. Following the Closing, in the event Sellers
or any of their Subsidiaries, officers, directors, or
affiliates shall be called upon to provide an indemnity
pursuant to the provisions of this Agreement, or should
otherwise be called upon to take or defend against legal
action with respect to matters occurring prior to the
Effective Time, Fourth shall permit Sellers to examine
(subject to reasonable limitations) the former records of
the Bank or the Corporations.
h. BANK IV shall reimburse LSB for all out-of-
pocket COBRA liabilities incurred by LSB with respect to
employees of the Bank at the Effective Time who are
terminated after the Effective Time by BANK IV to the
extent not paid or reimbursed by re-insurance or stop
loss coverage; provided, however that such reimbursement
shall be net of all COBRA premiums paid by such employees
after the Effective Time and net of the aggregate amount
of all Bank employee forfeitures under the Bank's
cafeteria plan.
3.2. Agreements of Sellers.
a. Prior to the Closing, except with respect to
those commitments binding as of the date of this
Agreement described in an exhibit to the Disclosure
Statement, or as otherwise provided in this Agreement,
Sellers shall not, without the prior written consent of
Fourth which shall not unreasonably be withheld, permit
any of the Corporations to:
(1) Amend its articles or certificate of
incorporation, bylaws, or other charter
documents, make any change in its authorized,
issued, or outstanding capital stock, grant any
stock options or right to acquire shares of any
class of its capital stock or any security
convertible into any class of capital stock,
purchase, redeem, retire, or otherwise acquire
(otherwise than in a fiduciary capacity) any
shares of any class of its capital stock or any
security convertible into any class of its
capital stock, or agree to do any of the
foregoing;
(2) Declare, set aside, or pay any dividend
or other distribution in respect of any class of
its capital stock;
(3) Adopt, enter into, or amend materially
any employment contract or any bonus, stock
option, profit sharing, pension, retirement,
incentive, or similar employee benefit program or
arrangement or grant any salary or wage increase,
except (a) normal individual increases in
compensation to employees in accordance with
established employee procedures of the
Corporations; (b) the Fourth Financial
Corporation Acquisition Severance Schedule
previously furnished to Seller; and (c) severance
agreements to be performed by Sellers without any
obligation of the Bank or Fourth;
(4) Incur any indebtedness for borrowed
money (except for federal funds, repurchase
agreements entered into in the ordinary and usual
course of business, deposits received by the
Bank, endorsement, for collection or deposit, of
negotiable instruments received in the ordinary
and usual course of business, and issuance of
letters of credit by the Bank in the ordinary and
usual course of business), assume, guarantee,
endorse, or otherwise as an accommodation become
liable or responsible for obligations of any
other individual, firm, or corporation;
(5) Pay or incur any obligation or
liability, absolute or contingent, other than
liabilities incurred in the ordinary and usual
course of business of the Corporations;
(6) Except for transactions in the ordinary
and usual course of business of the Bank,
mortgage, pledge, or subject to lien or other
encumbrance any of its properties or assets;
(7) Except for transactions in the ordinary
and usual course of business of the Bank
(including, without limitation, sales of assets
acquired by the Bank in the course of collecting
loans) or as permitted by this Agreement, sell or
transfer any of its properties or assets or
cancel, release, or assign any indebtedness owed
to it or any claims held by it;
(8) Make any investment of a capital nature
in excess of $25,000 for any one item or group of
similar items either by the purchase of stock or
securities (not including bonds or collateralized
mortgage obligations purchased in the ordinary
and usual course of business by the Bank),
contributions to capital, property transfers, or
otherwise, or by the purchase of any property or
assets of any other individual, firm, or
corporation other than certain planned
improvements being made to the Bank's Classen and
Portland branches;
(9) Enter into any other agreement not in
the ordinary and usual course of business;
(10) Merge or consolidate with any other
corporation, acquire any stock (except in a
fiduciary capacity), solicit any offers for any
Bank Stock, or a substantial portion of the
assets of any of the Corporations or, except in
the ordinary course of business, acquire any
assets of any other person, corporation, or other
business organization, or enter into any
discussions with any person concerning, or agree
to do, any of the foregoing;
(11) Own at the Effective Time any bonds,
notes, loans, or other investment securities of
any kind which are not expressly enumerated in
the definition of "Securities Portfolio" in
Section 1.1 of this Agreement other than Bank's
investments in the other Corporations; or
(12) Except as permitted or contemplated by
this Agreement, enter into any transaction or
take any action which would, if effected prior to
the Effective Time, constitute a material breach
of any of the representations, warranties, or
covenants contained in this Agreement.
b. Except as otherwise provided in this
Agreement, prior to the Effective Time, each Seller shall
use its reasonable best efforts to cause each of the
Corporations to conduct its respective business in the
ordinary and usual course as heretofore conducted and to
use its reasonable best efforts (1) to preserve its
business and business organization intact, (2) to keep
available to BANK IV the services of the present
officers and employees of the Bank, (3) to preserve the
good will of customers and others having business
relations with the Bank, (4) to maintain its properties
in customary repair, working order and condition
(reasonable wear and tear excepted), (5) to comply in all
material respects with all Laws applicable to it and the
conduct of its businesses, (6) to keep in force at not
less than their present limits all existing policies of
insurance, (7) to make no material changes in the
customary terms and conditions upon which it does
business, (8) to continue its current practice of selling
loans secured by fixed rate mortgages on a
servicing-retained basis, (9) to duly and timely file all
reports, tax returns, and other material documents
required to be filed with federal, state, local and other
authorities, and (10) unless it is contesting the same in
good faith and has established reasonable reserves
therefor, to pay when required to be paid all material
taxes indicated by tax returns so filed or otherwise
lawfully levied or assessed upon it or any of its
properties and to withhold or collect and pay to the
proper governmental authorities or hold in separate bank
accounts for such payment all taxes and other assessments
which it believes in good faith to be required by law to
be so withheld or collected.
c. Prior to the Effective Time, Sellers shall
cause the Corporations, to the extent permitted by Law,
to give Fourth and its counsel and accountants full
access, during normal business hours and upon reasonable
notice, to their respective properties, books, and
records, and to furnish Fourth during such period with
all such information concerning their affairs as Fourth
may reasonably request. Except for matters expressly
disclosed in the Disclosure Statement, the availability
or actual delivery of information about the Corporations
to Fourth shall not affect the covenants,
representations, and warranties of Sellers contained in
this Agreement. Except for information disclosed in the
course of obtaining Required Approvals, Fourth shall
treat as confidential all confidential information
disclosed to it by Sellers or the Corporations in the
same manner as Fourth treats similar confidential
information of its own and, if this Agreement is
terminated, Fourth shall continue to treat all such
confidential information obtained through such disclosure
and not otherwise known to Fourth or already in the
public domain, as confidential and shall return such
documents theretofore delivered by Sellers to Fourth as
Sellers shall request.
d. Sellers shall cause the Corporations,
separately and jointly with each other and with Fourth,
to each use reasonable efforts in good faith to take or
cause to be taken as promptly as practicable all such
steps as shall be necessary to obtain all Required
Approvals as promptly as practicable.
e. Sellers agree not to sell, pledge, encumber,
or otherwise hypothecate or transfer any shares of Bank
Stock prior to the Effective Time.
f. At the Closing, BANK IV, as lessee, and
Northwest Tower Limited Partnership, as lessor, shall
execute and deliver a real estate lease substantially in
the form of Exhibit "C," to this Agreement. No party
hereto shall be liable to any other party if such lessor
fails to execute such lease.
g. Sellers agree to cause the Corporations to
cooperate with Fourth in Fourth's efforts to obtain
current title evidence or insurance, environmental
assessment reports, and surveys on such of the
Corporations' real properties as Fourth may desire.
h. Sellers will take, and will cause the Bank to
take, all such corporate action as may be required to
authorize, execute, and perform the Bank Merger
Agreement.
i. LSB agrees:
(1) To file all required federal, state,
and local income tax returns in a timely manner
for 1993 and 1994 or obtain appropriate
extensions for such filings and to pay, when due,
all income taxes due for such periods;
(2) To give Fourth written notice promptly
of any issues raised by any taxing authorities
which might reasonably result in an increase in
the income tax liabilities of the Bank for any
period in which it is or was a member of the
"Group" defined in Section 4.1.k of this
Agreement or which might reasonably affect the
amount of the Bank's net operating loss;
(3) To consult with Fourth and BANK IV
about the resolution of any such issues and not
to settle any such issues without giving Fourth
an opportunity to assume responsibility for the
resolution of such issues, at Fourth's expense,
if the effect of such settlement would be to
increase the liability of Fourth or any of its
affiliates for any tax for any period beginning
after the Effective Time or affect the amount of
the Bank's net operating loss unless Sellers
agree to pay and do pay to Fourth the full amount
of such increase in liability grossed up for any
federal or state tax attributable to such
payment; and
(4) That all existing income tax sharing or
allocation agreements or arrangements of any kind
between the Corporations and LSB or any other
member of such Group, whether or not in writing,
shall automatically be terminated at the
Effective Time and no further payments shall be
made by Bank thereunder except to the extent the
amount thereof has been taken into account in
calculating the Tangible Book Value of the Bank.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of Sellers. Except
as expressly disclosed in the Disclosure Statement, Sellers jointly
and severally represent and warrant to Fourth as follows:
a. Organization, Good Standing, and Authority.
Each Seller is a savings and loan holding company duly
registered pursuant to the federal Home Owners' Loan Act.
Each of the Corporations is a corporation or savings bank
duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation,
and each has all requisite corporate power and authority
to conduct its business as it is now conducted, to own
its properties and assets, and to lease properties used
in its business. None of the Corporations is in
violation of its charter documents or bylaws, or of any
applicable Law in any material respect, or in default in
any material respect under any material agreement,
indenture, lease, or other document to which it is a
party or by which it is bound. The deposits of the Bank
are insured by the FDIC to the extent provided by the
Federal Deposit Insurance Act and the Bank has paid all
assessments and filed all reports required to be filed
under the Federal Deposit Insurance Act of which failure
to do so would have a material adverse effect upon the
Bank.
b. Binding Obligations; Due Authorization. This
Agreement constitutes the valid and binding obligation of
each Seller, enforceable against it in accordance with
the terms hereof, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or
other similar laws and equitable principles affecting
creditors' rights generally.
c. Absence of Default. The execution and the
delivery of this Agreement, the sale of the Shares, and
the consummation of the other transactions contemplated
hereby, and the fulfillment of the terms hereof will not
(1) conflict with, or result in a breach of the terms,
conditions, or provisions of, or constitute a default
under the organizational documents or bylaws of any of
the Corporations or under any agreement or instrument
under which any of the Corporations or either Seller is
obligated, or (2) violate any Law to which any of the
Corporations or any Seller is subject.
d. Subsidiaries. LSB is the owner of all of the
issued and outstanding capital stock of all classes of
Prime. The only Subsidiaries of the Bank are the
following:
Name State of Incorporation
---- --------------------
Northwest Financial Corporation Oklahoma
Northwest Energy Enterprises, Inc. Oklahoma
Credit Card Center, Inc. Oklahoma
Equity Financial Service Corp. Oklahoma
United BankCard, Inc. Oklahoma
Northwest Capital Corporation Oklahoma
e. Capitalization. The Bank is authorized to
issue 1,000,000 shares of capital stock, par value $.01
per share, of which 100,000 shares are issued and
outstanding. Prime is the owner, free and clear of all
encumbrances, liens, security interests, and claims
whatsoever, of all 100,000 shares of Bank Stock. The
capitalization of each of the Bank's Subsidiaries
excluding the Retained Corporations, is as follows:
Number of Shares
Name Par Value Issued Outstanding
---- --------- ------- ---------
Credit Card Center, Inc. $ 10.00 6,700 5,200
Equity Financial Service
Corp. 1.00 1,000 1,000
United BankCard, Inc. 1,000.00 250 250
f. Charter Documents. True and correct copies
of the charter documents and bylaws of each of the
Corporations, with all amendments thereto, are included
in the Disclosure Statement as Exhibits "E-1" to "E-8."
g. Options, Warrants, and Other Rights. None of
the Corporations has outstanding any options, warrants,
or rights of any kind requiring it to sell or issue to
anyone any capital stock of any class and none of the
Corporations has agreed to issue or sell any additional
shares of its capital stock.
h. Financial Statements. Included in the
Disclosure Statement as Exhibits "H-1" through "H-6" are
copies of the following financial statements, all of
which are true and complete in all material respects and
have been prepared in all material respects in accordance
with GAAP and all applicable regulatory accounting
principles consistently followed throughout the periods
indicated, subject in the case of interim financial
statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the
aggregate, be materially adverse) and the absence of
notes (which if presented would not differ materially
from those included in the most recent year-end financial
statements):
(1) Audited Consolidated Financial
Statements of the Bank as of December 31, 1992,
and 1991, and for the fiscal years then ended
with auditors' report thereon and notes thereto,
which have been examined by Ernst & Young,
independent certified public accountants;
(2) Thrift Financial Reports filed by the
Bank with the OTS for the quarters ended December
31, 1992, March 31, 1993, June 30, 1993, and
September 30, 1993; and
(3) Unaudited financial statements of the
Bank as of October 31, 1993 and for the period
then ended.
As soon as practicable between the date hereof and the
Effective Time, Sellers will deliver to Fourth copies of
monthly operating statements of the Bank and of all
reports filed by any of the Corporations with any
regulatory agencies. The books of account of each of the
Corporations and each of the Financial Statements fairly
and correctly reflect and, when delivered, will reflect
in all material respects in accordance with GAAP and all
applicable rules and regulations of regulatory agencies
applied on a consistent basis, the respective financial
conditions and results of operations of each of the
Corporations (except for the absence in the monthly
operating statements of the Bank of certain information
and footnotes normally included in financial statements
prepared in accordance with GAAP). There have been, and
prior to the Effective Time there will be, no material
adverse changes in the financial condition of the
Corporations from December 31, 1992, other than changes
made in the usual and ordinary conduct of the businesses
of the Corporations, none of which has been or will be
materially adverse and all of which have been or will be
recorded in the books of account of the Corporations; and
except as specifically permitted by this Agreement, there
have been, and prior to the Effective Time there will be,
no substantial adverse changes in the respective
businesses, assets, properties, or liabilities, absolute
or contingent, of any of the Corporations, or in their
respective condition, financial or otherwise, from the
date of the most recent of the Financial Statements that
has been delivered to Fourth on the date hereof other
than changes occurring in the usual and ordinary conduct
of the business of the Corporations, none of which has
been or will be materially adverse and all of which have
been or will be recorded in the respective books of
account of the Corporations. None of the Corporations
has any contingent liabilities, other than letters of
credit and similar obligations of the Bank incurred in
the ordinary course of business, that are not described
in or reserved against in the Financial Statements listed
above.
i. Real Properties. Exhibit "I" to the
Disclosure Statement is a complete list of all real
estate owned or leased by any of the Corporations. Each
Corporation has good and marketable title in fee simple
to all lands and buildings described in the Disclosure
Statement as being owned by it, free and clear of all
liens, encumbrances, and charges, except for Permitted
Encumbrances. All leases of real property to which any
of the Corporations is a party as lessee, complete copies
of each of which with all amendments thereto are included
in Exhibit "I" to the Disclosure Statement, are each
valid and enforceable in accordance with their respective
terms except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar Laws
and equitable principles affecting creditors' rights
generally, and there has been no material default by any
party thereto. No zoning ordinance prohibits, interferes
with, or materially impairs the usefulness of any of the
Facilities owned or used by any Corporation for the
purposes for which it is now being used; and all the
Facilities owned or leased by any of the Corporations are
in good operating condition and repair, normal wear and
tear excepted.
j. Personal Property. Except for leased
properties, each of the Corporations has good and
marketable title to all of the machinery, equipment,
materials, supplies, and other property of every kind,
tangible or intangible, contained in its offices and
other facilities or shown as assets in its records and
books of account, free and clear of all liens,
encumbrances, and charges. All leases of personal
property to which any of the Corporations is a party as
lessee are valid and enforceable in accordance with their
terms, and there has been no material default by any
party thereto. The material items of personal property
owned or leased by any of the Corporations are generally
in good operating condition, normal wear and tear
excepted.
k. Taxes. LSB, Prime, the Bank, the
Corporations, and the Retained Corporations are members
of the same "affiliated group" (the "Group"), as defined
in Section 1504(a)(1) of the Code. Each member of the
Group has filed or caused to be filed, or a filing was
made on its behalf, all tax returns and reports required
to have been filed by or for it, and all material
information set forth in such returns or reports is
accurate and complete. Each member of the Group has paid
or made adequate provision for all taxes, additions to
tax, penalties, and interest for all periods covered by
those returns or reports. There are no material unpaid
taxes, additions to tax, penalties, or interest due and
payable by any member of the Group, except for taxes and
any such related liabilities being contested in good
faith and disclosed in Exhibit "K" to the Disclosure
Statement. Each member of the Group has collected or
withheld all amounts required to be collected or withheld
by it for any taxes, and all such amounts have been paid
to the appropriate governmental agencies or set aside in
appropriate accounts for future payment when due. Each
member of the Group is in material compliance with, and
its records contain all information and documents
(including, without limitation, IRS Forms W-9) necessary
to comply in all material respects with applicable
information reporting and tax withholding requirements
under federal, state, and local laws, rules, and
regulations, and such records identify with specificity
all accounts subject to backup withholding. The
Financial Statements fully and properly reflect, as of
the dates thereof, the accrued taxes, additions to tax,
penalties, and interest. No extension of time for the
assessment of deficiencies for any years is in effect.
No member of the Group has any knowledge of any
unassessed tax deficiency proposed or threatened against
any of them.
l. Contracts. Other than Permitted Contracts
and agreements with customers of the Bank and with
financial institutions entered into by the Bank in the
ordinary course of its banking business, attached to the
Disclosure Statement as Exhibit "L" is a list of all
material contracts and other agreements and arrangements,
both written and oral, to which Bank or any of the other
Corporations is a party and which involve $10,000 or
more, which affect or pertain to the operation of their
respective businesses. To the knowledge of Sellers, all
parties thereto have in all material respects performed,
and are in good standing with respect to, all the
material obligations required to be performed under all
such contracts and other agreements and arrangements,
and no obligation with respect thereto is overdue. All
of the material agreements of the Corporations, including
without limitation the agreements disclosed in writing
pursuant to this clause (l), are valid, binding, and
enforceable in accordance with their terms, except as
limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws and equitable
principles affecting creditors' rights generally. Except
as otherwise noted in Exhibit "L" to the Disclosure
Statement, no material contract, lease, or other
agreement or arrangement to which either Bank or one of
the other Corporations is a party or as to which any of
their assets is subject requires the consent of any third
party in connection with this Agreement. Except as
described in Exhibit "L" to the Disclosure Statement,
neither any Corporation nor any Seller has any knowledge
of any threatened cancellation of, any outstanding
disputes or default under, or of any basis for any claim
of breach or default of, any material lease, contract, or
other agreement or arrangement to which any of the
Corporations is a party. Except for Permitted Contracts
and except as set forth in Exhibit "L" to the Disclosure
Statement, neither the Bank nor any of the other
Corporations is a party to:
(1) Any contract for the purchase or sale
of any materials or supplies having an aggregate
purchase or sale price in excess of $10,000 which
contains any escalator, renegotiation, or
redetermination clause or which commits it for a
fixed term;
(2) Any contract of employment with any
officer or employee not terminable at will
without liability on account of such termination;
(3) Any management or consultation
agreement not terminable at will without
liability on account of such termination;
(4) Any license or royalty agreement having
an aggregate future commitment to pay at least
$10,000, or union agreement, or loan agreement in
which any of the Corporations is the borrower;
(5) Any contract, accepted order, or
commitment for the purchase or sale of materials,
services, or supplies having a total remaining
contract price in excess of $10,000;
(6) Any contract containing any
restrictions on any party thereto competing with
the Bank, any of the other Corporations, or any
other person in the business of banking or
activities relating to banking;
(7) Any other agreement which materially
affects the business, properties, or assets of
either Bank or one of the other Corporations, or
which was entered into other than in the ordinary
and usual course of business; or
(8) Any letter of credit or commitment to
make any loan or group of loans to related
parties in an amount in excess of $500,000.
None of LSB, Prime, or any of the Corporations has any
knowledge based upon which it has formed a conclusion
that a material loss is reasonably anticipated with
respect to any of the agreements described in clause "l."
m. Labor Relations; Employees; ERISA. None of
the Corporations is a party to or affected by any
collective bargaining agreement, nor is any Corporation
a party to any pending or, to the knowledge of Sellers,
threatened labor dispute, organizational efforts, or
labor negotiations. Each of the Corporations has
complied in all material respects with all applicable
Laws relating to the employment of labor, including, but
not limited to, the provisions thereof relating to wages,
hours, collective bargaining, payment of social security
taxes, and equal employment opportunity, the violation of
which would have a materially adverse impact on their
respective businesses. None of the Corporations is
liable for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing in an
amount which would have a material adverse effect on the
Bank or any of the Corporations. None of the
Corporations has any written or oral retirement, pension,
profit sharing, stock option, bonus, or other employee
benefit plan or practice other than group health and
accident insurance except that Bank employees participate
in Bank's and LSB's cafeteria plans, which include
health, disability insurance (long and short term), life
insurance, and supplemental life insurance, and LSB's
401(k) plan, and thirteen employees in the United
BankCard division of the Bank participate in a "frozen"
401(k) plan. The Bank is in the process of attempting to
terminate this "frozen" plan. None of the Corporations
has violated any of the provisions of ERISA, and none of
them has engaged in any "prohibited transactions" as such
term is defined in Section 406 of ERISA in an amount
which would have a material adverse effect on the Bank or
the Corporations. There is no employee of any of the
Corporations whose employment is governed by a written or
oral employment agreement for a specific term of
employment.
n. Government Authorizations. Each of the
Corporations has all permits, charters, licenses, orders,
and approvals of every federal, state, local, or foreign
governmental or regulatory body required in order to
permit it to carry on its business substantially as
presently conducted except where the absence thereof
would not have a material adverse effect on the Bank or
the affected Corporation. All such licenses, permits,
charters, orders, and approvals are in full force and
effect, and, to the knowledge of the Corporations and
Seller, no suspension or cancellation of any of them is
threatened and none of the Corporations knows of any fact
or circumstance that will materially interfere with or
materially adversely affect the renewal of any of such
licenses, permits, charters, orders, or approvals; and
none of such permits, charters, licenses, orders, and
approvals will be affected by the consummation of the
transactions contemplated by this Agreement.
o. Insurance. Exhibit "O" to the Disclosure
Statement is a complete list of all insurance policies
presently in effect and in effect during the past three
years. All the insurance policies and bonds currently
maintained by any of the Corporations are in full force
and effect.
p. Litigation. Exhibit "P" to the Disclosure
Statement contains a true and complete list and brief
description of all pending or, to the knowledge of any of
the Corporations or any Seller, threatened, Litigation to
which any of the Corporations is or would be a party or
to which any of their assets is or would be subject.
Except as described on Exhibit "P" to the Disclosure
Statement, none of the Corporations is a party to any
Litigation other than routine litigation commenced by the
Bank to enforce obligations of borrowers in which no
counterclaims for any material amounts of money have been
asserted or, to the knowledge of the Corporations or any
Seller, threatened.
q. Brokers or Finders. Except for an agreement
with Lazard Freres & Co., whose fee will be paid by LSB,
no broker, agent, finder, consultant, or other party
(other than legal and accounting advisors) has been
retained by either of the Sellers or any of the
Corporations or is entitled to be paid based upon any
agreements, arrangements, or understandings made by
either of the Sellers or any of the Corporations in
connection with any of the transactions contemplated by
this Agreement.
r. Environmental Compliance. Except as
disclosed in Exhibit "R", to Sellers' knowledge, each of
the Corporations is in material compliance with all
relevant Environmental Laws and none of the Corporations
has any material Environmental Liabilities. None of the
Facilities is now being used or, to either Seller's
knowledge, has at any time in the past ever been used for
the storage (whether permanent or temporary), by any of
the Corporations, or to the knowledge of either Seller,
by third parties, disposal, or handling of any Hazardous
Materials, nor are any Hazardous Materials located in,
on, under, or at any of the Facilities. No Corporation
has received any notice of material violation of any
Environmental Law, or any notice of any material
potential Environmental Liabilities with respect to any
of the Facilities or to any other properties and assets
in which any Corporation has had an interest.
s. Employment of Aliens. Each Corporation is in
material compliance with the Immigration and Control Act
of 1986.
t. Notes and Leases. All promissory notes and
leases owned by the Bank or any other Corporation at the
Effective Time will represent bona fide indebtedness or
obligations to the Bank and are and will be fully
enforceable in accordance with their terms without valid
set-offs or counterclaims, except as limited by
applicable bankruptcy, insolvency, reorganization,
moratorium, or similar Laws and equitable principles
affecting creditors' rights generally; provided, however,
no representation or warranty is made in this Agreement
as to the collectibility of such notes and leases.
u. Updating of Representations and Warranties .
Between the date hereof and the Effective Time, Sellers
will promptly disclose to Fourth in writing any
information of which either of them has actual knowledge
(1) concerning any event that would render any
representation or warranty of Sellers untrue if made as
to the date of such event, (2) which renders any
information set forth in this Agreement or the Disclosure
Statement no longer correct in all material respects, or
(3) which arises after the date hereof and which would
have been required to be included in this Agreement or
Disclosure Statement if such information had existed on
the date hereof.
v. True at Effective Time. Except as otherwise
specifically provided in this Agreement, all of the
representations and warranties of Sellers set forth above
will be true and correct at the Effective Time with the
same force and effect as though such representations and
warranties had been made at the Effective Time.
4.2. Representations and Warranties of Fourth. Fourth
represents and warrants to Sellers as follows:
a. Organization, Good Standing, and Authority.
Fourth is a corporation duly organized, validly existing,
and in good standing under the laws of the State of
Kansas, and has all requisite corporate power and
authority to conduct its business as it is now conducted,
to own its properties and assets, and to lease properties
used in its business. Fourth is not in violation of its
charter documents or bylaws, or of any applicable Law in
any material respect, or in default in any material
respect under any material agreement, indenture, lease,
or other document to which it is a party or by which it
is bound.
b. Binding Obligations; Due Authorization. This
Agreement constitutes the valid and binding obligations
of Fourth, enforceable against it in accordance with its
terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar
laws and equitable principles affecting creditors' rights
generally. The execution, delivery, and performance of
this Agreement and the transactions contemplated hereby
have been duly authorized by the board of directors of
Fourth.
c. Absence of Default. None of the execution or
the delivery of this Agreement, the consummation of the
transactions contemplated hereby, or the fulfillment of
the terms hereof, will (1) conflict with, or result in
a breach of the terms, conditions, or provisions of, or
constitute a default under the charter documents or
bylaws of Fourth or under any agreement or instrument
under which Fourth is obligated, or (2) violate any Law
to which it is subject.
d. Brokers or Finders. No broker, agent,
finder, consultant, or other party (other than legal and
accounting advisors) has been retained by Fourth or is
entitled to be paid based upon any agreements,
arrangements, or understandings made by Fourth in
connection with any of the transactions contemplated by
this Agreement.
e. Required Approvals. Fourth knows of no
reason that would preclude obtaining the Required
Approvals in a timely manner, but various persons have
the right to object to the granting of Required Approvals
and the various governmental agencies involved can be
expected to conduct various types of economic and other
analysis, any one of which may cause a delay or denial of
a requested approval.
f. Capitalization of the Bank. Fourth will
contribute such additional capital to BANK IV as may be
necessary in order for BANK IV to be well capitalized
following consummation of the Purchase, the Merger, and
the other transactions contemplated or permitted by this
Agreement. Fourth has sufficient capital resources to be
able to make such additional capital contribution and to
perform its obligations under this Agreement.
ARTICLE V
CLOSING CONDITIONS
5.1. Conditions to Obligations of Fourth. The
obligations of Fourth to purchase the Shares shall be subject to
the following conditions which may, to the extent permitted by Law,
be waived by Fourth at its option:
a. Absence of Litigation. No order, judgment,
or decree shall be outstanding restraining or enjoining
consummation of the purchase of the Shares, the Merger,
or any of the other transactions permitted or
contemplated by this Agreement; and no Litigation shall
be pending or threatened in which it is sought to
restrain or prohibit the purchase of the Shares, the
Merger, or any of the other transactions permitted or
contemplated by this Agreement or to obtain other
substantial monetary or other relief against one or more
of the parties hereto in connection with this Agreement.
b. Regulatory Approvals. All Required Approvals
shall have been procured (and shall continue to be in
effect) and all other requirements prescribed by Law
shall have been satisfied.
c. Minimum Tangible Book Value of Bank. The
Tangible Book Value of the Bank as of the Effective Time,
without taking into account any restructuring charges
described in Section 2.3(b) of this Agreement, shall be
not less than $41,000,000. Such amount shall be
substantiated by the total consolidated stockholder's
equity of the Bank as reflected in the books of record
and balance sheets of the Bank.
d. Opinion of Counsel. Fourth shall have
received the opinion of Housley Goldberg & Kantarian,
P.C., counsel to the Corporations and Sellers,
substantially in the form of Exhibit "A" hereto.
e. Representations and Warranties; Covenants.
The representations and warranties of the Sellers
contained in this Agreement shall have been true and
correct in all material respects on the date made and
shall be true and correct in all material respects at the
Effective Time as though made at such time, excepting any
changes occurring in the ordinary course of business,
none of which shall have been materially adverse, and
excepting any changes contemplated or permitted by this
Agreement. Sellers shall have performed all of their
obligations under this Agreement.
f. Certificates. Sellers shall have delivered
to Fourth a certificate, in form and substance
satisfactory to Fourth, dated the Effective Time and
signed by the chief executive officer and chief financial
officer of each of the Corporations, certifying in such
detail as Fourth may reasonably request the fulfillment
of the foregoing conditions.
g. Resignations. Sellers shall have delivered
to Fourth the written resignations, effective at the
Effective Time, of those officers and directors of the
Bank and the other Corporations as Fourth shall have
requested at least two business days prior to the
Effective Time.
h. 1993 Audit Report. Seller shall have
delivered to Fourth a copy of the Bank's audited
consolidated Financial Statements as of December 31, 1993
and for the year then ended, with auditor's report
thereon and notes thereto.
i. Lease of Equity Tower. Northwest Tower
Limited Partnership shall have entered into a lease as
lessor of the Equity Tower, substantially in the form of
Exhibit "C" hereto.
j. Satisfactory Environmental Reports. Fourth
shall have received environmental assessment reports
covering all of the Facilities, in form and substance
reasonably satisfactory to Fourth, which do not cause
Fourth reasonably to conclude that there are any material
Environmental Liabilities associated with any of the
Facilities.
5.2. Conditions to Obligations of Sellers. The
obligation of Sellers to sell the Shares and to consummate the
transactions contemplated hereby shall be subject to the following
conditions which may, to the extent permitted by Law, be jointly
waived by Sellers at their option:
a. General. Each of the conditions specified in
clauses a and b of Section 5.1 shall have occurred and be
continuing.
b. Representations and Warranties; Covenants.
The representations and warranties of Fourth contained in
this Agreement shall have been true and correct in all
material respects on the date made and shall be true and
correct in all material respects at the Effective Time as
though made at such time. Fourth shall have duly
performed all of its obligations under this Agreement.
c. Minimum Purchase Price. The Purchase Price
shall be not less than $92,000,000, which minimum amount
shall be reduced by the amount of the option price
described in clause c of Section 7.5 if such option has
been exercised by Sellers.
d. Fairness Opinion. LSB shall have received by
February 10, 1994, a written opinion from Lazard Freres
& Co. to the effect that the Purchase Price is fair to
Sellers from a financial point of view.
e. Opinion of Counsel. Sellers shall have
received the opinion of Foulston & Siefkin, counsel to
Fourth, substantially in the form of Exhibit "B" hereto.
f. Certificates. Fourth shall have delivered to
Sellers a certificate, in form and substance reasonably
satisfactory to Sellers, dated the Effective Time and
signed by the chief executive officer and chief financial
officer of Fourth, certifying in such detail as Sellers
may reasonably request, the accuracy of the
representations and warranties and the fulfillment of the
covenants of Fourth hereunder.
g. LSB's Stockholder Approval. The stockholders
of LSB shall have approved this Agreement and the
Purchase.
h. Change in Treasury Regulations. The United
States Department of the Treasury shall not have finally
adopted the proposed changes to the Treasury Regulations,
at Sec. 1.1502-33 (56 FR 47379, Sept. 19, 1991, revised
57 FR 53550, Nov. 12, 1992, revised, 57 FR 62251, Dec.
30, 1992), nor shall have any other change in the Law
occurred with the effect, in the reasonable judgment of
Sellers based upon the advice of their tax advisors, that
the tax basis of LSB or Prime in the Bank Stock shall be
significantly reduced.
i. Conveyance of Retained Corporations and
Retained Assets. On or before the Effective Time, all of
the Retained Assets and all of the Bank's interests in
the Retained Corporations shall have been transferred to
Sellers or their designee or designees as provided in
this Agreement.
ARTICLE VI
TERMINATION OF AGREEMENT
6.1. Mutual Consent; Termination Date. This Agreement
shall terminate at any time when the parties hereto mutually agree
in writing. This Agreement may also be terminated at the election
of either Sellers (acting jointly) or Fourth, upon written notice
from the party electing to terminate this Agreement to the other
party if, without fault on the part of the party electing to
terminate this Agreement, there has been a denial of a Required
Approval or the imposition of one or more terms (not including a
requirement to divest a single branch of the Bank not located in
Oklahoma City) reasonably deemed onerous by Fourth or Sellers as a
condition to obtaining a Regulatory Approval. Unless extended by
written agreement of the parties, this Agreement shall terminate if
all conditions to the obligations of the parties hereto have not
occurred on or before June 30, 1994.
6.2. Election by Fourth. This Agreement shall
terminate at Fourth's election, upon written notice from Fourth to
Sellers if any one or more of the following events shall occur and
shall not have been remedied to the satisfaction of Fourth within
30 days after written notice is delivered to Seller: (a) there
shall have been any uncured material breach of any of the
obligations, covenants, or warranties of the Sellers hereunder; or
(b) there shall have been any written representation or statement
furnished by the Sellers hereunder which at the time furnished is
false or misleading in any material respect in relation to the size
and scope of the transactions contemplated by this Agreement.
6.3. Election by Sellers. This Agreement shall
terminate at the election of Sellers (acting jointly) upon written
notice from Sellers to Fourth if any one or more of the following
events shall occur and shall not have been remedied to its
satisfaction within 30 days after written notice is delivered to
Fourth: (a) there shall have been any uncured material breach of
any of the obligations, covenants, or warranties of Fourth
hereunder; or (b) there shall have been any written representation
or statement furnished by Fourth hereunder which at the time
furnished is false or misleading in any material respect in
relation to the size and scope of the transactions contemplated by
this Agreement.
ARTICLE VII
INDEMNIFICATION
7.1. Effect of Closing. Except as provided in this
Section, closing of the transactions contemplated by this Agreement
shall not prejudice any claim for damages which any of the parties
hereto may have hereunder in law or in equity, due to an uncured
material default in observance or the due and timely performance of
any of the covenants and agreements herein contained or for the
material breach of any warranty or representation hereunder, unless
such observance, performance, warranty, or representation is
specifically waived in writing by the party making such claim. If
any warranty or representation contained herein is or becomes
untrue or breached in any material respect (other than by reason of
any willful misrepresentation or breach of warranty) and such
breach or misrepresentation is promptly communicated to the other
parties in writing prior to the Effective Time, such non-breaching
parties shall have the right (jointly in the case of Sellers), at
their sole option, either to waive such misrepresentation or breach
in writing or to terminate this Agreement, but in either such
event, the breaching parties shall not be liable to the other
parties for any such damages, costs, expenses, or otherwise by
reason of such breach or misrepresentation. If such non-breaching
parties elect to close the transactions contemplated by this
Agreement notwithstanding the written communication of such breach
or misrepresentation, they shall be deemed to have waived such
breach or misrepresentation in writing. Similarly, if Fourth
receives an environmental assessment report on the Facilities
pursuant to Section 5.1(j) indicating the existence of any
Environmental Liability and elects to close the transactions
contemplated by this Agreement, it shall be deemed to have waived
all right to indemnification with respect thereto.
7.2. General Indemnification. Subject to the
limitations on the liability of Sellers contained in Section 7.1
and this Section 7.2, Sellers shall be jointly and severally liable
for, and shall defend, save, indemnify, and hold harmless Fourth,
BANK IV, the Corporations, and their respective successors,
officers, directors, employees, and agents, and each of them
(hereinafter individually referred to as an "Indemnitee" and
collectively as "Indemnitees") against and with respect to any
losses, liabilities, claims, diminution in value, litigation,
demands, damages, costs, charges, reasonable legal fees, suits,
actions, proceedings, judgments, expenses, or any other losses
(herein collectively referred to as "Indemnifying Losses") that may
be sustained, suffered, or incurred by, or obtained against, any
Indemnitee arising from or by reason of the material uncured breach
or nonfulfillment of any of the warranties, agreements, or
representations made by the Sellers, in this Agreement; provided,
however that the liability of Sellers to defend, save, indemnify,
and hold harmless any of the Indemnitees for any liabilities,
claims, or demands indemnified under this Section 7.2 (but not
under Section 7.5, 7.6, or 7.7) or any damages, costs, charges,
reasonable legal fees, suits, actions, proceedings, or judgments
received, incurred, filed, or entered thereon, shall be limited to
the amount by which all such liabilities, claims, and demands so
discovered or made, and all damages, costs, charges, reasonable
legal fees, suits, actions, proceedings, judgments, expenses, and
other losses recovered, incurred, filed, or entered thereon or in
connection therewith, exceed $1,000,000 in the aggregate, net of
income tax effect and such liability shall not exceed $25,000,000.
Indemnitees shall be obligated to exhaust all reasonably available
remedies as a condition to being indemnified hereunder but not as
a condition to giving notice pursuant to Sections 7.3 and 7.4. It
is agreed that the indemnification obligations of Sellers hereunder
shall be solely for the benefit of the Indemnitees and may not be
enforced by any insuror under any subrogation or similar agreement
or arrangement or by any governmental agency except as a receiver
for an Indemnitee.
7.3. Procedure. If any claim or demand shall be made
or liability asserted against any Indemnitee, or if any Litigation,
suit, action, or administrative or legal proceedings shall be
instituted or commenced in which any Indemnitee is involved or
shall be named as a defendant either individually or with others,
and if such Litigation, claim, demand, liability, suit, action, or
proceeding, if successfully maintained, will result in any
Indemnifying Losses as defined in Section 7.2, Fourth shall give
Sellers written notice thereof as soon as practicable but within 20
days (ten days in the case of legal process) after it acquires
knowledge thereof. If the Indemnifying Loss arises otherwise,
Fourth shall give notice to Sellers within 20 days of the discovery
of the basis therefor. If, within 20 days after the giving of such
notice, Fourth receives written notice from Sellers stating that
Sellers dispute or intend to defend against or prosecute, as the
case may be, such claim, demand, liability, suit, action, or
proceeding, then Sellers shall have the joint right to select
counsel of their choice and to dispute or defend against,
prosecute, or settle such claim at their expense, and the
Indemnitees shall fully cooperate with Sellers in such dispute,
prosecution, defense or settlement so long as Sellers are
conducting such dispute, defense, or prosecution diligently and in
good faith. If no such notice of intent to dispute or defend is
received by Fourth within the aforesaid 20-day period, of if such
diligent and good faith defense is not being, or ceases to be,
conducted, Fourth shall have the right, directly or through one or
more of the Indemnitees, to dispute and defend against the claim,
demand, or other liability at the cost and expense of Sellers, to
settle such claim, demand, or other liability, together with
interest or late charges thereon, and in either event to be
indemnified as provided in this Agreement so long as Fourth
conducts such defense diligently and in good faith. If any event
shall occur that would entitle Indemnitees to a right of
indemnification hereunder, any loss, damage, or expense subject to
indemnification shall be the after-tax net loss to the Indemnitees
(in excess of $1,000,000 but not to exceed $25,000,000, as provided
in the preceding section) after due allowance for the income tax
effect, if any, of amounts to be received by the Indemnitees
hereunder, insurance, or offsetting income or assets resulting
therefrom.
7.4. Survival of Representations and Warranties.
Notwithstanding any rule of law or provision of this Agreement to
the contrary, the representations and warranties of Sellers
contained in this Agreement shall survive the Closing and the
Purchase and the closing of the transactions described in this
Agreement; provided, however, that (except for the indemnification
obligations contained in Sections 7.6 and 7.7 hereof, as to which
there shall be no time limit) no claim for indemnification or
breach of warranty under this Agreement shall be valid unless an
Indemnitee shall have given written notice of its assertion or
claim to Seller:
(a) within three years from the Effective Time in
the case of a claim for breach of any representation or
warranty contained in Section 4.1.k of this Agreement;
(b) by the earlier of October 31, 1998 or 30 days
after the date on which the Internal Revenue Service
completes its examination of Fourth's 1994 federal income
tax return and gives Fourth written notice of any
proposed adjustments (provided that both such periods
shall be extended by a period of time equal to 30 days
plus the length of in each case any periods for which LSB
shall have agreed to a tolling of any limitation period
applicable to the assertion against LSB or any member of
the Group described in Section 4.1.k of any deficiency by
the Internal Revenue Service) in the case of a claim
under Section 7.5 of this Agreement; and
(c) within two years of the Effective Time in all
other cases.
7.5. Special Indemnification.
(a) Separate and apart from the indemnification
provisions in the preceding sections of this Article VII,
and not subject to the deductibility and maximum
liability provisions contained in Section 7.2, Sellers
jointly and severally agree to indemnify BANK IV and
Fourth from any reduction in the aggregate amount of the
Bank's net operating loss carryforward for federal income
tax purposes (to the extent an adjustment has not already
been made pursuant to Section 2.4(b)), below $64,000,000;
provided, however, that such reduction results from
either (i) a reduction required by final action related
to an audit or adjustment by the Internal Revenue Service
and made retroactive to the period prior to the Effective
Time or (ii) a reduction in the net operating loss
carryforward of the Bank at the Effective Time
attributable to the consolidated taxable income of LSB
(after taking into account the taxable income or loss of
each member of the consolidated group contained in the
consolidated return of LSB and taking into account the
allocations of consolidated income, gain, and loss
affecting such net operating loss carryforward),
including the effects of the sale of the Retained Assets
and Retained Corporations to Sellers and all
extraordinary items. The payment to be made by Sellers
shall be equal to the product of (a) the dollar amount of
the reduction required in (i) above and/or the reduction
determined in (ii) above, and (b) a fraction, the
numerator of which shall be $10,500,000, and the
denominator of which shall be $64,000,000. However, to
the extent that an adjustment merely postpones the
related tax benefit to BANK IV or Fourth to a later,
reasonably ascertainable period, then such adjustment
shall not be subject to this special indemnification.
(b) If there is an audit or similar inquiry of
the Internal Revenue Service of any tax return which may
have the effect of reducing the Bank's net operating loss
as of or for a period prior to the Closing, all parties
to this Agreement shall cooperate with each other as to
the determination of the adjustments under such audit,
shall make available to each other as may reasonably be
requested all information, records, and documents until
the expiration of any applicable statute of limitations
or extensions thereof.
(c) Sellers shall have the right and option,
exercisable at any time prior to the business day next
preceding the Effective Time, by giving written notice to
Fourth, to elect to have the Purchase Price reduced by
$600,000 in consideration of the termination of Section
7.5(a) of this Agreement, in which event the provisions
of Section 7.5(a) shall thereupon be of no further force
and effect.
7.6. Separate Indemnification for Environmental
Matters. Separate and apart from the indemnification provided in
the preceding sections of this Article VII, and not subject to the
$1,000,000 deductibility and $25,000,000 maximum liability
provisions contained in Section 7.2, Sellers shall be jointly and
severally liable for, and shall forever defend, save, indemnify,
and hold harmless Fourth, Bank, and BANK IV from and against, any
and all Environmental Liabilities that may be incurred or sustained
by, or rendered against Fourth, Bank, or BANK IV arising in any
manner out of the direct or indirect ownership or operation at any
time by the Bank or by any of its current or former Subsidiaries
of any current or former Non-Bank Facility (as hereinafter
defined). "Non-Bank Facility" means any interest in real property,
building, plant, structure, or equipment which is not (i) currently
or formerly owned or operated by the Bank in the ordinary course of
its banking business as a banking facility, (ii) the Equity Tower,
(iii) property located at Coffee Creek Road and Kelly Avenue,
Edmond, Oklahoma, (iv) an OREO Property, or (v) collateral held as
security for loans or participations.
7.7. Separate Indemnification for Barki Litigation,
COMAC, and 401(k) Plan. Separate and apart from the
indemnification provided in the preceding sections of this Article
VII, and not subject to the $1,000,000 deductibility and
$25,000,000 maximum liability provisions contained in Section 7.2,
Sellers shall be jointly severally liable for, and shall forever
defend, save, indemnify, and hold harmless Fourth, BANK IV, and
Bank from and against any and all losses, expenses (including
amounts reasonably paid in settlement), liabilities, costs,
penalties, damages, and judgments that may be incurred or sustained
by, or rendered against, Fourth, BANK IV, or Bank arising out of or
associated in any manner with (i) the United BankCard division
"frozen" 401(k) plan described in Section 4.1(m) of this Agreement,
(ii) Mai-Li Barki vs. Equity Bank for Savings, F.A. et al., Case
No. CJ-91-90852, filed in the District Court of Oklahoma County,
Oklahoma or otherwise out of the claims contained in such case, or
(iii) the pending Internal Revenue Service examination of COMAC
Financial Services Ltd Partnership described in Exhibit "K" to the
Disclosure Statement; provided, however, BANK IV shall be
responsible for the payment of one-half of the out-of-pocket
attorneys' fees and costs incurred in connection with the Barki
litigation. Sellers shall have the right to defend the Barki
action in accordance with the provisions of Section 7.2 of this
Agreement.
7.8. Director and Officer Indemnification. From and
after the Effective Time, Fourth shall indemnify, defend, and hold
harmless each person who is now, or has been at any time prior to
the date hereof or who becomes prior to the Effective Time, an
officer, director, or employee of any of the Corporations (the
"Bank Indemnified Parties") against all losses, claims, damages,
costs, expenses (including attorney's fees), liabilities, or
judgments or amounts that are paid in settlement (which settlement
shall require the prior written consent of Fourth, which consent
shall not be unreasonably withheld) of or in connection with any
claim, action, suit, proceeding, or investigation (each a "Claim")
in which a Bank Indemnified Party is, or is threatened to be made,
a party based in whole or in part on or arising in whole or in part
out of the fact that such person is or was a director, officer, or
employee of a Corporation if such Claim pertains to any matter or
fact arising, existing, or occurring prior to the Effective Time
(but excluding the transactions expressly contemplated by this
Agreement), regardless of whether such Claim is asserted or claimed
prior to, or at or after, the Effective Time (the "Indemnified
Liabilities") to the full extent required under applicable law in
effect as of the date hereof or as amended applicable to a time
prior to the Effective Time or as required under the Bank's charter
and bylaws (and Fourth shall pay expenses in advance of the final
disposition of any such action or proceeding to each Bank
Indemnified Party to the full extent permitted by applicable law
in effect as of the date hereof or as amended applicable to a time
prior to the Effective Time upon receipt of any undertaking
required by applicable law). Any Bank Indemnified Party wishing to
claim indemnification under this Section 7.8 upon learning of any
Claim, shall notify Fourth (but the failure so to notify Fourth
shall not relieve Fourth from any liability which it may have under
this Section 7.8 except to the extent such failure materially
prejudices Fourth) and shall deliver to Fourth copies of all demand
letters, notices, summonses, pleadings, and other documents which
such party may have received relating to such Claim. The
obligations of Fourth described in this Section 7.8 continue in
full force and effect, without any amendment thereto, for a period
of three years from the Effective Time; provided, however, that all
rights to indemnification in respect of any Claim asserted or made
within such period shall continue until the final disposition of
such Claim.
ARTICLE VIII
MISCELLANEOUS
8.1. Expenses. Whether or not the Purchase is effected
and whether or not this Agreement is terminated, all costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such expense.
8.2. Notices. All notices or other communications
required or permitted hereunder shall be sufficiently given if
personally delivered or if sent by certified or registered mail,
postage prepaid, return receipt requested, addressed as follows:
(a) If to Fourth, addressed to Ronald L. Baldwin, Executive Vice
President, Post Office Box 2360, Tulsa, Oklahoma 74101-2360; and
(b) if to the Sellers, addressed to Tony M. Shelby, Senior Vice
President, Post Office Box 754, 16 South Pennsylvania, Oklahoma
City, Oklahoma 73107, or to such other person or such other address
as shall have been furnished in writing in the manner provided
herein for giving notice.
8.3. Time. Time is of the essence of this Agreement.
8.4. Law Governing. This Agreement shall, except to
the extent federal law is applicable, be construed in accordance
with and governed by the laws of the State of Kansas, without
regard to the principles of conflicts of laws thereof.
8.5. Entire Agreement; Amendment. This Agreement
contains and incorporates the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof and
supersedes all prior negotiations, agreements, letters of intent,
and understandings. This Agreement may only be amended by an
instrument in writing duly executed by Fourth and Sellers and all
attempted oral waivers, modifications, and amendments shall be
ineffective.
8.6. Successors and Assigns. The rights and
obligations of the parties hereto shall inure to the benefit of and
shall be binding upon the successors and permitted assigns of each
of them; provided, however, that this Agreement or any of the
rights, interests, or obligations hereunder may not be assigned by
any of the parties hereto without the prior written consent of the
other parties hereto.
8.7. Cover, Table of Contents, and Headings. The
cover, table of contents, and the headings of the sections and
subsections of this Agreement are for convenience of reference only
and shall not be deemed to be a part hereof or thereof or taken
into account in construing this Agreement.
8.8. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original
but which together shall constitute but one agreement.
8.9. No Third Party Beneficiaries. Except as
specifically provided herein, nothing in this Agreement shall
entitle any person other than Sellers and Fourth to any claim,
cause of action, remedy, or right of any kind.
8.10. Severability. Whenever possible, each provision
of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of
this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed.
FOURTH FINANCIAL CORPORATION
By
---------------------------------
/s/Darrell G. Knudson,
Chairman of the Board
"Fourth"
PRIME FINANCIAL CORPORATION LSB INDUSTRIES, INC.
By_________________________ By_________________________
"Prime" "LSB"
"Sellers"
EXHIBIT "A"
_______, 1994
Board of Directors
Fourth Financial Corporation
Wichita, Kansas
Gentlemen:
We have acted as counsel to LSB Industries, Inc. ("LSB")
and Prime Financial Corporation ("Prime") (collectively "Sellers")
in connection with the preparation of the Stock Purchase Agreement,
dated as of February 8, 1994, among Fourth Financial Corporation
and Sellers (the "Agreement"). This Opinion Letter is provided to
you at the request of Seller pursuant to Section 5.1(d) of the
Agreement. Except as otherwise indicated herein, capitalized terms
used in this Opinion Letter are defined in the Agreement or the
Accord described below.
This Opinion Letter is governed by, and shall be
interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the ABA Section of Business Law (1991). As a
consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and
this Opinion Letter should be read in conjunction therewith. The
law covered by the opinions expressed herein is limited to the
Federal Law of the United States, the corporate Law of the State of
Deleware, and the Law of the State of Oklahoma. The confirmation
concerning Litigation below is further limited to our Actual
Knowledge after interviews with corporate officers and review of
copies of documents relating to Litigation furnished to us by such
officers. Based upon and subject to the foregoing, we are of the
opinion that:
1. Organization and Good Standing. Each Seller
is a savings and loan holding company duly registered
pursuant to the federal Home Owners' Loan Act. Sellers
and the Corporations are each a corporation or savings
bank duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation.
2. Binding Obligations. The Agreement is
enforceable against each Seller.
3. Absence of Default. None of the execution or
the delivery of the Agreement, the consummation of the
Purchase, or the performance by Sellers of the terms
thereof, will (a) violate the Constituent Documents of
any of the Corporations or of either Seller, (b) breach
or result in a default under any agreement or instrument
under which any of the Corporations or either Seller is
obligated of which we have Actual Knowledge, or (c)
violate any Laws to which any of the Corporations or
either Seller is subject.
4. Capitalization. The Bank is authorized to
issue 1,000,000 shares of common stock, par value $.01
per share, of which 100,000 shares are validly issued and
outstanding. Prime is the owner, free and clear of all
encumbrances, liens, and security interests whatsoever,
of all issued and outstanding shares of Bank Stock. LSB
owns all of the issued and outstanding capital stock of
Prime.
5. Options. None of the Corporations has
outstanding any options, warrants, or rights of any kind
requiring it to sell or issue to anyone any capital stock
of any class, and to our Actual Knowledge, none of the
Corporations has agreed to sell any shares of its capital
stock.
6. Governmental Approvals. The execution,
delivery, and performance of the Agreement by Sellers do
not require any approval, authorization, consent,
exemptions, notices of intent not to disapprove, or other
action of any regulatory body, administrative agency, or
any other governmental body or any filing with any
governmental body to which either Seller or any
Corporation is subject, other than approvals of or
filings with the Board, the OTS, and the Comptroller.
All such requisite approvals, authorizations, consents,
exemptions, and notices have been taken by the
appropriate governmental body.
We hereby confirm to you that the Disclosure Statement
contains a true and complete list and brief description of all
Litigation pending or overtly threatened in writing to which any of
the Corporation is or would be a party or to which any of their
assets is or would be subject. Except as set forth in Exhibit "P"
to the Disclosure Statement, none of the Corporations is a party to
any Litigation other than routine litigation commenced by the Bank
to enforce obligations of borrowers in which no counterclaims for
any material amounts of money have been asserted or overtly
threatened in writing.
The phrase "Primary Lawyer Group", as used in the Accord,
is hereby modified and, for the purposes of applying the Accord to
this Opinion Letter, the Primary Lawyer Group means only the
lawyers in this firm who have given substantive legal attention to
representation of Sellers and the Corporations in connection with
the Transaction.
This Opinion Letter may be relied upon by you only in
connection with the Transaction and may not be used or relied upon
by you or any other person for any purpose whatsoever, except to
the extent authorized in the Accord, without in each instance our
prior written consent.
Very truly yours,
Housley Goldberg & Kantarian P.C.
EXHIBIT "B"
___________, 1994
Boards of Directors and Stockholders
LSB Industries, Inc.
Prime Financial Corporation
Gentlemen:
We have acted as counsel to Fourth Financial Corporation
("Fourth") in connection with the preparation of the Stock Purchase
Agreement, dated as of February 9, 1994, among Fourth, LSB
Industries, Inc., and Prime Financial Corporation (the
"Agreement"). This Opinion Letter is provided to you at the
request of Fourth pursuant to Section 5.2.e of the Agreement.
Except as otherwise indicated herein, capitalized terms used in
this Opinion Letter are defined in the Agreement or the Accord
described below.
This Opinion Letter is governed by, and shall be
interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the ABA Section of Business Law (1991). As a
consequence, it is subject to a number of qualifications,
exceptions, assumptions, definitions, limitations on coverage and
other limitations, all as more particularly described in the
Accord, and this Opinion Letter should be read in conjunction
therewith. The law covered by the opinions expressed herein is
limited to the federal Law of the United States and the Law of the
State of Kansas.
Based upon and subject to the foregoing, we are of the
opinion that:
1. Organization, Good Standing, and Authority.
Fourth is a bank holding company duly registered pursuant
to the Bank Holding Company Act. Fourth is a corporation
validly existing and in good standing under the laws of
the jurisdiction of its incorporation.
2. Binding Obligations. The Agreement is
enforceable against Fourth.
3. Absence of Default. None of the execution or
the delivery of the Agreement, the consummation of the
Purchase, or the performance by Fourth of its agreements
therein will (a) violate the Constituent Documents of
Fourth, (b) breach or result in a default under any
agreement or instrument under which Fourth is obligated
of which we have Actual Knowledge, or (c) violate any
Laws to which Fourth is subject.
4. Governmental Approvals. The execution,
delivery, and performance of the Agreement by Fourth does
not require any approval, authorization, consent,
exemptions, notices of intent not to disapprove, or other
action of any regulatory body, administrative agency, or
any other governmental body or any filing with any
governmental body to which Fourth is subject, other than
approvals of or filings with the Board, the Comptroller,
and the OTS. All such requisite approvals,
authorizations, consents, exemptions, and notices have
been taken by the appropriate governmental body.
The phrase "Primary Lawyer Group", as used in the Accord,
is hereby modified and for the purposes of applying the Accord to
this Opinion Letter the Primary Lawyer Group means only the lawyers
in this firm who have given substantive legal attention to
representation of Fourth in connection with the Transaction.
This Opinion Letter may be relied upon by you only in
connection with the Transaction and may not be used or relied upon
by you or any other person for any purpose whatsoever, except to
the extent authorized by the Accord, without in each instance our
prior written consent.
Very truly yours,
FOULSTON & SIEFKIN
EXHIBIT "E"
AGREEMENT TO MERGE
between
BANK IV OKLAHOMA, NATIONAL ASSOCIATION
and
EQUITY BANK FOR SAVINGS, F.A.
under the charter of
BANK IV OKLAHOMA, NATIONAL ASSOCIATION
under the title of
BANK IV OKLAHOMA, NATIONAL ASSOCIATION
THIS AGREEMENT made between BANK IV Oklahoma, National
Association (hereinafter referred to as "BANK IV"), a banking
association organized under the laws of the United States, being
located at 515 South Boulder, City of Tulsa, County of Tulsa, in
the State of Oklahoma, with a capital of $190,712,286.07 divided
into 5,720,647 shares of common stock, each of $5.00 par value, and
surplus of $133,050,335.55 and undivided profits, including capital
reserves, of $29,058,715.74 as of December 31, 1993, and Equity
Bank for Savings, F.A. (hereinafter referred to as "Equity"), a
federal savings association organized under the laws of the United
States, being located at 1601 N.W. Expressway, Oklahoma City,
Oklahoma County, in the State of Oklahoma, with a capital of
$1,000.00, divided into 100,000 shares of common stock, each of
$.01 par value, and surplus and undivided profits of approximately
$__________ as of December 31, 1993, each acting pursuant to a
resolution of its board of directors, adopted by the vote of a
majority of its directors, pursuant to the authority given by and
in accordance with the provisions of the Act of November 7, 1918,
as amended (12 USC 215c).
W I T N E S S E T H: That,
Section 1. Equity shall be merged into BANK IV under the
charter of the latter, simultaneously with the consummation of the
Purchase, as such term is defined in a Stock Purchase Agreement,
dated as of February 9, 1994, between Fourth Financial Corporation,
as purchaser, and LSB Industries, Inc. and Prime Financial
Corporation, as sellers (the "Stock Purchase Agreement").
Section 2. The name of the receiving association
(hereinafter referred to as the "Association") shall be BANK IV
Oklahoma, National Association.
Section 3. The business of the Association shall be that
of a national banking association. This business shall be
conducted by the Association at its main office which shall be
located at 515 South Boulder, Tulsa, Oklahoma, and at its legally
established branches.
Section 4. The amount of capital stock of the
Association shall be $__________ divided into _________ shares of
common stock, each of $5.00 par value, and at the time the merger
shall become effective, the Association shall have a surplus of
$___________, and undivided profits, including capital reserves,
which when combined with the capital and surplus will be equal to
the combined capital structures of the merging banks as stated in
the preamble of this Agreement, adjusted, however, for normal
earnings and expenses (and, if applicable, other merger
transactions effected by BANK IV prior to the time this merger is
effective and purchase accounting adjustments) between December 31,
1993, and the effective time of the merger. The amount of capital
stock of the Association and its surplus and undivided profits at
the time the merger becomes effective shall also be adjusted to
reflect the effect of all mergers of other banks into the
Association, if any, between December 31, 1993 and the effective
time of the merger.
Section 5. All assets as they exist at the effective
time of the merger shall pass to and vest in the Association
without any conveyance or other transfer. The Association shall be
responsible for all of the liabilities of every kind and
description, including liabilities arising from the operation of a
trust department, of Equity existing as of the effective time of
the merger.
Section 6. Of the capital stock of the Association, the
presently outstanding 5,720,647 shares of common stock, each of
$5.00 par value, the two holders of it, Fourth Financial
Corporation and IV Commercial Acquisition, Inc., shall retain their
present rights. In addition, Fourth Financial Corporation, who
will then be the sole stockholder of Equity, shall receive by
reason of the merger an additional 200 shares of common stock, par
value $5.00 per share, of the Association.
Section 7. Except as expressly permitted in the Stock
Purchase Agreement, Equity shall not (i) declare or pay any
dividend to its shareholders, (ii) dispose of any of its assets in
any other manner except in the normal course of business and for
adequate value, or (iii) take any other action which would violate
the terms of the Stock Purchase Agreement.
Section 8. The present board of directors and officers
of BANK IV shall continue to serve as the board of directors and
officers of the Association until the next annual meeting or until
such time as their successors have been elected and have qualified.
Section 9. Effective as of the time this merger shall
become effective as specified in the merger approval to be issued
by the Comptroller of the Currency, the articles of association of
the resulting bank shall be the Articles of Association of BANK IV.
Section 10. This Agreement may be terminated as provided
in the Stock Purchase Agreement. Notwithstanding the approval of
this Agreement by any shareholder group, this Agreement shall
automatically terminate upon the termination of the Stock Purchase
Agreement for any reason, and in no event shall the merger of
Equity into BANK IV occur prior to the consummation of the Purchase
as such term is defined in the Stock Purchase Agreement.
Section 11. This Agreement shall be ratified and
confirmed by the affirmative vote of shareholders of each of BANK
IV and Equity owning at least two-thirds of its capital stock
outstanding, at a meeting to be held on the call of the directors;
and the merger shall become effective at the time specified in a
merger approval to be issued by the Comptroller of the Currency of
the United States.
WITNESS, the signatures and seals of said merging banks
this ___ day of February, 1994, each set by its chairman of the
board, president, or a vice president and attested to by its
cashier or secretary, pursuant to a resolution of its board of
directors, acting by a majority:
BANK IV OKLAHOMA,
NATIONAL ASSOCIATION
Attest:
By___________________
____________________ /s/Ronald L. Baldwin
/s/Lisa R. Carr, Secretary President
[Seal of Bank]
Equity Bank for Savings, F.A.
Attest:
By_________________________
___________________________ ________________, President
_____________, Secretary
[Seal of Association]
STATE OF OKLAHOMA )
) SS:
TULSA COUNTY )
On this ____ day of February, 1994, before me, a notary
public for this state and county, personally came Ronald L.
Baldwin, President, and Lisa R. Carr as Secretary, of BANK IV
Oklahoma, National Association, and each in his/her capacity
acknowledged this instrument to be the act and deed of the
association and the seal affixed to it to be its seal.
WITNESS my official seal and signature this day and year.
_____________________
My Appointment Expires: Notary
- ----------------------
STATE OF OKLAHOMA )
) SS:
OKLAHOMA COUNTY )
On this ___ day of February, 1994, before me, a notary
public for this state and county, personally came _______________
as President, and _____________ as Secretary of Equity Bank for
Savings, F.A., a federal savings association, and each in his/her
capacity acknowledged this instrument to be the act and deed of the
association and the seal affixed to it to be its seal.
WITNESS my official seal and signature this day and year.
_____________________
My Appointment Expires: Notary Public
______________________
EXHIBIT 10.15
June 2, 1993
Mike Shonka, SVP & Chief Financial Officer
Fourth Financial Corporation
P.O. Box 4
Wichita, KS 67201-0004
Dear Mike:
We confirm by this letter that Continental Bank, N.A. ("CBNA") has established a
committed short-term corporate liquidity and commercial paper backup line of
credit in favor of Fourth Financial Corporation ("FFC") in the amount of $35
million effective June 2, 1993 through May 31, 1994, subject to the following
terms and conditions:
1) The Bank will lend to FFC from time to time, amounts not exceeding
in aggregate outstanding at any one time $35 million. The maturity
of any individual borrowing shall be determined by FFC in advance,
provided that no individual borrowing will have a maturity date later
than May 31, 1994.
2) All borrowings under this line will be senior unsecured obligations of
FFC.
3) Fourth Financial may borrow under this line for short-term bridge
funding of an acquisition, not to include hostile or unfriendly
acquisitions, for period of up to 90 days.
4) Before first borrowing under this line, FFC, will, in advance, supply
CBNA with a certified copy of its General Operating and Borrowing
Resolution, certificates of incumbency, a Note, and any other
documents CBNA may reasonably require, attesting to the authority
and signature authenticity of any person or persons requesting the
borrowings from CBNA.
5) FFC may repay all or part of any individual borrowing under the line
at any time without penalty, other than our costs associated with
broken funding if applicable.
6) The line is subject to a facility fee on the commitment amount at the
rate of 1/8 of 1% per annum. The facility fee will be computed and
paid at the end of each calendar quarter in arrears, based on the
actual number of days elapsed in a year of 365 days.
7) Borrowing under the line shall bear interest at FFC's choice of
either:
a) The rate most recently announced by CBNA at Chicago,
Illinois, as its Reference Rate as quoted from time to time,
calculated based on a year of 365 days; or
b) Reserve-Adjusted LIBOR + 1/2 of 1% p.a. (for interest
periods of 30, 60, or 90 days), with three days' advance notice
of borrowing; or
c) Upon request, we will quote Money Market Rates for periods
of overnight to 30 days.
8) If FFC's consolidated or of its bank subsidiaries' individual
a) Capital ratios should at any time fall below the regulatory
"Well Capitalized" standard, or
b) Ratio of Nonperforming Assets to Total Loans and OREO
should at any time exceed 4.00%,
then CBNA will have the option either to:
(i) Impose on FFC such additional covenants, financial and
otherwise, and increased fees and margins as it may deem
prudent in the circumstances, or
(ii) Terminate the facility.
9) The Bank may at its discretion cancel this commitment and declare
any sum then outstanding to be immediately due and payable, should
FFC or any of its subsidiaries fail to pay or default on the payment
of any of its indebtedness or breach any term or covenant of any
evidence of such indebtedness, whether or not such default or breach
is waived by the noteholder or obligee.
10) FFC may cancel all or a part of this line at any time without penalty,
upon repayment of any outstanding advance and payment of any
accrued facility fee then due.
11) Regular year-to-year renewals are anticipated, by mutual agreement,
barring unexpected changes in Fourth Financial's condition.
12) Fourth Financial and its subsidiaries will promptly provide CBNA
with its audited annual and unaudited interim financial statements,
Call Reports and Y-9 Reports, and any other financial information as
CBNA shall reasonable request from time to time.
If this represents a correct expression of our agreement, please accept it by
signing each of the two originals of this letter and returning one to me for
our records.
Continental Bank looks forward to continuing our long and satisfying
relationship with Fourth Financial Corporation. Please let us know of anything
additional you may require.
Sincerely,
/s/ G. Waters
Geoffrey R. Waters
Vice President
Accepted:
Fourth Financial Corporation
Accepted by: -----------------
/s/ Michael J. Shonka
Title: Senior Vice President
---------------------
& Chief Financial Officer
EXHIBIT 22
SUBSIDIARIES OF REGISTRANT
--------------------------
Listed below are the names and states of incorporation or
jurisdiction of organization of each of Registrant's subsidiaries.
Each subsidiary does business only under its official name or an
abbreviated form of its official name, except BANK IV Kansas,
National Association, carries on its credit card and debit card
activities under the names "KBC Card Services" and Fourth Financial
Card Company" and carries on its residential mortgage origination
and servicing activities under the name " BANK IV Mortgage
Company".
Name State or Jurisdiction
---- ---------------------
Subsidiaries of Registrant
-------------------------
BANK IV Kansas, National Association United States
BANK IV Oklahoma, National Association United States
IV Commercial Acquisition, Inc. Kansas
Fourth Financial Insurance Company Arizona
BANK IV Financial Services, Inc. Kansas
Southgate Trust Company Kansas
Fourth Investment Advisors, Inc. Oklahoma
BANK IV Community Development Corporation Kansas
Subsidiaries of BANK IV Kansas
------------------------------
OA Management, Inc. Kansas
CSI Holdings, Inc. Kansas
Townsite Plaza Development, Inc. Kansas
SG Company Kansas
BANC IV Investments, Inc. Kansas
Subsidiaries of BANK IV Oklahoma
--------------------------------
Quatro I, Inc. Oklahoma
Boston Holdings, Ltd. Delaware
Subsidiary of IV Commercial Acquisition, Inc.
---------------------------------------------
IV CB&T-Tulsa Holdings, Inc. Oklahoma
EXHIBIT 24.01
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements (Form S-8 No. 2-80907, No. 33-34455, No. 33-21295, and No.
33-37477) pertaining to the Amended and Restated 1981 Incentive Stock
Option Plan, the Amended and Restated 1986 Incentive Stock Option Plan,
the 1993 Employee Stock Purchase Plan of Fourth Financial Corporation,
and the Fourth Financial Corporation Savings and Investment Plan of our
report dated January 20, 1994, with respect to the consolidated
financial statements of Fourth Financial Corporation included in this
Annual Report on Form 10-K for the year ended December 31, 1993.
/s/ Ernst & Young
ERNST & YOUNG
Wichita, Kansas
March 11, 1994
EXHIBIT 24.02
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports incorporated by reference in this Form 10-
K, into the Company's previously filed Registration Statements on Form
S-8 (Reg. No. 2-80907, No. 33-34455, No. 33-21295 and No. 33-37477).
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
Tulsa, Oklahoma
March 10, 1994
EXHIBIT 24.03
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (Form S-8 No. 2-80907, No. 33-34455, No. 33-21295 and No.
33-37477) pertaining to the Amended and Restated 1981 Incentive Stock
Option Plan, the Amended and Restated 1986 Incentive Stock Option Plan,
the 1993 Employee Stock Purchase Plan of Fourth Financial Corporation,
and the Fourth Financial Corporation Savings and Investment Plan of our
report dated February 19, 1993, with respect to the consolidated
financial statements of Commercial Landmark Corporation included in
this Annual Report on Form 10-K for the year ended December 31, 1993.
/s/ Sartain Fischbein & Co.
SARTAIN FISCHBEIN & CO.
March 9, 1994
EXHIBIT 24.04
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements (Form S-8 No. 2-80907, No. 33-34455, No. 33-21295, and No.
33-37477) pertaining to the Amended and Restated 1981 Incentive Stock
Option Plan, the Amended and Restated 1986 Incentive Stock Option Plan,
the 1993 Employee Stock Purchase Plan of Fourth Financial Corporation,
and the Fourth Financial Corporation Savings and Investment Plan of our
reports dated September 16, 1993, with respect to the consolidated
financial statements of Ponca Bancshares, Inc. and Subsidiary and of
Security Bank & Trust Company of Ponca City, Oklahoma and Subsidiaries
as of December 31, 1992 and for the periods then ended included in
Fourth Financial Corporation's Annual Report on Form 10-K for the year
ended December 31, 1993.
/s/ GRA, Thompson, White & Co., P.A.
GRA, THOMPSON, WHITE & CO., P.A.
Merriam, Kansas
March 10, 1994
EXHIBIT 24.05
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statements (Form S-8 No. 2-80907, No. 33-34455, No. 33-21295 and No.
33-37477) pertaining to the Amended and Restated 1981 Incentive Stock
Option Plan, the Amended and Restated 1986 Incentive Stock Option Plan,
the 1993 Employee Stock Purchase Plan of Fourth Financial Corporation
and the Fourth Financial Corporation Savings and Investment Plan of our
report dated January 23, 1992, with respect to the consolidated
financial statements of United Bank of Kansas, Inc. and Subsidiary (not
presented herein) included in this Annual Report on Form 10-K for
Fourth Financial Corporation for the year ended December 31, 1993.
/s/ Grant Thornton
GRANT THORNTON
Wichita, Kansas
March 10, 1994
EXHIBIT 24.06
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the following
Registration Statements of Fourth Financial Corporation of our report
on the financial statements of KNB Bancshares, Inc. and Subsidiaries
for the year ended December 31, 1991, dated February 7, 1992, which is
included in the Annual Report on Form 10-K of Fourth Financial
Corporation for the year ended December 31, 1993:
No. 2-80907 on Form S-8 (Amended and Restated 1981 Incentive
Stock Option Plan)
No. 33-34455 on Form S-8 (Amended and Restated 1986 Incentive
Stock Option Plan)
No. 33-21295 on Form S-8 (1993 Employee Stock Purchase Plan of
Fourth Financial Corporation)
No. 33-37477 on Form S-8 (Fourth Financial Corporation Savings
and Investment Plan)
/s/ Deloitte & Touche
DELOITTE & TOUCHE
Kansas City, Missouri
March 10, 1994
