<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No.1]
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(3)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Minbanc Capital Corp.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
------------------------------
[X] No fee required
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11
1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule O-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
-------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
5) Total fee paid:
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[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule O-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid____________________________________________________
2) Form Schedule or Registration Statement No.:______________________________
3) Filing Party:_____________________________________________________________
4) Date Filed:_______________________________________________________________
<PAGE> 2
MINBANC CAPITAL CORP.
[________], 1999
Dear Stockholder:
As you are aware, Minbanc Capital Corp. was established in 1971 as a
for-profit corporation for the purpose of providing capital assistance to
minority-owned banks. The stockholders of Minbanc are all commercial bank
members of the American Bankers Association. While Minbanc was successful in
achieving this objective in the early years, capital adequacy no longer appears
to be a critical issue faced by minority banks generally. In recent years,
Minbanc's loan activity has declined significantly to the point where its
outstanding loans as of March 31, 1999, total only $375,444. In addition,
whereas Minbanc's loans originally qualified as core capital, after the changes
to the capital rules in the late 1980's, such loans are not eligible for
treatment as Tier I capital.
In view of these changes, the Board of Directors of Minbanc unanimously
has determined that it is in the best interests of the corporation to refocus
its purpose and status by converting Minbanc into a not-for-profit foundation.
The purpose of the foundation will be to assist and support the professional
education and training of the management and employees of minority-owned banks.
This change would be achieved by the merger of Minbanc into a newly formed
corporation, Minbanc Foundation, Inc. (the "Foundation").
The proposed transaction requires the approval of the holders of a
majority of the outstanding shares of Minbanc common stock. If the Merger is
adopted at Special Meeting of the stockholders to be held on _______, 1999, or
any adjournment thereof, and all conditions to the merger are satisfied or
waived, all of the outstanding shares of Minbanc common stock of each
stockholder of record (other than those holders who exercise dissenters' rights
of appraisal under Delaware law) will be converted (except as described below)
into a Membership in the Foundation. Memberships in the Foundation will have no
economic value, no right to vote on any matter concerning the Foundation, and no
right to receive dividends or other distributions from the Foundation.
Any holders of Minbanc common stock who do not wish to participate in the
merger may elect instead to receive, immediately prior to the merger, a
distribution in cash of the net asset value per share of their shares of Minbanc
common stock. However, if the Board of Directors determines, after giving effect
to all such cash elections, that the Foundation would not have sufficient funds
to conduct effectively its planned activity, it may elect not to proceed with
the merger (even though it is approved by the requisite vote of the
stockholders). If the merger is not completed for any reason, no cash
distributions will be made.
Enclosed with this letter are the proxy materials for a Special Meeting
of the stockholders. For the reasons stated in the proxy statement, the Board
believes the merger is in the best interests of Minbanc and is fair to the
holders of Minbanc common stock. Accordingly, we the Board unanimously
recommends that you vote FOR the adoption of the Merger Agreement.
Please give this matter your prompt and careful attention and then sign
and promptly return the enclosed proxy in the envelope provided (whether or not
you intend to make an election to receive a cash distribution).
Very truly yours,
C. Kendric Fergeson
Chairman of the Board
(ii)
<PAGE> 3
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ____________, 1999
Notice is hereby given that a Special Meeting of the stockholders of
Minbanc Capital Corp. ("Minbanc") will be held at the offices of the American
Bankers Association, 1120 Connecticut Avenue, N.W., Washington, D.C., on
_________, 1999, at 10:00 a.m. (local time), for the purpose of considering and
acting upon:
1. A proposal to adopt an Amended and Restated Agreement of Merger
between Minbanc and Minbanc Foundation, Inc., a Delaware non-stock corporation
(the "Foundation"), which provides for the merger of Minbanc into the
Foundation. A copy of the Merger Agreement appears as Annex I to the
accompanying Proxy Statement.
2. Such other business as may properly come before the meeting or any
adjournment thereof.
Only stockholders of record at the close of business on __________, 1999,
are entitled to notice of and to vote at the Special Meeting or any adjournment
thereof.
If the merger is consummated, stockholders who do not vote for the merger
and who comply with the requirements of applicable Delaware law have the right
to an appraisal of their shares of Minbanc common stock in accordance with
Delaware law.
By Order of the Board of Directors,
Mathew Street
Secretary and Treasurer
Washington, D.C.
____________________, 1999
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
YOU ARE REQUESTED TO COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENVELOPE WHICH HAS BEEN PROVIDED. IF YOU DO ATTEND THE SPECIAL MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE IN PERSON. PLEASE DO NOT SEND ANY CERTIFICATES FOR
YOUR SHARES AT THIS TIME.
(iii)
<PAGE> 4
PROXY STATEMENT
OF
MINBANC CAPITAL CORP.
FOR A SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ________, 1999
This Proxy Statement is being furnished to the stockholders of Minbanc
Capital Corp., a Delaware corporation ("Minbanc"), in connection with the
solicitation of proxies by the management of Minbanc for use at a Special
Meeting of stockholders to be held on _______, 1999, or at any adjournment
thereof. At the Special Meeting, the stockholders of Minbanc will be asked to
consider and vote upon a proposal to adopt a Merger Agreement between Minbanc
and Minbanc Foundation, Inc., a Delaware non-stock corporation (the
"Foundation"), which provides for the merger of Minbanc into the Foundation. The
approximate date on which this Proxy Statement and the enclosed form of proxy
are being first sent or given to stockholders is _________, 1999.
If the Merger Agreement is adopted by the stockholders at the Special
Meeting and all other conditions to the merger are satisfied or waived, all of
the outstanding shares of Minbanc common stock of each stockholder of record
will be converted into a membership in the Foundation, with the exception of (i)
shares of Minbanc common stock as to which an effective cash election is made
prior to the merger and (ii) shares of any stockholder who exercises dissenters'
rights of appraisal under Delaware law. Memberships in the Foundation will have
no economic value, no right to vote on any matter concerning the Foundation, and
no right to receive dividends or other distributions from the Foundation.
A holder of Minbanc common stock who does not wish to participate in the
merger, and by reason thereof have its shares of Minbanc common stock converted
into a membership in the Foundation, may elect, prior to the merger, to receive
a distribution in cash from Minbanc of the net asset value per share of its
shares (a "Cash Election"). The Merger Agreement provides that if, after giving
effect to all Cash Elections, the Board of Directors of the Foundation
determines that the Foundation would not have sufficient funds to conduct
effectively the planned activities of the Foundation, the Board of Directors may
elect to terminate the Merger Agreement. The distribution of cash, pursuant to
Cash Elections, is contingent on the closing of the merger.
The merger should constitute a taxable transaction under federal income
tax law for the holders of Minbanc common stock. See "Certain Federal Income Tax
Consequences of the Merger and of the Cash Election."
The date of this Proxy Statement is ________, 1999.
(iv)
<PAGE> 5
AVAILABLE INFORMATION
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement in connection with the
solicitation made hereby and, if given or made, such information or
representation should not be relied upon as having been authorized by Minbanc.
The delivery of this Proxy Statement shall not, under any circumstances, create
any implication that the information contained herein is correct as of any time
subsequent to the date hereof or that there has been no change in the affairs of
Minbanc since the date hereof. This Proxy Statement does not constitute the
solicitation of a proxy from any person in any jurisdiction in which it is
unlawful to make such proxy solicitation.
Minbanc is subject to certain provisions of the Securities Exchange Act
of 1934, as amended (the "Securities Exchange Act"), and is subject to
regulation as a management investment company under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and in accordance with such
statutes, and the rules and regulations of the SEC thereunder, files periodic
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). Such reports, proxy statements and other information
filed with the SEC can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, and at the regional offices of the SEC located at Seven
World Trade Center, 13th Floor, New York, New York 10048, and at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material may also be obtained by mail at prescribed rates from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, or by accessing the SEC's World Wide Web site on the
Internet at http://www.sec.gov.
Minbanc will furnish to a stockholder of Minbanc upon request, without
charge, a copy of its most recent annual report and any succeeding semi-annual
report filed with the SEC. Requests for such reports should be directed to
Mathew Street, Secretary and Treasurer, Minbanc Capital Corp., c/o American
Bankers Association, 1120 Connecticut Ave., N.W., 7th Floor, Washington, D.C.
20036, by telephone at (800) 338-0626 or by electronic mail addressed to
[email protected].
(v)
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
COVER PAGE.............................................................................i
AVAILABLE INFORMATION..................................................................v
TABLE OF CONTENTS................................................................vi, vii
SUMMARY................................................................................1
The Parties to the Merger..................................................1
The Special Meeting........................................................1
Vote Required for Approval.................................................2
Terms of the Merger........................................................2
Reasons for the Merger.....................................................2
Recommendation of the Minbanc Board of Directors...........................3
Certain Federal Income Tax Consequences....................................3
Rights of Dissenting Stockholders..........................................4
Share Price Information....................................................4
Minbanc Summary Financial Data.............................................4
THE SPECIAL MEETING....................................................................6
Date, Time, Place and Purpose of the Special Meeting.......................6
Record Date; Shares Entitled to Vote ......................................6
Quorum.....................................................................6
Vote Required for Approval.................................................6
Solicitation and Revocation of Proxies.....................................6
Adjournment................................................................7
Expenses of the Solicitation ..............................................7
Attendance of Accountants..................................................7
THE COMPANIES..........................................................................7
Minbanc Capital Corp.......................................................7
Minbanc Foundation, Inc....................................................8
THE MERGER.............................................................................9
Reasons for the Merger.....................................................9
Fairness of the Transaction...............................................10
Recommendation of the Minbanc Board.......................................10
</TABLE>
(vi)
<PAGE> 7
<TABLE>
<S> <C>
The Merger Agreement......................................................10
Cash Elections............................................................12
Regulatory Matters........................................................13
Federal Securities Law Consequences.......................................13
Accounting Treatment......................................................14
Appraisal Rights of Dissenting Stockholders...............................14
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND
OF THE CASH ELECTION..................................................................15
COMPARISON OF RIGHTS..................................................................16
Amendment of Certificate of Incorporation and Bylaws......................17
Election and Removal of Directors.........................................17
Voting Generally..........................................................17
Dividends.................................................................17
BENEFICIAL OWNERSHIP OF MINBANC COMMON STOCK..........................................17
STOCKHOLDER PROPOSALS.................................................................18
ANNEX I The Merger Agreement
ANNEX II Section 262 of Delaware General Corporation Law - Appraisal Rights
ANNEX III Financial Statements of Minbanc
ANNEX IV Articles of Incorporation and Bylaws of Minbanc
ANNEX V Articles of Incorporation and Bylaws of the Foundation
</TABLE>
(vii)
<PAGE> 8
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) contained
elsewhere in this Proxy Statement (including the Annexes hereto). Stockholders
of Minbanc are urged to read this Proxy Statement (including the Annexes) in its
entirety.
THE PARTIES TO THE MERGER
Minbanc. Minbanc is a closed-end management investment company that is
registered under the Investment Company Act. Minbanc was established in 1971 as
a for-profit corporation for the purpose of providing capital assistance to
minority-owned banks. At the time that it was formed, Minbanc raised slightly
less than $5 million through the sale of shares of Minbanc common stock, par
value $1.00 per share ("Minbanc Common Stock"), to commercial bank members of
the American Bankers Association (the "ABA"). The proceeds of the offering, and
all investment income subsequently earned, have been used over the years to make
subordinated loans to minority-owned banks for the purpose of assisting such
banks in meeting regulatory capital requirements and to pay the operating
expenses of Minbanc. See "The Companies - Minbanc Capital Corp."
Minbanc Foundation, Inc. The Foundation is a non-stock corporation into
which Minbanc is to be merged pursuant to an Amended and Restated Agreement of
Merger, dated June 30, 1999, between Minbanc and the Foundation (the "Merger
Agreement"). The activities of the Foundation will be conducted on a
not-for-profit basis, and it has submitted a request to the Internal Revenue
Service (the "IRS") for a ruling that it qualifies as a private foundation under
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code").
Prior to the merger of Minbanc into the Foundation (the "Merger"), the
Foundation will have no operations and will not engage in any activities, other
than those that are incidental to the Merger. Following the Merger, the
activities of the Foundation will be to assist and support the professional
education and training of the management and employees of minority-owned banks.
The Foundation expects to achieve these objectives primarily through
scholarships and charitable contributions. See "The Companies - Minbanc
Foundation, Inc."
THE SPECIAL MEETING
Date, Time and Purpose of the Special Meeting. The Special Meeting of the
holders of Minbanc Common Stock will be held at the offices of the American
Bankers Association, 1120 Connecticut Avenue, N.W., Washington, D.C. on
_________, 1999, at 10:00 a.m. (local time), for the purpose of considering and
acting upon a proposal to adopt the Merger Agreement. See "The Special Meeting -
Date, Time, Place and Purpose of the Special Meeting."
Record Date; Shares Entitled to Vote. All stockholders of record of
Minbanc Common Stock at the close of business on ________, 1999 (the "Record
Date"), are entitled to notice of and to vote at the Special Meeting. At the
close of business on the Record Date, there were 8,626 shares of Minbanc Common
Stock outstanding. All stockholders are entitled to one vote per share. See "The
Special Meeting - Record Date; Shares Entitled to Vote."
<PAGE> 9
VOTE REQUIRED FOR APPROVAL
Adoption of the Merger Agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Minbanc Common Stock. A
stockholder who intends to dissent and seek appraisal rights under Section 262
of the Delaware General Corporation Law must not vote in favor of the Merger or
consent thereto in writing (including by returning a signed proxy card without
either specifying a vote against the Merger or a direction to abstain from
voting on the Merger). See "The Special Meeting - Vote Required for Approval"
and "The Merger - Appraisal Rights of Dissenting Stockholders."
TERMS OF THE MERGER
The Merger Agreement. The Merger Agreement provides that, following the
adoption of the Merger Agreement by the holders of Minbanc Common Stock and the
satisfaction or waiver of all other conditions to the Merger, Minbanc will be
merged into the Foundation, and the separate existence of Minbanc will cease.
See "The Merger - The Merger Agreement - The Merger."
Effective Date; Conversion of Minbanc Common Stock. The Merger will
become effective on the date of the filing by the Foundation of a Certificate of
Merger with the Secretary of State of the State of Delaware, or such later date
set forth therein as shall be agreed upon in writing by Minbanc and the
Foundation (the "Effective Date"). At the time that the Merger becomes
effective, all of the outstanding shares of Minbanc Common Stock of each
stockholder of record will be converted into a Membership in the Foundation,
with the exception of (i) shares of Minbanc Common Stock as to which an
effective Cash Election is made and (ii) shares of any stockholder who exercises
dissenters' rights of appraisal. See "The Merger - The Merger Agreement -
Closing and Effective Date."
Cash Election. If the Merger is consummated, each holder of Minbanc
Common Stock that makes an effective Cash Election will be entitled to receive,
for each share of Minbanc Common Stock tendered for payment, a cash distribution
from Minbanc in an amount per share equal to the net asset value per share of
the Minbanc Common Stock as shown by the March 31, 1999 balance sheet of
Minbanc, as adjusted to give effect to the payment of all unpaid costs
associated with the Merger that are not reflected on the balance sheet ("Net
Asset Value Per Share"). See "The Merger - The Merger Agreement - Mechanics of
Cash Election."
Conditions to the Merger. Consummation of the Merger is subject to the
satisfaction or waiver of a number of conditions, including (i) the requirement
that no more than 5% of the holders of Minbanc Common Stock have exercised
dissenters' rights of appraisal, (ii) the Board of Directors of the Foundation
does not make the determination that, after giving effect to all Cash Elections,
the Foundation after the Merger would be left with insufficient funds to conduct
effectively its planned activities, and (iii) a determination by the IRS that
the Foundation is a tax-exempt organization under Section 501(c)(3) of the Code.
The Merger Agreement provides for the waiver by the parties of any or all of the
conditions to the Merger, except for such conditions the compliance with which
are required by law. See "The Merger - The Merger Agreement - Conditions
Precedent."
REASONS FOR THE MERGER
For many years, Minbanc benefited from a provision of the federal banking
law that essentially permitted a loan from Minbanc to a minority-owned bank to
serve as an element of the bank's core capital. However, after the change in the
late 1980s to the concept of Tier 1 and Tier 2
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<PAGE> 10
capital, Minbanc loans do not qualify as Tier 1 capital. An extensive study by a
consultant concluded that Minbanc's strategy of offering subordinated debt
financing was no longer viable and suggested a number of business formats that
would be consistent with Minbanc's original goal of supporting the success of
minority-owned banks. After negotiations with the Office of the Comptroller of
the Currency in an effort to restore the special treatment accorded Minbanc
notes proved unsuccessful, the Board turned to consideration of other options.
The Board's deliberations culminated in the decision to convert Minbanc into a
private foundation focused on supporting the professional education and training
of the management and employees of minority-owned banks. See "The Merger -
Reasons for the Merger."
RECOMMENDATION OF THE MINBANC BOARD OF DIRECTORS
The Board of Directors of Minbanc has determined that the Merger is in
the best interests of Minbanc and is fair to the holders of Minbanc Common
Stock. Accordingly, the Board of Directors recommends that the Minbanc
Stockholders vote FOR adoption of the Merger Agreement. See "The Merger --
Recommendation of the Minbanc Board."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger of Minbanc into the Foundation will be a taxable transaction
for both Minbanc and the holders of Minbanc Common Stock under United States
federal income tax law and may also be a taxable transaction under applicable
state, local, foreign or other tax laws. For U.S. federal income tax purposes
the Merger should be treated as a transfer of all or substantially all of
Minbanc's assets to a tax-exempt entity, the Foundation.
Under this characterization of the transaction, Minbanc would recognize a
gain (or loss) immediately before the Merger as if the assets transferred to the
Foundation were sold at their fair market values. Such gain (or loss) would
generally be determined by reference to Minbanc's tax basis in the assets
transferred. It is expected that little or no gain (or loss) would be
recognized, however, because Minbanc's assets consist principally of assets,
such as cash and cash equivalents, with a tax basis equal to fair market value.
A Minbanc stockholder making the Cash Election would recognize gain or
loss equal to the difference between the amount received by such stockholder and
the stockholder's tax basis in the shares of Minbanc Common Stock exchanged
therefor. The amount to be received by a stockholder making the Cash Election
with respect to each share of Minbanc Common Stock tendered in exchange for cash
is the Net Asset Value Per Share. Assuming that the Minbanc Common Stock
constitutes a capital asset in the hands of the stockholder and has been held
for more than one year, any gain would be long-term capital gain which, in the
case of stockholder that is a corporation, is generally subject to a maximum tax
rate of 35%. A long-term capital loss of stockholder that is a corporation is
generally deductible only to the extent of long-term capital gains.
A stockholder that chooses not to make the Cash Election should be
treated as having exchanged such stockholder's shares of Minbanc Common Stock
for a non-voting membership in the Foundation. The Membership will have no fair
market value. Under this characterization, the stockholder not making the Cash
Election should recognize a loss equal to such stockholder's tax basis in the
shares tendered in the Merger.
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<PAGE> 11
It is possible that the Merger will be characterized differently by the
Internal Revenue Service. However, the tax consequences of a different
characterization should not differ materially from those described above.
No ruling has been or will be requested from the IRS as to the Merger,
including the deductibility of losses and deemed contributions to the
Foundation, and no opinion of counsel has been or will be rendered with respect
to any of the tax effects to stockholders of the Merger.
ALL STOCKHOLDERS SHOULD READ CAREFULLY THE DISCUSSION IN THIS PROXY STATEMENT
UNDER THE HEADING IN "CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND
OF THE CASH ELECTION" AND ARE URGED TO CONSULT THEIR OWN ADVISORS AS TO SPECIFIC
CONSEQUENCES TO THEM OF THE MERGER UNDER FEDERAL, STATE, LOCAL, FOREIGN OR ANY
OTHER APPLICABLE TAX LAWS.
RIGHTS OF DISSENTING STOCKHOLDERS
If the Merger is consummated, Minbanc stockholders who vote against the
Merger and who otherwise comply with the requirements of Section 262 of the
Delaware General Corporation Law will be entitled to statutory appraisal rights.
See "The Merger - Appraisal Rights of Dissenting Stockholders" and Annex II
hereto.
SHARE PRICE INFORMATION
The shares of Minbanc Common Stock are not publicly traded and,
accordingly, there is no established market price for the shares. Minbanc has a
right of first refusal in the event of a sale or transfer of all shares of
Minbanc Common Stock. The Foundation is a non-stock corporation.
MINBANC SUMMARY FINANCIAL DATA
The summary financial data of Minbanc presented below as of and for each
of the fiscal years indicated have been derived from the financial statements of
Minbanc, which have been audited by Grant Thornton, LLP (the "Financial
Statements").
4
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<TABLE>
<CAPTION>
Year Ended March 31
-------------------
1999 1998 1997
---- ---- ----
(in thousands, except per share data)
Statement of Income Data:
<S> <C> <C> <C>
Total Income 250 310 461
Total Expenses 184 108 120
Income Before Provision for Taxes 65 202 341
Net Income 49 114 261
Net Income Per Share
(8,626 Shares 5.69 13.24 30.27
outstanding)
</TABLE>
<TABLE>
<CAPTION>
March 31, 1999 March 31, 1998
-------------- --------------
(in thousands, except
per share data)
Statement of Assets:
<S> <C> <C>
Net Investments 250 307
Net Assets 5,587 5,538
Net Assets Per Share 647.66 641.97
</TABLE>
5
<PAGE> 13
THE SPECIAL MEETING
DATE, TIME, PLACE AND PURPOSE OF THE SPECIAL MEETING
The Special Meeting of the holders of Minbanc Common Stock will be held
at the offices of the American Bankers Association, 1120 Connecticut Avenue,
N.W., Washington, D.C. on _______, 1999, at 10:00 a.m. (local time) for the
purpose of considering and acting upon the proposal to adopt the Merger
Agreement. No other business other than that which is incidental to the proposed
Merger will be conducted at the Special Meeting.
RECORD DATE; SHARES ENTITLED TO VOTE
All stockholders of record of Minbanc Common Stock at the close of
business on ____________, 1999 (the "Record Date"), are entitled to notice of
and to vote at the Special Meeting. At the close of business on the Record Date,
there were 8,626 shares of Minbanc Common Stock outstanding, each of which
shares entitles the holder thereof to one vote.
QUORUM
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Minbanc Common Stock is required in order to constitute a
quorum for the conduct of business at the Special Meeting. Abstentions, if any,
will be counted as present and broker non-votes, if any, will not be counted as
present for purposes of establishing a quorum.
VOTE REQUIRED FOR APPROVAL
Adoption of the Merger Agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Minbanc Common Stock. In
determining whether the Merger Agreement has received the requisite number of
affirmative votes, abstentions and broker non-votes will have the same effect as
a vote against the adoption of the Merger Agreement. Those who intend to dissent
and seek appraisal rights under Section 262 of the Delaware General Corporation
Law must not vote in favor of the Merger or consent thereto in writing
(including by returning a signed proxy card without specifying a vote against
the Merger or a direction to abstain from voting on the Merger). See "The Merger
- - Appraisal Rights of Dissenting Stockholders."
SOLICITATION AND REVOCATION OF PROXIES
Holders of Minbanc Common Stock may vote at the Special Meeting either in
person or by proxy. By completing, signing and returning the proxy card that
accompanies this Proxy Statement, a Minbanc stockholder authorizes the persons
named therein to vote all of such holder's shares of Minbanc Common Stock (i) in
accordance with the directions indicated in the proxy card with respect to the
adoption of the Merger Agreement and (ii) at the discretion of the persons named
therein on any other matter incidental to the Merger that may come before the
Special Meeting. If a proxy card is properly signed and returned, but does not
specify how the shares represented thereby are to be voted, the shares will be
voted FOR the adoption of the Merger Agreement.
Any stockholder who signs and returns a proxy card may revoke the proxy
conferred thereby before the vote is taken at the Special Meeting either by (i)
delivering to the Secretary of
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<PAGE> 14
Minbanc a written notice expressly revoking the earlier proxy, (ii) signing and
forwarding to Minbanc a later-dated proxy, or (iii) attending the Special
Meeting and voting in person. Attendance at the Special Meeting will not, in and
of itself, constitute revocation of a proxy.
ADJOURNMENT
The Special Meeting may be adjourned to another date or place for any
proper purpose, including for the purpose of soliciting additional proxies, by a
majority vote of the holders of shares of Minbanc Common Stock present and
entitled to vote, even though the number of shares present and entitled to vote
is insufficient to constitute a quorum.
EXPENSES OF THE SOLICITATION
Minbanc will bear all costs of soliciting proxies for the Special
Meeting. In addition to the solicitation of proxies by mail, directors and
officers of Minbanc or their agents may solicit proxies by telephone, by e-mail,
by facsimile transmission or in person. Such directors and officers will not
receive any compensation for their solicitation efforts.
ATTENDANCE OF ACCOUNTANTS
The Financial Statements of Minbanc as of March 31, 1999, 1998 and 1997,
which are included as Annex III to this Proxy Statement, have been examined by
Grant Thornton, LLP, independent public accountants, as set forth in their
report accompanying the Financial Statements and are so included in reliance
upon such report and upon the authority of Grant Thornton, LLP as experts in
auditing and accounting. A representative of Grant Thornton, LLP is expected to
attend the Special Meeting, will have the opportunity to make a statement if he
or she desires to do so, and will be available to respond to appropriate
questions.
THE COMPANIES
MINBANC CAPITAL CORP.
Minbanc is a closed-end management investment company that is registered
under the Investment Company Act. The mailing address of the principal executive
offices of Minbanc is 1120 Connecticut Avenue, N.W., Washington, D.C. 20036. Its
telephone number at that address is (202) 663-5031.
Minbanc was established in June 1971 with the objective of providing
capital assistance to minority-owned banks. At the time Minbanc was formed,
shares of Minbanc Common Stock were offered to the commercial bank members of
the ABA in a transaction registered under the Securities Act. This offering
resulted in initial capital of slightly less than $5 million. The proceeds of
the offering, and all investment income subsequently earned, have been used over
the years to make subordinated loans to minority-owned banks for the purpose of
assisting such banks in meeting regulatory capital requirements and to pay the
operating expenses of Minbanc.
The Board of Directors of Minbanc consists of individuals from the
banking community. All of Minbanc's directors and officers serve without
compensation, except for the reimbursement of out-of-pocket travel expenses.
Minbanc reimburses the ABA in an amount up to $50,000 per year for use of the
ABA's facilities and administrative services.
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As of March 31, 1999, Minbanc had subordinated loans outstanding to three
minority banks (the "Subordinated Notes"). These loans had an aggregate book
value (net of allowance for possible loan loss) of $250,444. The remainder of
Minbanc's investments consisted primarily of U.S. Treasury bills and
certificates of deposit.
MINBANC FOUNDATION, INC.
The Foundation is a non-stock corporation that has been incorporated
under the laws of Delaware in anticipation of the Merger. Prior to the Merger,
the Foundation will not engage in any activities other than those that are
incidental to the Merger. The Foundation will operate on a not-for-profit basis
and has submitted a request to the IRS for a ruling that it qualifies as a
private foundation under Section 501(c)(3) of the Code.
If the Merger Agreement is adopted by the stockholders of Minbanc and the
Merger is completed, the Foundation (i) will succeed to all of the assets of
Minbanc (including the Subordinated Notes) and (ii) will become responsible for
all of the liabilities of Minbanc. Following the Merger, the charitable purpose
of the Foundation will be to assist and support the professional education and
training of the management and employees of minority-owned banks. The Foundation
intends to implement this charitable purpose by (i) granting scholarships
designed to promote the economic success of minority-owned banks by assisting in
the education and training of employees, (ii) making contributions to tax-exempt
educational institutions and providers of bank employee educational programs for
the development of programs, courses and materials to be used in the education
and training of employees of minority-owned banks, and (iii) promoting,
sponsoring and supporting other charitable organizations having similar
purposes. The Foundation will not make subordinated loans to minority banks.
The funds available to support the operations of the Foundation will
consist of (i) the cash and other current assets acquired from Minbanc in the
Merger (as reduced by the cash distributed to stockholders of Minbanc making a
Cash Election) and (ii) future payments by the borrowers of principal and
interest on the Subordinated Notes. The Foundation also will be eligible to
accept charitable contributions, but at the current time it does not anticipate
that such contributions will be solicited.
The Board of Directors of the Foundation will have sole and exclusive
responsibility for the oversight of the activities of the organization. Although
the Foundation is a member organization, membership will not confer any rights
or benefits on its members, other than the right of members to refer to
themselves as members. Members will have no voting rights nor will they have the
right to receive any dividends or distributions from the Foundation.
Under the Bylaws of the Foundation, the Board of Directors initially will
consist of six members. Directors will be elected annually by a majority vote of
the directors then in office. In effect, the Board of Directors will be
self-perpetuating (meaning that the then existing Board members will elect their
successors). Any director may be removed from the Board of Directors, with or
without cause, by vote of two-thirds of the directors then in office. Vacancies
on the Board of Directors caused by an increase in the number of directors or by
the resignation, removal or death of a director may be filled by a majority vote
of the directors then in office. In accordance with Bylaws, (i) two directors
will be individuals who are past or present employees of financial institutions
that are members of the ABA and who are knowledgeable in matters related to
minority-owned banks, (ii) two directors will be ABA employees, and (iii) two
directors will be individuals proposed jointly by the ABA and the National
Bankers Association.
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The names and affiliations of the persons who will be the directors of
the Foundation immediately following the Merger are as follows:
<TABLE>
<CAPTION>
NAME AFFILIATION
- ---- -----------
<S> <C>
Norma Alexander Heart President
National Bankers Association
Steven A. Hopkins Director of Government Relations (1973-1998; retired)
Citicorp/Citibank
Judith Knight Director, Housing and Community Development
American Bankers Association
Michael Mantle President/CEO (1989-1998; retired)
Bank of America Community Development Bank
Ignacio Urrabazo, Jr. President, Member of the Board of Directors
Commerce Bank, Laredo, Texas
Edward L. Yingling Deputy Executive Vice President
American Bankers Association
</TABLE>
Other than the Merger Agreement and the transactions contemplated
thereby, there are no past, existing or proposed contracts, arrangements,
understandings, relationships, negotiations or transactions between Minbanc or
its affiliates and the Foundation or its affiliates concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of securities,
an election of directors, or a sale or transfer of a material amount of assets.
It is anticipated that the ABA will provide services to the Foundation for a
period to be determined following the Merger and be reimbursed for the cost of
providing such services.
The Foundation does not have, and prior to the Merger will not have, any
assets or operations, and will only incur liabilities that are incidental to the
Merger. Accordingly, no summary financial data or financial statements for the
Foundation are presented in this Proxy Statement.
THE MERGER
REASONS FOR THE MERGER
Minbanc was established in June 1971 as a for-profit corporation for the
purpose of providing capital assistance to minority-owned banks. For many years,
Minbanc benefited from a special provision of federal banking law that
essentially permitted loans from Minbanc to a minority-owned bank to serve as an
element of the bank's core capital. However, after the change in the late 1980s
to the concept of Tier 1 and Tier 2 capital, Minbanc loans do not qualify as
Tier 1 capital. An extensive study by a consultant, the Center for Policy
Alternatives, delivered in December 1993 concluded that Minbanc's strategy of
providing subordinated debt financing was no longer viable and suggested a
number of business formats through which the original goal of supporting the
success of minority-owned banks might be achieved.
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The Board of Directors initially chose to pursue negotiations with the
Office of the Comptroller of the Currency in an effort to restore the special
treatment accorded Minbanc notes. This goal was pursued vigorously by Minbanc,
working with ABA government relations professionals, for over a year. When this
effort did not prove successful, the Board then turned to consideration of other
options. One course of action considered was a liquidation of the corporation.
However, the Board was of the view that the original goals of the corporation
should be preserved as nearly as possible and, therefore, a liquidation was
rejected. After extended consideration, the Board voted in November 1997 to
convert Minbanc into a private foundation that would have for its purpose
support for the professional education and training of the management and
employees of minority-owned banks. This decision was unanimously confirmed by
the Board in June 29, 1999, by the approval of the Merger Agreement.
FAIRNESS OF THE TRANSACTION
If the Merger is approved by the holders of a majority of the outstanding
shares of Minbanc Common Stock, the shares of each stockholder will be converted
by operation of law into a Membership in the Foundation. However, any
stockholder who does not wish to participate in the Merger may, prior to the
Merger, make a Cash Election to receive from Minbanc in cash a distribution per
share of Minbanc Common Stock in an amount equal to the Net Asset Value Per
Share.
A distribution to electing holders of Minbanc Common Stock will be made
only if the Merger is consummated (see "The Merger -- The Merger Agreement --
Conditions Precedent"). If the Board of Directors of the Foundation determines
that, as the result of Cash Elections, the Foundation after the Merger will have
insufficient assets to conduct its activities, it may elect not to consummate
the Merger. Accordingly, if the Merger is consummated, each stockholder who
wishes to receive a cash distribution in lieu of a Membership in the Foundation
will be entitled to do so. On this basis, the Board of Directors of Minbanc has
concluded that the terms of the Merger are fair to all of the holders of Minbanc
Common Stock.
The Minbanc Board of Directors has not sought or obtained a fairness
opinion or other report or appraisal from an outside party regarding the
fairness of the proposed Merger. The Board likewise has made no assessment of
what a stockholder might receive in an appraisal proceeding.
RECOMMENDATION OF THE MINBANC BOARD
The Board of Directors of Minbanc has determined that the Merger is in
the best interests of Minbanc and is fair to the holders of Minbanc Common
Stock. Accordingly, the Board of Directors recommends that the Minbanc
stockholders vote FOR the adoption of the Merger Agreement.
THE MERGER AGREEMENT
The following is a brief summary of the material terms of the Merger
Agreement. This summary is qualified in its entirety by reference to the Merger
Agreement, a copy of which is attached to this Proxy Statement as Annex I and is
incorporated herein by reference. This summary does not modify or supplement the
terms of the Merger Agreement.
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<PAGE> 18
The Merger. The Merger Agreement provides that, following the adoption of
the Merger Agreement by the holders of Minbanc Common Stock and the satisfaction
or waiver of all other conditions to the Merger, Minbanc will be merged with and
into the Foundation. After the Merger, the Foundation, as the surviving
corporation, will continue its corporate existence under the laws of the State
of Delaware and the separate existence of Minbanc will cease.
Closing and Effective Date. The closing of the Merger will occur on the
second business day following the day on which the Merger Agreement has been
adopted by the stockholders of Minbanc and all other conditions to the Merger
have been satisfied or waived. The Merger will become effective on the date on
which the Certificate of Merger is filed with the Secretary of State of the
State of Delaware, or such later date set forth therein as shall be agreed upon
in writing by the parties (the "Effective Date"). The time when the Merger
becomes effective is referred to herein as the "Effective Time." At the
Effective Time, all of the outstanding shares of Minbanc Common Stock of each
stockholder of record will be converted into a Membership in the Foundation,
with the exception of (i) shares of Minbanc Common Stock as to which an
effective Cash Election is made and (ii) shares of any stockholders who exercise
dissenters' rights of appraisal under Delaware law.
Representations and Warranties. In the Merger Agreement, Minbanc has made
certain representations and warranties to the Foundation with respect to, among
other things, its organization, capitalization, financial statements, the
absence of undisclosed liabilities, government approvals, litigation and tax
matters. The Foundation has also made certain representations and warranties to
Minbanc with respect to, among other things, its organization, the absence of
undisclosed liabilities, governmental approvals and litigation. None of the
representations and warranties of either party will survive the closing of the
Merger.
Conditions Precedent. The Merger Agreement provides that the consummation
of the Merger is subject to certain conditions. The respective obligations of
Minbanc and the Foundation to consummate the Merger each are subject, among
other things, to:
(i) the adoption of the Merger Agreement by the Minbanc
stockholders,
(ii) the absence of any law or order of a federal or state court
or a regulatory agency that prevents the consummation of the Merger,
(iii) the condition that no more than 5% of the holders of Minbanc
Common Stock have exercised dissenters' rights of appraisal,
(iv) the absence of a determination by the Board of Directors of
the Foundation that, after taking into account the number of shares of Minbanc
Common Stock in respect of which a Cash Election is made, the Foundation will
not have sufficient funds to conduct effectively its planned activities, and
(v) a determination by the IRS that the Foundation is a tax-exempt
organization under Section 501(c)(3) of the Code.
The respective obligations of each of Minbanc and the Foundation to
consummate the Merger also are subject, among other things, to:
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(i) the performance by the other party of its covenants and
agreements under the Merger Agreement,
(ii) the accuracy of the representations and warranties of the
other party contained in the Merger Agreement,
(iii) the absence of an occurrence or condition with respect to
the other that would constitute a material adverse effect, and
(iv) the securing by the other of any required governmental or
other approvals.
The Merger Agreement provides, however, that if any condition shall not
have been satisfied, the party whose obligation to proceed is subject to the
satisfaction of such condition may, at its election, waive such condition and
proceed with the Merger.
Additional Agreements. The Merger Agreement provides that, prior to the
Effective Time, Minbanc and the Foundation each will conduct their respective
operations in the usual, regular and ordinary course of business. In addition,
neither Minbanc nor the Foundation is permitted (i) to amend its Certificate of
Incorporation or Bylaws or (ii) to purchase any assets, make any capital
expenditures, or dispose of any assets, other than in the ordinary course of
business. Minbanc also may not declare or pay any dividend or make any
distributions, or issue or repurchase any shares of its capital stock.
Termination. The Merger Agreement may be terminated and the Merger
abandoned, whether before or after, as applicable, the adoption of the Merger
Agreement by the stockholders of Minbanc:
(i) by the mutual agreement of Minbanc and the Foundation,
(ii) by either Minbanc or the Foundation, if the stockholders of
Minbanc do not adopt the Merger Agreement at the Special Meeting or an
adjournment thereof,
(iii) by either party, following written notice to the other, if
the other party has materially breached any of its representations, warranties
or covenants, and such breach is not remedied within 20 days after such other
party is notified of the breach,
(iv) if the Merger is prohibited by law, or
(v) if the closing of the Merger has not occurred prior to
December 31, 1999.
Expenses. The Merger Agreement provides that all costs and expenses
incurred by either party in connection with the Merger will be paid by the party
incurring such costs and expenses.
CASH ELECTIONS
The Merger Agreement provides that each person who was a stockholder of
record of Minbanc may, by properly completing and delivering to Minbanc a Notice
of Cash Election (the form of which is enclosed with this Proxy Statement),
indicate that such stockholder wishes to make a Cash Election and receive, in
lieu of participation in the Merger, a cash distribution from Minbanc,
immediately prior to the Merger, in an amount per share equal to the Net Asset
Value Per Share. Distributions pursuant to effective Cash Elections will be made
only if the Merger is
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<PAGE> 20
consummated. Accordingly, if the Merger Agreement is terminated for any reason,
all Cash Elections will be null and void. All outstanding shares of Minbanc
Common Stock of each recordholder of Minbanc Common Stock as to which a Cash
Election is not in effect at the time of the Election Deadline (as defined
below) will be converted, at the Effective Time, into a Membership in the
Foundation.
No Cash Election will be effective unless a properly completed and signed
Notice of Cash Election, accompanied by the stock certificates for the shares of
Minbanc Common Stock that are the subject of the election (or an affidavit of
the stockholder claiming that the certificate(s) has been lost, mislaid, stolen
or destroyed, together with a bond, security or indemnity or any other
documentation that Minbanc may reasonably require) has been received by Minbanc
by 12:00 p.m. (Washington, D.C. time) on ______________, 1999 (the "Election
Deadline"). A Cash Election may be withdrawn by written notice delivered to
Minbanc at any time prior to the Election Deadline. Notices of Cash Election and
stock certificates should be delivered to Mathew H. Street, Secretary of
Minbanc, c/o American Bankers Association, 1120 Connecticut Avenue, N.W.,
Washington, D.C. 20036. The method of delivery is at the option and risk of the
Minbanc stockholder, but delivery by registered mail, return receipt requested,
properly insured, is suggested.
Minbanc and the Foundation reserve the right to make additional rules not
inconsistent with the Merger Agreement governing the validity of a Notice of
Cash Election and the distribution of cash pursuant to Cash Elections. All such
rules and determinations pursuant to such rules will be final and binding on all
holders of Minbanc Common Stock.
REGULATORY MATTERS
Minbanc is a closed-end management investment company that is registered
under the Investment Company Act. The Foundation, as a charitable foundation, no
part of the net earnings of which will inure to the benefit of any private
stockholder or individual, will not be subject to regulation under the
Investment Company Act. Following the Merger, Minbanc will file with the SEC an
application to terminate its registration under the Investment Company Act.
FEDERAL SECURITIES LAW CONSEQUENCES
As a closed-end management investment company that is registered under
the Investment Company Act, Minbanc is subject to extensive regulation by the
SEC. This regulation includes restrictions on capital structure, affiliate
transactions, corporate governance, functions and activities, distributions of
securities, and other matters, as well as reporting and record keeping
requirements. As a not-for-profit corporation, the Foundation will not be
required to register as an investment company by reason of Section 3(c)(10) of
the Investment Company Act, which excludes from the definition of an "investment
company" any corporation that is organized and operated exclusively for
charitable purposes and no part of the net earnings of which inures to the
benefit of any private stockholder or individual.
The Minbanc Common Stock currently is registered under the Securities
Exchange Act. As a consequence, Minbanc, among other things, is required to file
annual, quarterly and other reports with the SEC and is subject to the SEC's
proxy rules in connection with the solicitation of proxies for annual and
special meetings. The Foundation will not be the issuer of a security and,
accordingly, will not be subject to SEC regulation under the Securities Exchange
Act.
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ACCOUNTING TREATMENT
The Merger will be accounted for by the Foundation as a transfer of net
assets to be recorded at their fair value as determined on the Effective Date of
the Merger. Any net assets transferred will be recorded as an unrestricted
contribution.
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS
Holders of Minbanc Common Stock will be entitled to appraisal rights
under Section 262 of the Delaware General Corporation Law ("Section 262") if the
Merger is completed. Section 262 is reprinted in its entirely as Annex II to
this Proxy Statement. All references in Section 262 and in this summary to a
"stockholder" are to the holder of record of the shares of Minbanc Common Stock
as to which appraisal rights are asserted. A person having a beneficial interest
in shares of Minbanc Common Stock that are held of record in the name of another
person, such as a broker or nominee, must cause the holder of record to follow
in a timely manner the steps summarized below in order to perfect whatever
appraisal rights the beneficial owner may have.
The following discussion is not a complete statement of the law relating
to appraisal rights and is qualified in its entirety by reference to Annex II.
THIS DISCUSSION AND ANNEX II SHOULD BE REVIEWED CAREFULLY BY ANY HOLDER WHO
WISHES TO EXERCISE APPRAISAL RIGHTS OR WHO WISHES TO PRESERVE THE RIGHT TO DO
SO. FAILURE STRICTLY TO COMPLY WITH THE PROCEDURES SET FORTH IN SECTION 262 WILL
RESULT IN THE LOSS OF APPRAISAL RIGHTS.
Each stockholder electing to demand the appraisal of its Minbanc Common
Stock must deliver to Minbanc, before the taking of the vote on the Merger at
the Minbanc Special Meeting, a written demand for appraisal of its Minbanc
Common Stock. The demand must reasonably inform Minbanc of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
its Minbanc Common Stock. A vote against or the granting of a proxy to vote
against the Merger or abstaining from voting on the Merger will not constitute a
demand for appraisal within the meaning of Section 262. In order to preserve its
appraisal rights under Section 262, a stockholder must not vote in favor of the
Merger or consent thereto in writing (including by granting the proxy solicited
by this Proxy Statement or by returning a signed proxy card without specifying a
vote against the Merger or a direction to abstain from voting on the Merger).
Additionally, a stockholder must hold the shares of Minbanc Common Stock as to
which appraisal is sought continuously through the Effective Time. A stockholder
is not required to vote against the Merger in order to exercise appraisal
rights.
A demand for appraisal must be executed by or for the stockholder as such
stockholder's name appears on the certificate(s) representing Minbanc Common
Stock. If the shares of Minbanc Common Stock are owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, such demand must be
executed by the fiduciary. If the shares of Minbanc Common Stock are held of
record by more than one person, as in a joint tenancy or tenancy in common, such
demand must be executed by all joint owners. An authorized agent, including an
agent for two or more joint owners, may execute the demand for appraisal for a
stockholder; however, the agent must identify the stockholder and expressly
disclose the fact that, in exercising the demand, such person is acting as agent
for the stockholder.
Beneficial owners who are not holders of record of Minbanc Common Stock
and who intend to exercise appraisal rights should instruct the holder of record
of the shares to comply
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strictly with the statutory requirements with respect to the exercise of
appraisal rights before the date of the Special Meeting.
A stockholder who elects to exercise appraisal rights must mail or
deliver its written demand to Mathew H. Street, Secretary of Minbanc, c/o
American Bankers Association, 1120 Connecticut Avenue, N.W., Washington, D.C.
20036.
Within ten days after the Effective Date, the Foundation is required to
provide notice of the Effective Date to all stockholders who have complied with
the requirements of Section 262. Within 120 days after the Effective Date,
either the Foundation or any stockholder who has complied with the requirements
of Section 262 may file a petition in the Delaware Court of Chancery (the
"Delaware Chancery Court") demanding a determination of the value of the shares
of Minbanc Common Stock of all dissenting stockholders. If a petition for an
appraisal is timely filed, after a hearing on such petition, the Delaware
Chancery Court will determine which stockholders are entitled to appraisal
rights and will determine the fair value of the shares of Minbanc Common Stock
owned by such stockholders. For this purpose, fair value of the shares of
Minbanc Common Stock is determined exclusive of any element of value arising
from the accomplishment or expectation of the Merger, but may include a fair
rate of interest to be paid upon the amount determined to be the fair value. In
determining such fair value, the Delaware Chancery Court may take into account
all relevant factors.
The cost of the appraisal proceeding may be determined by the Delaware
Chancery Court and taxed against the parties as the Delaware Chancery Court
deems equitable in the circumstances. Upon application of a dissenting
stockholder, the Delaware Chancery Court may order that all or a portion of the
expenses incurred by any dissenting stockholder in connection with the appraisal
proceeding, including without limitation, reasonable attorneys' fees and the
fees and expenses of experts, be charged pro rata against the value of all
shares of Minbanc Common Stock entitled to appraisal.
At any time within 60 days after the Effective Date, any stockholder
shall have the right to withdraw its demand for appraisal and to accept the
terms offered in the Merger. After this period, a stockholder may withdraw its
demand for appraisal only with the consent of the Foundation. If no petition for
appraisal is filed with the Delaware Chancery Court within 120 days after the
Effective Date, the appraisal rights for all stockholders shall cease, and all
holders of Minbanc Common Stock shall be entitled to receive only the Merger
Consideration as provided for in the Merger Agreement.
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER AND THE CASH ELECTION
The Merger of Minbanc into the Foundation will be a taxable transaction
for both Minbanc and the holders of Minbanc Common Stock under United States
federal income tax law and may also be a taxable transaction under applicable
state, local, foreign or other tax laws.
For U.S. federal income tax purposes the Merger should be treated as a
transfer of all or substantially all of Minbanc's assets to a tax-exempt entity,
the Foundation.
Under this characterization of the transaction, Minbanc would recognize a
gain (or loss) immediately before the Merger as if the assets transferred to the
Foundation were sold at their fair market values. Such gain (or loss) would
generally be determined by reference to Minbanc's tax basis in the assets
transferred. It is expected that little or no gain (or loss) would be
recognized,
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however, because Minbanc's assets consist principally of assets, such as cash
and cash equivalents, with a tax basis equal to fair market value.
A Minbanc stockholder making the Cash Election would recognize gain or
loss equal to the difference between the amount received by such stockholder and
the stockholder's tax basis in the shares of Minbanc Common Stock exchanged
therefor. Assuming that the Minbanc Common Stock constitutes a capital asset in
the hands of the stockholder and has been held for more than one year, any gain
would be long-term capital gain which, in the case of a stockholder that is a
corporation, is generally subject to a maximum tax rate of 35%. A long-term
capital loss of a stockholder that is a corporation is generally deductible only
to the extent of long-term capital gains.
A stockholder that chooses not to make the Cash Election should be
treated as having exchanged such stockholder's shares of Minbanc Common Stock
for a non-voting membership in the Foundation. The Membership will have no fair
market value. Under this characterization, the stockholder not making the Cash
Election should recognize a loss equal to such stockholder's tax basis in the
shares tendered in the Merger.
It is possible that the Merger will be characterized differently by the
Internal Revenue Service. However, the tax consequences of a different
characterization should not differ materially from those described above.
The receipt of cash in connection with the exercise of dissenters' rights
pursuant to Section 262 will be a taxable transaction for federal income tax
purposes and may also be a taxable transaction under applicable state, local,
foreign or other tax laws. In general, a stockholder that receives cash pursuant
to the exercise of dissenters' rights will recognize a gain or loss equal to the
difference between the stockholder's tax basis for the Minbanc Common Stock and
the amount received.
No ruling has been or will be requested from the IRS as to the Merger,
including the deductibility of losses and deemed contributions to the
Foundation, and no opinion of counsel has been or will be rendered with respect
to any of the tax effects to stockholders of the Merger.
THE FOREGOING IS ONLY A GENERAL DESCRIPTION OF CERTAIN OF THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES, UNDER PRESENT LAW, OF THE MERGER TO MINBANC'S
STOCKHOLDERS, WITHOUT CONSIDERATION OF THE PARTICULAR FACTS AND CIRCUMSTANCES OF
EACH STOCKHOLDER'S SITUATION. NO INFORMATION IS PROVIDED HEREIN AS TO THE
POSSIBLE EFFECT, IF ANY, OF PROPOSED CHANGES IN THE FEDERAL TAX LAW OR AS TO THE
STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF THE TRANSACTIONS. EACH STOCKHOLDER
IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE FEDERAL, STATE,
LOCAL OR FOREIGN TAX CONSEQUENCES OF THE MERGER TO SUCH STOCKHOLDER.
COMPARISON OF RIGHTS
As a stockholder of Minbanc, a holder of shares of Minbanc Common Stock
has rights that are typical of a stockholder in a stock corporation generally.
If the Merger is consummated, the holders of Minbanc Common Stock (other than
those that exercise dissenters' rights of appraisal or make an effective Cash
Election) will become members of the Foundation. Under the
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Certificate of Incorporation and the Bylaws of the Foundation, the members of
the Foundation will have no rights comparable to those of a stockholder in a
stock corporation. Copies of the Certificate of Incorporation and the Bylaws of
Minbanc and the Foundation are attached hereto as Annex IV and Annex V,
respectively, and are hereby incorporated by reference. The following is a
summary of the rights of a holder of Minbanc Common Stock.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
Under Delaware law, amendments to the Certificate of Incorporation of
Minbanc require the affirmative vote of a majority of the outstanding shares of
Minbanc Common Stock. In accordance with Delaware law, the Bylaws of Minbanc may
be amended either by the Board of Directors or the stockholders of Minbanc.
The members of the Foundation have no voting rights with respect to the
amendment of the Certificate of Incorporation or the Bylaws of the Foundation.
ELECTION AND REMOVAL OF DIRECTORS
The directors of Minbanc are elected by a vote of the holders of the
Minbanc Common Stock, except that vacancies and newly created directorships
resulting from an increase in the number of authorized directors may be filled
by a majority of the directors then in office. Directors of the Foundation are
elected by the affirmative vote of a majority of the directors then in office.
Under Delaware law, directors of Minbanc may be removed, with or without
cause, by a vote of the holders of a majority of the outstanding shares of
Minbanc Common Stock. Under the Bylaws of the Foundation, the directors of the
Foundation may be removed, with or without cause, only by the affirmative vote
of at least two-thirds of the directors then in office.
VOTING GENERALLY
The holders of shares of Minbanc Common Stock are entitled to one vote
per share on all matters on which stockholders of Minbanc are entitled to vote.
Members of the Foundation have no voting rights.
DIVIDENDS
The holders of Minbanc Common Stock are entitled to receive from Minbanc
such dividends or other distributions as are declared from time to time by the
Board of Directors of Minbanc. The Certificate of Incorporation of the
Foundation provides that and no part of the assets or net earnings of the
Foundation shall inure to the benefit of, or be distributable to, any of its
directors or officers or any other private individual, including its members.
BENEFICIAL OWNERSHIP OF MINBANC COMMON STOCK
The following table sets forth, as of the Record Date, certain
information with respect to the only persons known to Minbanc to be a beneficial
owner of more than 5% of the outstanding Minbanc Common Stock:
17
<PAGE> 25
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
NAME OF SOLE VOTING & SHARED VOTING & PERCENT OF
BENEFICIAL DISPOSITIVE DISPOSITIVE COMMON STOCK
OWNER POWER POWER
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Chase Manhattan Bank - New York, NY 732 610 15.56%
- --------------------------------------------------------------------------------------------------------------
BankAmerica Corporation - San
Francisco, CA -0- 1151 13.34%
- --------------------------------------------------------------------------------------------------------------
Bankers Trust - New York, NY 200 499 8.10%
- --------------------------------------------------------------------------------------------------------------
Bank of New York - New York, NY 666 -0- 7.72%
- --------------------------------------------------------------------------------------------------------------
Wells Fargo Bank -- San Francisco, CA 510 -0- 5.91%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
STOCKHOLDER PROPOSALS
Under the Bylaws of Minbanc, the Annual Meeting of Stockholders is held
in October of each year. If the Merger is consummated, the 1999 Annual Meeting
will not occur. If the Merger is not consummated, because Minbanc did not hold
an Annual Meeting in 1998, in accordance with SEC rules, (i) a proposal
submitted pursuant to Rule 14a-8 for inclusion in Minbanc's proxy statement and
form of proxy relating to the 1999 Annual Meeting of Stockholders must be
received by the Secretary of Minbanc a reasonable time before Minbanc begins to
print and mail its proxy material for the 1999 Annual Meeting, and (ii) a
stockholder proposal submitted outside of the Rule 14a-8 process will be
considered untimely if not received a reasonable time before Minbanc mails its
proxy material for the 1999 Annual Meeting.
18
<PAGE> 26
IMPORTANT
PLEASE RETURN YOUR PROXY AND FORM OF ELECTION IMMEDIATELY.
In order to assure a quorum being represented at the Special Meeting, you
are urged to sign and return the enclosed proxy card immediately. Compliance
with this request will enable Minbanc to avoid the expense of a second mailing
or further communications.
Thank You.
MINBANC CAPITAL CORP.
19
<PAGE> 27
FORM OF PROXY
MINBANC CAPITAL CORP.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ___________, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF MINBANC CAPITAL CORP.
The undersigned stockholder(s) hereby appoints Jack Woodburn or Joanne Wharton,
or either of them (with full power of substitution), the attorneys of the
undersigned, to attend the Special Meeting of Stockholders of Minbanc Capital
Corp. to be held on ___________, 1999, and any adjournment(s) thereof, and to
vote all of the shares of Minbanc common stock registered in the name of the
undersigned and which the undersigned is entitled to vote at the Special Meeting
or at any adjournment(s) thereof:
1. TO ADOPT THE AMENDED AND RESTATED AGREEMENT OF MERGER, DATED AS OF
________, 1999 WHICH IS ATTACHED AS ANNEX I TO THE PROXY STATEMENT, DATED
______________, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE SPECIAL MEETING OR ANY ADJOURNMENT(S) THEREOF.
(Continued, and to be executed and dated on the reverse side.)
20
<PAGE> 28
(Continued from other side.)
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED OR NOT VOTED AS SPECIFIED. IF NO CHOICE IS
INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR PROPOSAL NO.
1. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE SPECIAL MEETING OR ANY
ADJOURNMENT(S) THEREOF, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
THE DISCRETION OF THE PROXIES ON SUCH MATTERS.
All proxies previously given or executed by the undersigned are hereby
revoked. The undersigned acknowledges receipt of the accompanying Notice of
Special Meeting of Stockholders and Proxy Statement for the Special Meeting.
Dated:______________________________, 1999
Signature of stockholder(s)
- ------------------------------------
Signature of stockholder(s)
- ------------------------------------
Please sign exactly as your name appears on the share certificate of the Minbanc
Common Stock. When shares are registered in two names, both stockholders must
sign. When signing as attorney, executor, administrator or trustee, please give
full title as such. If stockholder is a corporation, please sign in full
corporate name by president or other authorized officer. If stockholder is a
partnership, please sign in partnership name by authorized person. (Please note
any change of address on this proxy.)
PLEASE FILL IN, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
YOU SHOULD EXECUTE THIS PROXY WHETHER OR NOT YOU ARE MAKING A CASH ELECTION.
21
<PAGE> 29
NOTICE OF CASH ELECTION
MINBANC CAPITAL CORP.
The undersigned stockholder(s), having reviewed the Amended and Restated
Agreement of Merger (the "Merger Agreement"), dated ________, 1999, between
Minbanc Capital Corp. and Minbanc Foundation, Inc. (the "Foundation") and the
Proxy Statement of Minbanc Capital Corp. enclosed with this Notice of Cash
Election hereby elects:
[ ] TO RECEIVE THE "CASH PAYMENT" (as defined by the Merger Agreement)
with respect to all of the shares of Minbanc Common Stock registered in
my name
[ ] TO RECEIVE THE "CASH PAYMENT" (as defined by the Merger Agreement)
with respect to ______ SHARES OF MINBANC COMMON STOCK REGISTERED IN MY
NAME.
To be effective, this Notice of Cash Election must be properly completed
and signed, and is returned to Minbanc at the address provided below, on or
before 12:00 p.m. (Washington, D.C. time) on ___________, 1999 (the "Election
Deadline"), accompanied by the stock certificates evidencing the shares of
Minbanc Common Stock as to which the election is made (or an affidavit claiming
that the certificate(s) has been lost, mislaid, stolen or destroyed, together
with a bond, security or indemnity or any other documentation that Minbanc may
reasonably require). A Cash Election may be withdrawn by written notice received
by Minbanc on or prior to the Election Deadline.
PAYMENT WILL BE MADE PURSUANT TO A CASH ELECTION ONLY IF THE MERGER IS
COMPLETED.
IF A MINBANC STOCKHOLDER DOES NOT MAKE AN EFFECTIVE CASH ELECTION (AND
FAILS TO EXERCISE DISSENTERS' RIGHTS OF APPRAISAL UNDER DELAWARE LAW), SUCH
STOCKHOLDER WILL RECEIVE, IF THE MERGER IS COMPLETED, A MEMBERSHIP IN THE
FOUNDATION.
This Notice of Cash Election and your stock certificates must be
delivered to Mathew H. Street, Secretary of Minbanc, c/o American Bankers
Association, 1120 Connecticut Avenue, N.W., Washington, D.C. 20036. The method
of delivery is at your option and risk, but delivery by registered mail, return
receipt requested, properly insured, is suggested.
Dated: ______________________________, 1999
Signature of stockholder(s) Signature of stockholder(s)
- -------------------------------- --------------------------------
22
<PAGE> 30
Please sign exactly in the name as your stock certificates are
registered. Successors in interest should so note on the form. When shares are
registered in two or more names, all stockholders must sign. When signing as
attorney, executor, administrator or trustee, please give your full title. If
you are a corporation, please sign in full corporate name by president or other
authorized officer. If you are a partnership, please sign in partnership name by
authorized person. (Please note any change of address on this Notice of Cash
Election.)
WHETHER OR NOT YOU MAKE A CASH ELECTION, PLEASE EXECUTE AND RETURN THE
ACCOMPANYING PROXY
23
<PAGE> 31
ANNEX I
AMENDED AND RESTATED
AGREEMENT
OF
MERGER
BETWEEN
MINBANC CAPITAL CORP.
AND
MINBANC FOUNDATION, INC.
DATED AS OF JUNE 30, 1999
<PAGE> 32
AMENDED AND RESTATED AGREEMENT OF MERGER
This AMENDED AND RESTATED AGREEMENT OF MERGER (this
"Agreement") is entered into as of June 30, 1999, by and between MINBANC
CAPITAL CORP., a Delaware stock corporation ("Minbanc"), and MINBANC
FOUNDATION, INC., a Delaware non-stock, not-for-profit corporation (the
"Foundation").
W I T N E S S E T H:
WHEREAS, the Board of Directors of Minbanc deems it advisable
and in the best interests of Minbanc that it be merged with and into the
Foundation pursuant to this Agreement and the applicable provisions of the
General Corporation Law of the State of Delaware;
WHEREAS, the Board of Directors of the Foundation deems it
advisable and in the best interests of the Foundation that Minbanc shall be
merged with and into the Foundation pursuant to this Agreement and the
applicable provisions of the General Corporation Law of the State of Delaware;
WHEREAS, the parties hereto have previously entered into that
certain Agreement of Merger, dated as of January 19, 1999, in order to state
the terms and conditions of the Merger (as defined in Article I), the mode of
carrying the Merger into effect, the consideration which the holders of the
capital stock of Minbanc are to receive in exchange for such shares upon the
consummation of the Merger, and such other details and provisions as are deemed
necessary or desirable;
WHEREAS, Minbanc and the Foundation desire to enter into this
Agreement to amend and restate the aforementioned Agreement of Merger in order
to revise the merger consideration which the holders of the capital stock of
Minbanc are to receive and to make such other additions, modifications and
amendments as are set forth herein; and
WHEREAS, the Board of Directors of Minbanc has by resolution
duly approved this Agreement and directed that this Agreement be submitted to
its stockholders for adoption in accordance with the terms hereof and
applicable law, and the Board of Directors of the Foundation has by resolution
duly approved this Agreement in accordance with the terms hereof and applicable
law.
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as set forth below:
<PAGE> 33
- 2 -
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. For purposes of this Agreement, the following defined
terms shall have the meanings indicated:
"Cash Election" has the meaning ascribed to such term in Section
3.2(a).
"Closing" has the meaning ascribed to such term in Section 2.2.
"Closing Date" has the meaning ascribed to such term in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute or codification of the Federal income tax laws of the United
States of America.
"Effective Date" has the meaning ascribed to such term in Section 2.3.
"Effective Time" has the meaning ascribed to such term in Section 2.3.
"Election Deadline" has the meaning ascribed to such term in Section
3.2.
"Foundation" means Minbanc Foundation, Inc., a Delaware non-stock
corporation.
"IRS" means the Internal Revenue Service of the United States of
America.
"Material Adverse Effect" means, with respect to either Minbanc or the
Foundation, as the case may be, a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of such company or on the consummation of the
transaction contemplated by this Agreement.
"Membership" means a non-voting membership in the Foundation as
provided for in the Certificate of Incorporation of the Foundation.
"Merger" has the meaning ascribed to such term in Section 2.1.
"Merger Consideration" has the meaning ascribed to such term in
Section 3.1.
"Minbanc" means Minbanc Capital Corp., a Delaware stock corporation.
"Minbanc Common Stock" means the common stock, par value $1.00 per
<PAGE> 34
- 3 -
share, of Minbanc.
"Minbanc Special Meeting" has the meaning ascribed to such term in
Section 6.3.
"Net Asset Value Per Share" means, the net asset value per share of
Minbanc Common Stock as shown by the balance sheet of Minbanc for the month
ending immediately prior to the date of the Merger, as adjusted to give effect
to the payment of all unpaid costs associated with the Merger that are not
reflected on the balance sheet.
"Notice of Cash Election" has the meaning ascribed to such term in
Section 3.2.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization
or entity of whatever nature or government or any agency or political
subdivision thereof.
"Proxy Statement" means the proxy statement, together with any letters
to stockholders, to be used in connection with the solicitation of proxies from
the stockholders of Minbanc in connection with the Merger.
"SEC" means the United States Securities and Exchange Commission.
"Surviving Corporation" has the meaning ascribed to such term in
Section 2.1.
"Taxes" means any federal, state, county, local or foreign taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, sales and use, ad valorem, transfer, gains, profits,
excise, franchise, real and personal property, gross receipt, capital stock,
production, business and occupation, disability, employment, payroll, license,
estimated, stamp, custom duties, severance or withholding taxes or charges
imposed by any governmental entity, and includes any interest and penalties
(civil or criminal) on or additions to any such taxes, charges, fees, levies or
other assessments, and any expenses incurred in connection with the
determination, settlement or litigation of any liability for any of the
foregoing.
"Tax Return" means any report, return or other information required to
be supplied to a governmental entity with respect to Taxes, including, where
permitted or required, combines or consolidated returns for any group of
entities that includes Minbanc.
1.2 INTERPRETATION. In this Agreement, unless the context otherwise
requires:
(a) The term "hereby," "hereunder" or any similar terms shall
refer to
<PAGE> 35
- 4 -
this Agreement;
(b) Any reference to any Article, Section or Exhibit contained in
this Agreement shall refer to such Article, Section or Exhibit as set forth in
this Agreement, notwithstanding use of or failure to use the term "hereof" or
"herein" in connection with such reference;
(c) Words of the masculine gender shall mean and include
correlative words of the feminine and neuter genders;
(d) All headings preceding the text of the several Articles and
Sections of this Agreement shall be solely for convenience of reference and
shall not constitute a part of this Agreement, nor shall they affect the
meaning, construction or effect of this Agreement;
(e) Statements herein qualified by "known to Minbanc," "to the
knowledge of Minbanc" or a similar phrase shall mean that none of the officers
of Minbanc has current actual knowledge of the inaccuracy of such statement;
and
(f) Statements herein qualified by "known to the Foundation," "to
the knowledge of the Foundation" or a similar phrase shall mean that none of
the officers of the Foundation has current actual knowledge of the inaccuracy
of such statement.
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time, Minbanc shall be merged with and into the
Foundation in accordance with the provisions of Section 257 of the Delaware
General Corporation Law (the "Merger"). The Foundation shall be the surviving
corporation in the Merger and shall continue its existence under the laws of
the State of Delaware (the Foundation, as such, being sometimes referred to
herein as the "Surviving Corporation"). From and after the Effective Time, the
Foundation shall succeed to all rights, privileges, powers, franchises, assets,
liabilities and obligations of Minbanc, all in accordance with the provisions
of Section 259 of the Delaware General Corporation law, and the separate
existence of Minbanc shall cease.
2.2 CLOSING. The closing of the Merger (the "Closing") shall take place
at 10:00 A.M., local time, at the offices of Covington & Burling, 1201
Pennsylvania Avenue, N.W., Washington, D.C., or at any other mutually agreeable
location, on the second business day following the day on which this Agreement
shall have been adopted by the stockholders of Minbanc in accordance with the
Delaware General Corporation Law and all other conditions to the Merger have
been
<PAGE> 36
- 5 -
satisfied or waived (the "Closing Date").
2.3 EFFECTIVE TIME OF THE MERGER. If at the Closing the conditions to the
Merger, which are set forth in Article VII, are satisfied or, to the extent
permitted, waived, (i) the appropriate officers of Minbanc and the Foundation
shall execute a Certificate of Merger in the form required by the Delaware
General Corporation Law and (ii) promptly following the Closing on the Closing
Date, each of Minbanc and the Foundation shall file, or cause to be filed, the
Certificate of Merger with the Secretary of State of the State of Delaware.
The Merger shall become effective on the date on which said filing shall be
made with the Secretary of State of the State of Delaware, or such later date
set forth therein as shall be agreed upon in writing by the parties. The time
when the merger so becomes effective is referred to herein as the "Effective
Time" and the date on which the Effective Time occurs is referred to herein as
the "Effective Date." Following the Effective Time, the parties shall make any
such other filing or recordings as may be required by applicable law to give
effect to the Merger.
2.4 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of the
Foundation at the Effective Time shall be the Certificate of Incorporation of
the Surviving Corporation.
2.5 BYLAWS. The Bylaws of the Foundation at the Effective Time shall be
the Bylaws of the Surviving Corporation.
ARTICLE III
CONVERSION OF MINBANC COMMON STOCK
3.1 CONVERSION OF SHARES
At the Effective Time, by virtue of the Merger, all of the issued and
outstanding shares of Minbanc Common Stock (other than any shares that are
entitled to dissenters' rights of appraisal) of each stockholder of record
shall be converted into a Membership in the Foundation (the "Merger
Consideration").
3.2 CASH ELECTIONS.
(a) In lieu of participating in the Merger, each stockholder of
record of Minbanc shall be entitled to make an election to receive, immediately
prior to the Merger, a cash distribution from Minbanc in an amount per share of
Minbanc Common Stock equal to the Net Asset Value Per Share (a "Cash
Election"). A stockholder may make a Cash Election with respect all or any
portion of the shares of Minbanc Common Stock held of record by such
stockholder.
(b) In order for a Cash Election to be effective, a properly
completed Notice of Cash Election (in such form as the Board of Directors of
Minbanc shall
<PAGE> 37
- 6 -
prescribe) signed by the stockholder of record, and (except as otherwise
provided in paragraph (d) of this Section 3.2), accompanied by the
certificate(s) for the shares of Minbanc Common Stock that are the subject of
the Cash Election, must be received by Minbanc no later than 12:00 p.m.
(Washington, D.C. time) on a date selected by the Board of Directors of Minbanc
that is not later than the second business day preceding the Closing Date (the
"Election Deadline"). A Cash Election may be withdrawn by written notice
delivered to Minbanc at any time prior to the Election Deadline. All holders
of Minbanc Common Stock who do not make an effective Cash Election (and who do
not exercise dissenters' rights of appraisal under Delaware law) will receive
the Merger Consideration if the Merger is consummated.
(c) Distributions will be made pursuant to effective Cash
Elections only if the Merger is consummated. Accordingly, if this Agreement is
terminated for any reason, all Cash Elections will be null and void.
(d) If any certificate for shares of Minbanc Common Stock of a
stockholder who has made a Cash Election is claimed by such stockholder to have
been lost, stolen, mislaid or destroyed, then upon receipt by Minbanc of (i) an
affidavit of that fact from the stockholder, (ii) such bond, security or
indemnity from such stockholder as Minbanc may reasonably require, and (iii)
any other documentation as Minbanc may reasonably require to evidence and
effect the bona fide exchange thereof, Minbanc shall issue to such holder the
amount of cash that such stockholder would have been entitled to receive had
the certificate for the shares of Minbanc Common Stock represented by such
lost, stolen, mislaid or destroyed certificate been tendered pursuant to
Section 3.2(b) above.
3.3 APPRAISAL RIGHTS. Notwithstanding the terms of Section 3.1, shares of
Minbanc Common Stock outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger and who has demanded
appraisal for such shares in accordance with the applicable provisions of
Delaware General Corporation Law shall not be converted as provided in Section
3.1, unless and until such holder fails to perfect or withdraws or otherwise
loses his right to appraisal. If, after the Effective Time, such holder fails
to perfect or withdraws or loses his right to appraisal, such shares of Minbanc
Common Stock shall be treated as if they had been converted as of the Effective
Time into a right to receive the Merger Consideration. The Foundation shall
give Minbanc prompt notice of any demands received by the Foundation for
appraisal of shares of Minbanc Common Stock.
3.4 STOCK TRANSFER BOOKS. After the Effective Time, the stock transfer
books of Minbanc shall be closed and there shall be no registration of
transfers on the stock transfer books of Minbanc or its transfer agent, if any,
of the Minbanc Common Stock. If, after the Effective Time, a certificate for
shares of Minbanc Common Stock is presented to Minbanc or its transfer agent,
if any, for registration of transfer, it shall be cancelled.
<PAGE> 38
- 7 -
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE FOUNDATION
The Foundation hereby represents and warrants to Minbanc as follows:
4.1 ORGANIZATION, STANDING AND POWER. The Foundation is a non-stock
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Foundation is not and has not engaged in
any activities other than activities that are necessary to give effect to the
transactions that are contemplated by this Agreement. The Foundation has
applied to the IRS for recognition of exemption from federal income taxation
under section 501(c)(3) of the Code. The Foundation has all requisite
corporate power and authority to carry on its business as is contemplated by
this Agreement.
4.2 SUBSIDIARIES. The Foundation has no subsidiaries.
4.3 UNDISCLOSED LIABILITIES. Except for its obligations under this
Agreement, the Foundation does not have any debts, liabilities or obligations
of any nature (whether absolute, accrued, contingent or otherwise) and, to the
knowledge of the Foundation, there is no basis for the assertion against the
Foundation of any such debt, liability or obligation.
4.4 AUTHORIZATION AND VALIDITY.
(a) The Foundation has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of the Foundation, which constitutes all of the
corporate action that is necessary for the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
(c) This Agreement has been duly executed and delivered by the
Foundation, and constitutes a valid and legally binding obligation of the
Foundation that is enforceable against the Foundation in accordance with its
terms.
4.5 NON-CONTRAVENTION. The execution and delivery of this Agreement by
the Foundation, and the consummation by the Foundation of the transactions
contemplated hereby, will not violate, conflict with, or result in the breach
of any of the terms or conditions of, constitute a default under, result in the
acceleration of any obligation under, or result in the creation of any lien,
security interest,
<PAGE> 39
- 8 -
charge or encumbrance upon any of the property of the Foundation under (i) the
Certificate of Incorporation or the Bylaws of the Foundation, (ii) any statute,
law, ordinance, rule, regulation, judgment, decree, order, injunction, writ,
permit or license of any court, governmental or regulatory body or authority,
or (iii) any bond, note, mortgage, indenture, deed of trust, license,
franchise, permit, contract, lease or other instrument, obligation or agreement
of any kind to which the Foundation is a party or by which any of its property
is bound.
4.6 GOVERNMENTAL APPROVALS. No declaration, filing or registration with,
and no notice to or authorization, consent or approval of, any governmental
authority, other than compliance with applicable federal and state securities
laws and the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, is required on the part of the Foundation in connection
with the execution and delivery by the Foundation of this Agreement and the
consummation by the Foundation of the transactions contemplated hereby.
4.7 LITIGATION. There are no (i) claims, suits, actions or proceedings
pending or, to the knowledge of Minbanc, threatened against, relating to or
affecting the Foundation or (ii) judgments, decrees, injunctions, rules or
orders of any court, any governmental department, commission, agency,
instrumentality or authority or any arbitrator outstanding against the
Foundation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MINBANC
Minbanc hereby represents and warrants to the Foundation as follows:
5.1 ORGANIZATION, STANDING AND POWER. Minbanc is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Minbanc is duly licensed or qualified to do business under the laws
in each jurisdiction where the character or location of the properties owned by
it or the nature of the business conducted by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect on Minbanc. Minbanc has all
requisite corporate power and authority, and is duly authorized by all
necessary regulatory approvals and orders, to carry on its business as it
currently is conducted.
5.2 STOCK. As of the date of this Agreement, the authorized capital stock
of Minbanc consists of 20,000 shares of Minbanc Common Stock, of which 8,626
shares are issued and outstanding. All such outstanding shares of Minbanc
Common Stock are duly authorized, validly issued, fully paid and nonassessable.
There are no outstanding, options, warrants, subscriptions, contracts or other
commitments, understandings or arrangements (including convertible securities)
that obligate Minbanc to issue or sell any shares of Minbanc capital stock.
<PAGE> 40
- 9 -
5.3 SUBSIDIARIES. Minbanc has no subsidiaries.
5.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1999, the
business of Minbanc has been operated solely in the ordinary course of business
and there has not been any change in the condition (financial or other),
properties, assets or liabilities of Minbanc, except for changes in the
ordinary course of business that individually or in the aggregate have not had
a Material Adverse Effect on Minbanc.
5.5 FINANCIAL STATEMENTS. The audited financial statements of Minbanc at
March 31, 1999, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may otherwise be
indicated in the notes thereto) and fairly present in all material respects the
financial position of Minbanc as of the respective dates thereof and the
results of operations and cash flows for the respective periods then ended.
5.6 UNDISCLOSED LIABILITIES. Except (i) as disclosed in the audited
financial statements of Minbanc at March 31, 1999 (including the notes
thereto), (ii) as incurred in the ordinary course of business after March 31,
1999, or (iii) for its obligations under this Agreement, Minbanc does not have
any debts, liabilities or obligations of any nature (whether absolute, accrued,
contingent or otherwise) and, to the knowledge of Minbanc, there is no basis
for the assertion against Minbanc of any such debt, liability or obligation.
5.7 AUTHORIZATION AND VALIDITY.
(a) Minbanc has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Minbanc. Upon the adoption of this Agreement by
the stockholders of Minbanc, as contemplated by Section 6.3, this Agreement and
the consummation of the transactions contemplated hereby will be duly
authorized by all necessary corporate action on the part of Minbanc.
(c) This Agreement has been duly executed and delivered by
Minbanc, and constitutes a valid and legally binding obligation of Minbanc that
is enforceable against Minbanc in accordance with its terms.
5.8 NON-CONTRAVENTION. The execution and delivery of this Agreement by
Minbanc, and the consummation by Minbanc of the transactions contemplated
hereby, will not violate, conflict with, or result in the breach of any of the
terms or conditions of, constitute a default under, result in the acceleration
of any obligation under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the property of Minbanc under (i)
the Certificate of
<PAGE> 41
- 10 -
Incorporation or the Bylaws of Minbanc, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order injunction, writ, permit or license of any
court, governmental or regulatory body or authority, or (iii) any bond, note,
mortgage, indenture, deed of trust, license, franchise, permit, contract, lease
or other instrument, obligation or agreement of any kind to which Minbanc is a
party or by which any of its property is bound.
5.9 GOVERNMENTAL APPROVALS. No declaration, filing or registration with,
and no notice to or authorization, consent or approval of, any governmental
authority, other than compliance with applicable federal and state securities
laws and the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, is required on the part of Minbanc in connection with
the execution and delivery by Minbanc of this Agreement and the consummation by
Minbanc of the transactions contemplated hereby.
5.10 LITIGATION. There are no (i) claims, suits, actions or proceedings
pending or, to the knowledge of Minbanc, threatened against, relating to or
affecting Minbanc or (ii) judgments, decrees, injunctions, rules or orders of
any court, any governmental department, commission, agency, instrumentality or
authority or any arbitrator outstanding against Minbanc.
5.11 TAX MATTERS.
(a) Minbanc has (i) filed all material Tax Returns required to be
filed by it within the time and in the manner prescribed by law, (ii) paid all
Taxes that are shown on such Tax Returns as due and payable within the time and
in the manner prescribed by law, and (iii) paid all Taxes otherwise required to
be paid.
(b) As of the date hereof, (i) there are no claims, assessments,
audits or administrative or court proceedings pending against Minbanc for any
alleged deficiency in Taxes, and (ii) Minbanc has not executed any outstanding
waivers or comparable consents regarding the application of the statute of
limitations with respect to any Taxes or Tax Returns.
(c) Minbanc has established adequate accruals for Taxes and for
any liability for deferred Taxes in its financial statements in accordance with
generally accepted accounting principles.
5.12 DISCLOSURE. Both on the date that Minbanc mails the Proxy Statement
to the holders of Minbanc Common Stock and on the date that the stockholder
meeting of Minbanc to adopt this Agreement is held, the information in the
Proxy Statement with respect to Minbanc will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 ACCESS TO INFORMATION. Upon reasonable notice and during normal
business hours, each of Minbanc and the Foundation shall afford to the
officers, directors, employees, accountants, counsel and other representatives
of the other reasonable access, during the period prior to the Effective Time,
to all of its properties, books, contracts, commitments and records.
6.2 PROXY STATEMENT.
(a) As promptly as practicable after the date of this Agreement,
Minbanc shall prepare and file with the SEC the Proxy Statement and any
amendments thereto, which shall comply in all material respects with the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
(b) The Foundation shall cooperate with Minbanc in the preparation of
the Proxy Statement and shall furnish to Minbanc for inclusion therein all
information concerning the Foundation as is required or is customary for
inclusion in the Proxy Statement.
6.3 MINBANC STOCKHOLDER MEETING. As promptly as practicable after the
execution and delivery of this Agreement, Minbanc shall call, give notice of,
convene and hold a special meeting of its stockholders (the "Minbanc Special
Meeting") for the purpose of voting on the adoption of this Agreement, all in
accordance with applicable law and Minbanc's Certificate of Incorporation and
Bylaws.
6.4 RECOMMENDATION OF MERGER. Subject to its fiduciary obligations, the
Board of Directors of Minbanc shall recommend to the stockholders of Minbanc
the adoption of this Agreement at the Minbanc Special Meeting and shall use all
reasonable efforts to obtain such adoption.
6.5 PUBLIC ANNOUNCEMENTS. Minbanc and the Foundation shall cooperate with
each other in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement and the
transactions contemplated hereby. Neither party shall issue any such public
announcement or statement without advance consultation with the other party.
6.6 CONDUCT PENDING MERGER. From and after the date of this Agreement,
and until the Merger is completed or this Agreement is terminated, each of
Minbanc and the Foundation shall conduct its businesses and operations in the
usual, regular and ordinary course and in substantially the same manner as they
heretofore have been conducted. Without limitation of the foregoing:
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(a) Minbanc shall not (i) declare or pay any dividends or make
other distributions in respect of any of its capital stock, (ii) split, combine
or reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of, or in substitution for, shares
of its capital stock, or (iii) redeem, repurchase or otherwise acquire any
shares of its capital stock;
(b) Minbanc shall not issue, agree to issue, deliver or sell, or
authorize the issuance, delivery or sale of, any shares of its capital stock or
any class or any securities convertible into or exchangeable for, or any
rights, warrants or options to acquire, any such shares or convertible or
exchangeable securities;
(c) Neither Minbanc nor the Foundation shall amend its Certificate
of Incorporation or Bylaws in any way adverse to the other party;
(d) Neither Minbanc nor the Foundation shall acquire or agree to
acquire, by merger or consolidation, by purchase or otherwise, an equity
interest in, or the assets of, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets, except in the ordinary course of
business consistent with past practice;
(e) Neither Minbanc nor the Foundation shall make any capital
expenditure, except in the ordinary course of business consistent with past
practice;
(f) Neither Minbanc nor the Foundation shall sell, lease, license,
encumber or otherwise dispose of any of its assets, except in the ordinary
course of business consistent with past practices; and
(g) Neither Minbanc nor the Foundation shall incur, assume or
guarantee any indebtedness.
6.7 MUTUAL COOPERATION. Each of Minbanc and the Foundation shall take or
cause to be taken all reasonable actions that are necessary, proper or
advisable to cause the fulfillment of the conditions to its obligations under
this Agreement, and to obtain as promptly as possible any and all consents,
authorizations, orders or approvals that are required in connection with the
transactions contemplated by this Agreement. Each shall coordinate and
cooperate with the other in exchanging such information and providing such
reasonable assistance as the other may request in connection with the
foregoing.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF EACH PARTY
7.1 CONDITION TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
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respective obligations of Minbanc and the Foundation to effect the Merger shall
be subject to the satisfaction or waiver, on or prior to the Closing Date, of
the following conditions:
(a) Approval of Merger. This Agreement shall have been adopted by
the holders of Minbanc Common Stock in accordance with the requirements of the
Delaware General Corporation Law.
(b) No Injunction. No temporary restraining order or preliminary
or permanent injunction or other order by any federal or state court or
regulatory agency preventing consummation of the Merger shall have been issued
and is continuing in effect, and the Merger and the other transactions
contemplated hereby shall not be prohibited by any applicable federal or state
law or regulation.
(c) Proxy Statement. The Proxy Statement shall not be subject to
any proceedings commenced or threatened by the SEC.
(d) Tax Status. The Application for Recognition of Exemption
Under Section 501(c)(3) filed by the Foundation shall have been granted by the
IRS.
(e) Appraisal Demands. The holders of no more than 5% of the
outstanding shares of Minbanc Common Stock have demanded appraisal of the
shares in accordance with the provisions of the Delaware General Corporation
Law.
(f) Cash Election. The absence of a determination by the Board of
Directors of the Foundation that, after taking into account the number of
shares of Minbanc Common Stock in respect of which a Cash Election is made, the
Foundation will not have sufficient funds to conduct effectively its planned
activities.
7.2 CONDITIONS TO OBLIGATION OF MINBANC TO EFFECT THE MERGER. The
obligation of Minbanc to effect the Merger shall be further subject to the
satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:
(a) Performance of Obligations of the Foundation. The Foundation
shall have performed in all material respects its agreements and covenants
contained in this Agreement that it is required to perform at or prior to the
Effective Time.
(b) Accuracy of Representations and Warranties. Each of the
representations and warranties of the Foundation in Article IV are true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date.
(c) The Foundation Material Adverse Effect. With respect to the
Foundation, no Material Adverse Effect has occurred, and there shall exist no
fact
<PAGE> 45
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or circumstance that would have, or would be reasonably likely to have, a
Material Adverse Effect on the Foundation.
(d) Closing Certificates. Minbanc shall have received a
certificate signed by an officer of the Foundation, dated the Closing Date, to
the effect that, to such officer's knowledge, the conditions set forth in
Section 7.2(a), (b) and (c) have been satisfied.
(e) The Foundation's Required Consents. Any consents required by
Minbanc to effect the Merger shall have been obtained or those that have not
been obtained are not reasonably likely to result in a Material Adverse
Effect on the Foundation.
7.3 CONDITIONS TO OBLIGATION OF THE FOUNDATION TO EFFECT THE MERGER. The
obligation of the Foundation to effect the Merger shall be further subject to
the satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:
(a) Performance of Obligations of Minbanc. Minbanc shall have
performed in all material respects its agreements and covenants contained in
this Agreement that it is required to perform at or prior to the Effective
Time.
(b) Accuracy of Representations and Warranties. Each of the
representations and warranties of Minbanc in Article V are true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date.
(c) Minbanc Material Adverse Effect. With respect to Minbanc, no
Material Adverse Effect shall have occurred, and there shall exist no fact or
circumstance that would have, or would be reasonably likely to have, a Material
Adverse Effect on Minbanc.
(d) Closing Certificates. The Foundation shall have received a
certificate signed by an officer of Minbanc, dated the Closing Date, to the
effect that, to such officer's knowledge, the conditions set forth in Section
7.3(a), (b) and (c) have been satisfied.
(e) Minbanc's Required Consents. Any consents required by the
Foundation to effect the Merger shall have been obtained or those that are not
obtained are not reasonably likely result in a Material Adverse Effect on
Minbanc.
ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after the
adoption of this Agreement by the stockholders of Minbanc:
<PAGE> 46
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(a) by mutual agreement of Minbanc and the Foundation;
(b) by either the Foundation or Minbanc, if the stockholders of
Minbanc do not adopt this Agreement at the Minbanc Special Meeting, or any
adjournment thereof;
(c) by Minbanc, by written notice to the Foundation, if there shall
have been any breach of any material representation or warranty, or any
material breach of any covenant or agreement, of the Foundation hereunder, and
such breach shall not have been remedied within twenty days after receipt by
the Foundation of a notice in writing from Minbanc specifying the nature of
such breach and requesting that it be remedied;
(d) by the Foundation, by written notice to Minbanc, if there shall
have been any breach of any material representation or warranty, or any
material breach of any covenant or agreement, of Minbanc hereunder, and such
breach shall not have been remedied within twenty days after receipt by Minbanc
of a notice in writing from the Foundation specifying the nature of such breach
and requesting that it be remedied;
(e) by Minbanc or the Foundation, if (i) any state or federal law,
order, rule or regulation is adopted or issued that has the effect, in the
written opinion of outside counsel for such party, of prohibiting the Merger or
(ii) any court of competent jurisdiction shall have issued an order, judgment
or decree permanently restraining, enjoining or otherwise prohibiting the
Merger, and such order, judgment or decree shall have become final and
nonappealable; or
(f) by either Minbanc or the Foundation, if the Closing has not
occurred on or before September 30, 1999.
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall become void and be of
no further force or effect, except that (i) the provisions of this Section 8.2
and Sections 9.2, 9.3, 9.4, 9.5, 9.7, 9.8 and 9.9 shall survive the termination
of this Agreement, and (ii) the termination of this Agreement shall not relieve
either party of any liability it may have arising from any breach by it of any
representation, warranty or covenant contained in this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 REPRESENTATIONS AND WARRANTIES NOT TO SURVIVE. The representations
and warranties in this Agreement shall not survive the Effective Time.
<PAGE> 47
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9.2 EXPENSES. All costs and expenses incurred by either party in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
9.3 NOTICES. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and may be given or made
by (i) personal service, (ii) first class United States mail, postage prepaid,
(iii) overnight delivery service or (iv) facsimile transmission, if confirmed
promptly by any of the methods specified in clauses (i) through (iii) of this
sentence, addressed as set forth below, and shall be duly given or made when
received:
If to Minbanc:
Minbanc Capital Corp.
c/o American Bankers Association
1120 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attention: Mathew H. Street
If to the Foundation:
Minbanc Foundation, Inc.
c/o American Bankers Association
1120 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attention: Joanne Wharton
Either party may change its address for such communications by giving notice
thereof to the other party in conformity with this Section 9.3.
9.4 ASSIGNABILITY AND PARTIES IN INTEREST. This Agreement shall not be
assignable by either party without the prior written consent of the other
party. This Agreement shall inure solely to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement is intended to confer, expressly or by implication,
upon any Person, other than the parties hereto, any rights or remedies under or
by reason of this Agreement.
9.5 GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Delaware
(without giving effect to the conflicts of law provisions thereof).
9.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and which together
shall constitute a single instrument.
<PAGE> 48
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9.7 ENTIRE AGREEMENT. This Agreement, and any documents delivered
pursuant hereto, contain the entire understanding and agreement between the
parties hereto with respect to the transactions contemplated hereby, and
supersede all prior and contemporaneous agreements or understandings, express
or implied, oral or written, between the parties with respect to the subject
matter hereof, including without limitation, that certain Agreement of Merger
between Minbanc and the Foundation dated as of January 19, 1999.
9.8 AMENDMENTS AND WAIVERS.
(a) Subject to the limitations of Section 251(d) of the Delaware
General Corporation Law (as made applicable by Section 257(d) of the Delaware
General Corporation Law), at any time prior to the Effective Time, and
notwithstanding that the stockholders of Minbanc shall have adopted this
Agreement, Minbanc and the Foundation, by mutual written agreement, may amend,
modify or supplement this Agreement in any respect permitted by law.
(b) At any time prior to the Effective Time, the parties hereto may,
by written agreement, (i) extend the time for the performance of any of the
obligations or other acts of the parties hereto, (ii) waive any inaccuracies in
the representations and warranties contained herein or in any document
delivered pursuant hereto, (iii) waive compliance with any of the covenants or
agreements contained herein or in any document delivered pursuant hereto and
(iv) to the extent permitted by law, waive any conditions to the Merger set
forth in Article VII.
(c) Any instrument or agreement referred to in this Section 9.8 shall
be valid only if signed on behalf of the Foundation or Minbanc, as applicable,
by a person authorized to sign this Agreement.
9.9 SEVERABILITY. If any provisions of this Agreement, or the application
thereof, shall for any reason or to any extent be held invalid or unenforceable
as to any Person or under any circumstances, (i) the remainder of this
Agreement, and application of such provision to other Persons and in other
circumstances, shall continue in full force and effect and in no way be
affected, impaired or invalidated to the fullest extent permitted by law, and
(ii) the parties shall negotiate in good faith to replace any provision so held
invalid or unenforceable with a valid provision that is as similar as possible
in substance to the invalid or unenforceable provision.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
<PAGE> 49
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IN WITNESS WHEREOF, Minbanc and the Foundation each have caused this
Agreement to be executed by their respective duly authorized officers as of the
date first above written.
MINBANC CAPITAL CORP.
By:______________________
C. Kendrick Fergeson
President
Attest:_____________________
Joanne B. Wharton
Assistant Treasurer
MINBANC FOUNDATION, INC.
By:______________________
Edward L. Yingling
President
Attest:___________________
Joanne Wharton
Assistant Secretary
<PAGE> 50
ANNEX II
DELAWARE GENERAL CORPORATION LAW
Chapter 1 General Corporation Law
Subchapter IX Merger or Consolidation
262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to Section 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of any class or series
of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did
not require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of stock
of a constituent corporation if the holders thereof are required by the terms
of an agreement of merger or consolidation pursuant to Sections 251, 252, 254,
257, 258, 263 and 264 of this title to accept for such stock anything except:
<PAGE> 51
a. Shares of stock of the corporation surviving or resulting from such merger
or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in respect
thereof, which shares of stock (or depository receipts in respect thereof) or
depository receipts at the effective date of the merger or consolidation will
be either listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in lieu
of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party to
a merger effected under Section 253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for such
meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall include
in such notice a copy of this section. Each stockholder electing to demand the
appraisal of such stockholder's shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written demand for
appraisal of such stockholder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and that
the stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must do so
by a separate written demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation who
has complied with this subsection and has not voted in favor of or
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<PAGE> 52
consented to the merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section 228 or
Section 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation,
and shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all
such holders of any class or series of stock of a constituent corporation that
are entitled to appraisal rights. Such notice may, and, if given on or after
the effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on or
within 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice,
each constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record date
is fixed and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on which the
notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the
merger or consolidation, any stockholder who has complied with the requirements
of subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the
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<PAGE> 53
corporation surviving the merger or resulting from the consolidation a
statement setting forth the aggregate number of shares not voted in favor of
the merger or consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such shares. Such
written statement shall be mailed to the stockholder within 10 days after such
stockholder's written request for such a statement is received by the surviving
or resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders
who have complied with this section and who have become entitled to appraisal
rights. The Court may require the stockholders who have demanded an appraisal
for their shares and who hold stock represented by certificates to submit their
certificates of stock to the Register in Chancery for notation thereon of the
pendency of the appraisal proceedings; and if any stockholder fails to comply
with such direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
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<PAGE> 54
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon application
of a stockholder, the Court may order all or a portion of the expenses incurred
by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorney's fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares entitled to
an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded 1 appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall
deliver to the surviving or resulting corporation a written withdrawal of such
stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon
such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to the
merger or consolidation shall have the status of authorized and unissued shares
of the surviving or resulting corporation. (Last amended by Ch. 339, L. '98,
eff. 7-1-98.)
- 5 -
<PAGE> 55
ANNEX III
MINBANC CAPITAL CORP.
Financial Statements and Report of
Independent Certified Public Accountants
March 31, 1999 and 1998
- --------------------------------------------------
<PAGE> 56
MINBANC CAPITAL CORP.
Contents
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 3
FINANCIAL STATEMENTS
Statements of Net Assets 4
Statements of Income 5
Statements of Changes in Net Assets 6
Statements of Cash Flows 7-8
Notes to Financial Statements 9-16
<PAGE> 57
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholders and Board of Directors
Minbanc Capital Corp.
We have audited the accompanying statements of net assets of Minbanc Capital
Corp. as of March 31, 1999 and 1998, and the related statements of income,
changes in net assets and cash flows, and the selected per share data and
statistical information for the years ended March 31, 1999, 1998 and 1997. These
financial statements and per share data and statistical information are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and per share data and statistical
information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements and per share data
and statistical information are free of material misstatement. Our procedures
included confirmation of investments, U.S. Treasury bills, and certificates of
deposit owned as of March 31, 1999, 1998 and 1997, by correspondence with the
custodian. 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 and selected per share data and
statistical information referred to above present fairly, in all material
respects, the financial position of Minbanc Capital Corp. as of March 31, 1999
and 1998, and the results of its operations, its cash flows, changes in net
assets and the selected per share data and statistical information for the years
ended March 31, 1999, 1998 and 1997, in conformity with generally accepted
accounting principles.
Vienna, Virginia
April 28, 1999
3
<PAGE> 58
MINBANC CAPITAL CORP.
Statements of Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments $ 375,444 $ 432,306
Less allowance for possible investment loss (125,000) (125,000)
-----------------------------------------------
Net investments 250,444 307,306
U.S. Treasury bills, at cost which approximates market,
at rates ranging from 4.1 percent to 4.6 percent in
1999 and 4.9 percent to 5.5 percent in 1998 2,596,174 2,591,287
Certificates of deposit, at cost which approximates
market,at rates ranging from 2.0 percent to 6.0
percent in 1999 and 2.3 percent to 6.3 percent in 1998 2,500,000 2,300,000
Accrued interest receivable 38,330 46,883
Current income tax refund receivable 45,878 7,465
Deferred tax asset, less valuation allowance of $-0-
in 1998 and 1997 37,500 37,500
-----------------------------------------------
5,468,326 5,290,441
-----------------------------------------------
Cash and cash equivalents
Money market funds, at cost which approximates
market 119,591 152,531
Cash 4,913 108,321
-----------------------------------------------
124,504 260,852
-----------------------------------------------
TOTAL ASSETS 5,592,830 5,551,293
-----------------------------------------------
LIABILITIES
Accounts payable and accrued liabilities 1,000 3,000
Accounts payable to American Bankers Association 5,144 10,656
-----------------------------------------------
TOTAL LIABILITIES 6,144 13,656
-----------------------------------------------
NET ASSETS $ 5,586,686 $ 5,537,637
-----------------------------------------------
NET ASSETS PER SHARE (BASED ON 8,626 SHARES OF
COMMON STOCK OUTSTANDING) $ 647.66 $ 641.97
-----------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 59
MINBANC CAPITAL CORP.
Statements of Income
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31, 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Investment income $ 249,566 $ 285,233 $ 306,048
Miscellaneous income - - 5,000
Reversal of allowance for possible
investment loss - 25,000 150,000
----------------------------------------------------
TOTAL INCOME 249,566 310,233 461,048
----------------------------------------------------
EXPENSES
Professional fees 97,546 22,340 43,808
Administrative 47,835 48,809 42,619
Travel - 113 5,233
Scholarships 24,170 16,314 -
Consulting - 2,040 4,140
Printing - 1,778 2,775
Other 14,622 16,960 21,149
----------------------------------------------------
TOTAL EXPENSES 184,173 108,354 119,724
----------------------------------------------------
INCOME BEFORE PROVISION FOR TAXES 65,393 201,879 341,324
INCOME TAX PROVISION 16,345 87,638 80,196
----------------------------------------------------
NET INCOME $ 49,048 $ 114,241 $ 261,128
----------------------------------------------------
NET INCOME PER SHARE (BASED ON
8,626 SHARES OF COMMON STOCK
OUTSTANDING) $ 5.69 $ 13.24 $ 30.27
----------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 60
MINBANC CAPITAL CORP.
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31, 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Net income $ 49,048 $ 114,241 $ 261,128
NET ASSETS, BEGINNING OF YEAR 5,537,637 5,423,396 5,162,268
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR $ 5,586,685 $ 5,537,637 $ 5,423,396
- --------------------------------------------------------------------------------------------------------------------------
REPRESENTED BY:
Common stock, par value $1.00;
20,000 shares authorized; 8,729 shares
issued, of which 103 shares
were held as treasury stock $ 8,729 $ 8,729 $ 8,729
Capital surplus 4,294,316 4,294,316 4,294,316
Retained earnings 1,293,790 1,244,742 1,130,501
Less cost of treasury stock (10,150) (10,150) (10,150)
- --------------------------------------------------------------------------------------------------------------------------
$ 5,586,685 $ 5,537,637 $ 5,423,396
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 61
MINBANC CAPITAL CORP.
Statements of Cash Flows
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31, 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 258,119 $ 309,821 $ 291,388
Custodian and transfer agent fees paid (14,053) (13,298) (19,942)
Legal fees paid (90,501) (32,998) (34,248)
Accounting fees paid (12,249) (16,373) (9,997)
Printing costs - (1,778) (2,883)
Directors' travel costs - (1,331) (5,497)
Administrative fees paid (48,042) (56,738) (42,211)
Scholarships paid (24,170) (16,314) (6,172)
Consulting fees paid - (2,040) (13,140)
Miscellaneous (payments) receipts (1,609) (5,226) 2,152
Income taxes paid (55,818) (140,473) (14,047)
-------------------------------------------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 11,677 23,252 145,403
-------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Principal reductions on capital note
investments 56,862 149,986 348,653
Purchases of government securities (9,463,276) (6,957,575) (4,884,954)
Sales of government securities 9,458,389 6,427,756 3,746,502
Purchases of certificates of deposit (24,000,000) (3,400,000) (3,500,000)
Sales of certificate of deposit 23,800,000 3,600,000 3,500,000
-------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (148,025) (179,833) (789,799)
-------------------------------------------------------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (136,348) (156,581) (644,396)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 260,852 417,433 1,061,829
-------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END
OF YEAR $ 124,504 $ 260,852 $ 417,433
-------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 62
MINBANC CAPITAL CORP.
Statements of Cash Flows--Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31, 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Net income $ 49,048 $ 114,241 $ 261,128
Adjustments to reconcile net income
to net cash provided by operating
activities
Reversal of possible investment loss - (25,000) (150,000)
Decrease (increase) in accrued
interest receivable 8,553 24,588 (14,660)
Decrease in deferred tax asset - 7,500 9,000
(Increase) decrease in current
income tax refund receivable (38,413) (7,465) 450
Decrease (increase) in prepaid
expenses - 1,971 (1,796)
Decrease in accounts payable and
accrued liabilities (2,000) (7,826) (16,048)
Increase (decrease) in accounts
payable to American Bankers
Association (5,511) (27,703) 460
(Decrease) increase in current
income taxes payable - (57,054) 56,869
-----------------------------------------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 11,677 $ 23,252 $ 145,403
-----------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
8
<PAGE> 63
MINBANC CAPITAL CORP.
Notes to Financial Statements
- --------------------------------------------------------------------------------
March 31, 1999 and 1998
- --------------------------------------------------------------------------------
NOTE A--SUMMARY OF ACCOUNTING POLICIES
A summary of significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows.
ORGANIZATION
Minbanc Capital Corp. (the Company) is registered as a non-diversified,
closed-end management investment company under the Investment Company Act
of 1940, as amended. The Company was incorporated on June 18, 1971, for the
purpose of making capital funds available to qualifying minority-owned
banks which have been in operation for a minimum of two years.
Minority-owned banks are those banks managed by, or whose voting securities
are owned by, members of minority groups in the United States.
The Company's officers and directors serve without compensation, but are
entitled to reimbursement for out-of-pocket travel expenses. Effective
October 1, 1980, the Company agreed to reimburse the American Bankers
Association (the Association) a maximum of $50,000 per year for use of the
Association's facilities and administrative services. Administrative
expenses paid to the Association were $47,835, $48,809 and $42,619 for the
years ended March 31, 1999, 1998 and 1997, respectively. In addition, the
Association pays on behalf of the Company certain other expenses, which are
charged to the Company and recorded in its accounting records.
INVESTMENT VALUATION
Investments are valued at cost, less specific charge-offs and the allowance
for possible investment loss. In the opinion of the board of directors, the
allowance for possible investment loss is adequate to absorb losses which
may be incurred in the collection of outstanding investments. These
investments have not been discounted to reflect higher current market rates
of interest, as it is the Company's intention to hold the investments to
maturity. There is no public market for the Company's investments;
therefore, the directors, in their evaluation, have considered the cost of
the investments and developments since acquisition, including reviews of
the current financial statements of the investee banks and other factors
pertinent to the valuation of the investments.
INCOME TAXES
The Company is a taxable corporation under Internal Revenue Code Subchapter
C.
CASH EQUIVALENTS
For purposes of reporting cash flows, cash equivalents consist of money
market funds and cash.
9
<PAGE> 64
MINBANC CAPITAL CORP.
Notes to Financial Statements--Continued
- --------------------------------------------------------------------------------
March 31, 1999 and 1998
- --------------------------------------------------------------------------------
NOTE A--SUMMARY OF ACCOUNTING POLICIES--CONTINUED
USING ESTIMATES IN PREPARING FINANCIAL STATEMENTS
In preparing financial statements in conformity with generally accepted
accounting principles, the board of directors and management are required
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
- --------------------------------------------------------------------------------
NOTE B--INVESTMENTS
A summary of investments as of March 31, 1999 and 1998, is as follows:
<TABLE>
<CAPTION>
1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
6.00 percent subordinated note (variable rate with 6.00 percent floor) of
Cherokee County Bancshares, Inc. (an Oklahoma bank holding corporation),
Stilwell, Oklahoma, dated May 19, 1995, with interest payable quarterly
through June 1995; thereafter, principal and interest payable quarterly
from September 1995 through June 2004. Principal and interest payments
were not current as of March 31, 1999; however, they became current as
of April 1999 $ 244,444 $ 288,889
4.00 percent subordinated capital note (fixed rate) of $431,000 of the
Douglass Bank, Kansas City, Kansas, dated February 3, 1988, assumed by
Douglass Bancorp, Inc., on December 5, 1991, with principal and accrued
interest payable on December 4, 2006. The note balance is presented net
of a $300,000 charge-off taken in 1991. As of September 30, 1994, this
note was classified as nonaccrual. The amount of interest lost was
$17,240 per year for the years ended March 31, 1999 and 1998, and
$144,924 since charge-off in 1991 131,000 131,000
</TABLE>
10
<PAGE> 65
MINBANC CAPITAL CORP.
Notes to Financial Statements--Continued
- --------------------------------------------------------------------------------
March 31, 1999 and 1998
- --------------------------------------------------------------------------------
NOTE B--INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
6.00 percent subordinated capital note (variable rate with 6.00 percent
floor) of United National Bank, Fayetteville, North Carolina, dated
March 4, 1988, with interest payable quarterly through September 1990;
thereafter, principal and interest payable quarterly from September 1990
through June 1998. The Bank repaid the loan and accrued interest
in full in June 1998 - 12,417
- -------------------------------------------------------------------------------------------------------------------------------
375,444 432,306
Less allowance for possible investment loss (125,000) (125,000)
- -------------------------------------------------------------------------------------------------------------------------------
$ 250,444 $ 307,306
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTE C--ALLOWANCE FOR POSSIBLE INVESTMENT LOSS
The following is an analysis of the allowance for possible investment loss
as of March 31:
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $ 125,000 $ 150,000 $ 300,000
Reversal of possible investment loss - (25,000) (150,000)
--------------------------------------------------------
Balance, end of year $ 125,000 $ 125,000 $ 150,000
--------------------------------------------------------
</TABLE>
In 1998, the Company reduced the reserve for possible investment loss by
$25,000. The board of directors determined that, based upon (1) the
repayment in full of the Far East National Bank loan in 1997, (2) the
timely principal and interest payments by the banks and (3) the stronger
financial condition of the portfolio, $125,000 is a more accurate reserve
for possible investment loss as of both March 31, 1999 and 1998.
Although the board of directors believes the allowance is sufficient, it is
reasonably possible that in the near term, loan losses could be different
than estimated as of March 31, 1999.
11
<PAGE> 66
MINBANC CAPITAL CORP.
Notes to Financial Statements--Continued
- --------------------------------------------------------------------------------
March 31, 1999 and 1998
- --------------------------------------------------------------------------------
NOTE D--FINANCIAL INSTRUMENTS
It is not practicable to estimate the fair value of the Company's
investments, as there is no public market for such investments.
The carrying amount of the U.S. Treasury bills, the certificates of deposit
and the cash and cash equivalents approximate fair value because of the
short-term nature of the instruments. At March 31, 1999, the estimated fair
value of the U.S. Treasury bills, the certificates of deposit and cash and
cash equivalents is approximately $2,596,174, $2,500,000 and $124,504,
respectively.
- --------------------------------------------------------------------------------
NOTE E--COMMON STOCK
Shares of the Company's common stock were offered only to banks which were
members of the Association (or parent companies of such banks in states in
which the Company's shares may not be purchased by banks) and are subject
to restrictions on transfer. No bank may own more than 5 percent of the
Company's outstanding shares. At March 31, 1999, certain banks own more
than 5 percent of the Company's outstanding shares because of mergers and
acquisitions.
- --------------------------------------------------------------------------------
NOTE F--RELATED PARTY TRANSACTIONS
The Company incurred legal fees and out-of-pocket expenses of $5,729,
$16,558 and $62,233 for the years ended March 31, 1999, 1998 and 1997,
respectively, for services provided by a law firm in which a partner is an
otherwise uncompensated director of the Company.
The Company incurred consulting fees and out-of-pocket expenses of $361,
$2,040 and $4,140 for the years ended March 31, 1999, 1998 and 1997,
respectively, for consulting services provided by an individual who is also
an otherwise uncompensated officer of the Company.
12
<PAGE> 67
MINBANC CAPITAL CORP.
Notes to Financial Statements--Continued
- --------------------------------------------------------------------------------
March 31, 1999 and 1998
- --------------------------------------------------------------------------------
NOTE G--INCOME TAXES
The provision for taxes comprises the following at March 31:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense $ 16,345 $ 80,138 $ 71,196
Reduction of deferred tax asset - 7,500 9,000
Decrease in valuation allowance - - -
------------------------------------------------------
$ 16,345 $ 87,638 $ 80,196
------------------------------------------------------
</TABLE>
Deferred tax asset consists of the following at March 31:
<TABLE>
<CAPTION>
1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Temporary difference
Allowance for possible investment loss $ 37,500 $ 37,500
Valuation allowance - -
- -----------------------------------------------------------------------------------------------------
$ 37,500 $ 37,500
- -----------------------------------------------------------------------------------------------------
</TABLE>
In order to realize the deferred tax asset fully as of March 31, 1999, the
Company will need to generate future taxable income in the periods in which
the deductible temporary differences reverse.
13
<PAGE> 68
MINBANC CAPITAL CORP.
Notes to Financial Statements--Continued
- --------------------------------------------------------------------------------
March 31, 1999 and 1998
- --------------------------------------------------------------------------------
NOTE G--INCOME TAXES--CONTINUED
A reconciliation of the difference between income tax provision for the
years ended March 31, 1999, 1998 and 1997, and the tax computed by applying
the statutory federal income tax rate to income before taxes is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
PERCENTAGE PERCENTAGE PERCENTAGE
OF OF OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax computed at
federal statutory
rate $ 22,234 34.00% $ 68,638 34.0% $ 116,050 34.0%
State income taxes - - 7,769 3.8 10,251 3.0
Reduction of
deferred tax asset - - 7,500 3.7 9,000 2.6
Decrease in
valuation
allowance - - - - - -
Settlement of prior
years' federal and
state taxes - - 16,172 8.0 - -
Surtax exemption
and other rate
variances (5,889) (.09) (12,441) (6.1) (55,105) (16.0)
--------------------------------------------------------------------------------------
$ 16,345 33.91% $ 87,638 43.4% $ 80,196 23.6%
---------------------------------------------------------------------------------------
</TABLE>
Based on the amount of taxable income in 1999, 1998 and 1997, Minbanc's
actual tax rate varies from the statutory rate. Deferred tax adjustments
and rate variances were caused by the reduction in the allowance for
possible investment losses.
14
<PAGE> 69
MINBANC CAPITAL CORP.
Notes to Financial Statements--Continued
- --------------------------------------------------------------------------------
March 31, 1999 and 1998
- --------------------------------------------------------------------------------
NOTE H--PER SHARE AND STATISTICAL INFORMATION
Selected data for each weighted-average share of common stock outstanding
and other statistical data are as follows at March 31:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data:
Investment income $ 28.93 $ 33.07 $ 35.48 $ 32.41 $ 29.98
Reversal of allowance
for possible
investment loss - 2.89 17.39 23.17 -
Expenses, including
provision for taxes (23.24) (22.72) (23.18) (24.82) (23.20)
------------------------------------------------------------------------------
Net investment income 5.69 13.24 29.69 30.76 6.78
Miscellaneous income - - .58 .58 -
------------------------------------------------------------------------------
Net increase in net asset
value 5.69 13.24 30.27 31.34 6.78
Net assets, beginning of year 641.97 628.73 598.46 567.12 560.34
------------------------------------------------------------------------------
Net assets, end of year $ 647.66 $ 641.97 $ 628.73 $ 598.46 $ 567.12
------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 70
MINBANC CAPITAL CORP.
Notes to Financial Statements--Continued
- --------------------------------------------------------------------------------
March 31, 1999 and 1998
- --------------------------------------------------------------------------------
NOTE H--PER SHARE AND STATISTICAL INFORMATION--CONTINUED
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratio of expenses to
average net assets 3.60% 3.58% 3.78% 4.26% 4.12%
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment
income to average
net assets 1.18% 2.08% 4.84% 5.28% 1.20%
- ------------------------------------------------------------------------------------------------------------------
Weighted-average
shares of common
stock outstanding 8,626 8,626 8,626 8,626 8,626
- ------------------------------------------------------------------------------------------------------------------
Number of shares
of common stock
outstanding at
end of year 8,626 8,626 8,626 8,626 8,626
- ------------------------------------------------------------------------------------------------------------------
Dividends actually
paid per share
of outstanding
common stock
at end of year $ - $ - $ - $ - $ -
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover
rate 31.60% 61.39% 67.12% 38.85% 23.31%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 71
ANNEX IV
CERTIFICATE OF INCORPORATION
OF
MINBANC CAPITAL CORP.
* * * * *
1. The name of the corporation is MINBANC CAPITAL CORP.
2. The address of its registered office in the State of Delaware is No.
100 West Tenth Street, in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is:
To engage in the business of a closed-end investment company within the
meaning of and subject to the provisions of the Investment Company Act of 1940.
To purchase or otherwise acquire, hold for investment or otherwise, sell,
trade in, deal, assign, negotiate, transfer, exchange, and dispose of securities
and investments of every type and description, including without limitation,
stocks, shares, bonds, debentures, notes, mortgages or other obligations, and
any certificates, receipts, warrants, or other instruments, representing rights
to receive, purchase, or subscribe, for securities or other investments, created
or issued by any person, firm, partnership, association, trust, investment
company, corporation, syndicate, organization, government or political
subdivision, agencies, or entities thereof; to exercise, as owner or holder of
any such securities or investments, all acts and things necessary or desirable
for the preservation, protection, improvement, and enhancement in value, of any
and all such securities and investments.
To conduct researches, investigations, and examinations of businesses and
enterprises of every kind and description with the purpose of securing
information and
<PAGE> 72
particulars for the investment and employment of capital, and to undertake and
transact all kinds of business relating to the gathering and distribution of
financial and investment information and statistics.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
To manufacture, purchase or otherwise acquire, invest in, own, mortgage,
pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and
deal with goods, wares and merchandise and personal property of every class and
description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trade-marks and trade names, relating to
or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive, hold,
own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise
dispose of or deal in and with any of the shares of the capital stock, or any
voting trust certificates in respect of the shares of capital stock, scrip,
warrants, rights, bonds, debentures, notes, trust receipts, and other
securities, obligations, choses in action and evidences of indebtedness or
interest issued or created by any corporation, joint stock companies,
syndicates, associations, firms, trusts or persons, public or private, or by the
government of the United States of America, or by any foreign government, or by
any state, territory, province, municipality or other political
2
<PAGE> 73
subdivision or by any governmental agency, and as owner thereof to possess and
exercise all the rights, powers and privileges of ownership, including the right
to execute consents and vote thereon, and to do any and all acts and things
necessary or advisable for the preservation, protection, improvement and
enhancement in value thereof.
To borrow or raise moneys for any of the purposes of the corporation and,
from time to time without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the time owned
or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or otherwise,
lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal
in and with real or personal property, or any interest therein, wherever
situated, and to sell, convey, lease, exchange, transfer or otherwise dispose
of, or mortgage or pledge, all or any of the corporation's property and assets,
or any interest therein, wherever situated.
In general, to possess and exercise all the powers and privileges granted
by the General Corporation Law of Delaware or by any other law of Delaware or by
this certificate of incorporation together with any powers incidental thereto,
so far as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business or purposes of the corporation.
3
<PAGE> 74
The business and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in nowise limited or restricted by
reference to, or inference from, the terms of any other clause in this
certificate of incorporation, but the business and purposes specified in each of
the foregoing clauses of this article shall be regarded as independent business
and purposes.
4. The total number of shares of stock which the corporation shall have
authority to issue is twenty thousand (20,000) and the par value of each share
is One Dollar ($1.00) amounting in the aggregate to Twenty Thousand Dollars
($20,000).
The corporation shall have the right to impose restrictions and/or rights
of first refusal upon the transfer, pledge, sale, assignment or other
disposition of any share or shares of this corporation. The corporation's
rights, if any, under such restrictions shall be assignable by the corporation
and shall be binding upon all shareholders, their heirs, assignees and grantees.
No stockholder of this corporation shall by reason of his holding shares
in this corporation of any class have any pre-emptive or preferential right to
purchase or subscribe to any shares of any class of this corporation, now or
hereafter to be authorized, or any notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase shares of any
class, now or hereafter to be authorized, whether or not the issuance of any
such shares, or such notes, debentures, bonds or other securities, would
adversely affect the dividend or voting rights of such stockholder, other than
such rights, if any, as the board of directors, in its discretion from time to
time may grant, and at such price as the board of directors in its discretion
may fix, and the board of directors may issue shares of any class of this
corporation, or any notes, debentures, bonds, or other securities convertible
into or carrying options or warrants
4
<PAGE> 75
to purchase shares of any class, without offering any such shares of any class,
either in whole or in part, to the existing stockholders of any class.
5. The name and mailing address of each incorporator is as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
- ---- ---------------
<S> <C>
JUSTIN N. FELDMAN 777 Third Avenue
New York, Now York 10017
ROBERT L. CARTER 777 Third Avenue
New York, New York 10017
PEGGY C. DAVIS 777 Third Avenue
New York, New York 10017
</TABLE>
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The by-laws may provide that in the absence or disqualification
of a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
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may unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
or in the by-laws of the corporation, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or by-laws expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with statute, to
sell, lease, or exchange all or substantially all of the property and assets of
the corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its board of directors
shall deem expedient and for the best interests of the corporation.
8. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this
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<PAGE> 77
corporation under the provisions of section 291 of Title of the Delaware Code or
on the application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of section 279 of Title 8 of
the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
9. Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation. Election of directors
need not be by written ballot unless the by-laws of the corporation shall so
provide.
10. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
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<PAGE> 78
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware do make this certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are truer
accordingly have hereunto set our hands this 17th day of June, 1971.
s/ Justin N. Feldman
--------------------
s/ Robert L. Carter
-------------------
s/ Peggy C. Davis
-----------------
8
<PAGE> 79
BY-LAWS
of
MINBANC CAPITAL CORP.
ARTICLE I. STOCKHOLDERS' MEETINGS
Section 1. Annual Meeting. (a) The annual meeting of the stockholders,
commencing in 1972, shall be held in the month of October in each year, during
the same week as the annual meeting of the American Bankers Association, the
date to be selected by the Board of Directors, or at such other place as may be
designated in the notice of such meeting, whether within or without the State of
Delaware. If such date should be a legal holiday, the meeting shall be held at
the same hour on the next succeeding day which is not a legal holiday. The
business to be transacted at such meeting shall be the election of directors and
such other business as shall be properly brought before the meeting.
(b) If the election of directors shall not be held on the day here
designated for any annual meeting, or at any adjournment thereof, the Board of
Directors shall call a special meeting of the stockholders as soon as
conveniently possible thereafter. At such meeting, the election of directors
shall take place, and such election and any other business transacted thereat
shall have the same force and effect as at an annual meeting duly called and
held.
Section 2. Special Meetings. Special meetings of the stockholders may be
called by the Board of Directors for any lawful purpose upon a resolution of the
majority of the Board and shall be called upon a request by the holders of at
least fifty percent (50%) of the stock entitled to vote at such meeting or upon
a request by the President, acting in his sole discretion. At any time, upon the
written request of any person, or persons, entitled to request a special
meeting, it shall be the duty of the Secretary to send out notices of such
meeting. They shall be
<PAGE> 80
served personally or sent by mail addressed to each stockholder of record at his
last known Post Office address and shall contain a statement of the business to
be transacted at such meeting.
No business other than that specified in the call for the meetings shall
be transacted at any special meeting of the stockholders.
Section 3. Notice Requirements; Waiver. Each stockholder of record
entitled to vote at any meeting shall be given written notice in person or by
mail of the purpose or purposes and the time and place of every meeting of
stockholders. Such notice shall be given not less than ten (10) nor more than
fifty (50) days before the meeting. If mailed, the notice should be directed to
the stockholder's address as it appears on the stock book, unless the
stockholder shall have requested in writing that the Secretary mail such notices
to some other address, in which case the notice shall be transmitted to the
address so designated. A stockholder may waive the notice of meeting by so
stating in writing, either before or after such meeting, and shall be deemed to
have waived such notice by attendance at the meeting, either in person or by
proxy. Except where otherwise required by law, notice need not be given of any
adjourned meeting of the stockholders.
Section 4. Quorum. Except as otherwise provided by law, the Certificate
of Incorporation or these By-laws, a quorum at all meetings of the stockholders
shall consist of the holders of record of a majority of the shares entitled to
vote thereat, present in person or represented by proxy.
If, however, a quorum shall not be present either in person or
represented by proxy at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
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represented. At such adjourned meeting at which a quorum shall be present in
person or by proxy, any business may be transacted which might have been
transacted at the meeting as originally noticed; provided, however, that if the
adjournment is for more than thirty (30) days, notice of such adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
Section 5. Manner of Voting at Stockholders' Meetings. Except as
otherwise expressly provided by law, the Certificate of Incorporation or these
By-laws, voting at all meetings of stockholders shall be determined by a
majority vote of the stockholders present in person or represented by proxy.
Stockholders entitled to vote at meetings may do so in person or by written
proxy subscribed by the stockholder or by his duly authorized attorney. Each
stockholder shall be entitled to one vote for each share of voting stock
registered in his name on the books of the corporation. Except as otherwise
expressly provided by law, the Certificate of Incorporation or these By-laws,
all voting shall be by voice vote, except that any qualified voter may demand a
vote by written ballot.
Section 6. Corporate Action Without A Meeting. Except as otherwise
expressly provided by law, the Certificate of Incorporation or these By-laws,
any action required to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voting. Prompt notice of the taking of the corporate action without a meeting
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<PAGE> 82
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE II. DIRECTORS
Section 1. Number, Qualification, Term, Quorum and Vacancies. (a) The
property, affairs and business of the corporation shall be managed by a Board of
Directors which shall number not less than three (3) nor more than twenty-one
(21). The initial Board shall consist of five (5) directors. Thereafter, within
the limits above specified, the number of directors shall be determined by
resolution of the Board or by a vote of the stockholders at a meeting called for
such purpose; provided, however, that the Board of Directors shall not have the
power to reduce the number of directors constituting the whole Board during the
term of any director so as to cause his removal from the Board without
shareholder approval. Except as otherwise provided by law, the Certificate of
Incorporation or these By-laws, directors shall be elected at the annual meeting
of the stockholders and each director elected shall hold office until his
successor is elected and qualified. Directors need not be stockholders.
(b) Except as otherwise provided by law, the Certificate of Incorporation
or these By-laws, one-third (1/3) of the directors in office shall constitute a
quorum for the transaction of business. If, at any meeting of the Board of
Directors, there shall be less than a quorum present, a majority of those
present may adjourn the meeting, without further notice, from time to time until
a quorum shall have been obtained.
(c) Except as otherwise provided in the Investment Company Act of 1940,
as amended, vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced.
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Section 2. Meetings. (a) Regular meetings of the Board of Directors shall
be held at such times and in such places within or without the State of Delaware
as are fixed from time to time by resolution of the Board. Special meetings may
be held at any time upon call of the President or any two (2) directors, upon
ten (10) days written or personal notice. A meeting of the Board of Directors
may be held without notice immediately prior to or following the annual meeting
of the stockholders. Notice need not be given of regular meetings of the Board
held at times and places fixed by resolution of the Board of Directors, nor need
notice be given of any adjourned meetings. Meetings may be held at any time
without notice if all the directors are present or if, before the meeting, those
not present waive such notice in writing. Notice of a meeting of the Board of
Directors need not state the purposes of, nor the business to be transacted at,
such meeting.
(b) Except as otherwise provided by law, the Certificate of Incorporation
or these By-laws, any action required or permitted to be taken at any meeting of
the Board of Directors or any committee may be taken without a meeting, if all
members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
Section 3. Committees. (a) In addition to any other powers granted under
the Certificate of Incorporation, these By-laws or any corporation law of the
State of Delaware, the Board of Directors may, by resolution passed by a
majority of the whole Board, authorize the creation of an Advisory Board and
designate the size and qualifications for membership thereon. Thereafter,
members of the Advisory Board shall be elected by a majority vote of the Board
of Directors at any regular or special meeting.
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<PAGE> 84
Section 4. Compensation. No director shall be compensated for his
services as such, except that the directors may be paid their expenses, if any,
incurred in the furtherance of the investment goals of the corporation or in
attendance at any meeting of the Board of Directors.
ARTICLE III. OFFICERS
Section 1. Number. The officers of the corporation shall be a Chairman of
the Board, a President, an Executive Vice-President, a Secretary and a
Treasurer. In addition, there may be such subordinate officers as the Board of
Directors may deem necessary. Any officer may hold more than one office.
Section 2. Qualification and Term of Office. The principal officers shall
be chosen annually by the Board of Directors at the first meeting of the Board
following the annual meeting of the stockholders, or as soon thereafter as is
conveniently possible. Subordinate officers may be elected from time to time.
Each officer shall serve until his successor shall be chosen and qualified, or
until his death, resignation or removal.
Section 3. Removal and Vacancies. (a) Any officer may be removed from
office, with or without cause, at any time, by the affirmative vote of a
majority of the Board of Directors then in office.
Section 4. Compensation. The salaries of all officers shall be fixed by
the Board of Directors; provided, however, that no compensation shall be paid
any officer other than expenses actually incurred, if any, during the
corporation's first year of operation.
Section 5. Duties. (a) The Chairman of the Board shall be the chief
executive officer of the corporation. When present, he shall preside at all
meetings of the stockholders and the Board of Directors. He shall perform such
other duties as are incident to his office or which are authorized or required
by law.
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<PAGE> 85
(b) The President shall have general and active management of the
corporation, shall sign or counter-sign all certificates, contracts, or other
instruments of the corporation except where the signing and execution thereof
shall be delegated by the Board of Directors to some other officer or agent of
the corporation, shall make reports to the Board of Directors and stockholders
and shall perform such other duties as are incident to his office or which are
authorized or required by law.
(c) The Executive Vice-President shall perform the duties of the
President in the absence of the President or his inability or refusal to act,
and shall perform such other functions as the Board of Directors may from time
to time designate.
(d) Where possible, the Secretary shall attend all meetings of the Board
of Directors and all meetings of the stockholders and record all the proceedings
of such meetings in a book to be kept for that purpose. If the Secretary shall
be unable to attend any meeting of the stockholders or Board of Directors, he
shall designate another officer of the corporation to perform his duties at such
meeting. If requested, he shall perform like duties for the Advisory Board. He
shall give, or cause to be given, required notice of all meetings of the
stockholders and of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or the President, under whose
supervision he shall be. He shall have custody of the corporate seal of the
corporation and he shall have authority to affix the same to any instrument
requiring it; when so affixed, it may be attested by his signature. The Board of
Directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his signature.
(e) The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the
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<PAGE> 86
corporation and shall deposit all moneys and other valuable effects in the name
of and to the credit of the corporation in such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, taking proper vouchers
for such disbursements, and shall render to the President or the Board of
Directors at regular meetings of the Board of Directors and at such other times
as requested, an account of all his transactions as Treasurer and of the
financial condition of the corporation. If required by the Board of Directors,
he shall give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to the
corporation in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money or other property of whatever kind
in his possession or under his control belonging to the corporation.
ARTICLE IV. CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate signed in the name of the corporation by the
President or Executive Vice-President and the Treasurer or Secretary of the
corporation, certifying the number of shares owned by him. Where the certificate
is counter-signed by a transfer agent, or a registrar other than the corporation
or its employee, any other signature on the certificate may be facsimile.
Section 2. Transfers of Stock. (a) The person or corporation whose name
appears on the books of the corporation shall be deemed by the corporation to be
the owner thereof for all purposes. Transfers of the capital stock of the
corporation shall be made only upon the books of the corporation by the
registered owner thereof or by his duly authorized attorney, upon surrender of
the certificate or certificates for such shares properly endorsed and with all
taxes thereon paid.
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<PAGE> 87
(b) Any shareholder who desires to transfer, sell, assign or otherwise
dispose of all or any part of his stock for value shall first offer such stock
for sale to the corporation at the price offered by a bona fide prospective
transferee of such shares. The offer to the corporation shall be in writing and
shall set forth the name and address of the prospective transferee, the number
of shares of stock involved in the proposed transfer, sale, assignment or other
disposition and the terms, conditions and price thereof and shall be sent or
delivered to the corporation at its principal offices. In the event the
consideration offered by such other person shall be property other than cash,
the selling stockholder and the corporation shall attempt to agree upon the cash
value of the consideration so offered. If the selling stockholder and the
corporation shall be unable to agree as to such value within thirty (30) days,
each shall appoint one appraiser. The two appraisers so appointed shall appoint
a third appraiser and together they, by majority vote, shall determine the cash
value of the consideration so offered by the prospective transferee, and the
cash value as so determined shall be the price at which such shares shall be
offered to the corporation.
Within thirty (30) days after the receipt of such offer, or, in the event
appraisers shall be appointed to determine value as hereinbefore provided,
within thirty (30) days of the determination of value by such appraisers, the
corporation or its assignee or assignees may, by written notice to the selling
stockholder, elect to purchase all or part of the stock so offered. For the
purposes of this subsection, the purchase by an assignee or assignees of the
corporation shall be deemed to be a purchase by the corporation. If the offer to
the corporation has not been accepted as hereinbefore provided, the selling
stockholder may make a bona fide transfer, sale, assignment or other disposition
for value to the prospective transferee named in the offer to the corporation on
the terms therein stated.
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<PAGE> 88
(c) No transfer, sale, assignment or other disposition for value shall be
effected upon the books of the corporation in the absence of compliance with the
foregoing requirements. The existence of this restriction shall be noted
conspicuously upon the certificates of stock of the corporation and shall bind
all successor and transferee stockholders, whether or not they acquired their
shares for value.
(d) Before accepting any offer hereinabove described, the corporation
shall notify any stockholder who would become the record owner of five (5%)
percent or more of the total number of outstanding shares of the corporation
immediately after and as a result of such acceptance. For the purposes of the
preceding sentence, an acceptance by an assignee or assignees of the corporation
shall not be deemed to be an acceptance by the corporation.
Section 3. Lost, Stolen or Destroyed Certificates. The Board of Directors
may direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation which are
alleged to have been lost, stolen or destroyed. When authorizing such issue of a
new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his legal
representative, to give the corporation a bond in such sum as it shall require
as indemnity against any claim that may be made against the corporation with
respect to the certificate or certificates alleged to have been lost, stolen or
destroyed.
Section 4. Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer agents or transfer clerks and one or more
registrars, and may require all certificates for shares to bear the signature or
signatures of any of them.
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<PAGE> 89
ARTICLE V. NEGOTIABLE INSTRUMENTS
All checks, notes or other negotiable instruments shall be signed on
behalf of the corporation by such of the officers, agents and employees as the
Board of Directors may from time to time designate.
ARTICLE VI. SEAL
The seal of the corporation shall be as follows:
ARTICLE VII. AMENDMENTS
These By-laws may be amended, altered or added to by vote of the Board of
Directors of the corporation at any duly called regular meeting of the said
Board, or at a special meeting of directors called for that purpose. These
By-laws, and any amendments thereto and new by-laws added by the directors, may
be amended, altered or replaced by the stockholders at any annual or special
meeting of the stockholders. Whenever any provision of these By-laws or any
amendment thereto shall conflict with a provision in the Certificate of
Incorporation or any amendment thereto, the applicable provisions in such
Certificate, as amended, shall prevail and control.
ARTICLE VIII. FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Section 1. Fundamental Policies. The principal objective of the
corporation shall be to make capital funds available, both directly and
indirectly, to qualifying minority-owned banks so as to assist them in
contributing to the economic development of, and in rendering more effective
service to, the communities in which they are located. For the purposes of the
corporation's investment program, a qualifying minority-owned bank is one at
least fifty (50%)
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<PAGE> 90
percent of whose voting securities are owned, or which is managed by,
individuals from minority groups in the United States which are underrepresented
in its free enterprise system, and which has an operating history of three years
or more. In implementation of this objective, the Board of Directors shall make
a Declaration of corporate investment policy which shall be appended to these
By-laws and shall have the force and effect of a By-law. Thereafter, the
provisions expressly contained in such Declaration shall not be modified,
changed or amended without stockholder approval, although the Board of Directors
shall have the power to supplement them with additional provisions not
inconsistent with those contained in the original Declaration.
Section 2. Investment Restrictions. Notwithstanding the general
provisions contained in the Certificate of Incorporation, the Declaration of
corporate investment policy or elsewhere in these By-laws, the authority of the
Board of Directors to invest the funds of the corporation shall be subject to
the following restrictions and limitations:
(a) The corporation shall not purchase securities on margin, or write,
purchase or sell puts, calls or any combination thereof.
(b) The corporation shall not effect any short sales of securities.
(c) The corporation shall not engage in the purchase or sale of
commodities or commodity contracts.
(d) The corporation shall not participate on a joint or a joint and
several basis in any trading account in securities.
(e) The Corporation shall not purchase or otherwise acquire the
securities of another investment company if, immediately after and as a result
of such purchase or acquisition, the total value of all securities issued by
investment companies and owned by the corporation would exceed ten (10%) percent
of the total value of the corporation's assets. In no event shall
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the corporation's holdings of securities in any single investment company exceed
three (3%) percent of the outstanding voting stock of such other company or five
(5%) percent of the total value of the corporation's assets.
ARTICLE IX. INDEMNIFICATION OF OFFICERS, DIRECTORS AND EMPLOYEES
Section 1. Rights to Indemnification. The corporation shall indemnify any
director, officer, employee, agent or former director, officer, employee or
agent of the corporation, or any person who may have served at its request as a
director, officer, employee or agent of another corporation in which it owns or
owned shares of stock or of which it is or was a creditor, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and necessarily incurred by him in connection with any action, suit, or
proceeding, whether civil or criminal in nature, in which he is made a party by
reason of his being or having been such director, officer, employee or agent
(whether or not a director, officer, employee or agent at the time such costs or
expenses are incurred by or imposed upon him), if he acted in good faith and in
a manner he reasonably believed to be in and not opposed to the best interests
of the corporation, except that in any threatened, pending or completed action
or suit by or in the right of the corporation, no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty unless and only to the extent permitted by the Court in which such action
was brought, or by the Court of Chancery of Delaware. Any indemnification
pursuant to these By-laws shall be made only upon a determination that the
person to be indemnified has met the applicable standard of conduct as set forth
herein, which determination shall be made by the Board of Directors by a
majority vote of a quorum consisting of directors who are not parties to such
action, suit or proceeding, or, if such quorum is not obtainable, by independent
legal counsel in a written opinion. Such rights to indemnification and
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reimbursement shall not be deemed to be exclusive of any other rights to which
such director, officer, employee or agent may be entitled under any law, By-law,
agreement, vote of stockholders or otherwise.
Section 2. Advance Payment. The corporation shall pay all expenses
incurred in defending a civil or criminal action in which the defendant or
defendants are or may be entitled to indemnification or reimbursement under
Article IX, Section 1 of these By-laws in advance of the final disposition of
such action, suit or proceeding; provided, however, that the Board of Directors
may require an undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it ultimately shall be determined that he is
entitled to be indemnified or reimbursed by the corporation as provided by any
law, By-law, agreement, vote of stockholders or otherwise.
Section 3. Insurance. In the discretion of the Board of Directors, the
corporation shall purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the corporation or who is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not he would be
entitled to reimbursement or indemnification under any law, the Certificate of
Incorporation or these By-laws.
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<PAGE> 93
ANNEX V
CERTIFICATE OF INCORPORATION
OF
MINBANC FOUNDATION, INC.
Under Section 102 of the General Corporation
Law of the State of Delaware
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SECTION 1. NAME. The name of the Corporation is MINBANC FOUNDATION, INC.
(the "Corporation").
SECTION 2. REGISTERED OFFICE AND AGENT. The address of the Corporation's
registered office in the State of Delaware is Corporation Trust Center, 1209
Orange Street, in the City of Wilmington, County of New Castle, 19801. The name
of the Corporation's registered agent at such address is The Corporation Trust
Company.
SECTION 3. PURPOSES. The Corporation is organized and shall be operated
exclusively as a charitable organization within the meaning of Section 501(c)(3)
of the United States Internal Revenue Code of 1986, as amended, or corresponding
provision of any subsequent United States internal revenue laws (the "Code").
The purposes for which this Corporation is formed are:
(a) to grant scholarships designed to promote the economic success of
minority-owned banks by assisting in the professional education and training of
their management and employees;
(b) to make contributions to educational institutions and providers of
bank employee educational programs for the development of programs, courses and
materials to be used in the professional education and training of management
and employees of minority-owned banks;
(c) to promote, sponsor and support other charitable organizations having
purposes similar to those of the Corporation;
(d) to carry on any business in connection with the foregoing purposes or
to do any other thing that is necessary or appropriate to further or facilitate
the foregoing purposes; and
(e) to engage in any lawful act or activity for which a non-stock
corporation may be organized under the General Corporation Law of the State of
Delaware.
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SECTION 4. POWERS. (a) In order to facilitate the fulfillment of its
purposes, the Corporation shall have, without limitation, the following powers:
(i) to solicit, collect, accept, hold, invest and administer
contributions, gifts, bequests, devises, benefits of trusts (but not to act
within the State of Delaware as trustee of any trust) and property of any
and every kind whatsoever without limitation as to amount or value, and to
use, disperse or donate the income or principal thereof in furtherance of
the purposes of the Corporation;
(ii) to give, convey, assign or otherwise transfer any of its property
outright, or upon lawful terms regarding the use thereof, to other persons;
and
(iii) alone or in cooperation with or through other organizations or
persons, to do any and all lawful acts and things that may be necessary,
useful, suitable or proper for the furtherance, accomplishment or
fulfillment of the purposes of the Corporation.
(b) Notwithstanding any other provision of this Certificate of
Incorporation:
(i) the Corporation shall exercise only such powers and shall conduct
or carry on only such activities as are consistent with the exempt status
of organizations described in Section 501(c)(3) of the Code;
(ii) the Corporation shall not be organized for profit or organized to
engage primarily in any activity ordinarily carried on for profit, and no
part of the net earnings of the Corporation shall inure to the benefit of,
or be distributed to, its directors, officers or any other private person,
except that the Corporation shall be authorized and empowered to pay
reasonable compensation for services rendered to the Corporation and to
make payments and distributions in furtherance of the purposes set forth
herein as are consistent with the purposes allowed under Section 501(c)(3)
of the Code;
(iii) no substantial part of the activities of the Corporation shall
be the carrying on of propaganda, or otherwise attempting to influence
legislation, and the Corporation shall not participate in or intervene in
(including the publishing or distribution of statements) any political
campaign on behalf of, or in opposition to, any candidate for public
office; and
(iv) in the event that in any year the Corporation shall be a "private
foundation," as that term is defined in Section 509(a) of the Code, the
Corporation shall distribute its income for each such year at such time and
in such manner as not to subject it to tax under Section 4942 of the Code,
and the Corporation shall not (A) engage in any act of self-dealing as
defined in Section 4941(d) of the Code; (B) retain any excess business
holdings as defined in Section 4943(c) of the Code; (C) make any
investments in such manner as to subject the Corporation to tax under
Section 4944 of the Code; or (D) make any taxable expenditures as defined
in Section 4945(d) of the Code.
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SECTION 5. STOCK AND MEMBERSHIP. (a) The Corporation shall have no
capital stock and shall not have authority to issue any capital stock.
(b) The Corporation may, but is not required to, have members. The
conditions of membership in the Corporation, the rights, obligations and role in
the affairs of the Corporation of its members and the classification of members,
if any, shall be as provided in the Bylaws.
SECTION 6. BOARD OF DIRECTORS. The business and affairs of the
Corporation shall be conducted under the direction of the Board of Directors.
The number of directors and the manner of their election shall be as provided in
the Bylaws and, unless otherwise provided therein, the election of directors
need not be by ballot.
SECTION 7. INCORPORATOR. The name and mailing address of the incorporator
are as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Mathew H. Street c/o American Bankers Association
1120 Connecticut Ave., N.W.
Washington, DC 20036
</TABLE>
SECTION 8. BYLAWS. (a) The Corporation in its Bylaws may make any
provisions or requirements for the conduct of the business and affairs of the
Corporation, provided that such Bylaws are not inconsistent with this
Certificate of Incorporation, nor contrary to the laws of the State of Delaware
or the laws of the United States.
(b) The Board of Directors of the Corporation shall have the sole and
exclusive power to adopt, amend and repeal the Bylaws of the Corporation, which
action shall require the affirmative vote of at least a majority of the
directors then in office.
SECTION 9. LIMITATION OF LIABILITY OF DIRECTORS. To the fullest extent
permitted by the General Corporation Law of the State of Delaware, as the same
now exists or may hereafter be amended, a director of the Corporation shall not
be liable to the Corporation for monetary damages for breach of fiduciary duty
as a director.
SECTION 10. AMENDMENTS. The Board of Directors, by a vote of a majority
of the directors then in office, has the sole and exclusive right to amend,
alter, change or repeal any provision of this Certificate of Incorporation in
the manner now or hereafter permitted by law.
SECTION 11. LIQUIDATION. In the event of the liquidation, dissolution or
winding up of the Corporation, whether voluntary, involuntary or by operation of
law, the property or other net assets of the Corporation, or any net proceeds
thereof, shall be distributed for one or more exempt purposes within the meaning
of, or to one or more organizations described in, Section 501(c)(3) of the Code,
as the Board of Directors shall determine; and none of such property, assets or
proceeds shall be distributed to, or divided among, any of the directors or
officers of the Corporation or any other private individual. Any such assets not
so disposed of shall be disposed of by the Court of
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Common Pleas of the State of Delaware for the county in which the principal
office of the Corporation is then located, exclusively for the purposes set
forth in Section 3 hereof, or to such organization or organizations, as such
Court shall determine, which are organized and operated exclusively for such
purposes.
The undersigned incorporator hereby declares, under penalties of perjury,
that the statements made in the foregoing Certificate of Incorporation are true
on this 22nd day of December, 1998.
-----------------------------
Mathew H. Street
Sole Incorporator
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BYLAWS
OF
MINBANC FOUNDATION, INC.
A DELAWARE CORPORATION
As effective January 15, 1999
<PAGE> 98
BYLAWS
OF
MINBANC FOUNDATION, INC.
a Delaware corporation
ARTICLE I
OFFICES
SECTION 1.1 REGISTERED OFFICE. Except as may otherwise be specified in
the Certificate of Incorporation, the registered office of the Corporation shall
be at Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle, State of Delaware 19801, and the registered agent of the
Corporation at such address shall be The Corporation Trust Company.
SECTION 1.2 OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places, both within and outside the State of
Delaware, as the Board of Directors may from time to time determine or shall be
required for the conduct of the business of the Corporation.
ARTICLE II
MEMBERSHIP
SECTION 2.1 MEMBERSHIP. The founding members of the Corporation shall
consist of former holders of stock of Minbanc Capital Corp. whose shares are
converted into memberships under the terms of the Agreement of Merger, dated
_________, 1999, between the Corporation and Minbanc Capital Corp. Founding
members shall have no voting rights, except as may be specifically authorized by
the Board of Directors as to a particular matter.
SECTION 2.2 OTHER MEMBERSHIP CLASSES. The Board of Directors may from
time to time establish one or more other classes of members as it shall deem
advisable or desirable. Each such class of members shall have such composition,
role in the affairs of the Corporation and eligibility requirements as the Board
of Directors shall determine; provided, however, that such members shall have no
voting rights, except as may be specifically authorized by the Board of
Directors as to a particular matter.
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ARTICLE III
DIRECTORS
SECTION 3.1 GENERAL AUTHORITY. Subject to such limitations as may be
contained in the Certificate of Incorporation and these Bylaws, all powers,
rights and privileges of the Corporation shall be exercised by or under the
authority of, and the business and affairs of the Corporation shall be managed
by or under the direction of, the Board of Directors.
SECTION 3.2 NUMBER AND QUALIFICATION. The number of directors which shall
constitute the entire Board of Directors shall be six (6), subject to the right
of the Board of Directors at any time to increase or decrease the number of
directors, provided that the number of directors shall not be reduced so as to
shorten the term of any director at the time in office. Directors need not be
residents of the State of Delaware.
SECTION 3.3 ELECTION AND TERM. Directors shall be elected annually for
one-year terms by the affirmative vote of a majority of the directors then in
office. Each director shall hold office until his successor is elected and
qualified or until his earlier resignation, removal or death. To the extent
practicable, (i) two directors will be individuals who are past or present
employees of financial institutions that are members of the American Bankers
Association ("ABA") and who are knowledgeable in matters related to
minority-owned banks, (ii) two directors will be ABA employees, and (iii) two
directors will be individuals proposed jointly by the ABA and the National
Bankers Association.
SECTION 3.4 RESIGNATION. Any director may resign at any time by giving
written notice to the Board of Directors. The resignation of a director shall
take effect upon the receipt of notice thereof or at such later time as shall be
specified in the notice of resignation. Unless otherwise specified in the notice
of resignation, the acceptance of such resignation by the Board of Directors
shall not be necessary to make it effective.
SECTION 3.5 REMOVAL. Any director may be removed, with or without cause,
by the affirmative vote of at least two-thirds of the directors then in office.
SECTION 3.6 VACANCIES. Any vacancy on the Board of Directors caused by
reason of an increase in the number of authorized directors or by the
resignation, removal or death of a director may be filled by the affirmative
vote of a majority of the directors then in office. Any director so elected
shall hold office until the expiration of the term for which the vacancy
existed, subject to his earlier resignation, removal or death.
SECTION 3.7 COMMITTEES. The Board of Directors, by a resolution adopted
by a majority of the directors then in office, may establish one or more
committees, comprised of members of the Board of Directors, which shall have and
may exercise such powers as the Board of Directors, consistent with applicable
law, may confer upon such committee by such resolution or any other resolution
adopted by a majority of the directors then in office. Any such committee shall
keep regular minutes of its proceedings and shall report to the Board of
Directors from time to time, upon the request of the Board of Directors, with
regard to its activities.
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ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
SECTION 4.1 REGULAR MEETINGS. Regular meetings of the Board of Directors,
or of any committee thereof, may be held, without notice, at such time and at
such place as shall from time to time be determined by the Board or committee,
as the case may be, provided that any director or committee member who is absent
when such a determination is made shall be given notice of the determination.
SECTION 4.2 SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board or by the President and
shall be called upon the written request of directors sufficient in number to
constitute a quorum. A special meeting of a committee may be called by the
chairman of the committee and shall be called upon the written request of
members of the committee sufficient in number to constitute a quorum. Notice of
the time, place and purpose or purposes of a special meeting of the Board of
Directors, or of any committee thereof, shall be given not less than forty-eight
(48) hours prior to the date of the special meeting, whether the meeting is to
be attended in person or is to be conducted by telephone conference.
SECTION 4.3 MEETING BY TELEPHONE CONFERENCE. Directors may participate in
a meeting of the Board of Directors, or any committee thereof, by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear and speak to each other at the same time.
Participation in a meeting by these means shall constitute presence in person at
the meeting.
SECTION 4.4 WAIVER OF NOTICE. A written waiver of notice signed by a
director entitled to notice of any meeting of the Board of Directors, or a
committee thereof, whether executed and delivered before or after the time of
the meeting, shall be deemed the equivalent of notice thereof. Attendance of the
director at the meeting shall constitute a waiver of notice.
SECTION 4.5 QUORUM; REQUIRED VOTE; ADJOURNED MEETINGS. At all meetings of
the Board, a majority of the directors then in office shall constitute a quorum
for the transaction of business, and the act of a majority of the directors
present at a meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute, the
Certificate of Incorporation or these Bylaws. Unless otherwise specified in the
resolution establishing a committee or in any resolution thereafter adopted by
the Board of Directors, a majority of the members of the committee shall
constitute a quorum for the transaction of the business of the committee and the
action of a majority of the committee members present at a meeting at which a
quorum is present shall constitute action taken by the committee. If a quorum
shall not be present at any meeting of the Board of Directors, or of any
committee thereof, the directors or committee members present may adjourn the
meeting from time to time, without notice other than announcement of the new
time and place at the meeting at which the adjournment is taken, until a quorum
shall be present. In the event that such Board or
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committee is composed of an even number of persons, a majority means one-half
(1/2) of the number of such persons plus one (1).
SECTION 4.6 ORGANIZATION. The Chairman of the Board shall preside over
all meetings of the Board of Directors. If the Chairman of the Board is not
present or there is none, the President of the Corporation or, if the President
is not present or the President is not a director, a person chosen at the
meeting, shall preside.
SECTION 4.7 ACTION WITHOUT MEETINGS. Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting, if each member of the Board or committee, as the
case may be, before or after the action is taken, consents thereto in writing
and the writing or writings are filed with the minutes of proceedings of the
Board or committee.
ARTICLE V
OFFICERS
SECTION 5.1 DESIGNATION. The officers of the Corporation shall consist of
a Chairman of the Board, a President, a Secretary, a Treasurer and one or more
such Vice Presidents and other officers as the Board of Directors may designate
from time to time. Any number of offices may be held simultaneously by the same
person, except that neither the Chairman of the Board nor the President may also
serve as the Secretary. All officers of the Corporation, in addition to any
powers or duties set forth in this Article V, shall exercise the powers and
perform the duties that shall be determined by the Board of Directors from time
to time.
SECTION 5.2 ELECTION; TERM OF OFFICE. Officers shall be elected annually
by the Board of Directors. Each officer so elected shall hold office until his
successor is elected and qualified or until his earlier resignation, removal or
death.
SECTION 5.3 RESIGNATION. Any officer may resign at any time by written
notice to the Board of Directors, the Chairman of the Board, the President or
the Secretary of the Corporation. Unless otherwise specified in such written
notice, the resignation shall take effect upon the delivery thereof to the Board
of Directors or the designated officer, and the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 5.4 REMOVAL. Any officer elected or appointed by the Board of
Directors may be removed at any time, with or without cause, by action of the
Board of Directors.
SECTION 5.5 CHAIRMAN OF THE BOARD. The Chairman of the Board, if any,
shall be chosen from among the directors. During the absence or disability of
the President, the Chairman of the Board of Directors shall exercise all powers
and discharge all duties of the
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President. The Chairman also shall perform such other duties and have such other
powers as may from time to time be determined by the Board of Directors.
SECTION 5.6 PRESIDENT. The President shall be the chief executive officer
of the Corporation and, subject to the control of the Board of Directors, shall
be responsible for the supervision, direction and management of the business and
affairs of the Corporation.
SECTION 5.7 SECRETARY. The Secretary shall (i) attend all meetings of the
Board of Directors and record all the proceedings of the meetings of the Board
of Directors in a book to be kept for that purpose and shall perform like duties
for committees of the Board of Directors when required, (ii) give, or cause to
be given, notice of all special meetings of the Board of Directors or committees
thereof, (iii) authenticate records of the Corporation when such authentication
is required, (iv) have custody of all deeds, leases, contracts and other
important corporate documents, (v) have charge of the books, records and papers
of the Corporation, (vi) see that all reports, statements and other documents
required by law (except tax returns) are properly filed and (vii) perform such
other duties as may from time to time be prescribed by the Board of Directors or
the President. The Secretary shall have custody of the corporate seal of the
Corporation and shall have authority to affix the same to any instrument
requiring it, and when so affixed, it may be attested by his signature. The
Board of Directors may give general authority to any other officer to affix the
seal of the Corporation and to attest the affixing by his signature. The Board
of Directors also may elect one or more Assistant Secretaries who, in the
absence of the Secretary for any reason, may perform the duties and exercise the
powers of the Secretary and perform such other duties and have such other powers
as the Board of Directors or the President may from time to time prescribe.
SECTION 5.8 TREASURER. The Treasurer shall have custody of all funds and
securities of the Corporation and shall receive and give receipts for moneys due
and payable to the Corporation from any source whatsoever, and shall deposit all
such moneys in the name of the Corporation in such banks, trust companies or
other depositories as shall be selected by action of the Board of Directors. The
Treasurer shall keep full and accurate accounts of receipts and expenditures and
make disbursements in accordance with the budget approved by the Board of
Directors and shall report on such activities to the Board of Directors at such
time and in such form as the Board of Directors shall determine. The Treasurer's
accounts shall be examined at such times as the Board of Directors may specify
by an auditor selected by the Board of Directors or by an audit committee
established by the Board of Directors. The Board of Directors also may elect one
or more Assistant Treasurers who, in the absence of the Treasurer for any
reason, may perform such duties and exercise the powers of the Treasurer and
perform such other duties and have such other powers as the Board of Directors
or the President may from time to time prescribe.
SECTION 5.9 VICE PRESIDENTS. The Corporation may have such number of Vice
Presidents, including any number of Senior Vice Presidents or Executive Vice
Presidents, having such powers and responsible for performing such duties as is
determined from time to time by the Board of Directors.
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SECTION 5.10 EXECUTION OF DOCUMENTS. All deeds, mortgages, bonds,
contracts, checks, notes and other instruments made by the Corporation may be
executed on behalf of the Corporation by any officer of the Corporation (unless
such power is restricted by Board resolution or by law) or by any other person
or persons designated from time to time by resolution of the Board of Directors.
The Secretary, when necessary, shall attest the execution thereof.
SECTION 5.11 BONDS. Any or all officers and agents of the Corporation
shall, if required by the Board of Directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the Board of
Directors shall determine.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.1 VOTING SECURITIES OF OTHER CORPORATIONS. Any officer of the
Corporation shall have the authority to vote on behalf of the Corporation the
securities of any other corporation which are owned or held by the Corporation
and may attend meetings of stockholders or execute and deliver proxies or
written consents for such purpose.
SECTION 6.2 LOANS. Except for loans which are incurred in the ordinary
course of business, no loans shall be contracted on behalf of the Corporation,
and no evidences of indebtedness shall be issued in its name, unless authorized
by resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
SECTION 6.3 DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation or
otherwise as the Board of Directors, the President or the Treasurer shall
direct. For the purpose of deposit and collection for the account of the
Corporation, checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation may be endorsed, assigned and delivered
by any officer of the Corporation.
SECTION 6.4 FISCAL YEAR. The fiscal year of the Corporation shall begin
on April 1 of each year.
SECTION 6.5 SEAL. The corporate seal, if any, shall have inscribed
thereon the name of the Corporation, the year of its organization, the words
"Corporate Seal, Delaware" and such other words and figures as the Board of
Directors may approve and adopt. The seal may be used by causing it or a
facsimile thereof to be impressed, affixed or otherwise reproduced.
SECTION 6.6 FORM OF RECORDS. Any records maintained by the Corporation in
the regular course of its business, including its books of account and minute
books, may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, microphotographs or any other information storage device, provided
that the records so kept can be converted into clearly
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legible written form within a reasonable time. The Corporation shall so convert
any records so kept upon the request of any person entitled to inspect the same.
SECTION 6.7 NOTICES. All notices required or permitted to be given under
these Bylaws shall be effective if delivered in person, by telephone or
facsimile transmission, or if received by registered mail.
SECTION 6.8 RULES FOR PROCEEDINGS. In all proceedings of the Board of
Directors, or any committee thereof, any procedural controversy shall be finally
determined by a majority vote of the directors who are present or, upon the
failure to obtain such a vote, by the chairman of the meeting as he shall deem,
in his sole discretion, to be fair and equitable.
SECTION 6.9 COMPENSATION. Directors of the Corporation who are not
employees of the Corporation shall serve without compensation, except that they
may receive reimbursement of reasonable expenses incurred by them in attending
any regular or special meetings of the Board of Directors, or any committee
thereof, and for undertaking any other authorized activities on behalf of the
Corporation. The salary or other compensation, if any, paid to officers,
employees and agents of the Corporation shall be fixed by resolutions adopted by
the Board of Directors. In no event shall the Corporation be permitted to pay
any compensation or reimburse any expenses if doing so would adversely affect
the Corporation's qualification under Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, or the corresponding provisions of any future United
States internal revenue laws (the "Code").
SECTION 6.10 PROHIBITED INUREMENT. No part of the net earnings of the
Corporation shall inure to the benefit of, or be distributable to, its
incorporators, directors, officers or any other private person, except that the
Corporation shall be authorized and empowered to pay reasonable compensation for
services rendered and to make payments and distributions in furtherance of the
purposes set forth in the Certificate of Incorporation. All directors and
officers of the Corporation shall be deemed to have expressly consented and
agreed that, upon dissolution or winding up of the affairs of the Corporation,
the Board of Directors shall, after paying or making provision for the payment
of all liabilities of the Corporation, dispose of the remaining assets of the
Corporation exclusively for the purposes set out in the Certificate of
Incorporation.
SECTION 6.11 EXEMPT ACTIVITIES. In all events and under all
circumstances, and notwithstanding merger, consolidation, reorganization,
termination, dissolution or winding up of the Corporation, whether voluntary,
involuntary or by operation of law:
(a) The Corporation shall not have or exercise any power or authority
either expressly or by interpretation or operation of law, nor shall it
directly or indirectly engage in any activity, that would prevent it from
qualifying (and continuing to qualify) as a corporation described in
Section 501(c)(3) of the Code.
(b) No substantial part of the activities of the Corporation shall
consist of carrying on propaganda or otherwise attempting to influence
legislation; nor shall it in any manner or to any extent participate in or
intervene in (including the publishing or
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distributing of statements) any political campaign on behalf of, or in
opposition to, any candidate for public office.
(c) Neither the whole, nor any part or portion, of the assets or net
earnings of the Corporation shall be used, nor shall the Corporation ever
be organized or operated, for objects or purposes other than those set out
in the Certificate of Incorporation.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 7.1 RIGHT TO INDEMNIFICATION. Each person who was or is made 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, by reason of the fact such person is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, shall be indemnified
and held harmless by the Corporation to the fullest extent permitted by the
General Corporation Law of the State of Delaware against expenses (including
attorneys' fees), judgements, fines and amounts paid in settlement actually and
reasonably incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to such person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
person's heirs, executors and administrators. For purposes of this Section 7.1,
persons serving as directors, officers, employees or agents of any directly or
indirectly wholly-owned subsidiary of the Corporation shall be deemed to be
serving at the Corporation's request.
SECTION 7.2 RIGHT TO ADVANCEMENT OF EXPENSES. The right to
indemnification conferred in Section 7.1 hereof shall include the right to be
paid by the Corporation the expenses incurred in defending any action, suit or
proceeding in advance of its final disposition, subject to the receipt by the
Corporation of an undertaking by or on behalf of such person to repay all
amounts so advanced if it shall ultimately be determined that he is not entitled
to be indemnified.
SECTION 7.3 NONEXCLUSIVITY OF RIGHTS. The rights to indemnification and
to the advancement of expenses contained in this Article VII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the Corporation's Certificate of Incorporation,
bylaw, agreement, vote of disinterested directors or otherwise, including rights
under any insurance policy that may be purchased by the Corporation.
SECTION 7.4 EMPLOYEE BENEFIT PLANS. For purposes of the provisions of
this Article VII, references to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to "serving at
the request of the Corporation" shall include any service as a director,
officer, employee or agent of the Corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with respect to
an employee benefit plan,
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its participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation."
SECTION 7.5 DETERMINATIONS. If and to the extent such indemnification
shall require a determination whether or not the relevant person met the
applicable standard of conduct set forth in the General Corporation Law of the
State of Delaware, as it presently exists or may hereafter be amended, such
determination shall be made expeditiously at the cost of the Corporation after a
request for the same from the person seeking indemnification. If indemnification
is to be given or an advance of expenses is to be made upon a determination by
independent legal counsel, such counsel may be the regular counsel to the
Corporation. In rendering such opinion, such counsel shall be entitled to rely
upon statements of fact furnished to them by persons reasonably believed by them
to be credible, and such counsel shall have no liability or responsibility for
the accuracy of the facts so relied upon.
SECTION 7.6 INSURANCE. The Corporation may purchase and maintain, to the
fullest extent permitted by the laws of the State of Delaware, as they presently
exist or may hereafter be amended, insurance on behalf of any director, officer,
employee or agent of the Corporation and any person who is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against, or incurred by, him in such capacity or status.
SECTION 7.7 NO RETROACTIVE EFFECT. Any amendment, alteration, change or
repeal of this Article VII that reduces or limits the indemnification of the
persons referred to herein shall apply prospectively only and shall not be given
retroactive effect.
ARTICLE VIII
AMENDMENTS
SECTION 8.1 AMENDMENTS. The Board of Directors may amend, alter, change
or repeal, in the manner now or hereafter permitted by law, any provision of
these Bylaws by a majority vote of the directors then in office, provided that
any such amendment, alteration, change or repeal shall be consistent with the
requirements of section 501(c)(3) of the Code.
* * * * * *
10
