SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
(Amendment No. )
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Union Bancshares, Inc.
(Name of Registrant as Specified In its Charter)
Union Bancshares, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
PAGE
<PAGE>
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD March 29, 1995
Dear Stockholder:
A Special Meeting of Stockholders of Union Bancshares, Inc., will be held on
March 29, 1995, at 1:30 p.m. in the Executive Suite, Third Floor,
Union Center, 150 North Main, Wichita, Kansas 67202, for the following
purposes:
1. To consider and act upon the approval and adoption of the
Agreement and Plan of Merger dated as of the 1st day of November, 1994
(the "Merger Agreement"), by and among Commerce Bancshares, Inc.
("Commerce"), CBI-Central Kansas, Inc. ("CBI") and Union Bancshares,
Inc. ("UBI"), a copy of which is attached as Exhibit A to the enclosed
Proxy Statement, which provides for the merger of CBI, a wholly owned
subsidiary of Commerce, into UBI, and the conversion of each
outstanding share of UBI Class A Common Stock $10 par value per share,
into the right to receive the sum of $242.00 in cash, except shares
owned by dissenting stockholders of UBI.
2. To transact such other business as may be properly brought
before the meeting.
A Proxy Statement and a Proxy for the Special Meeting are enclosed.
Also enclosed are copies of UBI's 1994 Annual Report on Form 10-K.
YOU ARE REQUESTED TO MARK, DATE, AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE AT YOUR EARLIEST CONVENIENCE EVEN
IF YOU PLAN TO ATTEND THE MEETING. Stockholders who are present at
the meeting may withdraw their proxy prior to the exercise thereof and
vote in person, if they so desire.
We hope you will attend this meeting in person.
Very truly yours,
Jack B. Hinkle
Chairman of the Board
March 8, 1995
JBH/mm
Enclosures
<PAGE>
<PAGE>
UNION BANCSHARES, INC
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
March 29, 1995
TABLE OF CONTENTS
TABLE OF CONTENTS .. . . . . . . . . . . . . . . . . . . . . . . . . . . . i
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose of the Meeting . . . . . . . . . . . . . . . . . . . . . . . . 1
Solicitation and Revocation of Proxies. . . . . . . . . . . . . . . . . 1
Voting of Shares . . . . . . . . . . .. . . . . . . . . . . . . . . . . 2
THE COMPANIES .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Directors of UBI . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
UBI Voting Securities and Principal Holders Thereof.. . . . . . . . . . 6
Meetings of the UBI Board of Directors and Committees . . . . . . . . . 6
UBI Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities Ownership of UBI Management . . . . . . . . . . . . . . . . 8
Compensation of UBI Directors and Executive Officers . . . . . . . . . 9
UBI Board Compensation Committee Report. . . . . . . . . . . . . . . . 10
UBI Performance Graph. . . . . . . . . . . . . . . . . . . . . . . . . 11
Transactions with UBI Management . . . . . . . . . . . . . . . . . . . 11
THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Terms of the Merger.. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Conversion of UBI Shares in the Merger and Cash Payment . . . . . . . . 12
Transactions Between Commerce and UBI. . . . . . . . . . . . . . . . . 12
Reasons for the Merger and Recommendation of the UBI Board of
Directors . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 12
Conditions to the Merger . . . . . . . . . . . . . . . .. . . . . . . . 14
Possible Termination of the Merger . . . . . . . . . . .. . . . . . . . 15
Effective Time of the Merger . . . . . . . . . . . . . .. . . . . . . . 15
Exchange Ratio . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 15
Conduct of Business Prior to the Merger. . . . . . . . .. . . . . . . . 15
Interests of Certain Persons in the Merger . . . . . . .. . . . . . . . 15
Rights of Dissenting Stockholders. . . . . . . . . . . .. . . . . . . . 16
Accounting Treatment . . . . . . . . . . . . . . . . . .. . . . . . . . 16
Regulatory Approval. . . . . . . . . . . . . . . . . . .. . . . . . . . 17
Income Tax Consequences. . . . . . . . . . . . . . . . .. . . . . . . . 17
FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Selected Financial Data and Per Share Data . . . . . . . . . . . . . . 18
Independent Public Accountants for UBI . . . . . . . . . . . . . . . . 19
INCORPORATION BY REFERENCE. . . . . . . . . . . . . . . . . . . . . . . . 19
EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Exhibit A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Exhibit B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
<PAGE>
<PAGE>
UNION BANCSHARES, INC.
Union Center, 150 North Main
Wichita, Kansas 67202
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
March 29, 1995
INTRODUCTION
This Proxy Statement is furnished in connection with the
solicitation of proxies to be voted at the Special Meeting of
Stockholders of Union Bancshares, Inc. ("UBI"), to be held on March
29, 1995, at 1:30 p.m. in the Executive Suite, Third Floor, Union
Center, 150 North Main, Wichita, Kansas 67202, and at any adjournments
thereof (the "Meeting"). Stockholders of record at UBI's close of
business on February 1, 1995, will be entitled to vote at the Meeting.
This Proxy Statement is first being mailed or given to the holders of
the Class A Common Stock $10 par value per share, of UBI ("UBI Common
Stock") on or about February 24, 1995. Failure to mark your signed
proxy does not waive your appraisal rights provided that you follow
and meet in a timely manner all conditions set out on page 16 herein,
under Rights of Dissenting Stockholders.
Purpose of the Meeting
The Meeting has been called at the direction of the Board of
Directors of UBI to consider and act upon the approval and adoption of
the Agreement and Plan of Merger dated as of November 1, 1994 (the
"Merger Agreement"), by and among Commerce Bancshares, Inc.
("Commerce"), CBI-Central Kansas, Inc. ("CBI") and UBI, which provides
for the merger of CBI, a wholly owned subsidiary of Commerce, into UBI
and the conversion of each outstanding share of UBI Common Stock into
the right to receive the sum of $242.00 in cash, except shares owned
by dissenting stockholders of UBI (the "Merger"). The Merger
Agreement is further described herein and a copy is attached as
Exhibit A to this Proxy Statement.
Solicitation and Revocation of Proxies
The Board of Directors of UBI is soliciting proxies with respect to
the approval and adoption of the Merger Agreement and any other
matters to be submitted to the stockholders of UBI. Any such proxy,
if received in time for voting and not revoked, will be voted at the
Meeting in accordance with the instructions of the stockholder. If no
instructions are given on the proxy, the proxy will be voted for
approval and adoption of the Merger Agreement.
The management of UBI knows of no other matters to be presented at
the Meeting. If any other matter is presented upon which a vote may
properly be taken, shares represented by proxies in the accompanying
form will be voted with respect thereto in accordance with the
judgment of the person or persons voting such shares.
<PAGE>
UNION BANCSHARES, INC.
Proxy statement for Special Meeting of Stockholders
March 29, 1995
Page 2
A proxy may be revoked at any time prior to its exercise (i) by
filing, at the principal office of UBI, a written notice revoking such
proxy or a duly executed proxy bearing a later date; or, (ii) in the
Meeting prior to the taking of a vote in person on any matter properly
presented for a vote to the stockholders of UBI at the Meeting,
whether or not such stockholder has previously given a proxy.
Solicitation for proxies for the Meeting will be made initially by
mail through this Proxy Statement. Proxies may also be solicited in
person, by telephone, or by telegraph by the directors, officers and
other employees of UBI, none of whom will receive any additional
compensation for their efforts. It is expected that banks, brokerage
houses and others will be requested to forward the soliciting material
to their principals to obtain authorization for the execution of
proxies. All costs of solicitation, including the costs of preparing,
printing, assembling, and mailing this Proxy Statement and Proxy and
all papers which now accompany or may hereafter supplement the same,
as well as the reasonable out-of-pocket expenses incurred by the
above-mentioned banks, brokerage houses, and others, will be borne by
UBI. UBI's Executive Office is located at 200 Union Center, 150 North
Main, Wichita, Kansas 67202, telephone number (316) 261-4701.
Voting of Shares
UBI has outstanding and entitled to vote 358,190 shares of UBI
Common Stock. Only the holders of UBI Common Stock reflected on the
records of the UBI at the close of business on February 1, 1995, will
be entitled to vote at the Meeting and each such share will be
entitled to one vote. Approval of the Merger Agreement requires the
affirmative vote of not less than a majority of the outstanding shares
of the UBI Common Stock. Commerce, as the sole stockholder of CBI,
has approved the Merger Agreement on behalf of CBI. The Merger
Agreement has been approved by the Board of Directors of Commerce and
is not required to be submitted to or approved by the stockholders of
Commerce.
THE MEMBERS OF THE UBI BOARD OF DIRECTORS HAVE UNANIMOUSLY APPROVED
THE MERGER AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT.
PAGE
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 3
THE COMPANIES
Commerce is a registered multi-bank holding company which owns
substantially all of the outstanding capital stock of 10 national
banking associations located in Missouri, one national banking
association located in Illinois, two state banks and four national
banking associations located in Kansas, a credit card bank in Omaha,
Nebraska, a mortgage banking company, a credit life insurance company,
a small business investment company, a property and casualty insurance
agency and a company primarily engaged in holding bank-related real
property. The principal assets of Commerce are represented by its
banking subsidiaries. The business of Commerce consists primarily of
ownership, supervision and control of its subsidiaries, including
providing advice, counsel and specialized services in various fields
of financial and banking policy and operations. The total assets of
Commerce, on a consolidated basis as of December 31, 1994, were
approximately $8.0 billion and net income for the year ended December
31, 1994, was approximately $96.1 million. The principal executive
offices of Commerce are at the Commerce Bank Building, 1000 Walnut,
Kansas City, Missouri 64106 (telephone number (816) 234-2000).
CBI is a wholly owned subsidiary of Commerce. CBI is a second tier
holding company which is used to effect acquisition transactions for
Commerce in central and western Kansas. CBI currently owns 100% of
Commerce Bank, El Dorado, Kansas, Commerce Bank N.A., Manhattan,
Kansas, and Commerce Bank N.A., Hays, Kansas. At the Effective Time
CBI will be merged with and into UBI. The existence of CBI shall
thereupon cease. UBI's name will be changed to CBI-Central Kansas,
Inc. at merger.
UBI is a bank holding company formed in 1982 under the laws of the
State of Kansas. UBI has three active, wholly-owned subsidiaries:
Union National Bank of Wichita ("UNB"), UBI Growth Capital, Inc.
("UBIGC"), a venture capital company, and UBI Financial Services, Inc.
("UBIFS"), a community development company. In addition, UNB owns all
of the outstanding common stock of Union Center, Inc. ("UCI"), a
Kansas corporation formed in 1956 to purchase and operate the building
mainly occupied by UNB.
UBI and its subsidiaries are engaged primarily in commercial
banking and related activities authorized by the Bank Holding Company
Act of 1956, as amended, or determined by the Board of Governors of
the Federal Reserve System to be so closely related to the business of
banking as to be properly incidental thereto. UBI and its
subsidiaries, therefore, did not engage in material operations in
separate reportable industry segments for the last three years.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement of Special Meeting of Stockholders
March 29, 1995
Page 4
UBI offers a wide range of financial services in the Wichita and
Derby, Sedgwick County; Hutchinson, Reno County; and Winfield and
Arkansas City, Cowley County, Kansas, areas through UNB, its
subsidiary bank. These services include deposit accounts; commercial,
installment and real estate loans; trust, investment and escrow
services; and a network of automated teller machines. UNB has
fourteen locations situated within the city limits of Wichita,
Hutchinson, Derby, Winfield, and Arkansas City. UNB is the third
largest bank in Wichita; the second largest bank in Hutchinson and
Derby; and the largest bank in Winfield and Arkansas City.
UNB faces competition from banks and other financial institutions
located in Sedgwick, Reno, and Cowley County, Kansas. There are
approximately 97 other financial institutions within the Sedgwick,
Reno, and Cowley County areas.
The principal source of UBI's cash revenues is dividends from UNB.
The ability of UNB to pay such cash dividends is limited by federal
regulations.
The total assets of UBI, on a consolidated basis as of December 31,
1994, were approximately $665.7 million and net income for the twelve-
month period ended December 31, 1994, was approximately $5.7 million.
Directors of UBI
UBI has six (6) directors, all of which have served as a director
of UBI for more than the past five years with the exception of Mr.
Derek L. Park. Mr. Park was elected as a director of UBI on May 19,
1993. All of the directors are members of the Board of Directors of
UBI's subsidiary, Union National Bank of Wichita ("UNB"). The
following information is given with respect to the directors:
<TABLE>
<CAPTION>
Served as
Principal Occupation, Director
Name Other Directorship, and Age Since
<S> <C> <C>
Jack B. Hinkle1,2 Sole proprietor, Hinkle Oil 1982
Company, Independent Oil Producer;
Chairman of UBI's and UNB's
Board; Director of UNB since 1948;
age 83.
Randolph D. Love3 Vice President of Sales & Marketing and 1986
of Director of The Love Box Company, Inc.,
manufacturer of corrugated shipping
containers; Director of UNB since 1986;
age 46.
</TABLE>
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 5
<TABLE>
<CAPTION>
Served as
Principal Occupation, Director
Name Other Directorship, and Age Since
<S> <C> <C>
Robert D. Love3,4 President and Director of 1982
The Love Box Company,
Inc., manufacturer of corrugated
shipping containers; Director of
UNB since 1958; age 71.
Derek L. Park5 President and Director of 1993
PMS Foods, Inc., manufacturer
of industrial, food service and
retail food products; Director of
UNB since 1990; age 45.
Donald H. Pratt6 President and Director of 1982
Butler Manufacturing Company,
manufacturer of building systems
for nonresidential construction;
Director of UNB since 1974; age 57.
William G. Watson7 President and Chief Executive 1985
Officer of UBI and UNB;
Director of UNB since 1984; age 46.
<FN>
1 Jack B. Hinkle also serves as President and Director of UCI, Director of
UBIGC, and Director of UBIFS.
2 Jack B. Hinkle is the father-in-law of Donald H. Pratt.
3 Robert D. Love is the father of Randolph D. Love.
4 Robert D. Love also serves as Director of UBIGC.
5 Derek L. Park also serves as Director of UBIGC.
6 Donald H. Pratt also serves as Director of UBIGC.
7 William G. Watson also serves as President and Director of UBIGC, President
and Director of UBIFS, and Vice President and Director of UCI.
</TABLE>
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 6
UBI Voting Securities and Principal Holders Thereof
As of February 1, 1995, UBI had approximately 340 stockholders.
There is no established trading market for shares of UBI Common Stock.
Three stockholders own beneficially (determined under the Securities
Exchange Act of 1934) 5% or more of UBI Common Stock. They and their
interests are:
<TABLE>
<CAPTION>
Title Name and Address Amount and Nature of Percent
of Class of Beneficial Owner Beneficial Ownership of Class
<S> <C> <C> <C>
Class A Jack B. Hinkle 151,664 1 42.3%
Common Union Center Building
Stock Wichita, Kansas 67202
Class A Robert D. Love 94,490 2 26.4%
Common 700 East 37th Street North
Stock Wichita, Kansas 67219
Class A William G. Watson 18,538 3 5.2%
Common Union Center Building
Stock Wichita, Kansas 67202
<FN>
1 Jack B. Hinkle, a director of UBI, owns of record in his capacity as
trustee of The Jack B. Hinkle Revocable Trust A, 144,164 shares of such
stock, and in a life estate with the power to sell, 7,500 shares.
2 Robert D. Love, a director of UBI, owns of record as an individual 100
shares of UBI Class A Common Stock and beneficially through The Love Box
Company, Inc., of which corporation Mr. Love and his immediate family are
sole stockholders, 94,390 shares of such stock. As of July 16, 1982, a
Voting Trust was established with respect to certain UBI stock owned by the
Love interests. The sole trustee is Mercantile Bank of Kansas City, 1101
Walnut Street, Kansas City, Missouri. The Love Box Company, Inc., has
deposited 15,340 of its 94,390 shares owned with Mercantile Bank of Kansas
City as trustee of the voting trust. Mr. Love has voting power over the
remaining 79,050 shares held by The Love Box Company, Inc.
3 William G. Watson, a director of UBI, owns of record as an individual
18,313 shares of UBI Class A Common Stock and 25 shares in joint tenancy
with his wife over which he has shared voting power. An additional 200
shares are owned by his wife, individually.
</TABLE>
The three stockholders above intend to vote all shares controlled
by them in favor of the merger which assures the approval and adoption
of the Merger Agreement under the laws of the State of Kansas.
Meetings of the UBI Board of Directors and Committees
During 1994, the UBI Board of Directors held 13 meetings. UBI's
Audit Committee met three times during the year. UBI's Compensation
Committee met two times during 1994. All directors attended at least
94% of the UBI Board Committee meetings. All directors attended at
least 100% of the Audit Committee meetings, with the exception of
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 7
Thomas D. White who attended 33% of the meetings. All directors
attended 100% of the Compensation Committee meetings.
Members of the UBI Audit Committee during 1994 consisted of
Richard A. Curry, James N. Dondlinger, and Thomas D. White. Mr. Curry
served as Chairman of the Committee. Mr. Dondlinger resigned as a
Director of UNB and as a member of the Audit Committee effective
November 1, 1994. Mr. Dondlinger did not have any disagreements with
UBI on any matter relating to the companies operations, policies or
practices. All of the members serve as a Director for UNB. The
functions of the UBI Audit Committee are to appoint independent
certified public accountants to audit UBI and all its subsidiaries, to
direct internal audit and loan review departments activities, to
receive and review recommendations from the UBI auditors, and to
report findings to the Board.
Members of the UBI Compensation Committee during 1994 were Jack
B. Hinkle, Robert D. Love, Randolph D. Love, Donald H. Pratt, and
William G. Watson. Mr. Pratt serves as Chairman of the Committee.
This Committee may, from time to time, appoint other members to the
Committee. The functions of the UBI Compensation Committee are to
review officer Performance Appraisals, officer salaries and bonuses,
compensation of Board Committees, and to report to the Board actions
and recommendations related to such matters.
UBI has no other standing committees.
UBI Executive Officers
The executive officers of UBI, other than Messrs. Hinkle and
Watson, who are listed on pages 4 and 5, are as follows:
Steven C. Worrell (age 47) has served as Executive Vice President,
and Chief Financial Officer of UBI since April of 1994 and Vice
President, and Chief Financial Officer of UBI since its formation
in 1982. For the past five years, Mr. Worrell's principal
occupations have been: July 1988, Vice President, Secretary,
Treasurer, and Chief Financial Officer of UBI, Executive Vice
President, Secretary, and Chief Financial Officer of UNB. May
1993, elected as Director of UNB. April 1994, elected Executive
Vice President, Secretary, Treasurer, and Chief Financial Officer
of UBI. Steven C. Worrell also serves as Executive Vice President
and Director of UBIFS, Executive Vice President of UBIGC, and Vice
President and Director of UCI.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 8
Securities Ownership of UBI Management
The following information pertains to UBI Common Stock beneficially
owned, directly or indirectly, by each director and by all directors
and executive officers of UBI as a group as of February 1, 1995.
<TABLE>
<CAPTION>
Amount and
Title Nature of
of Name and Address of Beneficial Percent
Class Beneficial Owner Ownership of Class
<S> <C> <C> <C>
Class A Jack B. Hinkle 151,664 1 42.3%
Common Union Center Building
Stock Wichita, Kansas 67202
Class A Randolph D. Love 100 4 (4)
Common 700 East 37th Street North
Stock Wichita, Kansas 67219
Class A Robert D. Love 94,490 2 26.4%
Common 700 East 37th Street North
Stock Wichita, Kansas 67219
Class A Derek L. Park 100 4 (4)
Common P.O. Box 1099
Stock Hutchinson, Kansas 67504-1099
Class A Donald H. Pratt 6,107 3 1.7%
Common P. O. Box 917
Stock Kansas City, Missouri 64141
Class A William G. Watson 18,538 5 5.2%
Common Union Center Building
Stock Wichita, Kansas 67202
Class A All directors and officers 278,853 77.0%
Common as a group (7 persons)
Stock
<FN>
1 See note 1, page 6.
2 See note 2, page 6.
3 This total includes 5,570 shares owned by Mr. Pratt's wife and 100 shares
owned by his son over which he shares voting power.
4 Less than 1%.
5 See note 3, page 6.
</TABLE>
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 9
Compensation of UBI Directors and Executive Officers
UBI has paid no salaries to any person, nor has it established any
pension, profit sharing, or other compensation plans except a 401K
plan which was established on January 1, 1989, and is inactive. UBI
pays a monthly director's fee of $500 and a yearly directors retainer
fee of $5,000. UBI paid, in 1994, $500 per meeting to the Chairman of
its Audit and Compensation Committees and $250 per meeting to the
other director members of these committees. UBI can give no other
estimate concerning the compensation, if any, to be paid by UBI to its
executive officers in the future.
In the following table below are the only executive officers and
directors of UBI who received cash compensation in excess of $100,000,
which was paid by UBI and UNB for the year ended December 31, 1994:
<TABLE>
<CAPTION>
Name ANNUAL COMPENSATION
and All
Principal Other Annual Other
Position Year Salary Bonus Compensation1 Compensation2
<S> <C> <C> <C> <C> <C>
Jack B. Hinkle 1994 80,000 57,000 24,720 -0-
Chairman of the 1993 80,000 57,000 23,780 -0-
Board of UBI 1992 80,000 57,500 23,547 -0-
and UNB.
William G. Watson 1994 250,000 627,500 3 31,167 5,625
President and 1993 250,000 290,000 30,430 6,745
Chief Executive Officer 1992 250,000 240,000 25,883 6,546
of UBI and UNB.
Steven C. Worrell 1994 110,000 25,000 14,254 5,062
Executive Vice President, 1993 110,000 50,000 9,339 6,000
Secretary, Treasurer and 1992 100,000 35,000 4,198 5,063
Chief Financial Officer of UBI;
Executive Vice President,
Secretary and Chief Financial
Officer of UNB.
<FN>
1 Other annual compensation includes directors' fees, life insurance, auto
expenses, etc.
2 All other compensation includes employer's contributions to the 401K Plan.
3 Included in the bonus amount is a $337,500 stock bonus paid to Mr. Watson.
</TABLE>
The compensation disclosed does not include amounts attributable to
club membership expenses provided to certain of such officers, which
amounts did not exceed 10% of their cash compensation.
The executive officers of UBI are participants in UNB's 401K Thrift
Plan. The Thrift Plan allows an eligible participant to contribute
from 1% to 12% of annual salary to the plan. UNB contributes 75% on
the first 5% of a participants contribution. Forfeitures by
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 10
terminated participants who are not fully vested are allocated to the
remaining active participants.
Generally, a participant in the 401K Thrift Plan who retires at age
65 or later or terminates after 7 or more years of service will be
entitled to a distribution or rollover equal to 100% of his or her
plan assets as provided by the plan document.
Amount accrued pursuant to the plan during 1994 for the accounts of
Mr. Watson was $5,625 and Mr. Worrell was $5,062 and for all directors
and executive officers as a group was $10,687. Both individuals are
fully vested.
UBI Board Compensation Committee Report
The Compensation Committee meets annually in November of each year
to review officers' performances, year-end promotions, salaries, bonus
recommendations, and position requirements for UBI and its major
subsidiary, UNB, for the following year. This process begins in late
August with each officer completing a self-appraisal form. This form
is then used by the officer's manager in completing the officer's
review. These forms along with salary and bonus recommendations and
any promotional or other officer recommendations are provided to the
Compensation Committee for review and action. Members of the UBI
Compensation Committee during 1994 were Jack B. Hinkle, Robert D.
Love, Randolph D. Love, Donald H. Pratt, and William G. Watson. Mr.
Pratt serves as Chairman of the Committee.
Based upon this information, the Committee approves current year
bonuses and salaries for the coming year. The Committee discusses and
approves the salary and bonus of the CEO and Chairman of the Board,
with each of these individuals being absent during these discussions.
These recommendations are reported to and approved by the full Board
of Directors of UBI and each of its subsidiaries as required. The
Compensation Committee also meets in June of each year to follow up on
and take action with regard to any issues from the November meeting.
The Compensation Committee also reviews any special mid-year
recommendations submitted to it by management.
All officer positions, salaries, and position requirements are
analyzed and reviewed against industry standards, as well as local and
regional competition through information obtained from compensation
consultants of peer financial institutions selected on the basis of
similar size and profitability. The Committee sets salaries for all
officers including executive officers, the CEO, and the Chairman based
upon their performance over the prior year, the salaries of comparable
positions, and the duties and responsibilities of each job. The
Committee subjectively evaluates all these criteria with no specific
emphasis on any one factor when setting compensation levels. Bonuses
are paid to all officers including executive officers, based on
performance over the prior year, accomplishment of goals established
for the year, performance of the Company, and special accomplishments
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 11
beyond the normal duties of the job. The CEO and Chairman bonuses are
determined based upon the performance of the Company.
UBI Performance Graph
UBI stock is not actively traded or widely held and therefore, does
not have a measurable market value. Because there is no measurable
market value, a graph is not presented as it would not provide any
meaningful conclusions.
Transactions with UBI Management
UNB which is UBI's principal subsidiary, has had, and expects to
have in the future, banking transactions, including the making of
loans, in the ordinary course of business with officers and directors
of UBI and UNB and their associates, including associated companies.
All loans in 1994 from UNB to such persons were made in the ordinary
course of business; were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons; and did not
involve more than the normal risk of collectability or present other
unfavorable features. Loans to such persons from UNB at December 31,
1994 totaled $2,581,000, 5.7% of UBI stockholders' equity.
THE MERGER
The following discussion describes all material provisions of the
Merger Agreement. The Merger Agreement, a copy of which is attached
as Exhibit A hereto, contains the representations, warranties and
agreements of the parties, the conditions to the obligations of the
parties to effect the Merger, the means of effecting the Merger, and
the manner and basis for exchanging the shares of UBI Common Stock for
cash. The description set forth below of certain provisions of the
Merger Agreement is qualified in its entirety by reference to the text
of the Merger Agreement.
Terms of the Merger
Upon the terms and subject to the conditions of the Merger
Agreement at the Effective Time (as hereinafter defined), CBI shall be
merged with and into UBI and the separate existence and corporate
organization of CBI shall thereupon cease and CBI and UBI shall
thereupon be a single corporation. UBI shall be the surviving
corporation in the Merger and the separate corporate existence of UBI
shall continue unaffected and unimpaired by the Merger. However, UBI
will no longer be a separate reporting entity pursuant to the 1934 Act
of the federal securities laws.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 12
Conversion of UBI Shares in the Merger and Cash Payment
At the Effective Time as defined in the Merger Agreement, by virtue
of the Merger and without any action on the part of any holder
thereof:
(a) Each outstanding share of UBI Common Stock, $10 par value
per share, of which 358,190 shares are issued and outstanding, but
excepting UBI dissenting shares, shall be converted into the right
to receive $242.00 in cash.
(b) Each share of UBI Common Stock that is either authorized
but unissued or held in the treasury of UBI, if any, shall be
canceled and retired and shall cease to exist from and after the
Effective Time, and no cash, securities or other consideration
shall be delivered in exchange therefor.
(c) Commerce, on behalf of CBI, shall make available at and
after the Effective Time an amount in cash as necessary for the
purposes hereof. As soon as practicable after the Closing Date as
defined in the Merger Agreement, Commerce shall mail to the
holder(s) of record of shares of UBI Common Stock (i) a form letter
of transmittal and (ii) instructions for effecting the surrender of
certificates of UBI Common Stock for exchange into cash. Within
three (3) business days following receipt of all required
documentation, Commerce shall cause to be mailed checks for the
amount to be delivered in exchange for the UBI Common Stock.
(d) At the Effective Time, the stock transfer books of UBI
shall be closed and no transfer of UBI Stock shall thereafter be
made.
Transactions Between Commerce and UBI
No shares of UBI Common Stock are presently owned by Commerce or by
any of its subsidiaries, and no shares of Commerce Common Stock are
held by UBI. There have been no other material transactions between
Commerce and UBI for the period ending December 31, 1994.
Reasons for the Merger and Recommendation of the UBI Board of
Directors
William G. Watson, President and CEO of UBI on July 29, 1994
initiated for the first time discussions with Commerce about the
potential merger of UBI with Commerce at the direction of the UBI
Chairman of the Board and majority stockholder. On November 1, 1994
the Merger Agreement was signed by UBI, Commerce and CBI. At various
times between these two dates Mr. Watson, Mr. Hinkle, Chairman of the
Board, and Mr. Worrell, Executive Vice President and CFO, had
discussions with the Chairman of the Board and other Senior Executives
of CBI about the possibility of a business combination with CBI.
These discussions covered matters relating to the price to be paid by
Commerce to UBI
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 13
stockholders: the terms and conditions of the merger transaction which
were culminated in the Merger Agreement signed on November 1,1994; the
providing of information to Commerce by UBI under a confidentiality
agreement signed by both parties in order for Commerce to carry out
its due diligence examination of UBI; and the timing of the
transaction. The discussions mainly centered around the price to be
paid for UBI stock. Mr. Watson initially identified $300 per share as
a price for which UBI stock could be purchased. Commerce initially
responded with a discussion price of $237.50 per share. After review
by Mr. Hinkle, Mr. Watson and Mr. Worrell of similar transactions
trading in the range that would equal $230 to $240 per share, they
advised Commerce that they would recommend Commerce's offer of $242
per share to UBI stockholders. UBI and Commerce agreed that there
should be no special or extraordinary transactions between any
majority stockholders or executive officers of UBI and Commerce.
Commerce subsequently did execute an employment agreement with Mr.
Watson to continue as Chief Executive Officer of UBI. Details of Mr.
Watson's employment agreement are further explained under Interests of
Certain Persons in the Merger on page 15 herein. The Merger
Agreement, Exhibit A herein, sets forth the terms upon which the
Merger, if adopted, will be effected, the representations, warranties
and covenants of the parties relating to the consummation of the
Merger, the conditions which must be satisfied before the Merger may
be consummated, and the grounds for termination of the Merger.
The $242 offer resulted in a price for UBI at September 30, 1994 of
1.91 times its book and 15.21 times its earnings. From information
published by Sheshunoff, comparable banks sold in the North Central
area of the United States, which includes Kansas, received an average
of 1.85 times book and 15.78 times earnings during the first half of
1994. The majority stockholders felt that based on this information,
$242 per share was a good offer. Under bank regulations this price
would also be paid to all minority stockholders, subject to their
rights to dissent as provided under Kansas Statute 17-6712. Commerce
will use existing working capital and incur no external debt for
payment of the $242 per share to fulfill its obligation to UBI
stockholders under the Merger Agreement.
The Board of Directors of UBI has concluded that the terms of the
Merger are fair to UBI stockholders and that consummation of the
Merger is in the best interests of UBI and its stockholders. In
reaching these conclusions, the Board has considered, among other
things, the price being offered in the Merger relative to the book
value and earnings per share of UBI Common Stock. The Board has also
considered a number of additional factors in approving and
recommending the terms of the Merger, including, without limitation,
information concerning the financial condition, earnings and dividends
of UBI and Commerce, and the financial terms of other recent business
combinations in the banking industry.
The terms of the Merger were determined by arm's length
negotiations between representatives of UBI and Commerce. No
independent appraisal of the value of the physical properties of UBI
were made or obtained.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 14
The UBI Board of Directors unanimously recommends that UBI
stockholders vote FOR adoption of the Merger Agreement.
Conditions to the Merger
Consummation of the Merger is subject to the fulfillment of the
following material conditions set forth in the Merger Agreement,
including the following:
(a) Approval of the Merger by the holders of a majority of all
the outstanding sharesof UBI Common Stock entitled to vote
thereon;
NOTE: The three stockholders listed on page 6 intend to vote
all shares controlled by them in favor of the merger which
assures the approval and adoption of the Merger Agreement
under the laws of the State of Kansas.
(b) The accuracy of representations of Commerce and UBI made in
the Merger Agreement and the performance of their respective
obligations thereunder as set out below:
(1) The absence of a material adverse change since November
1, 1994, in the financial condition of, or in the properties,
assets, liabilities, rights or business, taken as a whole, of
UBI and taking into account for this purpose the proceeds of
any applicable insurance;
(2) The receipt by Commerce of a satisfactory legal opinion
of Martin, Pringle, Oliver, Wallace & Swartz, L.L.P. for UBI.
(3) Regulatory approvals of the State of Kansas, the
Federal Reserve Bank and the Department of Justice, which
have all been received as of the date of this proxy;
(4) A minimum consolidated net worth of $46,000,000 prior to
mark to market security adjustments under FASB 115 and a loan
loss reserve of $5,100,000 both as of closing date for UBI
and its subsidiary; As of December 31, 1994 both conditions
were met;
(5) The receipt by Commerce of a satisfactory letter from a
public accounting firm regarding the financial condition of
UBI; and
(6) Commerce will have sufficient cash to fulfill its
obligation to UBI Stockholders under the Merger Agreement.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 15
Possible Termination of the Merger
The Merger Agreement may be terminated by either party if the
Merger has not occurred by January 1, 1996.
Effective Time of the Merger
It is presently anticipated that the Effective Time of the Merger
will occur late in the first quarter or early in the second quarter of
1995, but no assurance can be given to that effect.
Exchange Ratio
At the Effective Time of the Merger, each share of UBI Common Stock
then outstanding will be converted into the right to receive the sum
of $242.00 in cash.
Conduct of Business Prior to the Merger
The Merger Agreement provides that, prior to the Effective Time of
the Merger, UBI will conduct its business in the ordinary course and
will not take certain specified actions including the following:
Issue any UBI capital stock or purchase any UBI capital stock ;
declare or pay any dividend except certain specific cash dividends in
accordance with its prior practice; effect a stock split,
reclassification or other change in its capital stock or otherwise
reorganize or recapitalize; change its Articles of Incorporation or
By-Laws; grant any increase in any benefit plan; or engage in certain
other material transactions except in the ordinary course of business.
Interests of Certain Persons in the Merger
William G. Watson, President and a director of UBI, has entered
into an employment agreement with Commerce. The two-year agreement
will commence on the closing of the Merger, provides for annual
compensation of $250,000, options to purchase up to 6,000 shares of
Commerce Common Stock, and certain other benefits.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 16
Rights of Dissenting Stockholders
The rights of dissenting stockholders of UBI are governed by
Section 17-6712 of the Kansas General Corporation Code. The material
provisions of this section provide that a stockholder shall be
entitled to receive the appraised value as determined by the district
court ("value") of his shares as of the Effective Time of the Merger
if such stockholder: (1) delivers a written objection to the Merger to
the attention of the Corporate Secretary of UBI, P.O. Box 637,
Wichita, Kansas 67201 prior to the vote on the Merger Agreement; (2)
does not vote in favor of the Merger (a failure to vote against the
Merger will not constitute a waiver of appraised rights) or deliver an
unmarked, but signed proxy; and (3) makes written demand for payment
of the value of his shares within twenty (20) days after receiving
notice via certified mail from Commerce that the Merger has become
effective (the "Payment Demand"). A vote against the Merger will not
be deemed to satisfy the written objection or demand requirement of
Kansas law.
Failure to comply with these procedures will cause the stockholder
to lose dissenters' rights to payment for the shares. Consequently,
any stockholder who desires to exercise dissenters' rights with
respect to their shares is urged to consult their legal advisor before
attempting to exercise such rights.
Within 30 days after the expiration of the 20-day time prescribed
for making the Payment Demand, UBI shall pay to all stockholders
filing a Payment Demand, the value of the stockholder's shares at the
Effective Time, exclusive of any element of value arising from the
expectation or accomplishment of the Merger. If, within such 30-day
period, UBI and any dissenting stockholder fail to agree upon the
value of the shares, the stockholder or UBI may demand a determination
of the value of the stock of all such dissenting stockholders by an
appraiser to be appointed by the district court. The appraised
determination of value as described above may result in consideration
which is more or less than the amount offered pursuant to the Merger
Agreement.
The foregoing summary of the applicable provisions of Section 17-
6712 is not intended to be a complete statement of such provisions,
and is qualified in its entirety by reference to such Section 17-6712
of the Kansas General Corporation Code which is included herein as
Exhibit B.
Neither UBI nor Commerce intend to make demand for a determination
of the value of the stock by the district court under Section 17-6712
of the Kansas General Corporation Code.
Accounting Treatment
The Merger will be accounted for as a purchase of UBI by Commerce
in accordance with generally accepted accounting principles.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 17
Regulatory Approval
The Merger is conditioned upon the approval of the Board of
Governors of the Federal Reserve System, the State Banking Board of
the State of Kansas, and the United States Department of Justice.
Income Tax Consequences
The following is only a general description of certain of the
federal income tax consequences of the Merger to UBI stockholders
without reference to the particular facts and circumstances of any
particular UBI stockholder or to any state, local or foreign tax laws
that may be applicable in a particular case. IN VIEW OF THE
INDIVIDUAL NATURE OF EACH UBI STOCKHOLDER'S TAX SITUATION, UBI
STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE SPECIFIC TAX CONSEQUENCES OF THE MERGER.
The Merger will be a taxable event for federal income tax purposes
and may also be a taxable event under applicable state, local and
foreign tax laws. A UBI stockholder will recognize gain or loss for
federal income tax purposes measured by the difference between the
amount of cash received (less, in the case of Dissenting Shares, any
amount thereof that is deemed to be interest for federal income tax
purposes) and such UBI stockholder's adjusted tax basis for the shares
of UBI Common Stock converted. The gain or loss recognized will be
treated as a long-term capital gain or loss if the UBI stockholder has
held the shares of UBI Common Stock as a capital asset and the UBI
stockholder's holding period for such shares exceeds one year.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
Page 18
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
Selected Financial Data and Per Share Data
(Amounts in thousands, except per share)
(unaudited)
The following table presents for UBI, on an historical basis, selected
consolidated financial data.
For the Year Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Income Statement Data
Net interest income and other income: 35,660 31,817 31,150 29,713 27,058
Income from continuing operations: 5,689 5,192 4,300 3,502 2,885
Balance Sheet Data
Total assets: 665,677 532,857 548,309 560,259 564,983
Long-term borrowings: 13,213 8,000 10,000 10,000 --
Total stockholders' equity: 45,649 40,816 36,220 32,480 29,373
Per Share Data
Income from continuing operations: 16.07 14.81 12.28 10.03 8.27
Book value: 127.44 116.39 103.28 92.88 84.24
Cash dividends: 1.20 1.70 1.70 1.20 1.20
<FN>
Refer to financial information for UBI contained in the UBI Annual Report on
Form 10-K accompanying this Proxy Statement.
</TABLE>
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 19
Independent Public Accountants for UBI
Representatives of Allen, Gibbs & Houlik, L.C. are expected to be present at
the UBI Special Meeting with the opportunity to make a statement if they so
desire to do so and to respond to appropriate questions.
INCORPORATION BY REFERENCE
The following documents filed by UBI with the SEC are hereby incorporated by
reference herein:
(a)UBI's Annual Report on Form 10-K for the fiscal year ended December 31, 1994
(Commission File No. 0-11114).
All documents subsequently filed by UBI pursuant to Sections 13(a) or 15(d) of
the Exchange Act shall be deemed to be incorporated by reference into this Proxy
Statement from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified,
to constitute a part of this Proxy Statement.
This Proxy Statement is accompanied by a copy of UBI's Annual Report on Form
10-K for the year ended December 31, 1994. Copies of any other documents
incorporated by reference relating to UBI will be provided without charge to
each person to whom a copy of this Proxy Statement is delivered upon written or
oral request. Requests for such copies should be directed to 200 Union Center,
150 North Main, Wichita, Kansas 67202 (telephone number (316) 261-4701).
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 20
EXHIBITS
Exhibit A
UNION BANCSHARES, INC
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
March 29, 1995
AGREEMENT AND PLAN OF MERGER
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 21
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") dated as of the 1st day
of November, 1994, is made by and between COMMERCE BANCSHARES, INC., a Missouri
corporation ("Commerce"), CBI-CENTRAL KANSAS, INC., a Kansas corporation
("Sub"), and UNION BANCSHARES, INC., a Kansas corporation ("Union").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Commerce, Sub and Union deem it advisable
and in the best interests of their respective stockholders that Commerce and
Union become affiliated through the merger of Union with and into Sub in the
manner hereinafter set forth (the "Merger").
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, the parties hereby agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions of this
Agreement at the Effective Time (as hereinafter defined), Sub shall be merged
with and into Union and the separate existence and corporate organization of Sub
shall thereupon cease and Sub and Union shall thereupon be a single corporation.
Union shall be the surviving corporation in the Merger and the separate
corporate existence of Union shall continue unaffected and unimpaired by the
Merger.
1.2. Effective Time of Merger. On the Closing Date (as hereinafter
defined), the proper officers of Union and Sub shall execute and acknowledge an
appropriate certificate of merger that shall be filed with the Kansas Secretary
of State on the first business day following the Closing Date, all in accordance
with the Kansas General Corporation Code (the "Kansas Code"). The Merger shall
become effective on the first day of the first calendar month following the
Closing Date (the "Effective Time"). The closing shall be on a day (the
"Closing Date") occurring not less than one (1) and not more than three (3)
business days before the Effective Time and not later than forty (40) days after
the date on which the last of any condition precedent contained herein is waived
or is fulfilled, as specified in a notice delivered by Commerce to Union not
less than three (3) business days prior to such Closing Date, or on such other
date as Union, Commerce and Sub shall mutually agree. The closing shall be at
10:00 a.m. at Commerce Bank of Kansas City, N.A., 1000 Walnut, Kansas City,
Missouri, on the Closing Date, or at such other time and place as Union,
Commerce and Sub shall mutually agree.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 22
1.3. The Articles of Incorporation. The Articles of Incorporation and
By-Laws of Sub as in effect immediately prior to the Effective Time shall be and
remain the Articles of Incorporation and By-Laws of the surviving corporation
from and after the Effective Time until amended as provided by law and the
officers and directors of Sub shall continue as the officers and directors of
the surviving corporation from and after the Effective Time and
the name of Union shall be changed to that of Sub at the Effective Time.
1.4. Effect of Merger. Subject to Kansas law, at the Effective Time (a)
Union shall possess all assets and property of every description, and every
interest therein, wherever located, and the rights, privileges, immunities,
powers, franchises, and authority, of a public as well as of a private nature,
of Sub and all obligations belonging to or due each of Union and Sub shall be
vested in Union without further act or deed; (b) title to any real estate or any
interest therein vested in Sub shall not revert or in any way be impaired by
reason of the Merger; (c) all rights of creditors and all liens on any property
of the Sub shall be preserved unimpaired; and (d) Union shall be liable for all
the obligations of Sub, and any claim existing, or action or proceeding pending,
by or against either of Union or Sub, may be prosecuted to judgment with the
right of appeal, as if the Merger had not taken place.
1.5. Further Assurances. If at any time after the Effective Time, Union
shall consider it advisable that any further conveyances, agreements, documents,
instruments or assurances of law or any other actions or things are necessary or
desirable to vest, perfect, confirm, or record in Sub the title to any property,
rights, privileges, powers, or franchises of Union, the Board of Directors and
officers of Sub shall, and will be authorized to, execute and deliver in the
name and on behalf of Union, Sub or otherwise, any and all proper conveyances,
agreements, documents, instruments, and assurances of law and do all things
necessary or proper to vest, perfect, or confirm title to such property, rights,
privileges, powers and franchises in Sub, and otherwise to carry out the
provisions of this Agreement.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 23
ARTICLE II
CONVERSION OF SHARES
2.1. Effect of Merger on Sub Stock. At the Effective Time of the Merger,
each share of common stock, $1.00 par value per share, of Sub issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding at the Effective Time and shall be unaffected by the Merger.
2.2. Conversion of Union Shares in the Merger and Cash Payment. At the
Effective Time, by virtue of the Merger and without any action on the part of
any holder thereof:
(a)Each outstanding share of Class A common stock, $10 par value per share
, of Union ("Common Stock"), of which 358,190 shares are issued and
outstanding, but excepting Union Dissenting Shares, as defined below, shall
be converted into the right to receive $242.00 in cash.
(b)Each share of Common Stock that is either authorized but unissued or
held in the treasury of Union, if any, shall be canceled and retired and
shall cease to exist from and after the Effective Time, and no cash,
securities or other consideration shall be delivered in exchange therefor.
(c)Commerce, on behalf of Sub, shall make available at and after the
Effective Time an amount in cash as necessary for the purposes hereof. As
soon as practicable after the Closing Date, Commerce shall mail to the
holder(s) of record of shares of Common Stock (i) a form letter of
transmittal and (ii) instructions for effecting the surrender of certificates
of Common Stock for exchange into cash. Within three (3) business days
following receipt of all required documentation, Commerce shall cause to be
mailed checks for the amount to be delivered in exchange for the Common
Stock.
(d)At the Effective Time, the stock transfer books of Union shall be
closed and no transfer of Common Stock shall thereafter be made.
2.3. Stockholders' Approval. Union agrees to call and hold a meeting of its
stockholders (the "Stockholder Meeting") as promptly as practicable after the
date hereof for the purpose of voting upon the approval of the Merger. Union
shall use its reasonable best efforts to solicit from its stockholders proxies
in favor of the approval of the Merger, and shall take all other action
necessary or advisable to secure the vote or consent of stockholders required by
the Kansas Code to obtain such approval, unless otherwise necessary under the
applicable fiduciary duties of the directors of Union as determined by such
directors in good faith after consultation with and based upon the advice of
independent legal counsel.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 24
2.4. Dissenting Shares. Notwithstanding anything to the contrary contained
in this Agreement, to the extent appraisal rights are available to the Company's
stockholders pursuant to the Kansas Code, any shares of Common Stock held by a
person who objects to the Merger, whose shares of Common Stock were not voted in
favor of the Merger and who complies with all of the provisions of the Kansas
Code concerning the rights of such person to dissent from the Merger and to
require appraisal of such person's shares of Common Stock and who has not
withdrawn such objection or waived such rights prior to the Closing Date ("Union
Dissenting Shares") shall not be converted pursuant to Section 2.2 but shall
become the right to receive such consideration as may be determined to be
due to the holder of such Union Dissenting Shares pursuant to the Kansas Code,
including, if applicable, any costs determined to be payable by Sub to the
holders of the Union Dissenting Shares pursuant to an order of the district
court in accordance with the Kansas Code.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMMERCE AND SUB
Commerce and Sub, jointly and severally, hereby represent and warrant as
follows:
3.1. Organization and Authority.
(a)Commerce is a corporation duly organized, validly existing and in good
standing under the laws of the State of Missouri and is a duly registered
bank holding company under the provisions of the Bank Holding Company Act of
1956, as amended. Commerce has the corporate power to enter into and perform
this Agreement and the execution, delivery and performance of this Agreement
by Commerce and the consummation by Commerce of the transactions contemplated
hereby have been duly authorized by the Board of Directors of Commerce with
no approval thereof by the stockholders of Commerce being required to approve
this Agreement.
(b)Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Kansas, and is a duly registered bank
holding company under the Bank Holding Company Act of 1956, as amended. Sub
has the corporate power to enter into and perform this Agreement, and the
execution, delivery and performance of this Agreement by Sub and the
consummation by Sub of the transactions contemplated hereby have been duly
authorized by its Board of Directors and by Commerce as the sole stockholder
of Sub.
3.2. Valid and Binding Agreement; No Violation. Commerce and Sub have all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. Execution and delivery of this Agreement by Commerce and Sub and the
consummation by Commerce and Sub of the transactions contemplated hereby have
been duly and validly
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 25
authorized by all necessary corporate action, and no other
corporate proceedings on the part of Commerce are necessary to authorize this
Agreement or to consummate the transactions contemplated herein. This Agreement
constitutes a valid and binding agreement of Commerce and Sub enforceable in
accordance with its terms, and neither the execution and delivery of this
Agreement nor the consummation by Commerce or Sub of the transactions
contemplated hereby violates or conflicts with the Articles of Incorporation or
By-Laws of Commerce or Sub or any agreement, law, regulation, order, judgment or
other restriction of any kind to which Commerce or Sub is a party or by which
either of them is bound.
3.3. SEC Reports.
(a)Commerce's Report on Form 10-K for year ended December 31, 1993, filed
with the Securities and Exchange Commission ("SEC"), and all subsequent
reports and proxy statements filed by Commerce thereafter pursuant to Section
13(a) or 14(a) of the Securities Exchange Act of 1934, as amended, or any
successor federal statute and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time (the "Exchange
Act"), do not contain a misstatement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading as of the time the document was filed.
Since the filing of such Report on Form 10-K, no other report, proxy
statement, or other document, which has been required to be filed by Commerce
or any of its subsidiaries pursuant to Section 13(a) or 14(a) of the Exchange
Act has not been filed. Commerce has delivered to Union the following
documents: Form 10-K for Fiscal Year Ended December 31, 1993; the Annual
Report to Stockholders for such year; Form 10-Q Quarterly Reports for the
quarters ended March 31, 1994 and June 30, 1994; and a copy of the Proxy
Statement for the 1994 Annual Meeting of Stockholders of Commerce. Commerce
shall deliver to Union a copy of all additional reports, proxy statements and
other documents filed with the SEC pursuant to Section 13(a) or 14(a) of the
Exchange Act since its Form 10-Q Quarterly Report for the quarter ended June
30, 1994, when and as such filings are made, through the Closing Date.
(b)Each of the consolidated financial statements (including, in each case,
any notice thereto), contained in the SEC Reports was prepared in accordance
with the generally accepted accounting principles supplied on a consistent
basis throughout the periods indicated (except as may be indicated in the
notes thereto) and each fairly presented the financial position, results of
operations and cash flows of Commerce on a consolidated basis as at the
respective dates thereof and for the respective periods indicated therein
(subject, in case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or in the
aggregate, to be material in amount).
3.4. Proxy Statement. The information contained in the proxy statement (or
any supplements thereto), to be sent to stockholders of Union to solicit their
votes in connection with the transaction contemplated by this Agreement (the
"Proxy Statement"),
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UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 26
provided by Commerce to Union, or available from Commerce's public filings with
government agencies for use in the Proxy Statement, at the time when mailed to
the stockholders of Union and at all times up to the meeting of such stock-
holders, does not and will not contain any untrue statement of material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statement therein in light of the circumstances under which
they were made, not misleading; provided, however, that information as of a
later date shall be deemed to modify information as of an earlier date.
3.5. Commerce will have sufficient cash at and following the Effective Time
to fulfill its obligations to the holders of shares of common stock pursuant to
Article II above.
3.6. Neither Commerce nor Sub know of any material fact or event which might
cause the disapproval of the Merger by any appropriate regulatory authorities.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF UNION
Except as otherwise qualified in the Schedules attached hereto, Union hereby
represents and warrants to each of Commerce and Sub as follows:
4.1. Organization and Good Standing.
(a)Union and each of its non-banking subsidiaries (including Union Center,
Inc.) is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation with the
corporate power and authority to own its respective properties and conduct
its respective businesses as now being conducted, and Union is duly
registered as a bank holding company under the Bank Holding Company Act of
1956, as amended. The conduct of Union's and each of its non-banking
subsidiaries' respective businesses and the ownership of their properties do
not require Union or any subsidiary to qualify as a foreign corporation in
any jurisdiction except where the failure to be so qualified individually or
in the aggregate would not materially and adversely affect the business,
operations, properties or financial condition of Union and its subsidiaries.
(b)Union has one banking subsidiary, Union National Bank of Wichita (the
"Bank"), which is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America
with the corporate power and authority to carry on its business as it is now
being conducted. Bank is duly qualified to do business in each jurisdiction
in which it owns or leases real property or in which the conduct of its
business requires such qualification except where the failure to be so
qualified individually or in the aggregate would not materially and adversely
affect the business, operations, properties or financial condition of Union
and Bank.
(c)Bank has one subsidiary, Union Center, Inc.
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(d)The subsidiaries listed on Schedule 4.7 attached hereto constitute all
of the subsidiaries of Union and Bank.
4.2. Authority Relative to this Agreement. Union has all necessary power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Execution and
delivery of this Agreement by Union and the consummation by Union of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Union are necessary to authorize this Agreement or to consummate the
transactions contemplated herein (other than, with respect to the Merger, the
approval and adoption of this Agreement by holders of a majority of the then
outstanding shares of Union Common Stock and the filing and recordation of
appropriate merger documents as required by the Kansas Code). This Agreement
has been duly and validly executed and delivered by Union and, assuming the due
authorization, execution and delivery by Commerce and Sub constitutes a legal,
valid and binding obligation of Union, enforceable against Union in accordance
with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.3 No Conflict. The execution and delivery of this Agreement by Union
does not, and the performance of the transactions contemplated herein by Union
will not, (i) conflict with or violate the Articles of Incorporation or By-Laws
of Union (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Union or Bank or by which any property or asset
of Union or Bank is bound of affected or (iii) result in a breach of or
constitute a default under (or an event which with notice or lapse of time or
both would become a default), result in the loss of a material benefit under, or
give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any property or
asset of Union or Bank pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Union or Bank is a party or by which Union or Bank or any
property or assets of Union or Bank is bound or affected.
4.4 Compliance. Neither Union nor Bank nor any subsidiary of Union or Bank
is in conflict with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to any such entity or by which
any property or asset of any such entity is bound or affected or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which any such entity is a party
or by which any such entity or any property or asset of any such entity is bound
or affected.
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Proxy Statement for Special Meeting of Stockholders
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Page 28
4.5. Capitalization.
(a)Union has authorized capital stock consisting of 1,000,000 shares of
Common Stock, of which 358,190 shares are issued and outstanding. All of the
issued and outstanding shares of Common Stock are validly issued, fully paid
and non-assessable. There are no outstanding warrants, options,
subscriptions, contracts, rights or other agreements or commitments
obligating Union to issue or sell any additional shares of Common Stock nor
are there outstanding any securities, debts, obligations or rights which are
convertible into or exchangeable for shares of Common Stock.
(b)The authorized capital stock of Bank consists of 1,000,000 shares of
common stock, $10.00 par value per share, of which 600 shares have been duly
and validly authorized and issued, are fully paid, and of which 600 shares
are owned of record by Union free and clear of all liens, encumbrances,
equities or claims. There are no outstanding warrants, options,
subscriptions, contracts, rights or other arrangements or commitments
obligating Union or Bank to issue or sell any additional shares of Bank's
capital stocks nor are there outstanding any securities, debts, obligations
or rights which are convertible into or exchangeable for shares of capital
stock of Bank.
(c)Union owns all of the issued and outstanding shares of capital stock of
each subsidiary other than Bank free and clear of all liens, encumbrances,
equities or claims.
4.6. Government Regulation. Union and Bank hold all material licenses,
certificates, permits, franchises and rights from all appropriate federal, state
or other public authorities necessary for the lawful conduct of their respective
businesses and ownership of their respective properties. Except as disclosed
herein or in Schedules attached hereto, Union and Bank have substantially
complied with all material federal, state and local statutes, regulations,
ordinances or rules applicable to the ownership of their respective properties
or the conduct of their respective businesses.
4.7. SEC Filings; Financial Statements.
(a)Union has filed all forms, reports and documents required to be filed
with the SEC. Union's Report on Form 10-K for year ended December 31, 1993,
filed with the Securities and Exchange Commission ("SEC") and all subsequent
reports and proxy statements filed by Union thereafter pursuant to Section
13(a) or 14(a) of the Securities Exchange Act of 1934, as amended, or any
successor federal statute and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time (the "Exchange
Act"), do not contain a misstatement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading as of the time the document was filed.
Since the filing of such Report on Form 10-K, no other report, proxy
statement, or other document has been required to be filed by Union or any of
its subsidiaries pursuant to Section 13(a) or 14(a) of the Exchange Act which
has not been filed. Union has delivered to Commerce all reports and
documents listed on Schedule 4.7.
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(b)Each of the consolidated financial statements (including, in each case,
any notice thereto) contained in the SEC Reports was prepared in accordance
with the generally accepted accounting principles supplied on a consistent
basis throughout the periods indicated (except as may be indicated in the
notes thereto) and each fairly presented the financial position, results of
operations and cash flows of Union and Bank on a consolidated basis as at the
respective dates thereof and for the respective periods indicated therein
(subject, in case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or the aggre-
gate, to be material in amount).
4.8. Litigation. Except as set forth on Schedule 4.8 and except as
disclosed herein or any Schedule hereto, there are as of the date hereof no
actions, suits, claims, demands or other proceedings or investigations, either
judicial or administrative, pending or, to the knowledge of Union, threatened
against or affecting the properties, assets, rights or business of Union or Bank
or any of their respective subsidiaries or the right to carry on or conduct
their respective businesses, nor are there to the knowledge of Union any grounds
therefor, which, if adversely determined, would in the aggregate materially
adversely affect the business, operations, properties or financial condition of
Union or Bank or any of their respective subsidiaries. As of the date hereof,
no judgment, order, decree or award has been entered against Union or Bank or
any of their respective subsidiaries nor to the knowledge of Union has any
liability been incurred which has or could have such effect. Except as
otherwise disclosed to Commerce, there are as of the date hereof no actions,
suits, claims, demands or other proceedings or investigations, either judicial
or administrative, pending or, to the knowledge of Union, threatened which will
or could prevent or materially interfere with the consummation of the
transactions contemplated by this Agreement.
4.9. Title to Assets. Except for assets pledged to the Federal Home Loan
Bank of Topeka and except for securities pledged to secure deposits of public
funds or subject to customer repurchase agreements entered into in the ordinary
course of business, Union and Bank and their respective subsidiaries have good
and marketable title to and possession of all of their respective real and
personal properties and assets, in each case free and clear of any liens,
restrictions, encumbrances, rights, title and interests of others, except as
reflected on their respective financial statements and except for the lien of
current taxes, covenants and restrictions of record, and other minor
imperfections of title not affecting marketability, which liens, covenants,
restrictions and imperfections do not materially affect the value of such
property and do not interfere with the use made of such property by Union and
Bank.
4.10. Undisclosed Liabilities. Except as disclosed herein in Schedule 4.10
attached hereto, and except for one or more letters of credit and any other
credits which, when aggregated as to one borrower amounts to less than $250,000
as of the date hereof, Union and Bank and their respective subsidiaries have no
debt, liability or obligation (whether accrued, contingent, absolute or
otherwise) known to either of the nature customarily reflected in a corporate
balance sheet or the notes thereto that is not reflected
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or reserved against in the Financial Statements or was not incurred in the
ordinary course of their business.
4.11. Taxes. Union has heretofore delivered to Commerce copies of the
federal and state tax returns for Union and Bank and all notices related thereto
for the three fiscal years immediately preceding the date of this Agreement.
Union and Bank have filed with the appropriate governmental agencies, all
federal, state and local tax or information returns and tax reports due in
respect of any of their business or properties in a timely fashion and have paid
all amounts due shown on such returns, except where the failure to make such
filing or make such payment, individually or in the aggregate, would not
materially and adversely affect the business, operations, properties or
financial condition of Union or Bank. Neither the Internal Revenue Service nor
any other taxing authority or agency, is now asserting or, to the best knowledge
of Union, threatening to assert against Union or Bank any deficiency or material
claim for additional taxes or interest thereon or penalties in connection
therewith. The accruals and reserves for taxes (including interest and
penalties, if any, thereon) reflected in the balance sheet contained in Union's
Form 10-K for the year ended December 31, 1993 and the most recent quarterly
financial statements are accurate in accordance with generally accepted
accounting principles. Union and Bank have withheld or collected and paid over
to the appropriate governmental authorities, or are properly holding for such
payment, all taxes required by law to be withheld or collected. There are no
liens for taxes upon the assets of Union or Bank, other than liens for current
taxes not yet due and payable.
4.12. Contracts. Except as set forth on Schedule 4.12 or any other Schedule
attached hereto, neither Union nor Bank nor any of their respective subsidiaries
is party to or bound by any:
(a)employment contract;
(b)bonus, deferred compensation, savings, profit sharing, severance pay,
pension or retirement plan or arrangement;
(c)material lease or license with respect to any property, real or
personal, whether Union or Bank is landlord or tenant, licensor or licensee,
involving a liability or obligation of Union or Bank as obligor in excess of
$5,000 on an annual basis;
(d)agreement, contract or indenture relating to the borrowing of money by
Union or any subsidiary, excluding deposit obligations, obligations under
certificates of deposit, letters of credit, items in the process of
collection, commitments to loan or discount, endorsements made for collection
and guarantees made in the ordinary course of business;
(e)agreement with any present or former officer, director or stockholder
of Union or Bank; or
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(f)other contract, agreement or other commitment (other than those
expressly excluded in Section 4.12.(d) above) which is material to the
business, operations, property, prospects or assets or to the condition,
financial or otherwise, of Union or Bank or which involve a payment by Union
or Bank of more than $10,000 in one year.
4.13. Conduct. Since December 31, 1993 and except as set forth in Schedule
4.13 or any other Schedule attached hereto:
(a)There has been no material adverse change in the financial condition
of, or in the properties, assets, liabilities, rights or business, taken as a
whole, of Union or Bank or their respective subsidiaries or in the relation-
ship of Union or Bank or their respective subsidiaries with respect to their
employees, creditors, suppliers, distributors, customers or others with whom
they have business relationships.
(b)The business affairs of Union and Bank and their respective
subsidiaries have been conducted and carried on only in the ordinary and
regular course of business, and Union and Bank and their respective
subsidiaries have not, except as otherwise disclosed to Commerce, incurred or
become subject to any liabilities or obligations other than those incurred in
the ordinary course of business, those incurred pursuant to existing
contracts disclosed pursuant to Section 4.12. and those incurred pursuant to
commitments permitted hereby.
(c)There have been no dividends or other distributions declared, set aside
or paid in respect of Union Common Stock, nor has any action with respect to
Union Common Stock proscribed under Section 5.1(g) of this Agreement occurred
or been taken.
(d)Union and Bank and their respective subsidiaries have not entered into
any employment contract with any director, officer or salaried employee, paid
any or made any accrual or arrangement for payment of bonuses or special
compensation of any kind or any severance or termination pay to any of their
officers, employees or directors, increased the rate of compensation, if any,
or instituted or made any material increase in any officer's, employee's or
director's welfare, retirement or similar plan or arrangement, other than
merit increases made in accordance with past practices and procedures which
have not exceeded 5% on an annual basis for the Bank taken as a whole.
(e)Except as set forth on Schedule 4.13 (attached hereto) there have been
no material contractual or substantive business commitments or plans for
material contractual or substantive business commitments made by Union as of
the date of this Agreement.
4.14. Compliance with ERISA. Neither Union nor Bank nor their respective
subsidiaries has established, maintained or contributed at any time during the
five-year period ending as of the Effective Time to any employee benefit plan
(as defined in Sections 3(3) or 3(37) of the Employment Retirement Income
Security Act of 1974 ("ERISA")), except for Union's 401(k) plan (the "Plan") and
those welfare benefit plans (including any cafeteria
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plan under Section 125 of the Internal Revenue Code of 1986, as amended) listed
on Schedule 4.14 hereto (the "Welfare Plans"). True and accurate copies of the
Plan and the Welfare Plans and all currently effective amendments thereto have
been provided to Commerce together with (i) determination letters received in
respect of the Plan, and (ii) the Form 5500 annual reports and supporting
schedules filed in respect of the Plan and the Welfare Plans, as applicable, for
the three most recent years ending on or before the Effective Time. To the best
of Union's knowledge as sponsor of the Plan, the Plan, the Plan Sponsor and each
fiduciary (as defined in Section 3(21) of ERISA) of the Plan are in compliance
in all material respects with all applicable requirements of ERISA, and are in
compliance in all material respects with all applicable requirements (including
nondiscrimination requirements in effect as of the Effective Time) of the
Internal Revenue Code of 1986 ("Code"), including, but not limited to, Sections
401, 501 and 4975 of the Code. The Welfare Plans have been operated and
maintained in all material respects in compliance with the health care
continuation provisions of the Consolidated Omnibus Reconciliation Act of 1985
("COBRA"). For purposes of this Section 4.14., noncompliance with the Code,
COBRA or ERISA is material if such noncompliance could have a material adverse
effect on the condition of the Plan or of Union or Bank, either as of the
Effective Time or upon discovery of the noncompliance. To the best of Union's
knowledge as sponsor of the Plan, all required contributions to the Plan through
the Effective Time have been made. To the best of Union's knowledge as sponsor
of the Plan, Union and Bank (each with respect to the Plan) as well as the Plan
have no material current or threatened liability of any kind to any person,
including but not limited to any government agency, now or as of the Effective
Time, other than for the payment of benefits in the ordinary course.
4.15. Information Supplied. Other than information supplied by Commerce or
Sub, none of the information supplied by Union for inclusion or incorporation by
reference in the Proxy Statement will, at the date of mailing to stockholders
and at the time of the meeting of stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.16. Defaults. As of the date hereof, neither Union nor Bank nor their
respective subsidiaries is in material breach or material default known to
either under any agreement or commitment to which the Union or Bank or their
respective subsidiaries is a party, or under any loan agreement, note, security
agreement, guarantee or other document pursuant to or in connection with the
Union's or Bank's extension of credit; and to their knowledge there has not
occurred any event which, after the giving of notice, the lapse of time or
otherwise, would constitute any such default under, or result in any such breach
of, any such agreement, commitment or extension of credit.
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4.17. Insurance. All insurance maintained by Union and Bank and their
respective subsidiaries with respect to their insurable properties specifying
the risk insured against, the coverage provided, and the respective insurance
carrier is set forth on Schedule 4.17, and Commerce concurs that the forms of
coverage for the insurable properties so provided are acceptable for all
purposes hereof.
4.18. Environmental Laws. Except as may be reflected on the reports listed
on Schedule 4.18, (i) the operations and Properties (as hereinafter defined) of
Union and Bank and their respective subsidiaries comply in all material respects
with all applicable past and present federal, state and local environmental
statutes and regulations; (ii) none of the operations of Union or Bank or their
respective subsidiaries are subject to any judicial or administrative
proceedings alleging the violation of any federal, state or local environmental
health or safety statute or regulation nor are they the subject of any claim
alleging damages to health or property pursuant to which Union or Bank or their
respective subsidiaries would be liable in law or equity, which claims, if
determined adversely, could have a material adverse effect on the business,
operations or financial condition of Union or Bank taken as a whole; (iii) none
of the operations of Union or Bank or their respective subsidiaries are the
subject of any federal, state or local investigation evaluating whether any
remedial action is needed to respond to a release or threatened release of any
hazardous or toxic waste, substance or constituent, or any other substance into
the environment which remedial action may materially adversely affect the
assets, condition (financial or otherwise), operations, results of operations,
business or prospects of Union or Bank or their respective subsidiaries taken as
a whole, or the value of the property affected by such release, nor has Union or
Bank been directed to conduct such investigation, formally or informally, by any
governmental agency, nor has it agreed with any governmental agency or private
person to conduct any such investigation; and (iv) neither Union nor Bank nor
their respective subsidiaries has filed any notice under any federal, state or
local law indicating past or present treatment, storage or disposal of a
hazardous waste or reporting a spill or release of a hazardous or toxic waste,
substance or constituent or any other substance into the environment which
materially and adversely affects the assets, condition (financial or otherwise),
operations, results of operations, business or prospects of Union or Bank or
their respective subsidiaries taken as a whole.
4.19. Loans. Except as set forth on Schedule 4.19 attached hereto, all of
the accounts, notes and other receivables which are reflected in the
consolidated Union financial statements as of June 30, 1994 were acquired in the
ordinary course of business and are believed to be collectable in full in the
ordinary course of business, except for possible loan losses which are
adequately provided for in the allowance for loan losses in such financial
statements. The collection experience of Bank since June 30, 1994 to the date
hereof has not materially deteriorated from the credit and collection experience
of said entity for the six months ended June 30, 1994 and the year ended
December 31, 1993. Schedule 4.19 sets forth as of the date of this Agreement
all assets classified as real estate acquired through foreclosure, including in
substance foreclosed real estate.
4.20. Labor. No work stoppage involving Union or Bank or their respective
subsidiaries is pending or, to the best knowledge of Union, threatened. Neither
Union nor Bank nor
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Page 34
their respective subsidiaries is involved in, or, to the best knowledge of
Union, threatened with or affected by, any labor dispute, arbitration, lawsuit
or administrative proceeding which could materially adversely affect the
business of Union or Bank. No employee of Union or Bank is represented by any
labor union or any collective bargaining agreements otherwise in effect with
respect to any such employee.
ARTICLE V
COVENANTS OF UNION
5.1. Conduct of Business Until Closing Date. Between the date hereof and
the Closing Date, unless prior written consent of Commerce is obtained, and
except pursuant to existing agreements disclosed herein or hereunder, Union and
Bank and their respective subsidiaries:
(a)will carry on their business diligently and substantially in the same
manner as heretofore conducted, and will not enter into any transaction other
than in the ordinary course of business;
(b)will not make any single loan (or series of loans to the same or
related entities or persons) or any commitment to loan (or series of
commitments to the same or related entities or persons) which would be graded
Credit Quality 4 (CQ4) or lower under Bank's rating system in an amount
greater than $100,000 other than renewals of existing loans or commitments to
loan;
(c)will not sell securities held in the bank portfolio in the aggregate
amount of more than $1 million during any calendar month, except the Bank may
make immediate sales to meet extraordinary liquidity requirements and will
not purchase or invest in any securities, other than U.S. government
obligations or securities backed by the full faith and credit of the United
States having a maturity of not more than three years from the date of
purchase;
(d)will not amend or adopt any employee benefit plan, and will not grant
any increase in the rates of pay of their employees or any increase in the
compensation payable or to become payable, if any, to any director, officer,
employee or agent thereof, or increase in any amount the benefits or
compensation of any such directors, officers or employees of Union or Bank
under any pension plan or other contract or commitment, except that Bank may
continue its past practice of granting compensation increases to newly-hired
hourly employees after such new hire has passed a 90-day probation period,
and except that Bank may, in accordance with past practices and procedures,
grant bonuses and merit increases; provided, however, that with respect to
the officer groups identified on Schedule 5.1(d), the aggregate compensation
increases for merit on an annual basis will not exceed 5% for any one
officer; and provided further that cash performance bonuses may be paid in an
amount not to exceed $700,000 in the aggregate for calendar year ending
December 31, 1994.
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(e)will not enter into any contract or commitment (except loan commitments
as permitted in Subparagraph (b) of this Section 5.1.) involving an
obligation or commitment in excess of $5,000 or engage in any transaction not
in their usual and ordinary course of business and consistent with past
practices and will not enter into any contracts relating to the provision of
data processing or other operational services in amounts exceeding $1,000 per
year except as permitted in subparagraph (f) of this Section 5.1.;
(f)will not, except as set forth in Schedules set forth in Section 4, make
any expenditure for fixed assets or computer software in excess of $2,500 for
any single item or $10,000 in the aggregate or enter into any leases of fixed
assets or computer software;
(g)will not declare or pay any dividend or make any other distribution in
respect of any Union Common Stock, except that one dividend of $.30 per share
may be declared and paid in the fourth quarter of the 1994 fiscal year of
Union, and except that if the Closing does not occur on or before March 31,
1995, dividends may be paid after such date and any such dividend shall not
exceed fifty percent (50%) of the net earnings of Union and Bank for each
full month after such date.
(h) will not, directly or indirectly, redeem, purchase or otherwise
acquire any Union Common Stock or enter into agreements to purchase or
acquire such stock except that Union may close the transactions described in
a letter dated October 5, 1994 between Robert D. Love, Love Box Company and
Union;
(i)will not amend the Articles of Incorporation or By-Laws of Union or the
Articles of Incorporation or By-Laws of Bank or make any change in the
authorized, issued or outstanding capital stock of Union or Bank;
(j)will not acquire or purchase any assets of or make any investment in
any financial institution other than the purchase of loans or participation
therein in the ordinary course of business, but subject to Section 5.1.(b)
and other than the acquisition of all of the outstanding capital stock of
Clearwater Home State Bank, Inc., Clearwater, Kansas, but only following
written approval of such acquisition by Commerce; and
(k)will keep in force all insurance policies presently in effect until the
Effective Time.
(l)will grant Commerce the right to participate in decisions regarding any
community development corporation to which Union is a party.
For purposes hereof and for anything requiring written consent of Commerce,
Union and/or Bank shall request in writing the required consent of Commerce
which shall be deemed received by Commerce when given to Commerce as provided in
Section 11.4 hereof. If no objection is given by Commerce to such request
within 10 business days (except with
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respect to loans made pursuant to Section 5.1(b) in which event it shall be two
(2) business days) after it is so given, the request shall be deemed granted.
Nothing contained in this Section 5.1 shall be deemed to preclude or prohibit
Union from paying costs and expenses associated with the transactions
contemplated by this Agreement, and Bank shall be entitled to declare a dividend
sufficient for Union to pay such costs and expenses without the consent of
Commerce.
5.2. Inspection. Between the date hereof and the Closing Date and upon
reasonable notice, Commerce and its authorized representatives shall be
permitted full access during normal business hours to all properties, books,
records, contracts and documents of Union and Bank. Union shall furnish to
Commerce and its authorized representative all information with respect to the
affairs of Union and Bank as Commerce may reasonably request.
5.3. Financial Statements and Call Reports. Union shall deliver to Commerce
monthly reports of condition and income statements of Bank in the format
currently used by Bank, when and as prepared, shall deliver to Commerce copies
of the Call Reports for Bank as filed with any regulatory agency promptly after
such filing, and shall deliver to Commerce quarterly financial statements of
Union.
5.4. Right to Attend Meetings. Union and Bank shall allow a representative
of Commerce to attend as an observer
(a)all meetings of the Boards of Directors of Union and Bank and their
respective subsidiaries;
(b)all meetings of the committees of each such board, including, without
limitation, the audit and executive committees thereof; and
(c)any other meeting of Union or Bank officials at which significant
policies are being made.
Union and Bank shall give two (2) days notice (such period conclusively presumed
to be reasonable notice) to Commerce of any such meeting and, if then known, the
agenda for or business to be discussed at such meeting. Union and Bank shall
provide to Commerce all information provided to the directors on all such boards
and committees in connection with all such meetings or otherwise provided to the
directors and shall provide any other financial reports or other analyses
prepared for senior management of Union or Bank.
5.5. Data Processing. Union shall cooperate with Commerce in taking those
planning actions necessary (not to include giving notice to any Bank customers)
to be in a position to convert its data processing procedures and formats to
procedures and formats used by Commerce as soon as reasonably practicable under
the circumstances after the Effective Time. Commerce shall provide such
assistance and consultation as Union may reasonably require in such planning
process. In addition, Union shall not enter into any new data processing
contracts without the approval of Commerce, and will cooperate with Commerce to
terminate existing data processing contracts. As soon as practicable, Union
will
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UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 37
permit its residential real estate loan service data processing operations to be
converted to systems used by Commerce Mortgage Corporation under a contractual
arrangement which is standard to the industry. Commerce will also take all
reasonable steps to accomplish such conversion.
5.6. No Solicitation. Neither Union nor Bank, nor any affiliates or
associates of Union or Bank acting for or on behalf of Union or Bank, shall,
directly or indirectly, make, encourage, facilitate, solicit, assist or initiate
any inquiry or proposal, or participate in any negotiations with, or, subject to
the provisos to this sentence, furnish any information to, any corporation,
partnership, agent, attorney, financial adviser, person, or other entity or
group (other than (a) Commerce, Sub, an affiliate or associate of Commerce or
Sub or an officer, employee or other authorized representative of Commerce, Sub
or such affiliate or associate or (b) Union's counsel and financial adviser, if
any, solely for use in connection with the transactions contemplated hereby)
relating to any (i) liquidation, dissolution, recapitalization, merger or
consolidation of Union or Bank, (ii) outside the ordinary course of business,
sale of a significant amount of assets of Union or Bank, (iii) purchase or sale
of shares of capital stock of Union or Bank (except for any exchange of Bank
stock for Union Common Stock by the holders thereof, other than Union), or (iv)
any similar transactions involving Union or Bank, other than the transactions
contemplated by this Agreement; provided, however, that Union may provide
information at the request of a third party if the Board of Directors of Union
determines, in good faith, that the exercise of its fiduciary duties to Union's
stockholders under applicable law, as advised in writing by Martin, Pringle,
Oliver, Wallace & Swartz L.C., requires it to take such action, and, provided
further, that Union may not, in any event, provide to such third party any
information which it has not provided to Commerce and Sub. Union shall
immediately cease and cause to be terminated any and all such contacts and
negotiations with respect to any such transaction. Union shall immediately
inform Commerce and Sub of any inquiry, proposal or request for information
(including the terms thereof and the person making such inquiry) which it may
receive in respect of such a transaction.
5.7. Notification of Certain Matters. Union shall give prior notice to
Commerce of (i) the occurrence or non-occurrence, of any event the occurrence,
or non-occurrence, which would be likely to cause (x) any representation or
warranty contained in this Agreement to be untrue or inaccurate or (y) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied and (ii) any failure of Union to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
5.8. Financial Actions. Following the date on which the last of the
conditions set forth in Section 7.4 and 7.7 hereof is waived or is (or could be)
fulfilled and prior to Closing, Union shall take such financial actions in such
manner and in such amounts as requested in writing by Commerce, allowed by law
and made with the reasonable approval of Union's outside accountants, Allen,
Gibbs & Houlik. In the event that the Closing does not occur and such actions
cannot be reversed, Commerce shall indemnify Union for the actual damage
resulting from any such action (as have been requested in writing.) The
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UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 38
financial actions that may be requested by Commerce pursuant to this paragraph
include, but are not limited to: adjustments in the bond portfolio, adjustments
to the loan loss reserve, the sale of any or all of Union's fixed rate
residential loan portfolio, the initiation of financial accounting entries to
reflect restructuring charges, and the initiation of the asset valuation
processes in connection with purchase accounting rules. None of the changes
made in this Section 5.8 shall effect computation of the net worth covenant
contained in Section 7.6.
ARTICLE VI
COVENANTS OF COMMERCE AND SUB
6.1. Regulatory Approvals. Subject to the terms and conditions of this
Agreement, Commerce and Sub agree to use their reasonable best efforts to secure
as expeditiously as practicable all the necessary approvals, regulatory or
otherwise, needed to consummate the transactions contemplated herein. Commerce
and Sub shall file such applications as are necessary within 45 days after the
date hereof, provide to Union's counsel a copy of all applications for such
approvals when and as such are filed and shall keep such counsel or Union
advised of the status of the regulatory review process.
6.2. Information. Commerce and Sub shall provide such information and
answer such inquiries as Union may reasonably request or make concerning the
subject matter of the representations and warranties of Commerce and Sub herein.
6.3. Employee Benefits.As of the Effective Time, Commerce, at its option,
shall either terminate the Plan (defined in Section 4.12) or merge the Plan into
a corresponding Commerce retirement plan, copies of which have been provided to
Union. Regardless of the option chosen, as of the Effective Time all of the
then participants in the Plan shall become fully vested in their accrued
benefits thereunder and employees of Bank shall be entitled to participate in
the retirement plan(s) sponsored by Commerce for the benefit of its employees in
accordance with their terms. All periods of employment by Union or Bank prior
to the Effective Time (measured from date of hire by the Union or Bank) shall be
counted or included in determining years of service or employment under any and
all Commerce retirement plans for purposes of eligibility thereunder. If Bank's
Welfare Plans are not maintained, employees of Union or Bank shall be eligible
to participate in all Commerce employee welfare benefit plans in accordance with
their terms, and for such purpose all service of such employees with Union and
Bank shall be counted as service with Commerce and for purposes of pre-existing
condition limitations under the health plan of Commerce, continuous coverage
under the health plan of Union or Bank through the Effective Time shall count as
coverage under the health plan of Commerce. If an employee
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UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 39
of Union has satisfied the pre-existing condition requirement of Union's Welfare
Plans at the effective time, such employee shall be deemed to have satisfied the
pre-existing condition of Commerce's Welfare Plans.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF COMMERCE AND SUB
The obligations of Commerce and Sub to consummate the transactions hereunder
shall be subject to the satisfaction on or before the Closing Date of all of the
following conditions, except such conditions as Commerce or Sub may waive in
writing:
7.1. Representations, Warranties and Covenants. All representations and
warranties of Union and Bank contained in this Agreement shall be true in all
material respects on and as of the Closing Date, except for changes permitted by
or contemplated by this Agreement and except to the extent that any such
representation or warranty is made solely as of a specified date. Union and
Bank shall have performed all agreements and covenants in all material respects
required by this Agreement to be performed on or prior to the Closing Date.
7.2. Material Actions, Debts or Defaults. On the Closing Date, there shall
not be: (i) except as set forth on Schedule 4.6 or as otherwise disclosed to
Commerce prior to the date hereof, any material actions, suits, claims, demands
or other proceedings or investigations, either judicial or administrative,
pending or, to the knowledge of Union or Bank, threatened against or materially
affecting the properties, assets, rights or business of Union or Bank or the
right to carry on or conduct their respective businesses; (ii) any material
debt, liability or obligation of Union or Bank known to either (whether accrued,
contingent, absolute or otherwise) required to be reflected in a corporate
balance sheet or the notes thereto that is not reflected or reserved against in
their respective financial statements or was not incurred in ordinary course of
their respective businesses; or (iii) any material breach or material default of
Union or Bank known to either under any agreement or commitment to which either
is a party, or under any loan agreement, note, security agreement, guarantee or
other document pursuant to or in connection with Union's or Bank's extension of
credit; any of the foregoing of which would have a material adverse effect upon
the financial condition of, or upon the properties, assets, liabilities, rights
or business, taken as a whole, of Union or Bank.
7.3. Adverse Changes. From the date hereof to the Closing Date, there will
have been no material adverse change in the financial condition of, or in the
properties, assets, liabilities, rights or business, taken as a whole, of Union
or Bank, and taking into account for this purpose the proceeds of any applicable
insurance.
7.4. Regulatory Authority Approval. Orders, consents and approvals in form
and substance reasonably satisfactory to Commerce shall have been entered by or
obtained from the appropriate regulatory authorities authorizing consummation of
the transactions contemplated hereby pursuant to the provisions of the Bank
Holding Company Act and any
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UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 40
other applicable federal or state banking regulatory statute or rule and no such
order, consent or approval shall be conditioned or restricted in any manner
which in the reasonable judgment of Commerce and Union would materially
adversely affect the operations of or be unduly burdensome to Commerce.
7.5. Litigation. At the Closing Date, there shall not be pending or
threatened litigation in any court, or any proceeding by any governmental
commission, board or agency which Commerce reasonably believes could reasonably
result in restraining, enjoining or prohibiting the consummation of this
Agreement.
7.6. Financial Measures. On the Closing Date, the consolidated net worth of
Union and Bank shall not be less than $46,000,000, except that FASB 115 shall
not apply in making such computation. On the Closing Date, the loan loss
reserve of Bank shall be at least $5,100,000. The foregoing financial measures
shall be determined on the basis of the financial statements of Union and Bank
as prepared in accordance with applicable bank holding company and bank
regulatory instructions.
7.7. Approval by Stockholders. The stockholders of Union shall have duly
approved and adopted this Agreement and the other transactions contemplated
hereby to the extent required by applicable requirements of law and the Articles
of Incorporation and By-Laws of Union.
7.8 Legal Opinion. Commerce shall have received an opinion of counsel for
Union in form and substance reasonably satisfactory to Commerce.
7.9 Comfort Letter. Commerce shall have received a "Comfort" letter from a
public accounting firm acceptable to Commerce dated no more than three days
prior to the Closing Date in form and substance satisfactory to Commerce.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATION OF UNION
The obligations of Union to consummate the transactions contemplated
hereunder shall be subject to satisfaction on or before the Closing Date of all
of the following conditions, except such conditions as Union may waive in
writing:
8.1. Representations, Warranties and Covenants. All representations and
warranties of Commerce contained in this Agreement shall be true in all material
respects on and as of the Closing Date, except to the extent that any such
representation or warranty is made solely as of a specified date, and Commerce
shall have performed all agreements and covenants in all material respects
required by this Agreement to be performed on or prior to the Closing Date.
8.2. Regulatory Authority Approval. Orders, consents and approvals in form
and substance reasonably satisfactory to Union shall have been entered by or
obtained from
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UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 41
the appropriate regulatory authorities authorizing consummation of the
transactions contemplated by this Agreement pursuant to the provisions of the
Bank Holding Company Act and any other applicable federal or state banking
regulatory statute or rule.
8.3. Litigation. There shall not be pending or threatened litigation in any
court or any proceeding by any governmental commission, board or agency which
Union believes could reasonably result in restraining, enjoining or prohibiting
the consummation of the transactions contemplated by this Agreement.
8.4. Approval by Stockholders. The stockholders of Union shall have duly
approved and adopted this Agreement and the transactions contemplated hereby to
the extent required by applicable requirements of law and the Articles of
Incorporation and By-Laws of Union.
ARTICLE IX
TERMINATION OF AGREEMENT
9.1. Basis for Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing Date:
(a) by mutual consent in writing of the parties hereto; (b) by Commerce upon
written notice to Union if any regulatory approval of the transactions
contemplated under the terms of this Agreement shall be denied or if any such
regulatory approval shall be conditioned or restricted in any manner which in
the reasonable judgment of Commerce and Union would materially adversely affect
the operations of or would be unduly burdensome to Commerce; (c) by Commerce or
Union if the other party has materially breached this Agreement and has not
cured such breach within the earlier of (i) 30 days after the non-breaching
party shall have given notice to the breaching party of the existence of such
breach or (ii) the Closing Date; (d) by Commerce or Union upon written notice to
the other of any other condition imposed for the benefit of such party that
shall not have been satisfied or waived prior to the Closing Date and the
failure of such satisfaction or waiver would have a material adverse effect; or
(e) in the event that an Environmental Liability exists as described in the last
sentence of Section 4.18, except that the Environmental Liability must be one
which would likely have a material adverse effect or (f) by either Commerce or
Union if this Agreement shall not have been consummated prior to January 1,
1996, provided that the terminating party is not then in material breach of this
Agreement.
9.2. Effect of Termination. In the event of termination of this Agreement
for any reason set forth in Section 9.1, other than a breach thereof, no party
hereto shall have any liability to the other of any nature whatsoever, including
any liability for loss, damages or expenses suffered or claimed to be suffered
by reason thereof, except as provided in Sections 5.8 and 10.7 hereof.
9.3. Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the merger
by the stockholders of
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UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 42
Union or Sub, but, after any such approval, no amendment shall be made which by
law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
9.4. Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE X
MISCELLANEOUS
10.1. Brokers and Finders. Commerce and Union represent each to the other
that this Agreement is the result of direct negotiations between them and that
such party has not incurred any liability for any brokers, finders or similar
fees in connection with this Agreement.
10.2. Parties in Interest. This Agreement and the rights hereunder are not
assignable unless such assignment is consented to in writing by all parties
hereto. Except as otherwise expressly provided herein, all of the terms and
provisions of this Agreement shall be binding upon, shall inure to the benefit
of and shall be enforceable by the respective heirs, beneficiaries, personal and
legal representatives, successors and permitted assigns of the parties hereto.
10.3. Entire Agreement, Amendments, Waiver. This Agreement contains the
entire understanding of Commerce, Sub and Union with respect to the Merger and
supersedes all prior agreements and understandings, whether written or oral,
between them with respect to the Merger contemplated herein. This Agreement
may be amended only by a written instrument duly executed by the parties or
their respective successors or permitted assigns. Any condition to a party's
obligation hereunder may be waived by such party in writing.
10.4. Notices. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered or transmitted by facsimile with a copy thereof deposited
in the United States mail, certified or registered, return receipt requested,
postage prepaid, addressed to the parties at the following addresses or at such
other address as shall be given in like manner by any party to the other:
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 43
If to Union: Mr. William G. Watson
President
Union Bancshares, Inc.
P.O. Box 367
Wichita, KS 67201
Telephone: 316-261-4880
FAX: 316-261-4987
with a copy to:Mr. Steven C. Worrell
Executive Vice President
Union Bancshares, Inc.
P.O. Box 367
Wichita, KS 67201
Telephone: 316-261-4994
FAX: 316-261-4987
If to Commerce:Mr. A. Bayard Clark
Commerce Bancshares, Inc.
8000 Forsyth Boulevard
Clayton, Missouri 63105
Telephone: (314) 746-7440
FAX: (314) 746-3039
with a copy to:Mr. Charles E. Templer
Commerce Bancshares, Inc.
1000 Walnut Street
P.O. Box 13686
Kansas City, Missouri 64199-3686
Telephone: (816) 234-2360
FAX: (816) 234-2369
10.5. Law Governing. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Kansas.
10.6. Further Acts. Commerce and Union agree to execute and deliver on or
before the Closing Date such other documents, certificates, agreements or other
writings and take such other actions as may be necessary or desirable in order
to consummate or implement expeditiously the transactions contemplated by this
Agreement.
10.7. Confidential Treatment. In the event the transactions contemplated by
this Agreement shall not be consummated for any reason whatsoever, Commerce
agrees that all information relative to Union and Bank concerning their
operations and, in particular and without limitation, information relative to
loan and deposit customers shall be treated as confidential information which
will not be disclosed or utilized by Commerce or its agents, representatives or
employees, and Commerce further agrees that it will cause all copies of
documents or other papers received from Union or Bank to be returned thereto.
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 44
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
UNION BANCSHARES, INC.
By: /S/ WILLIAM G. WATSON
William G. Watson, President
ATTEST:
/S/ STEVEN C. WORRELL
Secretary
COMMERCE BANCSHARES, INC.
By: /S/ DAVID KEMPER
David Kemper, President
ATTEST:
/S/ T. ALAN PESCHKA
Secretary
CBI-CENTRAL KANSAS, INC.
By: /S/ A. BAYARD CLARK
A. Bayard Clark, Vice President
ATTEST:
/S/ T. ALAN PESCHKA
Secretary
PAGE
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UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 45
UNION BANCSHARES, INC
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
March 29, 1995
Exhibit B
KANSAS GENERAL CORPORATION CODE SECTION 17-6712
RIGHTS OF DISSENTING STOCKHOLDERS
<PAGE>
UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 46
KANSAS STATUTES
CHAPTER 17. CORPORATIONS
1972 GENERAL CORPORATION CODE--ARTICLES 60 TO 74
ARTICLE 67. MERGER OR CONSOLIDATION
17-6712. Payment for "stock" of "stockholder" objecting to merger or
consolidation; "stockholder," "stock" and "share" defined; notice to objecting
stockholders; demand for payment; appraisal and determination of value by
district court, when; taxation of costs; rights of objecting stockholders;
status of stock; section inapplicable to certain shares of stock.
(a) When 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.
(b) The corporation surviving or resulting from any merger or consolidation,
within 10 days after the effective date of the merger or consolidation, shall
notify each stockholder of any corporation of this state so merging or
consolidating who objected thereto in writing and whose shares either were not
entitled to vote or were not voted in favor of the merger or consolidation, and
who filed such written objection with the corporation before the taking of the
vote on the merger or consolidation, that the merger or consolidation has become
effective. If any such stockholder, within 20 days after the date of mailing of
the notice, shall demand in writing, from the corporation surviving or resulting
from the merger or consolidation, payment of the value of the stockholder's
stock, the surviving or resulting corporation shall pay to the stockholder,
within 30 days after the expiration of the period of 20 days, the value of the
stockholder's stock on the effective date of the merger or consolidation,
exclusive of any element of value arising from the expectation or accomplishment
of the merger or consolidation.
(c) If during a period of 30 days following the period of 20 days provided
for in subsection (b), the corporation and any such stockholder fail to agree
upon the value of such stock, any such stockholder, or the corporation surviving
or resulting from the merger or consolidation, may demand a determination of the
value of the stock of all such stockholders by an appraiser or appraisers to be
appointed by the district court, by filing a petition with the court within four
months after the expiration of the thirty-day period.
(d) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the corporation, which shall file with the clerk of
such court, within 10 days after such service, 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 corporation. If the petition shall be filed by the corporation,
the petition shall be accompanied by such duly verified list. The clerk of
the court shall give notice of the time and place fixed for the hearing of such
petition by registered or certified mail to the corporation and to the stock-
holders shown upon the list at the addresses therein stated and notice shall
also be given by publishing a notice at least
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UNION BANCSHARES, INC.
Proxy Statement for Sepcial Meeting of Stockholders
March 29, 1995
Page 47
once, at least one week before the day of the hearing, in a newspaper of general
circulation in the county in which the court is located. The court may direct
such additional publication of notice as it deems advisable. The forms of the
notices by mail and by publication shall be approved by the court.
(e) After the hearing on such petition the court shall determine the stock-
holders who have complied with the provisions of this section and become
entitled to the valuation of and payment for their shares, and shall appoint an
appraiser or appraisers to determine such value. Any such appraiser may examine
any of the books and records of the corporation or corporations the stock of
which such appraiser is charged with the duty of valuing, and such appraiser
shall make a determination of the value of the shares upon such investigation as
seems proper to the appraiser. The appraiser or appraisers shall also afford
a reasonable opportunity to the parties interested to submit to the appraiser or
appraisers pertinent evidence on the value of the shares. The appraiser or
appraisers, also, shall have the powers and authority conferred upon masters by
K.S.A. 60-253 and amendments thereto.
(f) The appraiser or appraisers shall determine the value of the stock of the
stockholders adjudged by the court to be entitled to payment therefor and shall
file a report respecting such value in the office of the clerk of the court, and
notice of the filing of such report shall be given by the clerk of the court to
the parties in interest. Such report shall be subject to exceptions to be heard
before the court both upon the law and facts. The court by its decree shall
determine the value of the stock of the stockholders entitled to payment
therefor and shall direct the payment of such value, together with interest, if
any, as hereinafter provided, to the stockholders entitled thereto by the
surviving or resulting corporation. Upon payment of the judgment by the
surviving or resulting corporation, the clerk of the district court shall
surrender to the corporation the certificates of shares of stock held by the
clerk pursuant to subsection (g). The decree may be enforced as other judgments
of the district court may be enforced, whether such surviving or resulting
corporation be a corporation of this state or of any other state.
(g) At the time of appointing the appraiser or appraisers, the court shall
require the stockholders who hold certificated shares and who demanded payment
for their shares to submit their certificates of stock to the clerk of the
court, to be held by the clerk pending the appraisal proceedings. If any stock-
holder fails to comply with such direction, the court shall dismiss the
proceedings as to such stockholder.
(h) The cost of any such appraisal, including a reasonable fee to and the
reasonable expenses of the appraiser, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to such appraisal or any of them as appears to be equitable, except
that the cost of giving the notice by publication and by registered or certified
mail hereinabove provided for shall be paid by the corporation. The court, on
application of any party in interest, shall determine the amount of interest, if
any, to be paid upon the value of the stock of the stockholders entitled
thereto.
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UNION BANCSHARES, INC.
Proxy Statement for Special Meeting of Stockholders
March 29, 1995
Page 48
(i) Any stockholder who has demanded payment of the stockholder's stock as
herein provided shall not thereafter be entitled to vote such stock for any
purpose or be entitled to the payment of dividends or other distribution 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,
unless the appointment of an appraiser or appraisers shall not be applied for
within the time herein provided, or the proceeding be dismissed as to such
stockholder, or unless such stockholder with the written approval of the
corporation shall deliver to the corporation a written withdrawal of the stock-
holder's objections to and an acceptance of the merger or consolidation, in any
of which cases the right of such stockholder to payment for the stockholder's
stock shall cease.
(j) The shares of the surviving or resulting corporation into 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.
(k) This section shall not apply to the shares of any class or series of a
class of stock, which, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of stockholders at
which the agreement of merger or consolidation is to be acted on, were either
(1) registered on a national securities exchange, or (2) held of record by not
less than 2,000 stockholders, unless the articles of incorporation of the
corporation issuing such stock shall otherwise provide; nor shall this section
apply to any of the shares of stock of the constituent corporation surviving a
merger, if the merger did not require for its approval the vote of the stock-
holders of the surviving corporation, as provided in subsection (f) of K.S.A.
17-6701 and amendments thereto. This subsection shall not be applicable to the
holders of a class or series of a class of stock of a constituent corporation if
under the terms of a merger of consolidation pursuant to K.S.A. 17-6701 or
17-6702, and amendments thereto, such holders are required to accept for such
stock anything except (i) stock or stock and cash in lieu of fractional shares
of the corporation surviving or resulting from such merger or consolidation, or
(ii) stock or stock and cash in lieu of fractional shares of any other
corporation, which at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of stockholders at
which the agreement of merger or consolidation is to be acted on, were either
registered on a national securities exchange or held of record by not less than
2,000 stockholders, or (iii) a combination of stock or stock and cash in lieu of
fractional shares as set forth in (i) and (ii) of this subsection.
History: L. 1972, ch. 52, Sec. 90; L. 1973, ch. 100, Sec. 9; L. 1986, ch. 399,
Sec. 14; July 1.
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UNION BANCSHARES, INC.
Proxy for Special Meeting of Stockholders to be held on March 29, 1995.
The undersigned hereby appoint Mr. John A. Elliott and Mr. Stanley R.
Ahlerich, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all of the
shares of Class A Common Stock of Union Bancshares, Inc. held of record by
the undersigned on February 1, 1995, at the Special Meeting of stockholders
of Union Bancshares, Inc. to be held on March 29, 1995, or any adjournments
or postponements thereof.
1. ADOPTION OF MERGER AGREEMENT
Approval and adoption of the Agreement and Plan of Merger (the "Merger
Agreement"), among Union Bancshares, Inc. ("UBI"), Commerce Bancshares,
Inc. ("Commerce") and CBI-Central Kansas, Inc. ("CBI"), a wholly -owned
subsidiary of Commerce, pursuant to which (i) CBI would be merged into UBI
and (ii) each outstanding share of UBI Common Stock will be converted into
the right to receive the sum of $242.00 in cash.
For Against Abstain
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE MERGER
AGREEMENT.
(IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ADOPTION OF
THE MERGER AGREEMENT.)
2. OTHER BUSINESS
This proxy revokes all prior proxies with respect to the Special Meeting
and may be revoked prior to exercise.
The named proxies may vote in their discretion upon such other business
as may properly come before the meeting, or any adjournments or postpone-
ments thereof, including with limitation upon any proposal to postpone or
adjourn the Special Meeting (in order to solicit proxies or otherwise).
Receipt of the notice of the Special Meeting and the Proxy Statement of UBI
accompanied herewith is hereby acknowledged.
Please sign exactly as your name or names appear on your stock certifi-
cate(s).
Joint owners should each sign personally. When signing as attorney,
executor, administrator, trustee or guardian, the full title as such should
be given.
,1995
SIGNATURE DATE
,1995
SIGNATURE(S) IF HELD JOINTLY DATE
,1995
SIGNATURE(S) IF HELD JOINTLY DATE
Should any joint tenants be deceased please attach certified copy of the
death certificate or affidavit of death.
