<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 6, 1998
REGISTRATION NO. 333-40779
REGISTRATION NO. 333-40779-01
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------
<TABLE>
<S> <C>
INTRUST FINANCIAL CORPORATION INTRUST CAPITAL TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF CO-REGISTRANT AS SPECIFIED IN ITS CHARTER)
KANSAS DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
48-0937376 43-1798058
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>
105 NORTH MAIN STREET, BOX ONE, WICHITA, KANSAS 67202 (316) 383-1111
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S AND CO-REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
-----------------------------------------
C. Q. CHANDLER
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
INTRUST FINANCIAL CORPORATION
105 NORTH MAIN STREET, BOX ONE
WICHITA, KANSAS 67202
(316) 383-1111
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-----------------------------------------
WITH COPIES TO:
<TABLE>
<S> <C>
FREDERICK W. SCHERRER, ESQ. THOMAS C. ERB, ESQ.
BRYAN CAVE LLP LEWIS, RICE & FINGERSH, L.C.
211 NORTH BROADWAY, SUITE 3600 500 NORTH BROADWAY, SUITE 2000
ST. LOUIS, MO 63102-2750 ST. LOUIS, MISSOURI 63102
(314) 259-2000 (314) 444-7600
</TABLE>
--------------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Securities of
INTRUST Capital Trust<F1>... 2,300,000<F1> $25.00 $57,500,000<F1> $17,424<F2>
- ---------------------------------------------------------------------------------------------------------------
Subordinated Debentures of
INTRUST Financial
Corporation<F3>............. <F3><F4>
- ---------------------------------------------------------------------------------------------------------------
Guarantee of INTRUST Financial
Corporation, with respect to
Preferred Securities<F4>.... <F4>
===============================================================================================================
<FN>
<F1> Includes 300,000 Preferred Securities which may be sold by INTRUST Capital
Trust to cover over-allotments.
<F2> The registration fee is calculated in accordance with Rule 457(n) under
the Securities Act of 1933, as amended. Filing fee previously submitted.
<F3> The Subordinated Debentures will be purchased by INTRUST Capital Trust
with the proceeds of the sale of the Preferred Securities. Such securities
may later be distributed for no additional consideration to the holders of
the Preferred Securities of INTRUST Capital Trust upon its dissolution and
the distribution of its assets.
<F4> This Registration Statement is deemed to cover the Subordinated Debentures
of INTRUST Financial Corporation, the rights of holders of Subordinated
Debentures of INTRUST Financial Corporation under the Indenture, and the
rights of holders of the Preferred Securities under the Trust Agreement,
the Guarantee and the Expense Agreement entered into by INTRUST Financial
Corporation. No separate consideration will be received for the Guarantee.
</TABLE>
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
==============================================================================
<PAGE> 2
*******************************************************************************
*INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
*REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
*WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
*BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
*REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
*CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
*NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
*SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
*REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
*STATE. *
*******************************************************************************
SUBJECT TO COMPLETION, DATED JANUARY 6, 1998
PROSPECTUS
2,000,000 PREFERRED SECURITIES
INTRUST CAPITAL TRUST
INTRUST BANK
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED, AS DESCRIBED HEREIN, BY
INTRUST FINANCIAL CORPORATION
-------------------
$50,000,000 % SUBORDINATED DEBENTURES OF
INTRUST FINANCIAL CORPORATION
-------------------
The % Cumulative Trust Preferred Securities (the "Preferred
Securities") offered hereby represent preferred undivided beneficial interests
in the assets of INTRUST Capital Trust, a statutory business trust created
under the laws of the State of Delaware ("INTRUST Capital"). INTRUST
Financial Corporation, a Kansas corporation (the "Company"), will own all the
common securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing undivided beneficial
interests in the assets of INTRUST Capital.
(continued on next page)
The Preferred Securities have been approved for trading on the American
Stock Exchange, Inc. under the symbol "IKT.PR.A."
--------------------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 8 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
----------------------------
THE SECURITIES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS OR DEPOSIT ACCOUNTS,
ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANKING OR NON-BANKING
AFFILIATE OF THE COMPANY (EXCEPT TO THE EXTENT THAT PREFERRED
SECURITIES ARE GUARANTEED BY THE COMPANY AS DESCRIBED HEREIN),
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY AND
INVOLVE INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
--------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC COMMISSION<F1> INTRUST CAPITAL<F2>
<S> <C> <C> <C>
Per Preferred Security.......................... $25.00 <F2> $25.00
- ------------------------------------------------------------------------------------------------------------------
Total<F3>....................................... $50,000,000 <F2> $50,000,000
==================================================================================================================
<FN>
<F1> INTRUST Capital and the Company have each agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
<F2> In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Subordinated Debentures, the Company
has agreed to pay the Underwriters as compensation for its arranging the
investment therein of such proceeds $ per Preferred Security, or $
in the aggregate ($ if the over-allotment option is exercised in full).
See "Underwriting." The Company has also agreed to pay the expenses of
the offering estimated to be $ .
<F3> INTRUST Capital has granted the Underwriters an option exercisable within
30 days from the date of this Prospectus to purchase up to 300,000
additional Preferred Securities on the same terms and conditions set forth
above to cover over-allotments, if any. If all such additional Preferred
Securities are purchased, the total Price to Public and Proceeds to
INTRUST Capital will be $57,500,000.
</TABLE>
-----------------------------------------
The Preferred Securities are offered by the Underwriters subject to receipt
and acceptance by it, prior sale and the Underwriters' right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of the Preferred Securities will be made
on or about , 1998.
STIFEL, NICOLAUS & COMPANY
INCORPORATED
, 1998
<PAGE> 3
(continued from previous page)
State Street Bank and Trust Company is the Property Trustee (as defined
herein) of INTRUST Capital. INTRUST Capital exists for the purpose of issuing
the Preferred Securities and investing the proceeds thereof in an equivalent
amount of % Subordinated Debentures (the "Subordinated Debentures") of
the Company. The Subordinated Debentures will mature on January 31, 2028,
which date may be (i) shortened to a date not earlier than January 31, 2003,
or (ii) extended to a date not later than January 31, 2037, in each case if
certain conditions are met (including, in the case of shortening the Stated
Maturity (as defined herein), the Company having received prior approval of
the Board of Governors of the Federal Reserve System ("Federal Reserve") to
do so if then required under applicable capital guidelines or policies of the
Federal Reserve). The Preferred Securities will have a preference under
certain circumstances with respect to cash distributions and amounts payable
on liquidation, redemption or otherwise over the Common Securities. See
"Description of the Preferred Securities--Subordination of Common
Securities."
Holders of Preferred Securities are entitled to receive preferential
cumulative cash distributions, at the annual rate of % of the liquidation
amount of $25 per Preferred Security (the "Liquidation Amount"), accruing
from , 1998, the date of original issuance, and payable
quarterly in arrears on the last day of March, June, September and December of
each year, commencing March 31, 1998 (the "Distributions"). The Company has
the right, so long as no Debenture Event of Default (as defined herein) has
occurred and is continuing, to defer payment of interest on the Subordinated
Debentures at any time or from time to time for a period not to exceed 20
consecutive quarters with respect to each deferral period (each, an
"Extension Period"); provided that no Extension Period may extend beyond the
Stated Maturity of the Subordinated Debentures. Upon the termination of any
such Extension Period and the payment of all amounts then due, the Company may
elect to begin a new Extension Period subject to the requirements set forth
herein. If interest payments on the Subordinated Debentures are so deferred,
Distributions on the Preferred Securities will also be deferred, and the
Company will not be permitted, subject to certain exceptions described herein,
to declare or pay any cash distributions with respect to its capital stock or
debt securities that rank pari passu with or junior to the Subordinated
Debentures. WHILE THE COMPANY INTENDS TO TAKE THE POSITION THAT THE
SUBORDINATED DEBENTURES WILL NOT BE DEEMED TO BE ISSUED WITH ORIGINAL ISSUE
DISCOUNT ("OID"), DURING AN EXTENSION PERIOD, INTEREST ON THE SUBORDINATED
DEBENTURES WILL CONTINUE TO ACCRUE (AND THE AMOUNT OF DISTRIBUTIONS TO WHICH
HOLDERS OF THE PREFERRED SECURITIES ARE ENTITLED WILL ACCUMULATE) AT THE RATE
OF % PER ANNUM, COMPOUNDED QUARTERLY, AND HOLDERS OF THE PREFERRED
SECURITIES WILL BE REQUIRED TO INCLUDE INTEREST INCOME AS OID IN THEIR GROSS
INCOME FOR UNITED STATES FEDERAL INCOME TAX PURPOSES IN ADVANCE OF RECEIPT OF
THE CASH DISTRIBUTIONS WITH RESPECT TO SUCH DEFERRED INTEREST PAYMENTS. A
HOLDER OF PREFERRED SECURITIES WHO DISPOSES OF ITS PREFERRED SECURITIES
BETWEEN RECORD DATES FOR PAYMENTS OF DISTRIBUTIONS (AND CONSEQUENTLY DOES NOT
RECEIVE A DISTRIBUTION FROM INTRUST CAPITAL FOR THE PERIOD PRIOR TO SUCH
DISPOSITION) WILL NEVERTHELESS BE REQUIRED TO INCLUDE ACCRUED BUT UNPAID
INTEREST OR OID, IF ANY, ON THE SUBORDINATED DEBENTURES THROUGH THE DATE OF
DISPOSITION IN ORDINARY INCOME AND TO ADD THE AMOUNT OF ANY ACCRUED OID TO ITS
ADJUSTED TAX BASIS IN ITS PRO RATA SHARE OF THE UNDERLYING SUBORDINATED
DEBENTURES DEEMED DISPOSED OF. See "Description of the Subordinated
Debentures--Option to Extend Interest Payment Period," "Certain Federal
Income Tax Consequences--Potential Extension of Interest Payment Period and
Original Issue Discount" and "--Disposition of Preferred Securities."
The Company and INTRUST Capital believe that, taken together, the
obligations of the Company under the Guarantee, the Trust Agreement, the
Subordinated Debentures, the Indenture and the Expense Agreement (each as
defined herein) provide, in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of all of the obligations of
INTRUST Capital under the Preferred Securities. See "Relationship Among the
Preferred Securities, the Subordinated Debentures and the Guarantee--Full and
Unconditional Guarantee." The Guarantee of the Company guarantees the payment
of Distributions and payments on liquidation or redemption of the Preferred
Securities, but only in each case to the extent of funds held by INTRUST
Capital, as described herein. See "Description of the Guarantee--General." If
the Company does not make interest payments on the Subordinated Debentures held
by INTRUST Capital, INTRUST Capital will have insufficient funds to pay
Distributions on the Preferred Securities. The Guarantee does not cover
payments of Distributions when INTRUST Capital does not have sufficient funds
to pay such Distributions. In such event, a holder of Preferred Securities may
institute a legal
(continued on next page)
<PAGE> 4
(continued from previous page)
proceeding directly against the Company pursuant to the terms of the Indenture
to enforce payments of amounts equal to such Distributions to such holder. See
"Description of the Subordinated Debentures--Enforcement of Certain Rights by
Holders of the Preferred Securities." The obligations of the Company under the
Guarantee and the Preferred Securities are subordinate and junior in right of
payment to all Senior Debt, Subordinated Debt and Additional Senior Obligations
(each as defined herein) of the Company. The Subordinated Debentures are
unsecured obligations of the Company and are subordinated to all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company.
The Preferred Securities are subject to mandatory redemption, in whole or
in part, upon repayment of the Subordinated Debentures at maturity or their
earlier redemption. Subject to Federal Reserve approval, if then required under
applicable capital guidelines or policies of the Federal Reserve, the
Subordinated Debentures are redeemable prior to maturity at the option of the
Company (i) on or after January 31, 2003, in whole at any time or in part from
time to time, or (ii) at any time, in whole (but not in part), within 180 days
following the occurrence of a Tax Event, a Capital Treatment Event or an
Investment Company Event (each as defined herein), in each case at a redemption
price equal to the accrued and unpaid interest on the Subordinated Debentures
so redeemed to the date fixed for redemption, plus 100% of the principal amount
thereof. See "Description of the Preferred Securities--Redemption."
The Company has the right at any time to dissolve, wind-up or terminate
INTRUST Capital subject to the Company having received prior approval of the
Federal Reserve to do so if then required under applicable capital guidelines
or policies of the Federal Reserve. In the event of the voluntary or
involuntary dissolution, winding up or termination of INTRUST Capital, after
satisfaction of liabilities to creditors of INTRUST Capital as required by
applicable law, the holders of Preferred Securities will be entitled to receive
a Liquidation Amount of $25 per Preferred Security, plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
Subordinated Debenture having an aggregate principal amount equal to the
Liquidation Amount of such Preferred Securities (and carrying with it
accumulated interest in an amount equal to the accumulated and unpaid
Distributions then due on such Preferred Securities), subject to certain
exceptions. See "Description of the Preferred Securities--Redemption" and
"--Liquidation Distribution Upon Termination."
--------------------------------
The Company will provide Quarterly Reports containing unaudited financial
statements to the holders of Preferred Securities if such reports are furnished
to the holders of the Company's common stock, and Annual Reports containing
financial statements audited by the Company's independent auditors. The Company
will also furnish Annual Reports on Form 10-K and Quarterly Reports on Form
10-Q free of charge to holders of Preferred Securities who so request in
writing addressed to the Secretary of the Company.
--------------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE OVERALLOTMENT, STABILIZING
TRANSACTIONS, THE PURCHASE OF PREFERRED SECURITIES TO COVER SHORT POSITIONS AND
THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF SUCH ACTIVITIES, SEE
"UNDERWRITING." SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
<PAGE> 5
[MAP]
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere (or incorporated by reference) in this
Prospectus. Unless otherwise indicated, the information in this Prospectus
assumes that the Underwriters' over-allotment option will not be exercised.
Prospective investors should carefully consider the information set forth under
the heading "Risk Factors."
THE COMPANY
GENERAL
INTRUST Financial Corporation (the "Company") is a Kansas corporation and
registered bank holding company headquartered in Wichita, Kansas. At September
30, 1997 the Company had total assets of $1.8 billion and total stockholders'
equity of $129.7 million. The Company's principal subsidiaries, INTRUST Bank,
N.A. and Will Rogers Bank (collectively the "Subsidiary Banks") operate 33
banking locations. INTRUST Bank, N.A. ("IBNA") operates 30 banking locations,
with 26 of these offices located in Wichita and surrounding communities and 4
locations in Johnson County, Kansas and surrounding areas. Will Rogers Bank
("WRB") maintains 3 locations in Oklahoma City, Oklahoma and surrounding
communities. The Subsidiary Banks, through these banking locations, offer a
broad range of consumer and commercial banking services to their customers.
The principal executive office of the Company is located at 105 North Main,
Box One, Wichita, Kansas 67202, and its telephone number is (316) 383-1111.
BUSINESS OBJECTIVES AND STRATEGY
The Company has identified several business objectives designed to enhance
financial performance as measured by earnings and returns on equity and assets.
The principal objectives of the Company are to (i) provide exceptional customer
service, (ii) increase market share in existing markets and identify new
markets, (iii) diversify income sources, and (iv) maintain credit quality
standards while increasing earning asset balances. The Company has employed the
following strategies in furtherance of its business objectives:
* Provide exceptional customer service
The Company employs a business strategy that is generally known in the
industry as community banking. Under this strategy the Company provides a
broad line of financial products and services to small and medium-sized
businesses and consumers through full-service community banking offices. This
business strategy centers around relationship banking and seeks to position the
Company as the primary provider of financial services to its customers. A key
element of this strategy is to develop and maintain efficient and convenient
delivery systems for the Company's products and services. Examples of the
Company's progressive efforts toward this goal include its position as the
first bank located within the leading supermarket chain in the Wichita market
and the introduction of on-line banking products which allow both its commercial
and consumer customers to access products and services via the Internet on an
on-line / real-time basis. Additionally, the Company maintains an extensive ATM
network and comprehensive telephone banking call center.
* Increase market share in each market served and identify new market
opportunities
The current consolidation occurring within the banking industry has created
opportunities for the Subsidiary Banks to increase their market share of both
loans and deposit products, and the Company believes that the uncertainty and
customer dislocation created by this consolidation affords additional
opportunities to further expand its market share within its principal markets.
Within the consumer lending area, the Company, during 1997, focused its
efforts in those markets where it believes it has both a competitive advantage
and a significant presence in the marketplace. Additionally, the Company seeks
to expand into contiguous markets which meet certain characteristics identified
by management relating to demographics, population, business potential and
proximity to existing markets.
* Diversify income sources
The Company has expanded its fee-based businesses in the past two years, as
it has sought to become less interest-margin dependent. Taking advantage of
certain competitors exiting the market, IBNA invested in the establishment of
a business unit that manages proprietary mutual funds and is engaged in offering
employee benefit plan services to small and mid-sized commercial customers. The
Company also has aggressively marketed its traditional trust services and debt
administration capabilities. These efforts have resulted in a significant
increase in
2
<PAGE> 7
assets under management. The Company believes further expansion opportunities
exist in wealth management business activities and intends to pursue efforts to
further develop this line of business.
* Maintain credit quality standards while increasing earning asset balances
Due to the aforementioned consolidation of banking organizations within the
Company's primary markets, the Company has been opportunistic in expanding its
commercial and consumer loan portfolios. Within this framework, the Company's
primary objective has been to maintain credit quality standards within
defined risk parameters. In furtherance of this objective, the Company
recognized during 1995 that its national credit card portfolio was
underperforming acceptable profitability measures due to higher than anticipated
delinquency rates and charge-off experience. Accordingly, during 1996 and the
second quarter of 1997 the Company made provisions for credit card valuation
write-downs in order to bring the national credit card portfolio balance to its
fair market value. This portfolio was subsequently sold and the Company
anticipates no further effects on income due to the national credit card
portfolio. Additionally, the Company has no plans to market its credit card
product line on a national basis in the future.
OWNERSHIP
As of October 14, 1997, the directors and executive officers of the Company
and their immediate families owned approximately 31.6% of the Company's common
stock.
3
<PAGE> 8
INTRUST CAPITAL
INTRUST Capital is a statutory business trust formed under Delaware law
pursuant to (i) a trust agreement, dated as of November 19, 1997, executed by
the Company, as depositor, and the trustees of INTRUST Capital (together with
the Property Trustee, the "Trustees"), and (ii) a certificate of trust filed
with the Secretary of State of the State of Delaware on November 19, 1997. The
initial trust agreement will be amended and restated in its entirety (as so
amended and restated, the "Trust Agreement") substantially in the form filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
The Trust Agreement will be qualified as an indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"). Upon issuance of the
Preferred Securities, the purchasers thereof will own all of the Preferred
Securities. The Company will acquire all of the Common Securities which will
represent an aggregate liquidation amount equal to at least 3% of the total
capital of INTRUST Capital. The Common Securities will rank pari passu, and
payments will be made thereon pro rata, with the Preferred Securities, except
that upon the occurrence and during the continuance of an Event of Default (as
defined herein) under the Trust Agreement resulting from a Debenture Event of
Default, the rights of the Company as holder of the Common Securities to payment
in respect of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. See "Description of the Preferred Securities--Subordination of
Common Securities." INTRUST Capital exists for the exclusive purposes of (i)
issuing the Trust Securities representing undivided beneficial interests in
the assets of INTRUST Capital, (ii) investing the gross proceeds of the Trust
Securities in the Subordinated Debentures issued by the Company, and (iii)
engaging in only those other activities necessary, advisable, or incidental
thereto. The Subordinated Debentures and payments thereunder will be the only
assets of INTRUST Capital and payments under the Subordinated Debentures will
be the only revenue of INTRUST Capital. INTRUST Capital has a term of 55
years, but may terminate earlier as provided in the Trust Agreement. The
principal executive office of INTRUST Capital is 105 North Main Street, Box
One, Wichita, Kansas 67202, and its telephone number is (316) 383-1111.
The number of Trustees will, pursuant to the Trust Agreement, initially be
five. Three of the Trustees (the "Administrative Trustees") will be persons
who are employees or officers of, or who are affiliated with, the Company. The
fourth trustee will be a financial institution that is unaffiliated with the
Company, which trustee will serve as institutional trustee under the Trust
Agreement and as indenture trustee for the purposes of compliance with the
provisions of the Trust Indenture Act (the "Property Trustee"). State Street
Bank and Trust Company, a state chartered trust company organized under the
laws of the Commonwealth of Massachusetts, will be the Property Trustee until
removed or replaced by the holder of the Common Securities. For purposes of
compliance with the provisions of the Trust Indenture Act, State Street Bank
and Trust Company will also act as trustee (the "Guarantee Trustee") under
the Guarantee and as Debenture Trustee (as defined herein) under the Indenture.
The fifth trustee will be an entity that maintains its principal place of
business in the State of Delaware (the "Delaware Trustee"). Wilmington Trust
Company, a Delaware chartered trust company, will act as Delaware Trustee.
The Property Trustee will hold title to the Subordinated Debentures for the
benefit of the holders of the Trust Securities and in such capacity will have
the power to exercise all rights, powers and privileges under the Indenture.
The Property Trustee will also maintain exclusive control of a segregated
non-interest-bearing bank account (the "Property Account") to hold all
payments made in respect of the Subordinated Debentures for the benefit of the
holders of the Trust Securities. The Property Trustee will make payments of
Distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Preferred Securities. The Company, as the holder of all the Common Securities,
will have the right to appoint, remove or replace any Trustee and to increase
or decrease the number of Trustees. The Company will pay all fees and expenses
related to INTRUST Capital and the offering of the Trust Securities.
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the Trust
Agreement, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
4
<PAGE> 9
THE OFFERING
<TABLE>
<S> <C>
Securities Offered............ 2,000,000 Preferred Securities having a Liquidation Amount of $25 per Preferred Security.
The Preferred Securities represent preferred undivided beneficial interests in the
assets of INTRUST Capital, which will consist solely of the Subordinated Debentures
and payments thereunder. INTRUST Capital has granted the Underwriters an option,
exercisable within 30 days after the date of this Prospectus, to purchase up to
an additional 300,000 Preferred Securities at the initial offering price, solely
to cover over-allotments, if any.
Distributions................. The Distributions payable on each Preferred Security will be fixed at a rate per annum
of % of the Liquidation Amount of $25 per Preferred Security, will be cumulative,
will accrue from , 1998, the date of original issuance of the Preferred
Securities, and will be payable quarterly in arrears, on March 31, June 30, September 30
and December 31 of each year, commencing March 31, 1998. See "Description of the
Preferred Securities--Distributions--Payment of Distributions."
Option to Extend Interest
Payment Period.............. The Company has the right, at any time, so long as no Debenture Event of Default has
occurred and is continuing, to defer payments of interest on the Subordinated Debentures
for a period not exceeding 20 consecutive quarters; provided, that no Extension
Period may extend beyond the Stated Maturity of the Subordinated Debentures. As a
consequence of the extension by the Company of the interest payment period, quarterly
Distributions on the Preferred Securities will be deferred (though such Distributions
would continue to accrue with interest thereon compounded quarterly, since interest will
continue to accrue and compound on the Subordinated Debentures) during any such Extension
Period. During an Extension Period, the Company will be prohibited, subject to certain
exceptions described herein, from declaring or paying any cash distributions with respect
to its capital stock or debt securities that rank pari passu with or junior to the
Subordinated Debentures. Upon the termination of any Extension Period and the payment of
all amounts then due, the Company may commence a new Extension Period, subject to the
foregoing requirements. See "Description of the Preferred Securities--Distributions--
Extension Period" and "Description of the Subordinated Debentures--Option to Extend
Interest Payment Period."
Should an Extension Period occur, holders of Preferred Securities will be required to
include deferred interest income in their gross income for United States federal income
tax purposes in advance of receipt of the cash distributions with respect to such
deferred interest payments. See "Certain Federal Income Tax Consequences--Potential
Extension of Interest Payment Period and Original Issue Discount."
Optional Redemption........... The Preferred Securities are subject to mandatory redemption, in whole or in part, upon
repayment of the Subordinated Debentures at maturity or their earlier redemption. Subject
to Federal Reserve approval, if then required under applicable capital guidelines or
policies of the Federal Reserve, the Subordinated Debentures are redeemable prior to
maturity at the option of the Company (i) on or after January 31, 2003, in whole at any
time or in part from time to time, or (ii) at any time, in whole (but not in part),
within 180 days following the occurrence of a Tax Event, a Capital Treatment Event or an
Investment Company Event, in each case at the redemption price equal to 100% of the
principal amount of the Subordinated Debenture, together with any accrued but unpaid
interest to the date fixed for redemption. See "Description of the Subordinated
Debentures--Redemption."
5
<PAGE> 10
<S> <C>
Distribution of Subordinated
Debentures.................. The Company has the right at any time to terminate INTRUST Capital and cause the
Subordinated Debentures to be distributed to holders of Preferred Securities in
liquidation of INTRUST Capital, subject to the Company having received prior approval of
the Federal Reserve to do so if then required under applicable capital guidelines or
policies of the Federal Reserve. See "Description of the Preferred Securities--
Redemption" and "Description of the Preferred Securities--Liquidation Distribution Upon
Termination."
Guarantee..................... The Company has guaranteed the payment of Distributions and payments on liquidation or
redemption of the Preferred Securities, but only in each case to the extent of funds
held by INTRUST Capital, as described herein. The Company and INTRUST Capital believe
that, taken together, the obligations of the Company under the Guarantee, the Trust
Agreement, the Subordinated Debentures, the Indenture and the Expense Agreement provide,
in the aggregate, a full, irrevocable and unconditional guarantee, on a subordinated
basis, of all of the obligations of INTRUST Capital under the Preferred Securities. The
obligations of the Company under the Guarantee and the Preferred Securities are
subordinate and junior in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company. If the Company does not make principal or
interest payments on the Subordinated Debentures, INTRUST Capital will not have
sufficient funds to make distributions on the Preferred Securities; in which event, the
Guarantee will not apply to such Distributions until INTRUST Capital has sufficient funds
available therefor. See "Description of the Guarantee."
Voting Rights................. The holders of the Preferred Securities will have no voting rights except in limited
circumstances. If any Distributions payable on the Preferred Securities are in arrears
for six quarterly periods, then the holders of the Preferred Securities, voting separately
as a class, will be entitled at the next regular or special meeting of shareholders of the
Company to elect two directors to the Board of Directors of the Company (such voting
rights will continue until such time as the Distribution arrearage on the Preferred
Securities has been paid in full). The affirmative consent of the holders of at least
66 2/3% of the outstanding Preferred Securities will be required for amendments to the Trust
Agreement or the Guarantee that would adversely affect the rights or privileges of the
holders of the Preferred Securities. See "Description of the Preferred Securities--Voting
Rights; Amendment of Trust Agreement."
Use of Proceeds............... The proceeds from the sale of the Preferred Securities offered hereby will be used by
INTRUST Capital to purchase the Subordinated Debentures issued by the Company. The
Company intends to use the net proceeds from the sale of the Subordinated Debentures for
general corporate purposes including, without limitation, the repurchase from time to
time of the Company's common stock, the making of investments in or possibly acquiring
businesses which enhance the Company's long-term growth or improve or expand the Company's
products, services or markets and the funding of investments in or extensions of credit to
the Company's subsidiaries and to enhance the Company's capital adequacy. Pending their
application for any or all of such purposes, the net proceeds may be invested in
investment grade financial instruments. See "Use of Proceeds" and "Capitalization."
American Stock Exchange,
Inc........................ The Preferred Securities have been approved for trading on the American Stock Exchange,
Inc. under the symbol "IKT.PR.A."
</TABLE>
6
<PAGE> 11
SUMMARY CONSOLIDATED FINANCIAL DATA
The consolidated financial data below summarizes historical consolidated
financial information of the Company for the periods indicated and should be
read in conjunction with the financial statements and other information
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, which is incorporated by reference in this Prospectus. The
unaudited consolidated financial data below for the interim periods indicated
has been derived from, and should be read in conjunction with, the Company's
Quarterly Report on Form 10-Q for the nine-month period ended September 30,
1997, which is incorporated by reference in this Prospectus. See "Available
Information" and "Incorporation of Certain Documents by Reference." All
adjustments considered necessary for a fair presentation have, in the opinion
of management, been included in the unaudited interim data. Interim results for
the nine months ended September 30, 1997 are not necessarily indicative of
results which may be expected for future periods, including the year ending
December 31, 1997.
<TABLE>
<CAPTION>
SEPTEMBER 30,
UNAUDITED YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SELECTED RESULTS OF
OPERATIONS:
Interest income............. $ 97,641 $ 99,466 $ 132,463 $ 127,919 $ 110,383 $ 98,825 $ 96,313
Interest expense............ 44,423 42,132 56,436 53,460 38,267 34,253 38,368
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income......... 53,218 57,334 76,027 74,459 72,116 64,572 57,945
Provision for loan losses... 6,320 15,901 20,151 18,118 2,962 5,596 8,906
Credit card valuation
write-down................ 4,645 -- 17,475 -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after
provision for loan
losses.................... 42,253 41,433 38,401 56,341 69,154 58,976 49,039
Other noninterest income.... 30,984 24,942 33,768 33,620 26,888 24,224 20,565
Noninterest expense......... 54,971 51,276 70,438 71,195 66,189 57,420 47,224
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income tax
expense................... 18,266 15,099 1,731 18,766 29,853 25,780 22,380
Income tax expense.......... 6,521 5,406 51 6,379 10,884 8,154 6,546
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before cumulative
effect of accounting
change.................... 11,745 9,693 1,680 12,387 18,969 17,626 15,834
Cumulative effect of
accounting change......... -- -- -- -- -- -- 1,679
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income.................. $ 11,745 $ 9,693 $ 1,680 $ 12,387 $ 18,969 $ 17,626 $ 17,513
========== ========== ========== ========== ========== ========== ==========
PER SHARE DATA:
Net income (primary)........ $ 5.34 $ 4.20 $ 0.74 $ 5.28 $ 8.00 $ 7.40 $ 7.31
Net income (fully
diluted).................. 4.75 3.80 0.74 4.77 7.10 6.59 6.52
Cash dividends declared..... 1.05 0.95 1.55 1.50 2.50 1.50 2.00
Book value.................. 59.64 59.71 55.37 57.81 54.01 48.51 42.62
Dividend payout ratio....... 19.66% 22.62% 210.81% 28.40% 31.25% 20.28% 27.31%
SELECTED BALANCE SHEET DATA:
Assets...................... $1,797,590 $1,662,172 $1,721,402 $1,666,984 $1,519,117 $1,523,868 $1,251,610
Securities<F1>.............. 286,114 324,313 295,638 320,246 276,779 341,561 320,376
Loans and leases............ 1,235,056 1,141,265 1,054,112 1,055,796 1,057,238 973,222 755,487
Allowance for loan and lease
losses.................... 17,901 27,452 15,536 25,892 19,886 21,793 16,099
Deposits.................... 1,436,663 1,357,442 1,428,395 1,367,141 1,276,076 1,283,284 1,066,323
Long term debt, excluding
current portion........... 26,219 26,505 26,379 29,664 32,450 35,080 12,700
Stockholders' equity........ 129,706 132,704 122,094 135,163 127,590 115,529 101,616
PERFORMANCE RATIO:
Return on average equity.... 12.44% 9.93% 1.23% 9.34% 14.91% 16.64% 18.32%
Return on average assets.... 0.90% 0.80% 0.10% 0.79% 1.23% 1.31% 1.51%
Net interest income (fully
taxable equivalent)....... 4.60% 5.09% 5.07% 5.30% 5.25% 5.34% 5.50%
ASSET QUALITY RATIOS:
Allowance for loan losses to
loans..................... 1.45% 2.41% 1.47% 2.45% 1.88% 2.24% 2.13%
Non-performing assets to
total loans............... 0.51% 0.78% 1.03% 0.89% 0.59% 0.53% 0.83%
Net loan losses to average
loans..................... 0.34% 1.31% 1.70% 1.18% 0.50% 0.42% 1.07%
CAPITAL RATIOS:
Average equity to average
assets.................... 7.19% 8.09% 8.14% 8.41% 8.26% 7.85% 8.23%
Tier 1 risk-based capital
ratio..................... 7.90% 8.34% 7.80% 8.80% 9.19% 8.92% 11.14%
Total risk-based capital
ratio..................... 9.46% 10.15% 8.90% 10.60% 11.27% 11.29% 13.78%
Leverage ratio.............. 6.42% 6.32% 6.30% 6.70% 7.10% 6.42% 7.73%
RATIO OF EARNINGS TO FIXED
CHARGES:<F2>
Including interest on
deposits.................. 1.41x 1.36x 1.03x 1.35x 1.78x 1.75x 1.58x
Excluding interest on
deposits.................. 3.33x 3.20x 1.19x 3.27x 6.85x 8.77x 8.90x
<FN>
- ----------
<F1> Includes market value adjustment on available-for-sale securities.
<F2> Earnings consist of income before income tax plus interest expense. Fixed
charges consist of interest expense, amortization of debt issuance costs
and the interest component of rent expense. The Company does not currently
have any preferred stock outstanding.
</TABLE>
7
<PAGE> 12
RISK FACTORS
Prospective investors should carefully consider, together with the other
information contained and incorporated by reference in this Prospectus, the
following risk factors in evaluating the Company and its business and INTRUST
Capital before purchasing the Preferred Securities offered hereby. Prospective
investors should note, in particular, that this Prospectus contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and that
actual results could differ materially from those contemplated by such
statements. The considerations listed below represent certain important factors
the Company believes could cause such results to differ. These considerations
are not intended to represent a complete list of the general or specific risks
that may affect the Company and INTRUST Capital. It should be recognized that
other risks may be significant, presently or in the future, and the risks set
forth below may affect the Company and INTRUST Capital to a greater extent than
indicated.
RISK FACTORS RELATING TO THE PREFERRED SECURITIES
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED
DEBENTURES
The obligations of the Company under the Guarantee issued for the benefit
of the holders of Preferred Securities and under the Subordinated Debentures
are unsecured and rank subordinate and junior in right of payment to all Senior
Debt, Subordinated Debt and Additional Senior Obligations of the Company,
whether now existing or hereinafter incurred. At September 30, 1997, the
aggregate outstanding Senior Debt, Subordinated Debt and Additional Senior
Obligations of the Company was approximately $36.7 million. Because the Company
is a holding company, the right of the Company to participate in any
distribution of assets of any Subsidiary Bank upon such Subsidiary Bank's
liquidation or reorganization or otherwise (and thus the ability of holders of
the Preferred Securities to benefit indirectly from such distribution) is
subject to the prior claims of creditors of that Subsidiary Bank, except to the
extent that the Company may itself be recognized as a creditor of that
Subsidiary Bank. The Subordinated Debentures, therefore, will be effectively
subordinated to all existing and future liabilities of the Subsidiary Banks and
holders of Subordinated Debentures and Preferred Securities should look only to
the assets of the Company for payments on the Subordinated Debentures. Neither
the Indenture, the Guarantee nor the Trust Agreement places any limitation on
the amount of secured or unsecured debt, including Senior Debt, Subordinated
Debt and Additional Senior Obligations, that may be incurred by the Company. See
"Description of the Guarantee--Status of the Guarantee" and "Description of the
Subordinated Debentures--Subordination."
The ability of INTRUST Capital to pay amounts due on the Preferred
Securities is dependent solely upon the Company making payments on the
Subordinated Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD, TAX CONSEQUENCES; MARKET PRICE
CONSEQUENCES
The Company has the right under the Indenture, so long as no Debenture
Event of Default has occurred and is continuing, to defer the payment of
interest on the Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarters with respect to each Extension
Period; provided that no Extension Period may extend beyond the Stated Maturity
of the Subordinated Debentures. As a consequence of any such deferral,
quarterly Distributions on the Preferred Securities by INTRUST Capital will be
deferred (and the amount of Distributions to which holders of the Preferred
Securities are entitled will accumulate additional Distributions thereon at the
rate of % per annum, compounded quarterly from the relevant payment date
for such Distributions) during any such Extension Period. During any such
Extension Period, the Company may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (other than (a) dividends
or distributions in common stock of the Company, any declaration of a non-cash
dividend in connection with the implementation of a shareholder rights plan, or
the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (b) purchases of common
stock of the Company related to the rights under any of the Company's benefit
plans for its directors, officers or employees), (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu with or junior in interest to the
Subordinated Debentures (other than payments under the Guarantee), or (iii)
redeem, purchase or acquire less than all of the Subordinated Debentures or any
of the Preferred Securities. Prior to the termination of any such Extension
8
<PAGE> 13
Period, the Company may further defer the payment of interest; provided that no
Extension Period may exceed 20 consecutive quarters or extend beyond the Stated
Maturity of the Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at the annual rate of % compounded quarterly, to the
extent permitted by applicable law), the Company may elect to begin a new
Extension Period, subject to the above requirements. Subject to the foregoing,
there is no limitation on the number of times that the Company may elect to
begin an Extension Period. See "Description of the Preferred
Securities--Distributions--Extension Period" and "Description of the
Subordinated Debentures--Option to Extend Interest Payment Period."
Should an Extension Period occur, each holder of Preferred Securities will
be required to accrue and recognize income (in the form of OID) in respect of
its pro rata share of the interest accruing on the Subordinated Debentures held
by INTRUST Capital for United States federal income tax purposes. A holder of
Preferred Securities must, as a result, include such income in gross income for
United States federal income tax purposes in advance of the receipt of cash,
and will not receive the cash related to such income from INTRUST Capital if
the holder disposes of the Preferred Securities prior to the record date for
the payment of the related Distributions. See "Certain Federal Income Tax
Consequences--Potential Extension of Interest Payment Period and Original Issue
Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures. Should the Company elect, however, to exercise such
right in the future, the market price of the Preferred Securities is likely to
be adversely affected. A holder that disposes of its Preferred Securities
during an Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Preferred Securities. As a
result of the existence of the Company's right to defer interest payments, the
market price of the Preferred Securities may be more volatile than the market
prices of other securities on which OID accrues that are not subject to such
optional deferrals.
TAX EVENT, CAPITAL TREATMENT EVENT OR INVESTMENT COMPANY EVENT; REDEMPTION
The Company has the right to redeem the Subordinated Debentures in whole
(but not in part) within 180 days following the occurrence of a Tax Event, a
Capital Treatment Event or an Investment Company Event (whether occurring
before or after January 31, 2003), and, therefore, cause a mandatory
redemption of the Preferred Securities. The exercise of such right is subject
to the Company having received prior approval of the Federal Reserve to do so
if then required under applicable capital guidelines or policies of the Federal
Reserve.
"Tax Event" means the receipt by INTRUST Capital of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment
to, or change (including any announced prospective change) in the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) INTRUST Capital is, or will be within 90 days of
the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Subordinated Debentures, (ii)
interest payable by the Company on the Subordinated Debentures is not, or,
within 90 days of such opinion, will not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes, or (iii)
INTRUST Capital is, or will be within 90 days of the date of the opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges. The Company must request and receive an opinion with
regard to such matters within a reasonable period of time after it becomes
aware of the possible occurrence of any of the events described in clauses (i)
through (iii) above.
"Capital Treatment Event" means the receipt by INTRUST Capital of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to or any change (including any announced prospective change)
in the laws (or any regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such proposed
change, pronouncement or decision is announced on or after the date of issuance
of the Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk of impairment of the Company's ability to treat the
aggregate Liquidation Amount of the Preferred Securities (or any substantial
portion thereof) as "Tier 1 Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then in
effect and applicable to the Company;
9
<PAGE> 14
provided, however, that the inability of the Company to treat all or any
portion of the Liquidation Amount of the Preferred Securities as Tier 1 Capital
shall not constitute the basis for a Capital Treatment Event if such inability
results from the Company having cumulative preferred stock, minority interests
in consolidated subsidiaries, or any other class of security or interest which
the Federal Reserve now or may hereafter afford Tier 1 Capital treatment in
excess of the amount which may qualify for treatment as Tier 1 Capital under
applicable capital adequacy guidelines of the Federal Reserve.
"Investment Company Event" means the receipt by INTRUST Capital of an
opinion of counsel experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, INTRUST Capital is or will
be considered an "investment company" that is required to be registered under
the Investment Company Act of 1940, as amended (the "Investment Company
Act"), which change becomes effective on or after the date of original
issuance of the Preferred Securities.
SHORTENING OR EXTENSION OF STATED MATURITY OF SUBORDINATED DEBENTURES
The Company has the right, at any time, to shorten the maturity of the
Subordinated Debentures to a date not earlier than January 31, 2003. The
exercise of such right is subject to the Company having received prior approval
of the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve. The Company also has the right to extend the
maturity of the Subordinated Debentures (whether or not INTRUST Capital is
terminated and the Subordinated Debentures are distributed to holders of the
Preferred Securities) to a date no later than January 31, 2037, a date
approximately 39 years after the initial issuance of the Preferred
Securities. Such right may only be exercised, however, if at the time such
election is made and at the time of such extension (i) the Company is not in
bankruptcy, otherwise insolvent or in liquidation, (ii) the Company is not in
default in the payment of any interest or principal on the Subordinated
Debentures, and (iii) INTRUST Capital is not in arrears on payments of
Distributions on the Preferred Securities and no deferred Distributions are
accumulated. See "Description of the Subordinated Debentures--General."
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the Preferred Securities, to the
extent not paid by INTRUST Capital, (i) any accrued and unpaid Distributions
required to be paid on the Preferred Securities, to the extent that INTRUST
Capital has funds available therefor at such time, (ii) the Redemption Price
(as defined herein) with respect to any Preferred Securities called for
redemption, to the extent that INTRUST Capital has funds available therefor at
such time, and (iii) upon a voluntary or involuntary dissolution, winding-up or
liquidation of INTRUST Capital (other than in connection with the distribution
of Subordinated Debentures to the holders of Preferred Securities or a
redemption of all of the Preferred Securities), the lesser of (a) the amount of
the Liquidation Distribution (as defined herein), to the extent INTRUST Capital
has funds available therefor at such time, and (b) the amount of assets of
INTRUST Capital remaining available for distribution to holders of the
Preferred Securities in liquidation of INTRUST Capital. The holders of not less
than a majority in Liquidation Amount of the Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of the Guarantee or to
direct the exercise of any trust power conferred upon the Guarantee Trustee
under the Guarantee. Any holder of the Preferred Securities may institute a
legal proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against INTRUST Capital,
the Guarantee Trustee or any other Person (as defined in the Guarantee). If the
Company were to default on its obligation to pay amounts payable under the
Subordinated Debentures, INTRUST Capital would lack funds for the payment of
Distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and, in such event, holders of Preferred Securities would not be
able to rely upon the Guarantee for such amounts. In the event, however, that a
Debenture Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest on or principal of
the Subordinated Debentures on the payment date on which such payment is due
and payable, then a holder of Preferred Securities may institute a legal
proceeding directly against the Company for enforcement of payment to such
holder of the principal of or interest on such Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Preferred
Securities of such holder (a "Direct Action"). The exercise by the Company of
its right, as described herein, to defer the payment of interest on the
Subordinated Debentures does not constitute a Debenture Event of Default.
10
<PAGE> 15
In connection with such Direct Action, the Company will have a right of set-off
under the Indenture to the extent of any payment made by the Company to such
holder of Preferred Securities in the Direct Action. Except as described herein,
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Subordinated Debentures or assert
directly any other rights in respect of the Subordinated Debentures. See
"Description of the Subordinated Debentures--Enforcement of Certain Rights by
the Holders of Preferred Securities," "Description of the Subordinated
Debentures--Debenture Events of Default" and "Description of the Guarantee." The
Trust Agreement provides that each holder of Preferred Securities by acceptance
thereof agrees to the provisions of the Guarantee and the Indenture.
The Company and INTRUST Capital believe that, taken together, the
obligations of the Company under the Guarantee, the Trust Agreement, the
Subordinated Debentures, the Indenture and the Expense Agreement provide,
in the aggregate, a full, irrevocable and unconditional guarantee, on a
subordinated basis, of all of the obligations of INTRUST Capital under the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Subordinated Debentures and the Guarantee--Full and Unconditional Guarantee."
NO VOTING RIGHTS EXCEPT IN LIMITED CIRCUMSTANCES
Holders of Preferred Securities will have no voting rights except in
limited circumstances relating only to the modification of the Preferred
Securities and the exercise of the rights of INTRUST Capital as holder of the
Subordinated Debentures and the Guarantee. If any Distributions payable on the
Preferred Securities are in arrears for six quarterly periods, then the holders
of the Preferred Securities, voting separately as a class, will be entitled at
the next regular or special meeting of shareholders of the Company to elect two
directors to the Board of Directors of the Company (such voting rights will
continue until such time as the Distribution arrearage on the Preferred
Securities has been paid in full). The affirmative consent of the holders of at
least 66-2/3% of the outstanding Preferred Securities will be required for
amendments to the Trust Agreement or the Guarantee that would adversely affect
the rights or privileges of the holders of the Preferred Securities. Holders of
Preferred Securities will not be entitled to vote to appoint, remove or replace
the Property Trustee or the Delaware Trustee, as such voting rights are vested
exclusively in the holder of the Common Securities (except upon the occurrence
of certain events described herein). The Property Trustee, the Administrative
Trustees and the Company may amend the Trust Agreement without the consent of
holders of Preferred Securities to ensure that INTRUST Capital will be
classified for United States federal income tax purposes as a grantor trust even
if such action adversely affects the interests of such holders. See "Description
of the Preferred Securities--Voting Rights; Amendment of Trust Agreement" and
"Description of the Preferred Securities--Removal of INTRUST Capital Trustees."
RECENT TAX LEGISLATION
Certain legislative proposals were made in 1996 and 1997 which, if enacted,
could have adversely affected the ability of the Company to deduct interest
paid on the Subordinated Debentures. These proposals were not, however,
incorporated into the legislation enacted on August 5, 1997 as the Taxpayer
Relief Act of 1997. Nevertheless, there can be no assurance that other
legislation enacted after the date hereof will not otherwise adversely affect
the ability of the Company to deduct the interest payable on the Subordinated
Debentures. Consequently, there can be no assurance that a Tax Event will not
occur. A Tax Event would permit the Company, upon approval of the Federal
Reserve if then required under applicable capital guidelines or policies of the
Federal Reserve, to cause a redemption of the Preferred Securities before, as
well as after, January 31, 2003. See "Description of the Subordinated
Debentures--Redemption" and "Description of the Preferred Securities--
Redemption--Tax Event Redemption, Capital Treatment Event Redemption or
Investment Company Event Redemption" and "Certain Federal Income Tax
Consequences--Effect of Recent Changes in Tax Laws."
REDEMPTION; EXCHANGE OF PREFERRED SECURITIES FOR SUBORDINATED DEBENTURES
The Company has the right at any time to dissolve, wind-up or terminate
INTRUST Capital and cause the Subordinated Debentures to be distributed to the
holders of the Preferred Securities in exchange therefor in liquidation of
INTRUST Capital. The exercise of such right is subject to the Company having
received prior approval of the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve. The Company
will have the right, in certain circumstances, to redeem the Subordinated
Debentures in whole or in part, in lieu of a distribution of the Subordinated
Debentures by INTRUST Capital, in which event INTRUST Capital will
11
<PAGE> 16
redeem the Trust Securities on a pro rata basis to the same extent as the
Subordinated Debentures are redeemed by the Company. Any such distribution or
redemption prior to the Stated Maturity will be subject to prior approval of
the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve. See "Description of the Preferred Securities--
Redemption--Tax Event Redemption, Capital Treatment Event Redemption or
Investment Company Event Redemption."
Under current United States federal income tax law, a distribution of
Subordinated Debentures upon the dissolution of INTRUST Capital would not be a
taxable event to holders of the Preferred Securities. If, however, INTRUST
Capital were to be recharacterized as an association taxable as a corporation
at the time of the dissolution of INTRUST Capital, the distribution of the
Subordinated Debentures may constitute a taxable event to holders of Preferred
Securities. Moreover, upon occurrence of a Tax Event, a dissolution of INTRUST
Capital in which holders of the Preferred Securities receive cash may be a
taxable event to such holders. See "Certain Federal Income Tax
Consequences--Receipt of Subordinated Debentures or Cash Upon Liquidation of
INTRUST Capital."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities upon a dissolution or liquidation of INTRUST Capital.
The Preferred Securities or the Subordinated Debentures, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby. Because holders of Preferred Securities may receive
Subordinated Debentures, prospective purchasers of Preferred Securities are
also making an investment decision with regard to the Subordinated Debentures
and should carefully review all the information regarding the Subordinated
Debentures contained herein.
If the Subordinated Debentures are distributed to the holders of Preferred
Securities upon the liquidation of INTRUST Capital, the Company will use its
best efforts to list the Subordinated Debentures on the American Stock
Exchange, Inc. or such stock exchanges or other organizations, if any, on which
the Preferred Securities are then listed or quoted.
TRADING PRICE; ABSENCE OF PRIOR PUBLIC MARKET FOR THE PREFERRED SECURITIES
The Preferred Securities may trade at prices that do not fully reflect the
value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder of Preferred Securities that disposes of its
Preferred Securities between record dates for payments of Distributions (and
consequently does not receive a Distribution from INTRUST Capital for the
period prior to such disposition) will nevertheless be required to include
accrued but unpaid interest on the Subordinated Debentures through the date of
disposition in income as ordinary income and to add such amount to its adjusted
tax basis in its pro rata share of the underlying Subordinated Debentures
deemed disposed of. Such holder will recognize a capital loss to the extent the
selling price (which may not fully reflect the value of accrued but unpaid
interest) is less than its adjusted tax basis (which will include all accrued
but unpaid interest). Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income
tax purposes. See "Certain Federal Income Tax Consequences--Disposition of
Preferred Securities."
There is no current public market for the Preferred Securities. Although
the Preferred Securities have been approved for trading on the American Stock
Exchange, Inc., there can be no assurance that an active public market will
develop for the Preferred Securities or that, if such market develops, the
market price will equal or exceed the public offering price set forth on the
cover page of this Prospectus. The public offering price for the Preferred
Securities has been determined through negotiations between the Company and the
Underwriters. Prices for the Preferred Securities will be determined in the
marketplace and may be influenced by many factors, including prevailing
interest rates, the liquidity of the market for the Preferred Securities,
investor perceptions of the Company and general industry and economic
conditions.
PREFERRED SECURITIES ARE NOT INSURED
The Preferred Securities are not insured by the Bank Insurance Fund or the
Savings Association Insurance Fund of the Federal Deposit Insurance Corporation
or by any other governmental agency.
12
<PAGE> 17
RISK FACTORS RELATING TO THE COMPANY
ADVERSE CHANGES IN THE ECONOMY
The Company's profitability is dependent on the profitability of its
principal subsidiary, IBNA. IBNA's principal service area has been identified
as the Wichita, Kansas metropolitan statistical area. IBNA's profitability is
therefore dependent on the economic vitality of this region. While IBNA's
customers within the region are widely diversified, with no individual industry
accounting for more than 20% of the Company's commercial loans outstanding,
there can be no assurance that the Company would be able to withstand adverse
changes in the Wichita economy should they occur. Wichita presently enjoys a
favorable economic climate, with an unemployment rate of 3.5%. During 1997,
Wichita has enjoyed a 10% growth rate in manufacturing employment, with most of
this increase occurring in the commercial and general aviation industry. The
Boeing Company, Cessna Aircraft, Learjet, and Raytheon Aircraft all have
significant manufacturing facilities in Wichita, with subcontractors to these
companies also employing a significant number of people. A prolonged downturn
in the general aviation industry would likely have a detrimental impact on the
Company's profitability. Food service industry borrowers comprise an important
part of the Company's commercial loan portfolio. A pervasive downturn in the
restaurant industry could negatively impact the Company's financial
performance. The Company believes, however, that its risk in this industry is
spread among a number of borrowers who are involved in a variety of different
types of food service in a number of geographic markets throughout the United
States. The agricultural industry is an important part of the overall Kansas
economy. While the Company's direct exposure to this industry is less than it
is to the manufacturing and food service industries, an economic slump in this
industry would negatively impact the state's overall business climate, and
would likely have a negative impact on the Company's operating results. In
addition, there can be no assurance that adverse changes in other sectors of
the Wichita economy or that adverse developments in the national economy would
not adversely affect the Company's financial condition or results of
operations. Accordingly, the Company will remain subject to risks associated
with prolonged declines in either the local or national economy.
ADVERSE CHANGES IN INTEREST RATES
With banking as its principal business, the Company has exposure to changes
in interest rates, as its assets and liabilities will not necessarily reprice
at the same time in a changing interest rate environment. In addition, changes
in interest rates may impact the Company with respect to its ability to attract
deposits. The Company believes its existing balance sheet structure is
appropriate and will allow the Company to maintain acceptable interest margins
in various interest rate environments. There can be no assurance, however, that
competitive factors will not result in a change in the composition of the
balance sheet, or that interest rate movements will not negatively impact the
financial condition or results of operations of the Company. Further, should
its ability to attract deposits be diminished because of movements in interest
rates, the Company would be required to access secondary funding sources, which
would likely negatively impact the Company's net interest margin.
YEAR 2000 ISSUES
In the next two years, many companies, including financial institutions
such as the Company, will face potentially serious issues associated with the
inability of existing data processing hardware and software to appropriately
recognize calendar dates beginning in the year 2000. Many computer programs
that can only distinguish the final two digits of the year entered may read
entries for the year 2000 as the year 1900 and compute payment, interest or
delinquency based on the wrong date or are expected to be unable to compute
payment, interest or delinquency. In 1997, the Company began the process of
identifying the many software applications and hardware devices expected to be
impacted by this issue. The Company outsources its principal data processing
activities to a third party, and purchases most of its software applications
from third party vendors. The Company believes that its vendors are actively
addressing the problems associated with the "Year 2000" issue. While the
Company expects that efforts on the part of current employees will be required
to continue to monitor "Year 2000" activities, the Company does not expect the
costs of addressing these issues in a timely manner will have a material impact
on the Company's financial position or on its results of operations.
Additionally, the failure of a commercial bank customer to prepare for
year 2000 compatibility could have a significant adverse effect on such
customer's operations and profitability, in turn inhibiting its ability to
repay loans in accordance with their terms. Until sufficient information is
accumulated from customers of the Subsidiary Banks to
13
<PAGE> 18
enable the Company to assess the degree to which customers' operations are
susceptible to potential problems relating to the year 2000 issue, the Company
will be unable to quantify the potential for losses from loans to its
commercial customers.
USE OF PROCEEDS
INTRUST Capital will use the gross proceeds received from the sale of the
Preferred Securities to purchase Subordinated Debentures from the Company. The
Company intends to use the net proceeds from the sale of the Subordinated
Debentures for general corporate purposes including, without limitation, the
repurchase from time to time of the Company's common stock, the making of
investments in or possibly acquiring businesses which enhance the Company's
long-term growth or improve or expand the Company's products, services or
markets, the funding of investments in or extensions of credit to the
Company's subsidiaries and to enhance the Company's capital adequacy.
Although the Company evaluates possible acquisitions from time to time,
as of the date of this Prospectus the Company is not engaged in negotiating
any acquisitions. Pending their application for any or all of such
purposes, the net proceeds may be invested in investment grade financial
instruments. See "Capitalization."
MARKET FOR THE PREFERRED SECURITIES
The Preferred Securities have been approved for trading on the American
Stock Exchange, Inc. under the symbol "IKT.PR.A." There can be no assurance,
however, that an active and liquid trading market will develop or, if
developed, that such a market will continue. The offering price and
distribution rate have been determined by negotiations among representatives of
the Company and the Underwriters, and the offering price of the Preferred
Securities may not be indicative of the market price following the offering.
See "Underwriting."
ACCOUNTING TREATMENT
INTRUST Capital will be treated, for financial reporting purposes, as a
subsidiary of the Company and, accordingly, the accounts of INTRUST Capital
will be included in the consolidated financial statements of the Company. The
Preferred Securities will be presented as a separate category of long-term debt
in the consolidated balance sheet of the Company under the caption "Guaranteed
preferred beneficial interests in the Company's Subordinated Debentures," and
appropriate disclosures about the Preferred Securities, the Guarantee and the
Subordinated Debentures will be included in the notes to consolidated financial
statements. The Company will record Distributions payable on the Preferred
Securities as an expense in its consolidated statements of operations for
financial reporting purposes.
All future reports of the Company filed under the Exchange Act while the
Preferred Securities are outstanding will (a) present the Trust Securities
issued by INTRUST Capital on the balance sheet as a separate category of long-
term debt item entitled "Guaranteed preferred beneficial interests in the
Company's subordinated debentures," (b) include in a footnote to the financial
statements disclosure that the sole assets of INTRUST Capital are the
Subordinated Debentures (including the outstanding principal amount, interest
rate and maturity date of such Subordinated Debentures), and (c) include in an
audited footnote to the financial statements disclosure that the Company owns
all of the Common Securities of INTRUST Capital, the sole assets of INTRUST
Capital are the Subordinated Debentures, and the back-up obligations, in the
aggregate, constitute a full and unconditional guarantee by the Company of the
obligations of INTRUST Capital under the Preferred Securities.
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<PAGE> 19
CAPITALIZATION
The following table sets forth (i) the unaudited consolidated
capitalization of the Company at September 30, 1997, and (ii) the unaudited
consolidated capitalization of the Company giving effect to the issuance of the
Preferred Securities hereby offered by INTRUST Capital and the receipt by the
Company of the net proceeds from the corresponding sale of the Subordinated
Debentures to INTRUST Capital (the "Offering"), as if the Offering had been
consummated on September 30, 1997, and assuming the Underwriters'
over-allotment option was not exercised.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
----------------------------
AS ADJUSTED
ACTUAL FOR OFFERING
------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT:
Notes payable.................... $ 15,000 $ 15,000
Convertible capital notes........ 11,219 11,219
Guaranteed preferred beneficial
interests in the Company's
Subordinated Debentures........ -- 50,000
-------- --------
Total long-term debt, excluding
current portion.............. 26,219 76,219
STOCKHOLDERS' EQUITY:
Common stock, $5 par value;
10,000,000 shares authorized,
2,415,071 shares issued........ 12,075 12,075
Capital surplus.................. 12,377 12,377
Retained earnings................ 121,807 121,807
Cost of common stock in treasury,
240,277 shares................. (17,047) (17,047)
Unrealized securities gains, net
of tax......................... 494 494
-------- --------
Total stockholders' equity..... 129,706 129,706
-------- --------
Total capitalization........... $155,925 $205,925
======== ========
CAPITAL RATIOS:
Stockholders' equity to total
assets......................... 7.22% 7.02%
Leverage ratio<F1><F2>........... 6.42% 8.56%
Risk-based capital ratios<F2><F3>
Tier 1 capital to risk-weighted
assets....................... 7.90% 10.53%
Total risk-based capital to
risk-weighted assets......... 9.46% 12.51%
<FN>
- --------
<F1> The leverage ratio is Tier 1 capital divided by average quarterly assets,
after deducting intangible assets and net deferred tax assets in excess of
regulatory limits.
<F2> The capital ratios are computed including the total estimated net proceeds
from the sale of the Preferred Securities, in a manner consistent with
Federal Reserve calculation guidelines.
<F3> Federal Reserve guidelines for calculation of Tier 1 capital to
risk-weighted assets limit the amount of cumulative preferred stock which
can be included in Tier 1 capital to 25% of total Tier 1 capital. Approxi-
mately $37.8 million of the aggregate amount of the Preferred Securities
offered hereby will be included as Tier 1 capital for the Company.
</TABLE>
15
<PAGE> 20
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the Trust
Agreement. The Trust Agreement will be qualified as an indenture under the
Trust Indenture Act. The Property Trustee, State Street Bank and Trust Company,
will act as indenture trustee for the Preferred Securities under the Trust
Agreement for purposes of complying with the provisions of the Trust Indenture
Act. The terms of the Preferred Securities will include those stated in the
Trust Agreement and those made part of the Trust Agreement by the Trust
Indenture Act. The following summary of the material terms and provisions of
the Preferred Securities and the Trust Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Trust Agreement, the Trust Act, and the Trust Indenture Act. Wherever
particular defined terms of the Trust Agreement are referred to, but not
defined herein, such defined terms are incorporated herein by reference. The
form of the Trust Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part.
GENERAL
Pursuant to the terms of the Trust Agreement, the Trustees, on behalf of
INTRUST Capital, will issue the Trust Securities. All of the Common Securities
will be owned by the Company. The Preferred Securities will represent preferred
undivided beneficial interests in the assets of INTRUST Capital and the holders
thereof will be entitled to a preference in certain circumstances with respect
to Distributions and amounts payable on redemption or liquidation over the
Common Securities, as well as other benefits as described in the Trust
Agreement. The Trust Agreement does not permit the issuance by INTRUST Capital
of any securities other than the Trust Securities or the incurrence of any
indebtedness by INTRUST Capital.
The Preferred Securities will rank pari passu, and payments will be made
thereon pro rata, with the Common Securities, except as described under
"--Subordination of Common Securities." Legal title to the Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The Guarantee executed by the Company for the
benefit of the holders of the Preferred Securities will be a guarantee on a
subordinated basis with respect to the Preferred Securities, but will not
guarantee payment of Distributions or amounts payable on redemption or
liquidation of such Preferred Securities when INTRUST Capital does not have
funds on hand available to make such payments. State Street Bank and Trust
Company, as Guarantee Trustee, will hold the Guarantee for the benefit of the
holders of the Preferred Securities. See "Description of the Guarantee."
DISTRIBUTIONS
PAYMENT OF DISTRIBUTIONS. Distributions on each Preferred Security will be
payable at the annual rate of % of the stated Liquidation Amount of $25,
payable quarterly in arrears on March 31, June 30, September 30 and December
31 of each year, to the holders of the Preferred Securities on the relevant
record dates (each date on which Distributions are payable in accordance with
the foregoing, a "Distribution Date"). The record date will be the 15th day of
the month in which the relevant Distribution Date occurs. Distributions will
accumulate from , 1998, the date of original issuance. The
first Distribution Date for the Preferred Securities will be March 31, 1998.
The amount of Distributions payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which Distributions are payable on the Preferred Securities is not a Business
Day, then payment of the Distributions payable on such date will be made on
the next succeeding day that is a Business Day (and without any additional
Distributions, interest or other payment in respect of any such delay) with
the same force and effect as if made on the date such payment was originally
due and payable. "Business Day" means any day other than a Saturday or a
Sunday, a day on which banking institutions in the City of New York are
authorized or required by law or executive order to remain closed or a day on
which the corporate trust office of the Property Trustee or the Debenture
Trustee is closed for business.
EXTENSION PERIOD. The Company has the right under the Indenture, so long as
no Debenture Event of Default has occurred and is continuing, to defer the
payment of interest on the Subordinated Debentures at any time, or from time to
time (each, an "Extension Period"), which, if exercised, would defer
quarterly Distributions on the Preferred Securities during any such Extension
Period. Distributions to which holders of the Preferred Securities are entitled
will accumulate additional Distributions thereon at the rate per annum of
% thereof, compounded quarterly from the relevant Distribution Date.
"Distributions," as used herein, includes any such additional Distributions.
The right to defer the payment of interest on the Subordinated Debentures is
limited, however, to a period, in each
16
<PAGE> 21
instance, not exceeding 20 consecutive quarters and no Extension Period may
extend beyond the Stated Maturity of the Subordinated Debentures. During any
such Extension Period, the Company may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's capital stock (other than (a) dividends
or distributions in common stock of the Company, any declaration of a non-cash
dividend in connection with the implementation of a shareholder rights plan, or
the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (b) purchases of common
stock of the Company related to the rights under any of the Company's benefit
plans for its directors, officers or employees), (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu with or junior in interest to the
Subordinated Debentures (other than payments under the Guarantee), or (iii)
redeem, purchase or acquire less than all of the Subordinated Debentures or any
of the Preferred Securities. Prior to the termination of any such Extension
Period, the Company may further defer the payment of interest; provided that
such Extension Period may not exceed 20 consecutive quarters or extend beyond
the Stated Maturity of the Subordinated Debentures. Upon the termination of any
such Extension Period and the payment of all amounts then due, the Company may
elect to begin a new Extension Period, subject to the above requirements.
Subject to the foregoing, there is no limitation on the number of times that
the Company may elect to begin an Extension Period.
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures.
SOURCE OF DISTRIBUTIONS. The funds of INTRUST Capital available for
distribution to holders of its Preferred Securities will be limited to payments
under the Subordinated Debentures in which INTRUST Capital will invest the
proceeds from the issuance and sale of its Trust Securities. See "Description
of the Subordinated Debentures." Distributions will be paid through the
Property Trustee who will hold amounts received in respect of the Subordinated
Debentures in the Property Account for the benefit of the holders of the Trust
Securities. If the Company does not make interest payments on the Subordinated
Debentures, the Property Trustee will not have funds available to pay
Distributions on the Preferred Securities. The payment of Distributions (if and
to the extent INTRUST Capital has funds legally available for the payment of
such Distributions and cash sufficient to make such payments) is guaranteed by
the Company. See "Description of the Guarantee." Distributions on the
Preferred Securities will be payable to the holders thereof as they appear on
the register of holders of the Preferred Securities on the relevant record
dates, which will be the 15th day of the month in which the relevant
Distribution Date occurs.
REDEMPTION
GENERAL. The Subordinated Debentures will mature on January 31, 2028. The
Company will have the right to redeem the Subordinated Debentures (i) on or
after January 31, 2003, in whole at any time or in part from time to time, or
(ii) at any time, in whole (but not in part), within 180 days following the
occurrence of a Tax Event, a Capital Treatment Event or an Investment Company
Event, in each case subject to receipt of prior approval by the Federal Reserve
if then required under applicable capital guidelines or policies of the Federal
Reserve. The Company will not have the right to purchase the Subordinated
Debentures, in whole or in part, from INTRUST Capital until after January 31,
2003. See "Description of the Subordinated Debentures--General."
MANDATORY REDEMPTION. Upon the repayment or redemption, in whole or in part,
of any Subordinated Debentures, whether at Stated Maturity or upon earlier
redemption as provided in the Indenture, the proceeds from such repayment or
redemption will be applied by the Property Trustee to redeem a Like Amount (as
defined herein) of the Trust Securities, upon not less than 30 nor more than 60
days notice, at a redemption price (the "Redemption Price") equal to the
aggregate Liquidation Amount of such Trust Securities plus accumulated but
unpaid Distributions thereon to the date of redemption (the "Redemption
Date"). See "Description of the Subordinated Debentures--Redemption." If
less than all of the Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption will be
allocated to the redemption of the Trust Securities pro rata.
17
<PAGE> 22
DISTRIBUTION OF SUBORDINATED DEBENTURES. Subject to the Company having
received prior approval of the Federal Reserve if so required under applicable
capital guidelines or policies of the Federal Reserve, the Company will have
the right at any time to dissolve, wind-up or terminate INTRUST Capital and,
after satisfaction of the liabilities of creditors of INTRUST Capital as
provided by applicable law, cause the Subordinated Debentures to be distributed
to the holders of Trust Securities in liquidation of INTRUST Capital. See
"--Liquidation Distribution Upon Termination."
TAX EVENT REDEMPTION, CAPITAL TREATMENT EVENT REDEMPTION OR INVESTMENT
COMPANY EVENT REDEMPTION. If a Tax Event, a Capital Treatment Event or an
Investment Company Event in respect of the Trust Securities occurs and is
continuing, the Company has the right to redeem the Subordinated Debentures in
whole (but not in part) and thereby cause a mandatory redemption of such Trust
Securities in whole (but not in part) at the Redemption Price within 180 days
following the occurrence of such Tax Event, Capital Treatment Event or
Investment Company Event. In the event a Tax Event, a Capital Treatment Event
or an Investment Company Event in respect of the Trust Securities has occurred
and the Company does not elect to redeem the Subordinated Debentures and
thereby cause a mandatory redemption of such Trust Securities or to liquidate
INTRUST Capital and cause the Subordinated Debentures to be distributed to
holders of such Trust Securities in liquidation of INTRUST Capital as described
below under "--Liquidation Distribution Upon Termination," such Preferred
Securities will remain outstanding and Additional Payments (as defined herein)
may be payable on the Subordinated Debentures.
"Additional Payments" means the additional amounts as may be necessary in
order that the amount of Distributions then due and payable by INTRUST Capital
on the outstanding Trust Securities will not be reduced as a result of any
additional taxes, duties and other governmental charges to which INTRUST
Capital has become subject as a result of a Tax Event.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Subordinated Debentures to be contemporaneously redeemed in
accordance with the Indenture, which will be used to pay the Redemption Price
of such Trust Securities, and (ii) with respect to a distribution of
Subordinated Debentures to holders of Trust Securities in connection with a
dissolution or liquidation of INTRUST Capital, Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Subordinated Debentures are distributed. Each Subordinated
Debenture distributed pursuant to clause (ii) above will carry with it
accumulated interest in an amount equal to the accumulated and unpaid interest
then due on such Subordinated Debentures.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
After the liquidation date fixed for any distribution of Subordinated
Debentures for Preferred Securities (i) such Preferred Securities will no
longer be deemed to be outstanding, and (ii) any certificates representing
Preferred Securities will be deemed to represent the Subordinated Debentures
having a principal amount equal to the Liquidation Amount of such Preferred
Securities, and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid Distributions on the Preferred Securities until such
certificates are presented to the Administrative Trustees or their agent for
transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities if a dissolution and liquidation of INTRUST Capital
were to occur. The Preferred Securities that an investor may purchase, or the
Subordinated Debentures that an investor may receive on dissolution and
liquidation of INTRUST Capital, may, therefore, trade at a discount to the
price that the investor paid to purchase the Preferred Securities offered
hereby.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date will be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Subordinated Debentures. Redemptions of the Preferred
Securities will be made and the Redemption Price will be payable on each
Redemption Date only to the extent that INTRUST Capital has funds on hand
available for the payment of such Redemption Price. See "--Subordination of
Common Securities."
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<PAGE> 23
If INTRUST Capital gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, eastern standard time, on the Redemption Date,
to the extent funds are available, the Property Trustee will irrevocably
deposit with the paying agent for the Preferred Securities funds sufficient to
pay the aggregate Redemption Price and will give the paying agent for the
Preferred Securities irrevocable instructions and authority to pay the
Redemption Price to the holders thereof upon surrender of their certificates
evidencing such Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Preferred
Securities called for redemption will be payable to the holders of such
Preferred Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption will have been given and funds deposited as
required, then upon the date of such deposit, all rights of the holders of such
Preferred Securities so called for redemption will cease, except the right of
the holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price, and such Preferred Securities will
cease to be outstanding. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day which is a
Business Day (and without any additional Distribution, interest or other
payment in respect of any such delay) with the same force and effect as if made
on such date. In the event that payment of the Redemption Price in respect of
Preferred Securities called for redemption is improperly withheld or refused
and not paid either by INTRUST Capital, or by the Company pursuant to the
Guarantee, Distributions on such Preferred Securities will continue to accrue
at the then applicable rate, from the Redemption Date originally established by
INTRUST Capital for such Preferred Securities to the date such Redemption Price
is actually paid, in which case the actual payment date will be considered the
date fixed for redemption for purposes of calculating the Redemption Price. See
"Description of the Guarantee."
Subject to applicable law (including, without limitation, United States
federal securities law), and further provided that the Company does not and is
not continuing to exercise its right to defer interest payments on the
Subordinated Debentures, the Company or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Subordinated Debentures to holders of Preferred Securities will
be made to the applicable recordholders thereof as they appear on the register
for the Preferred Securities on the relevant record date, which date will be
the date 15 days prior to the Redemption Date or liquidation date, as
applicable.
If less than all of the Trust Securities are to be redeemed on a Redemption
Date, then the aggregate Liquidation Amount of such Trust Securities to be
redeemed will be allocated pro rata to the Trust Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed will be selected by the Property Trustee from the
outstanding Preferred Securities not previously called for redemption, by such
method as the Property Trustee deems fair and appropriate and which may provide
for the selection for redemption of portions (equal to $25 or an integral
multiple of $25 in excess thereof) of the Liquidation Amount of Preferred
Securities of a denomination larger than $25. The Property Trustee will
promptly notify the registrar for the Preferred Securities in writing of the
Preferred Securities selected for redemption and, in the case of any Preferred
Securities selected for partial redemption, the Liquidation Amount thereof to
be redeemed. For all purposes of the Trust Agreement, unless the context
otherwise requires, all provisions relating to the redemption of Preferred
Securities will relate to the portion of the aggregate Liquidation Amount of
Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the redemption price on the Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on such Subordinated Debentures
or portions thereof (and Distributions will cease to accrue on the related
Preferred Securities or portions thereof) called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and Common Securities, as applicable, will be made pro rata based on
the Liquidation Amount of the Preferred Securities and Common Securities;
provided, however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default has occurred and is continuing, no payment of any
Distribution on, or Redemption Price of, any of the Common
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Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, will be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full
amount of such Redemption Price on all of the outstanding Preferred Securities
then called for redemption, will have been made or provided for, and all funds
available to the Property Trustee will first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Preferred
Securities then due and payable.
In the case of any Event of Default resulting from a Debenture Event of
Default, the Company as holder of the Common Securities will be deemed to have
waived any right to act with respect to any such Event of Default under the
Trust Agreement until the effect of all such Events of Default with respect to
the Preferred Securities have been cured, waived or otherwise eliminated. Until
any such Events of Default under the Trust Agreement with respect to the
Preferred Securities has been so cured, waived or otherwise eliminated, the
Property Trustee will act solely on behalf of the holders of the Preferred
Securities and not on behalf of the Company, as holder of the Common
Securities, and only the holders of the Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
The Company will have the right at any time to dissolve, wind-up or
terminate INTRUST Capital and cause the Subordinated Debentures to be
distributed to the holders of the Preferred Securities. Such right is subject,
however, to the Company having received prior approval of the Federal Reserve
if then required under applicable capital guidelines or policies of the Federal
Reserve.
Pursuant to the Trust Agreement, INTRUST Capital will automatically
terminate upon expiration of its term and will terminate earlier on the first
to occur of (i) certain events of bankruptcy, dissolution or liquidation of the
Company, (ii) the distribution of a Like Amount of the Subordinated Debentures
to the holders of its Trust Securities, if the Company, as depositor, has given
written direction to the Property Trustee to terminate INTRUST Capital (which
direction is optional and wholly within the discretion of the Company, as
depositor), (iii) redemption of all of the Preferred Securities as described
under "--Redemption--Mandatory Redemption," or (iv) the entry of an order for
the dissolution of INTRUST Capital by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv) of
the preceding paragraph, INTRUST Capital will be liquidated by the Trustees as
expeditiously as the Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of INTRUST Capital as provided by
applicable law, to the holders of such Trust Securities a Like Amount of the
Subordinated Debentures, unless such distribution is determined by the Property
Trustee not to be practical, in which event such holders will be entitled to
receive out of the assets of INTRUST Capital available for distribution to
holders, after satisfaction of liabilities to creditors of INTRUST Capital as
provided by applicable law, an amount equal to, in the case of holders of
Preferred Securities, the aggregate of the Liquidation Amount plus accrued and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid
only in part because INTRUST Capital has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by INTRUST Capital on the Preferred Securities will be paid on a pro
rata basis. The Company, as the holder of the Common Securities, will be
entitled to receive distributions upon any such liquidation pro rata with the
holders of the Preferred Securities, except that, if a Debenture Event of
Default has occurred and is continuing, the Preferred Securities will have a
priority over the Common Securities. See "--Subordination of Common
Securities."
Under current United States federal income tax law and interpretations and
assuming, as expected, that INTRUST Capital is treated as a grantor trust, a
distribution of the Subordinated Debentures should not be a taxable event to
holders of the Preferred Securities. Should there be a change in law, a change
in legal interpretation, a Tax Event or other circumstances, however, the
distribution could be a taxable event to holders of the Preferred Securities.
See "Certain Federal Income Tax Consequences--Receipt of Subordinated
Debentures or Cash Upon Liquidation of INTRUST Capital." If the Company elects
neither to redeem the Subordinated Debentures prior to maturity nor to
liquidate INTRUST Capital and distribute the Subordinated Debentures to holders
of the Preferred Securities, the Preferred Securities will remain outstanding
until the repayment of the Subordinated Debentures.
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If the Company elects to liquidate INTRUST Capital and thereby causes the
Subordinated Debentures to be distributed to holders of the Preferred
Securities in liquidation of INTRUST Capital, the Company will continue to have
the right to shorten or extend the maturity of such Subordinated Debentures,
subject to certain conditions. See "Description of the Subordinated
Debentures--General."
LIQUIDATION VALUE
The amount of the Liquidation Distribution payable on the Preferred
Securities in the event of any liquidation of INTRUST Capital is $25 per
Preferred Security plus accrued and unpaid Distributions thereon to the date of
payment, which may be in the form of a distribution of such amount in
Subordinated Debentures, subject to certain exceptions. See "--Liquidation
Distribution Upon Termination."
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an event of default under the
Trust Agreement (an "Event of Default") with respect to the Preferred
Securities (whatever the reason for such Event of Default and whether voluntary
or involuntary or effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of
the Subordinated Debentures--Debenture Events of Default"); or
(ii) default by INTRUST Capital in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of 30
days; or
(iii) default by INTRUST Capital in the payment of any Redemption Price of
any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Trustees in the Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach of
which is dealt with in clauses (ii) or (iii) above), and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Trustee(s) by the holders of at least 25%
in aggregate Liquidation Amount of the outstanding Preferred Securities, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" under the
Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of the Preferred Securities, the
Administrative Trustees and the Company, as depositor, unless such Event of
Default has been cured or waived. The Company, as depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities will have a preference over the Common Securities upon
termination of INTRUST Capital. See "--Liquidation Distribution Upon
Termination." The existence of an Event of Default does not entitle the
holders of Preferred Securities to accelerate the maturity thereof.
REMOVAL OF INTRUST CAPITAL TRUSTEES
Unless a Debenture Event of Default has occurred and is continuing, any
Trustee may be removed at any time by the holder of the Common Securities. If a
Debenture Event of Default has occurred and is continuing, the Property Trustee
and the Delaware Trustee may be removed at such time by the holders of a
majority in Liquidation Amount of the outstanding Preferred Securities. In no
event, however, will the holders of the Preferred Securities have the right to
vote to appoint, remove or replace the Administrative Trustees, which voting
rights are vested exclusively in the Company as the holder of the Common
Securities. No resignation or removal of a Trustee and no appointment of
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a successor trustee will be effective until the acceptance of appointment by
the successor trustee in accordance with the provisions of the Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default has occurred and is continuing, at any time or
times, for the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any part of the Trust Property (as defined
in the Trust Agreement) may at the time be located, the Company, as the holder
of the Common Securities, will have power to appoint one or more Persons (as
defined in the Trust Agreement) either to act as a co-trustee, jointly with the
Property Trustee, of all or any part of such Trust Property, or to act as
separate trustee of any such Trust Property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in such Person or
Persons in such capacity any property, title, right or power deemed necessary
or desirable, subject to the provisions of the Trust Agreement. In case a
Debenture Event of Default has occurred and is continuing, the Property Trustee
alone will have power to make such appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Trustee is a party, or any Person
succeeding to all or substantially all the corporate trust business of such
Trustee, will be the successor of such Trustee under the Trust Agreement,
provided such Person is otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF INTRUST CAPITAL
INTRUST Capital may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described below. INTRUST
Capital may, at the request of the Company, with the consent of the
Administrative Trustees and without the consent of the holders of the Preferred
Securities, the Property Trustee or the Delaware Trustee, merge with or into,
consolidate, amalgamate, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any State; provided, that (i) such successor entity either
(a) expressly assumes all of the obligations of INTRUST Capital with respect to
the Preferred Securities, or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the same as
the Preferred Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) the Company expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee in its capacity as the holder of the
Subordinated Debentures, (iii) the Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Preferred
Securities are then listed (including, if applicable, the American Stock
Exchange, Inc.), if any, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the Preferred Securities
(including any Successor Securities) in any material respect, (v) prior to such
merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, the Company has received an opinion from independent counsel to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither INTRUST Capital nor such successor entity will be required to register
as an "investment company" under the Investment Company Act, and (vi) the
Company owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee, the Indenture, the
Subordinated Debentures, the Trust Agreement and the Expense Agreement.
Notwithstanding the foregoing, INTRUST Capital will not, except with the
consent of holders of 100% in Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other Person or permit any other Person to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger,
replacement,
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conveyance, transfer or lease would cause INTRUST Capital or the successor
entity to be classified as other than a grantor trust for United States federal
income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "Description of the Guarantee--Voting
Rights; Amendments and Assignment" and as otherwise required by the Trust Act,
the Trust Agreement and the Guarantee, the holders of the Preferred Securities
will have no voting rights.
The Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) with respect to acceptance of
appointment by a successor trustee, (ii) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under the Trust Agreement (provided such amendment is not
inconsistent with the other provisions of the Trust Agreement), (iii) to
modify, eliminate or add to any provisions of the Trust Agreement to such
extent as is necessary to ensure that INTRUST Capital will be classified for
United States federal income tax purposes as a grantor trust at all times that
any Trust Securities are outstanding or to ensure that INTRUST Capital will not
be required to register as an "investment company" under the Investment
Company Act, or (iv) to reduce or increase the Liquidation Amount per Trust
Security and simultaneously to increase or reduce the number of Trust
Securities issued and outstanding solely for the purpose of maintaining the
eligibility of the Preferred Securities for listing or quotation on any
national securities exchange or other organization on which the Preferred
Securities are then listed or quoted (including, if applicable, the American
Stock Exchange, Inc.); provided, however, that in the case of clause (ii), such
action may not adversely affect the interests of any holder of Trust Securities
and that, in the case of clause (iv), the aggregate Liquidation Amount of the
Trust Securities outstanding, upon completion of any such reduction or
increase, must be the same as the aggregate Liquidation Amount of the Trust
Securities outstanding immediately prior to any such reduction or increase, and
any amendments of such Trust Agreement will become effective when notice
thereof is given to the holders of Trust Securities (or, in the case of an
amendment pursuant to clause (iv), as of the date specified in the notice). The
Trust Agreement may be amended by the Trustees and the Company with (i) the
consent of holders representing not less than a majority in the aggregate
Liquidation Amount of the outstanding Trust Securities, and (ii) receipt by the
Trustees of an opinion of counsel to the effect that such amendment or the
exercise of any power granted to the Trustees in accordance with such amendment
will not affect INTRUST Capital's status as a grantor trust for United States
federal income tax purposes or INTRUST Capital's exemption from status as an
"investment company" under the Investment Company Act. The affirmative
consent of the holders of at least 66 2/3% of the outstanding Preferred
Securities will be required by INTRUST Capital for amendments to the Trust
Agreement that would adversely affect the rights or privileges of the holders
of the Preferred Securities. Notwithstanding anything in this paragraph to the
contrary, without the consent of each holder of Trust Securities, the Trust
Agreement may not be amended to (a) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date, or (b) restrict the right of a holder of Trust Securities
to institute suit for the enforcement of any such payment on or after such
date.
The Trustees will not, so long as any Subordinated Debentures are held by
the Property Trustee, (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Property Trustee with respect to the
Subordinated Debentures, (ii) waive any past default that is waivable under the
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debentures will be due and payable, or (iv)
consent to any amendment, modification or termination of the Indenture or the
Subordinated Debentures, where such consent is required, without, in each case,
obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of all outstanding Preferred Securities; provided, however,
that where a consent under the Indenture requires the consent of each holder of
Subordinated Debentures affected thereby, no such consent will be given by the
Property Trustee without the prior consent of each holder of the Preferred
Securities. The Trustees may not revoke any action previously authorized or
approved by a vote of the holders of the Preferred Securities except by
subsequent vote of the holders of the Preferred Securities. The Property
Trustee will notify each holder of Preferred Securities of any notice of
default with respect to the Subordinated Debentures. In addition to obtaining
the foregoing approvals of the holders of the Preferred Securities, prior to
taking any of the foregoing actions, the Trustees must obtain an opinion of
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counsel experienced in such matters to the effect that INTRUST Capital will not
be classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be taken,
to be given to each holder of record of Preferred Securities in the manner set
forth in the Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for INTRUST Capital to redeem and cancel its Preferred Securities in accordance
with the Trust Agreement.
Notwithstanding the fact that holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Trustees or any
affiliate of the Company or any Trustee will, for purposes of such vote or
consent, be treated as if they were not outstanding.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities will be made by check
mailed to the address of the holder entitled thereto as such address will
appear on the register of holders of the Preferred Securities. The paying agent
for the Preferred Securities will initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Company. The paying agent for the Preferred
Securities may resign as paying agent upon 30 days' written notice to the
Property Trustee and the Company. In the event that the Property Trustee no
longer is the paying agent for the Preferred Securities, the Administrative
Trustees will appoint a successor (which must be a bank or trust company
acceptable to the Administrative Trustees and the Company) to act as paying
agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as the registrar and the transfer agent for
the Preferred Securities. Registration of transfers of Preferred Securities
will be effected without charge by or on behalf of INTRUST Capital, but upon
payment of any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. INTRUST Capital will not be required
to register or cause to be registered the transfer of Preferred Securities
after such Preferred Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than upon the occurrence and during the
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreement and, upon the occurrence and
during the continuance of an Event of Default, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the Trust Agreement at
the request of any holder of Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby. If no Event of Default has occurred and is continuing and the
Property Trustee is required to decide between alternative causes of action,
construe ambiguous provisions in the Trust Agreement or is unsure of the
application of any provision of the Trust Agreement, and the matter is not one
on which holders of Preferred Securities are entitled under the Trust Agreement
to vote, then the Property Trustee will take such action as is directed by the
Company and if not so directed, will take such action as it deems advisable and
in the best interests of the holders of the Trust Securities and will have no
liability except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate INTRUST Capital in such a way that INTRUST Capital
will not be deemed to be an "investment company" required to be registered
under the Investment Company Act or classified as an association taxable as a
corporation for United
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States federal income tax purposes and so that the Subordinated Debentures will
be treated as indebtedness of the Company for United States federal income tax
purposes. The Company and the Administrative Trustees are authorized, in this
connection, to take any action, not inconsistent with applicable law, the
certificate of trust of INTRUST Capital or the Trust Agreement, that the
Company and the Administrative Trustees determine in their discretion to be
necessary or desirable for such purposes.
Holders of the Preferred Securities have no preemptive or similar rights.
The Trust Agreement and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
Concurrently with the issuance of the Preferred Securities, INTRUST Capital
will invest the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Subordinated Debentures issued by the
Company. The Subordinated Debentures will be issued as unsecured debt under the
Indenture, to be dated as of , 1998 (the "Indenture"), between
the Company and State Street Bank and Trust Company, as trustee (the "Debenture
Trustee"). The Indenture will be qualified as an indenture under the Trust
Indenture Act. The following summary of the material terms and provisions of the
Subordinated Debentures and the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Indenture and
to the Trust Indenture Act. Wherever particular defined terms of the Indenture
are referred to, but not defined herein, such defined terms are incorporated
herein by reference. The form of the Indenture has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
GENERAL
The Subordinated Debentures will be limited in aggregate principal amount
to approximately $51,546,400 (or $59,278,375 if the option described under the
heading "Underwriting" is exercised by the Underwriters), such amount being
the sum of the aggregate stated Liquidation Amount of the Trust Securities.
The Subordinated Debentures will bear interest at the annual rate of
% of the principal amount thereof, payable quarterly in arrears on March
31, June 30, September 30, and December 31 of each year (each, an "Interest
Payment Date") beginning March 31, 1998, to the Person (as defined in the
Indenture) in whose name each Subordinated Debenture is registered, subject to
certain exceptions, at the close of business on the fifteenth day of the last
month of the calendar quarter. It is anticipated that, until the liquidation of
INTRUST Capital, the Subordinated Debentures will be held in the name of the
Property Trustee in trust for the benefit of the holders of the Preferred
Securities. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any date
on which interest is payable on the Subordinated Debentures is not a Business
Day, then payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if
made on the date such payment was originally payable. Accrued interest that is
not paid on the applicable Interest Payment Date will bear additional interest
on the amount thereof (to the extent permitted by law) at the rate per annum of
% thereof, compounded quarterly. The term "interest," as used herein,
includes quarterly interest payments, interest on quarterly interest payments
not paid on the applicable Interest Payment Date and Additional Payments, as
applicable.
The Subordinated Debentures will mature on January 31, 2028 (such date, as
it may be shortened or extended as hereinafter described, the "Stated
Maturity"). Such date may be shortened at any time by the Company to any date
not earlier than January 31, 2003, subject to the Company having received
prior approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve. Such date may also be extended
at any time at the election of the Company but in no event to a date later than
January 31, 2037, provided that at the time such election is made and at the
time of extension (i) the Company is not in bankruptcy, otherwise insolvent or
in liquidation, (ii) the Company is not in default in the payment of any
interest or principal on the Subordinated Debentures, and (iii) INTRUST Capital
is not in arrears on payments of Distributions on the Preferred Securities and
no deferred Distributions are accumulated. In the event that the Company elects
to shorten or extend the Stated Maturity of the Subordinated Debentures, it will
give notice thereof to the Debenture Trustee, INTRUST Capital and to the holders
of the Subordinated Debentures no more than 180 days and no less than 90 days
prior to the
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effectiveness thereof. The Company will not have the right to purchase the
Subordinated Debentures, in whole or in part, from INTRUST Capital until after
January 31, 2003, except if a Tax Event, a Capital Treatment Event or an
Investment Company Event has occurred and is continuing.
The Subordinated Debentures will be unsecured and will rank junior and be
subordinate in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company. Because the Company is a holding
company, the right of the Company to participate in any distribution of assets
of any Subsidiary Bank, upon any such Subsidiary Bank's liquidation or
reorganization or otherwise (and thus the ability of holders of the
Subordinated Debentures to benefit indirectly from such distribution), is
subject to the prior claim of creditors of such Subsidiary Bank, except to the
extent that the Company may itself be recognized as a creditor of such
Subsidiary Bank. The Subordinated Debentures will, therefore, be effectively
subordinated to all existing and future liabilities of the Subsidiary Banks,
and holders of Subordinated Debentures should look only to the assets of the
Company for payments on the Subordinated Debentures. The Indenture does not
limit the incurrence or issuance of other secured or unsecured debt of the
Company, including Senior Debt, Subordinated Debt and Additional Senior
Obligations, whether under the Indenture or any existing indenture or other
indenture that the Company may enter into in the future or otherwise. See
"--Subordination."
The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving the Company that may
adversely affect such holders.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Indenture at any time during the term
of the Subordinated Debentures, so long as no Debenture Event of Default has
occurred and is continuing, to defer the payment of interest at any time, or
from time to time (each, an "Extension Period"). The right to defer the
payment of interest on the Subordinated Debentures is limited, however, to a
period, in each instance, not exceeding 20 consecutive quarters and no
Extension Period may extend beyond the Stated Maturity of the Subordinated
Debentures. At the end of each Extension Period, the Company must pay all
interest then accrued and unpaid (together with interest thereon at the annual
rate of %, compounded quarterly, to the extent permitted by applicable
law). During an Extension Period, interest will continue to accrue and holders
of Subordinated Debentures (or the holders of Preferred Securities if such
securities are then outstanding) will be required to accrue and recognize
income for United States federal income tax purposes. See "Certain Federal
Income Tax Consequences--Potential Extension of Interest Payment Period and
Original Issue Discount."
During any such Extension Period, the Company may not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock (other
than (a) dividends or distributions in common stock of the Company, any
declaration of a non-cash dividend in connection with the implementation of a
shareholder rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
and (b) purchases of common stock of the Company related to the rights under
any of the Company's benefit plans for its directors, officers or employees),
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu
with or junior in interest to the Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee ranks pari passu or junior in
interest to the Subordinated Debentures (other than payments under the
Guarantee), or (iii) redeem, purchase or acquire less than all of the
Subordinated Debentures or any of the Preferred Securities. Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest; provided that no Extension Period may exceed 20
consecutive quarters or extend beyond the Stated Maturity of the Subordinated
Debentures. Upon the termination of any such Extension Period and the payment
of all amounts then due on any Interest Payment Date, the Company may elect to
begin a new Extension Period subject to the above requirements. No interest
will be due and payable during an Extension Period, except at the end thereof.
The Company has no present intention of exercising its rights to defer payments
of interest on the Subordinated Debentures. The Company must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of its
election of such Extension Period at least two Business Days prior to the
earlier of (i) the next succeeding date on which Distributions on the Trust
Securities would have been payable except for the election to begin such
Extension Period, or (ii) the date the Trust is required to give notice of the
record date, or the date such Distributions
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are payable, to the American Stock Exchange, Inc. (or other applicable
self-regulatory organization) or to holders of the Preferred Securities, but in
any event at least one Business Day before such record date. Subject to the
foregoing, there is no limitation on the number of times that the Company may
elect to begin an Extension Period.
ADDITIONAL SUMS
If INTRUST Capital or the Property Trustee is required to pay any
additional taxes, duties or other governmental charges as a result of the
occurrence of a Tax Event, the Company will pay to the recordholders of the
Subordinated Debentures as additional amounts (referred to herein as
"Additional Payments") on the Subordinated Debentures such additional amounts
as may be required so that the net amounts received and retained by INTRUST
Capital after paying any such additional taxes, duties or other governmental
charges will not be less than the amounts INTRUST Capital would have received
had such additional taxes, duties or other governmental charges not been
imposed.
REDEMPTION
The Company will have the right to redeem the Subordinated Debentures prior
to maturity (i) on or after January 31, 2003, in whole at any time or in part
from time to time, or (ii) at any time in whole (but not in part), within 180
days following the occurrence of a Tax Event, a Capital Treatment Event or an
Investment Company Event, in each case at a redemption price equal to the
accrued and unpaid interest on the Subordinated Debentures so redeemed to the
date fixed for redemption, plus 100% of the principal amount thereof. Any such
redemption prior to the Stated Maturity will be subject to prior approval of
the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve.
"Tax Event" means the receipt by INTRUST Capital of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) interest payable by the Company on the Subordinated
Debentures is not, or within 90 days of the date of such opinion will not be,
deductible by the Company, in whole or in part, for United States federal
income tax purposes, (ii) INTRUST Capital is, or will be within 90 days after
the date of such opinion of counsel, subject to United States federal income
tax with respect to income received or accrued on the Subordinated Debentures,
or (iii) INTRUST Capital is, or will be within 90 days after the date of such
opinion of counsel, subject to more than a de minimis amount of other taxes,
duties, assessments or other governmental charges. The Company must request and
receive an opinion with regard to such matters within a reasonable period of
time after it becomes aware of the possible occurrence of any of the events
described in clauses (i) through (iii) above.
"Capital Treatment Event" means the receipt by INTRUST Capital of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to or any change (including any announced prospective change)
in the laws (or any regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such proposed
change, pronouncement or decision is announced on or after the date of issuance
of the Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk of impairment of the Company's ability to treat the
aggregate Liquidation Amount of the Preferred Securities (or any substantial
portion thereof) as "Tier 1 Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then in
effect and applicable to the Company; provided, however, that the inability of
the Company to treat all or any portion of the Liquidation Amount of the
Preferred Securities as Tier 1 Capital shall not constitute the basis for a
Capital Treatment Event if such inability results from the Company having
cumulative preferred stock, minority interests in consolidated subsidiaries, or
any other class of security or interest which the Federal Reserve now or may
hereafter afford Tier I Capital Treatment in excess of the amount which may
qualify for treatment as Tier 1 Capital under applicable capital adequacy
guidelines of the Federal Reserve.
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"Investment Company Event" means the receipt by INTRUST Capital of an
opinion of counsel experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, INTRUST Capital is or will
be considered an "investment company" that is required to be registered under
the Investment Company Act, which change becomes effective on or after the date
of original issuance of the Preferred Securities.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Subordinated Debentures to
be redeemed at its registered address. Unless the Company defaults in payment
of the redemption price for the Subordinated Debentures, on and after the
redemption date interest ceases to accrue on such Subordinated Debentures or
portions thereof called for redemption.
The Subordinated Debentures will not be subject to any sinking fund.
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Preferred Securities--Liquidation
Distribution Upon Termination," under certain circumstances involving the
termination of INTRUST Capital, the Subordinated Debentures may be distributed
to the holders of the Preferred Securities in liquidation of INTRUST Capital
after satisfaction of liabilities to creditors of INTRUST Capital as provided
by applicable law. Any such distribution will be subject to receipt of prior
approval by the Federal Reserve if then required under applicable policies or
guidelines of the Federal Reserve. If the Subordinated Debentures are
distributed to the holders of Preferred Securities upon the liquidation of
INTRUST Capital, the Company will use its best efforts to list the Subordinated
Debentures on the American Stock Exchange, Inc. or such stock exchanges or other
organizations, if any, on which the Preferred Securities are then listed or
quoted. There can be no assurance as to the market price of any Subordinated
Debentures that may be distributed to the holders of Preferred Securities.
RESTRICTIONS ON CERTAIN PAYMENTS
If at any time (i) there has occurred a Debenture Event of Default, (ii)
the Company is in default with respect to its obligations under the Guarantee,
or (iii) the Company has given notice of its election of an Extension Period as
provided in the Indenture with respect to the Subordinated Debentures and has
not rescinded such notice, or such Extension Period, or any extension thereof,
is continuing, the Company will not (1) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (other than (a) dividends
or distributions in common stock of the Company, any declaration of a non-cash
dividend in connection with the implementation of a shareholder rights plan, or
the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (b) purchases of common
stock of the Company related to the rights under any of the Company's benefit
plans for its directors, officers or employees), (2) make any payment of
principal, interest or premium, if any, on or repay or repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu or junior in interest to the
Subordinated Debentures (other than payments under the Guarantee), or (3)
redeem, purchase or acquire less than all of the Subordinated Debentures or any
of the Preferred Securities.
SUBORDINATION
The Indenture provides that the Subordinated Debentures are subordinated
and junior in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company. Upon any payment or distribution
of assets to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors, marshaling of assets
or any bankruptcy, insolvency, debt restructuring or similar proceedings in
connection with any insolvency or bankruptcy proceedings of the Company, the
holders of Senior Debt, Subordinated Debt and Additional Senior Obligations of
the Company will first be entitled to receive payment in full of principal of
(and premium, if any) and interest, if any, on such Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company before the holders of
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the principal of or interest on the Subordinated Debentures.
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In the event of the acceleration of the maturity of any Subordinated
Debentures, the holders of all Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company outstanding at the time of such acceleration
will first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of the
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the principal of or interest on the Subordinated Debentures.
No payments on account of principal or interest in respect of the
Subordinated Debentures may be made if there has occurred and is continuing a
default in any payment with respect to Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Company or an event of default with
respect to any Senior Debt, Subordinated Debt or Additional Senior Obligations
of the Company resulting in the acceleration of the maturity thereof, or if any
judicial proceeding is pending with respect to any such default.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (v) every capital lease obligation of such Person, and (vi) and
every obligation of the type referred to in clauses (i) through (v) of another
Person and all dividends of another Person the payment of which, in either
case, such Person has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise.
"Senior Debt" means, with respect to the Company, the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not such claim for post-petition interest is allowed in such
proceeding), on Debt, whether incurred on or prior to the date of the Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Subordinated Debentures
or to other Debt which is pari passu with, or subordinated to, the Subordinated
Debentures; provided, however, that Senior Debt will not be deemed to include
(i) any Debt of the Company which when incurred and without respect to any
election under section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company, (ii) any Debt of the Company to
any of its subsidiaries, (iii) any Debt to any employee of the Company, (iv)
any Debt which by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business to the extent
that payments made to the holders of such Debt by the holders of the
Subordinated Debentures as a result of the subordination provisions of the
Indenture would be greater than they otherwise would have been as a result of
any obligation of such holders to pay amounts over to the obligees on such
trade accounts payable or accrued liabilities arising in the ordinary course of
business as a result of subordination provisions to which such Debt is subject,
and (v) Debt which constitutes Subordinated Debt.
"Subordinated Debt" means, with respect to the Company, the principal of
(and premium, if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating
to the Company whether or not such claim for post-petition interest is allowed
in such proceeding), on Debt, whether incurred on or prior to the date of the
Indenture or thereafter incurred, which is by its terms expressly provided to
be junior and subordinate to other Debt of the Company (other than the
Subordinated Debentures).
"Additional Senior Obligations" means, with respect to the Company, all
indebtedness, whether incurred on or prior to the date of the Indenture or
thereafter incurred, for claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; provided, however, that Additional Senior Obligations do not
include claims in respect of Senior Debt or Subordinated Debt or obligations
which, by their terms, are expressly stated to be not superior in right of
payment to the Subordinated Debentures or to rank pari passu in right of
payment with the Subordinated Debentures. "Claim," as used herein, has the
meaning assigned thereto in Section 101(4) of the United States Bankruptcy Code
of 1978, as amended.
The Indenture places no limitation on the amount of additional Senior Debt,
Subordinated Debt or Additional Senior Obligations that may be incurred by the
Company. The Company expects from time to time to incur additional indebtedness
constituting Senior Debt, Subordinated Debt and Additional Senior Obligations.
As of September 30,
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1997, the Company had aggregate Senior Debt, Subordinated Debt and Additional
Senior Obligations of approximately $36.7 million. Because the Company is a
holding company, the Subordinated Debentures are effectively subordinated to all
existing and future liabilities of the Company subsidiaries, including
obligations to depositors of the Subsidiary Banks.
PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on the Subordinated Debentures
will be made at the office of the Debenture Trustee in Boston, Massachusetts,
except that, at the option of the Company, payment of any interest may be made
(i) by check mailed to the address of the Person entitled thereto as such
address appears in the register of holders of the Subordinated Debentures, or
(ii) by transfer to an account maintained by the Person entitled thereto as
specified in the register of holders of the Subordinated Debentures, provided
that proper transfer instructions have been received by the regular record
date. Payment of any interest on Subordinated Debentures will be made to the
Person in whose name such Subordinated Debenture is registered at the close of
business on the regular record date for such interest, except in the case of
defaulted interest. The Company may at any time designate additional paying
agents for the Subordinated Debentures or rescind the designation of any paying
agent for the Subordinated Debentures; however, the Company will at all times
be required to maintain a paying agent in each place of payment for the
Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent for the
Subordinated Debentures, or then held by the Company in trust, for the payment
of the principal of or interest on the Subordinated Debentures and remaining
unclaimed for two years after such principal or interest has become due and
payable will be repaid to the Company on May 31 of each year or (if then held
in trust by the Company) will be discharged from such trust and the holder of
such Subordinated Debenture will thereafter look, as a general unsecured
creditor, only to the Company for payment thereof.
REGISTRAR AND TRANSFER AGENT
The Debenture Trustee will act as the registrar and the transfer agent for
the Subordinated Debentures. Subordinated Debentures may be presented for
registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed), at the office of
the registrar in Boston, Massachusetts. The Company may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts. The Company may at any time
designate additional transfer agents with respect to the Subordinated
Debentures. In the event of any redemption, neither the Company nor the
Debenture Trustee will be required to (i) issue, register the transfer of or
exchange Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of Subordinated
Debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption, or (ii) transfer or exchange any Subordinated
Debentures so selected for redemption, except, in the case of any Subordinated
Debentures being redeemed in part, any portion thereof not to be redeemed.
MODIFICATION OF INDENTURE
The Company and the Debenture Trustee may, from time to time without the
consent of the holders of the Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies and qualifying, or maintaining
the qualification of, the Indenture under the Trust Indenture Act. The
Indenture contains provisions permitting the Company and the Debenture Trustee,
with the consent of the holders of not less than a majority in principal amount
of the outstanding Subordinated Debentures, to modify the Indenture; provided,
that no such modification may, without the consent of the holder of each
outstanding Subordinated Debenture affected by such proposed modification, (i)
extend the fixed maturity of the Subordinated Debentures, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or (ii) reduce the percentage of principal amount of
Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture; provided that so long as any of the
Preferred Securities remain outstanding, no such modification may be made that
requires the consent of the holders of the Subordinated Debentures, and no
termination of the Indenture may occur, and no waiver of any Debenture Event of
Default may be effective, without the prior consent of the holders of at least
a majority of the aggregate Liquidation Amount of the Preferred Securities and
that if the consent of the holder of each Subordinated
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Debenture is required, such modification will not be effective until each
holder of Trust Securities has consented thereto.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Subordinated Debentures that has occurred and is
continuing constitutes an event of default (each, a "Debenture Event of
Default") with respect to the Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Subordinated
Debentures when due (subject to the deferral of any due date in the case of
an Extension Period); or
(ii) failure to pay any principal on the Subordinated Debentures when
due whether at maturity, upon redemption by declaration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Company from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of the Subordinated Debentures; or
(iv) certain events of bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee.
The Debenture Trustee, or the holders of not less than 25% in aggregate
outstanding principal amount of the Subordinated Debentures, may declare the
principal due and payable immediately upon a Debenture Event of Default. The
holders of a majority in aggregate outstanding principal amount of the
Subordinated Debentures may annul such declaration and waive the default if the
default (other than the non-payment of the principal of the Subordinated
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
Should the holders of the Subordinated Debentures fail to annul such
declaration and waive such default, the holders of a majority in aggregate
Liquidation Amount of the Preferred Securities will have such right.
The Company is required to file annually with the Debenture Trustee a
certificate as to whether or not the Company is in compliance with all the
conditions and covenants applicable to it under the Indenture.
If a Debenture Event of Default has occurred and is continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such Subordinated Debentures, and any other amounts payable under
the Indenture, to be forthwith due and payable and to enforce its other rights
as a creditor with respect to such Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest on or
principal of the Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Preferred Securities may institute
a legal proceeding directly against the Company for enforcement of payment to
such holder of the principal of or interest on such Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such holder (a "Direct Action"). In connection with
such Direct Action, the Company will have a right of set-off under the
Indenture to the extent of any payment made by the Company to such holder of
Preferred Securities in the Direct Action. The Company may not amend the
Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the Preferred Securities. If the
right to bring a Direct Action is removed, INTRUST Capital may become subject
to the reporting obligations under the Exchange Act. The Company has the right
under the Indenture to set-off any payment made to such holder of Preferred
Securities by the Company in connection with a Direct Action.
The holders of the Preferred Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the Subordinated Debentures unless there has been
an Event of Default under the Trust Agreement. See "Description of the
Preferred Securities--Events of Default; Notice."
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CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Company may not consolidate with or merge into any other Person or
convey or transfer its properties and assets substantially as an entirety to
any Person, and any Person may not consolidate with or merge into the Company
or sell, convey, transfer or otherwise dispose of its properties and assets
substantially as an entirety to the Company, unless (i) in the event the
Company consolidates with or merges into another Person or conveys or transfers
its properties and assets substantially as an entirety to any Person, the
successor Person is organized under the laws of the United States or any State
or the District of Columbia, and such successor Person expressly assumes by
supplemental indenture the Company's obligations on the Subordinated
Debentures, (ii) immediately after giving effect thereto, no Debenture Event of
Default, and no event which, after notice or lapse of time or both, would
become a Debenture Event of Default, has occurred and is continuing, and (iii)
certain other conditions as prescribed in the Indenture are met.
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to the
Company's obligations to pay certain sums due pursuant to the Indenture and to
provide certain officers' certificates and opinions of counsel described
therein) and the Company will be deemed to have satisfied and discharged the
Indenture when, among other things, all Subordinated Debentures not previously
delivered to the Debenture Trustee for cancellation (i) have become due and
payable, or (ii) will become due and payable at their Stated Maturity within
one year or are to be called for redemption within one year, and the Company
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation, for the principal and interest to the date
of the deposit or to the Stated Maturity or redemption date, as the case may
be.
GOVERNING LAW
The Indenture and the Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of Kansas.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee has and is subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Subordinated Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might be incurred thereby. The Debenture Trustee is not required to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
MISCELLANEOUS
The Company has agreed, pursuant to the Indenture, for so long as Trust
Securities remain outstanding, (i) to maintain directly or indirectly 100%
ownership of the Common Securities of INTRUST Capital (provided that certain
successors which are permitted pursuant to the Indenture may succeed to the
Company's ownership of the Common Securities), (ii) not to voluntarily
terminate, wind up or liquidate INTRUST Capital, except upon prior approval of
the Federal Reserve if then so required under applicable capital guidelines or
policies of the Federal Reserve, and (a) in connection with a distribution of
Subordinated Debentures to the holders of the Preferred Securities in
liquidation of INTRUST Capital, or (b) in connection with certain mergers,
consolidations or amalgamations permitted by the Trust Agreement, and (iii) to
use its reasonable efforts, consistent with the terms and provisions of the
Trust Agreement, to cause INTRUST Capital to remain classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes.
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DESCRIPTION OF THE GUARANTEE
The Preferred Securities Guarantee Agreement (the "Guarantee") will be
executed and delivered by the Company concurrently with the issuance of the
Preferred Securities for the benefit of the holders of the Preferred
Securities. The Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Guarantee Trustee will act as indenture trustee under the
Guarantee for purposes of complying with the provisions of the Trust Indenture
Act. The Guarantee Trustee, State Street Bank and Trust Company, will hold the
Guarantee for the benefit of the holders of the Preferred Securities. The
following summary of the material terms and provisions of the Guarantee does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Guarantee and the Trust Indenture
Act. Wherever particular defined terms of the Guarantee are referred to, but
not defined herein, such defined terms are incorporated herein by reference.
The form of the Guarantee has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part.
GENERAL
The Company will, pursuant to the Guarantee, irrevocably agree to pay in
full on a subordinated basis, to the extent set forth therein, the Guarantee
Payments (as defined below) to the holders of the Preferred Securities, as and
when due, regardless of any defense, right of set-off or counterclaim that
INTRUST Capital may have or assert other than the defense of payment. The
following payments with respect to the Preferred Securities, to the extent not
paid by or on behalf of INTRUST Capital (the "Guarantee Payments"), will be
subject to the Guarantee: (i) any accrued and unpaid Distributions required to
be paid on the Preferred Securities, to the extent that INTRUST Capital has
funds available therefor at such time, (ii) the Redemption Price with respect
to any Preferred Securities called for redemption to the extent that INTRUST
Capital has funds available therefor at such time, and (iii) upon a voluntary
or involuntary dissolution, winding up or liquidation of INTRUST Capital (other
than in connection with the distribution of Subordinated Debentures to the
holders of Preferred Securities or a redemption of all of the Preferred
Securities), the lesser of (a) the amount of the Liquidation Distribution, to
the extent INTRUST Capital has funds available therefor at such time, and (b)
the amount of assets of INTRUST Capital remaining available for distribution to
holders of Preferred Securities in liquidation of INTRUST Capital. The
obligation of the Company to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of the
Preferred Securities or by causing INTRUST Capital to pay such amounts to such
holders.
The Guarantee will not apply to any payment of Distributions except to the
extent INTRUST Capital has funds available therefor. If the Company does not
make interest payments on the Subordinated Debentures held by INTRUST Capital,
INTRUST Capital will not pay Distributions on the Preferred Securities and will
not have funds legally available therefor.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company in the same
manner as the Subordinated Debentures. The Guarantee does not place a
limitation on the amount of additional Senior Debt, Subordinated Debt or
Additional Senior Obligations that may be incurred by the Company. The Company
expects from time to time to incur additional indebtedness constituting Senior
Debt, Subordinated Debt and Additional Senior Obligations.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other Person). The Guarantee will
not be discharged except by payment of the Guarantee Payments in full to the
extent not paid by INTRUST Capital or upon distribution of the Subordinated
Debentures to the holders of the Preferred Securities. Because the Company is a
holding company, the right of the Company to participate in any distribution of
assets of any Subsidiary Bank upon such Subsidiary Bank's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
Subsidiary Bank, except to the extent the Company may itself be recognized as a
creditor of that Subsidiary Bank. The Company's obligations under the
Guarantee, therefore, will be effectively subordinated to all existing and
future liabilities of the Company subsidiaries, and claimants should look only
to the assets of the Company for payments thereunder.
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<PAGE> 38
The Company and INTRUST Capital believe that, taken together, the
obligations of the Company under the Guarantee, the Trust Agreement, the
Subordinated Debentures, the Indenture and the Expense Agreement provide,
in the aggregate, a full, irrevocable and unconditional guarantee, on a
subordinated basis, of all of the obligations of INTRUST Capital under the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Subordinated Debentures and the Guarantee--Full and Unconditional Guarantee."
VOTING RIGHTS; AMENDMENTS AND ASSIGNMENT
Pursuant to the Guarantee, if any Distributions payable on the Preferred
Securities are in arrears for six quarterly periods, then the holders of the
Preferred Securities, voting separately as a class, will be entitled at the
next regular or special meeting of shareholders of the Company to elect two
directors to the Board of Directors of the Company (such voting rights will
continue until such time as the Distribution arrearage on the Preferred
Securities has been paid in full). The affirmative consent of the holders of at
least 66 2/3% of the outstanding Preferred Securities will be required by
INTRUST Capital for amendments to the Guarantee that would adversely affect the
rights or privileges of the holders of the Preferred Securities. No vote of the
holders of Preferred Securities will be required with respect to any amendments
to the Guarantee which do not adversely affect the rights or privileges of such
holders. See "Description of the Preferred Securities--Voting Rights;
Amendment of Trust Agreement." All guarantees and agreements contained in the
Guarantee will bind the successors, assigns, receivers, trustees and
representatives of the Company and will inure to the benefit of the holders of
the Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Any holder of Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against INTRUST Capital, the Guarantee
Trustee or any other Person.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with
all the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee and, after
default with respect to the Guarantee, must exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or
her own affairs. Subject to such provisions, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of any Preferred Securities, unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon (a)
full payment of the Redemption Price of the Preferred Securities, (b) full
payment of the amounts payable upon liquidation of INTRUST Capital, or (c)
distribution of the Subordinated Debentures to the holders of the Preferred
Securities. The Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the Preferred Securities must
restore payment of any sums paid under such Preferred Securities or the
Guarantee.
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<PAGE> 39
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of Kansas.
EXPENSE AGREEMENT
The Company will, pursuant to the Agreement as to Expenses and Liabilities
entered into by it under the Trust Agreement (the "Expense Agreement"),
irrevocably and unconditionally guarantee to each person or entity to whom
INTRUST Capital becomes indebted or liable, the full payment of any costs,
expenses or liabilities of INTRUST Capital, other than obligations of INTRUST
Capital to pay to the holders of the Preferred Securities or other similar
interests in INTRUST Capital of the amounts due such holders pursuant to the
terms of the Preferred Securities or such other similar interests, as the case
may be. Third party creditors of INTRUST Capital may proceed directly against
the Company under the Expense Agreement, regardless of whether such creditors
had notice of the Expense Agreement.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent INTRUST Capital has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of the Guarantee." The Company and INTRUST
Capital believe that, taken together, the obligations of the Company under the
Subordinated Debentures, the Indenture, the Trust Agreement, the Expense
Agreement, and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of payment of Distributions
and other amounts due on the Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the obligations of INTRUST Capital under the
Preferred Securities. If and to the extent that the Company does not make
payments on the Subordinated Debentures, INTRUST Capital will not pay
Distributions or other amounts due on the Preferred Securities. The Guarantee
does not cover payment of Distributions when INTRUST Capital does not have
sufficient funds to pay such Distributions. In such event, the remedy of a
holder of Preferred Securities is to institute a legal proceeding directly
against the Company for enforcement of payment of such Distributions to such
holder. The obligations of the Company under the Guarantee are subordinate and
junior in right of payment to all Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Preferred Securities, primarily
because (i) the aggregate principal amount of the Subordinated Debentures will
be equal to the sum of the aggregate stated Liquidation Amount of the Trust
Securities, (ii) the interest rate and interest and other payment dates on the
Subordinated Debentures will match the Distribution rate and Distribution and
other payment dates for the Preferred Securities, (iii) the Company will pay
for all and any costs, expenses and liabilities of INTRUST Capital (except the
obligations of INTRUST Capital to holders of the Preferred Securities), and
(iv) the Trust Agreement further provides that INTRUST Capital will not engage
in any activity that is not consistent with the limited purposes of INTRUST
Capital.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, INTRUST
Capital or any other Person. A default or event of default under any Senior
Debt, Subordinated Debt or Additional Senior Obligations of the Company would
not constitute a default or Event of Default. In the event, however, of payment
defaults under, or acceleration of, Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Company, the subordination provisions of
the Indenture provide that no payments may be made in respect of the
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<PAGE> 40
Subordinated Debentures until such Senior Debt, Subordinated Debt or Additional
Senior Obligations has been paid in full or any payment default thereunder has
been cured or waived. Failure to make required payments on the Subordinated
Debentures would constitute an Event of Default.
LIMITED PURPOSE OF INTRUST CAPITAL
The Preferred Securities evidence a preferred undivided beneficial interest
in the assets of INTRUST Capital. INTRUST Capital exists for the exclusive
purposes of (i) issuing the Trust Securities representing undivided beneficial
interests in the assets of INTRUST Capital, (ii) investing the gross proceeds
of the Trust Securities in the Subordinated Debentures issued by the Company,
and (iii) engaging in only those other activities necessary, advisable, or
incidental thereto. A principal difference between the rights of a holder of a
Preferred Security and the rights of a holder of a Subordinated Debenture is
that a holder of a Subordinated Debenture is entitled to receive from the
Company the principal amount of and interest accrued on Subordinated Debentures
held, while a holder of Preferred Securities is entitled to receive
Distributions from INTRUST Capital (or from the Company under the Guarantee) if
and to the extent INTRUST Capital has funds available for the payment of such
Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
INTRUST Capital involving the liquidation of the Subordinated Debentures, the
holders of the Preferred Securities will be entitled to receive, out of assets
held by INTRUST Capital, the Liquidation Distribution in cash. See
"Description of the Preferred Securities--Liquidation Distribution Upon
Termination." Upon any voluntary or involuntary liquidation or bankruptcy of
the Company, the Property Trustee, as holder of the Subordinated Debentures,
would be a subordinated creditor of the Company, subordinated in right of
payment to all Senior Debt, Subordinated Debt and Additional Senior Obligations
of the Company (as set forth in the Indenture), but entitled to receive payment
in full of principal and interest before any shareholders of the Company
receive payments or distributions. Since the Company is the guarantor under the
Guarantee and has agreed to pay for all costs, expenses and liabilities of
INTRUST Capital (other than the obligations of INTRUST Capital to the holders
of its Preferred Securities), the positions of a holder of the Preferred
Securities and a holder of the Subordinated Debentures relative to other
creditors and to shareholders of the Company in the event of liquidation or
bankruptcy of the Company are expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a summary of the material United States federal income tax
considerations that may be relevant to the purchasers of the Preferred
Securities which has been passed upon by Bryan Cave LLP, special counsel to the
Company, insofar as it relates to matters of law and legal conclusions. This
summary is based upon current provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury regulations issued thereunder and current
administrative rulings and court decisions, all of which are subject to change
at any time, with possible retroactive effect. Subsequent changes may cause the
tax consequences to vary substantially from the consequences described below.
Furthermore, the authorities on which the following summary is based are
subject to various interpretations, and it is therefore possible that the
United States federal income tax treatment of the purchase, ownership, and
disposition of the Preferred Securities may differ from the treatment described
below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of the Preferred
Securities. Moreover, this summary generally focuses on holders of the
Preferred Securities who are individual citizens or residents of the United
States and who acquire the Preferred Securities on their original issue at
their offering price and hold the Preferred Securities as capital assets. This
summary has only limited application to dealers in securities, corporations,
estates, trusts or nonresident aliens and does not address all the tax
consequences that may be relevant to holders who may be subject to special tax
treatment, such as, for example, banks, thrifts, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, or persons that will hold the Preferred
Securities as a position in a "straddle," as part of a "synthetic security"
or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. This summary also does not
address the tax consequences to persons that have a functional currency other
than the U.S. dollar or the tax consequences to shareholders, partners
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<PAGE> 41
or beneficiaries of a holder of the Preferred Securities. Further, it does not
include any description of any alternative minimum tax consequences or the tax
laws of any state or local government or of any foreign government that may be
applicable to the Preferred Securities. Accordingly, each prospective investor
should consult, and should rely exclusively on, such investor's own tax
advisors in analyzing the federal, state, local and foreign tax consequences of
the purchase, ownership or disposition of the Preferred Securities.
CLASSIFICATION OF THE SUBORDINATED DEBENTURES
The Company intends to take the position that the Subordinated Debentures
will be classified for United States federal income tax purposes as
indebtedness of the Company under current law, and, by acceptance of a
Preferred Security, each holder covenants to treat the Subordinated Debentures
as indebtedness and the Preferred Securities as evidence of an indirect
beneficial ownership interest in the Subordinated Debentures. No assurance can
be given, however, that such position of the Company will not be challenged by
the Internal Revenue Service or, if challenged, that such a challenge will not
be successful. The remainder of this discussion assumes that the Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company.
CLASSIFICATION OF INTRUST CAPITAL
Under current law and assuming full compliance with the terms of the Trust
Agreement and Indenture (and certain other documents described herein), INTRUST
Capital will be classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation. Accordingly,
for United States federal income tax purposes, each holder of the Preferred
Securities generally will be treated as owning an undivided beneficial interest
in the Subordinated Debentures, and upon the occurrence of an Extension Period
each holder will be required to include in its gross income any OID accrued
with respect to its allocable share of the Subordinated Debentures whether or
not cash is actually distributed to such holder.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations (the "Regulations"), a debt
instrument will be deemed to be issued with OID if there is more than a
"remote" contingency that periodic stated interest payments due on the
instrument will not be timely paid. Because the exercise by the Company of its
option to defer the payment of stated interest on the Subordinated Debentures
would prevent the Company from declaring dividends on any class of equity, the
Company believes that the likelihood of its exercising the option is "remote"
within the meaning of the Regulations. As a result, the Company intends to take
the position that the Subordinated Debentures will not be deemed to be issued
with OID. Accordingly, based on this position, stated interest payments on the
Subordinated Debentures will be includible in the ordinary income of a holder
at the time that such payments are paid or accrued in accordance with the
holder's regular method of accounting. Because the Regulations have not yet
been addressed in any published rulings or other published interpretations
issued by the Internal Revenue Service, it is possible that the Internal
Revenue Service could take a position contrary to the position taken by the
Company.
If the Company were to exercise its option to defer the payment of stated
interest on the Subordinated Debentures, the Subordinated Debentures would be
treated, solely for purposes of the OID rules, as being "reissued" at such
time with OID. The amount of interest income includible in the taxable income
of a holder of the Subordinated Debentures would be determined on the basis of
a constant yield method over the remaining term of the instrument regardless of
the holder's method of tax accounting and the actual receipt of future payments
of stated interest on the Subordinated Debentures would no longer be separately
reported as taxable income. Consequently, a holder of the Preferred Securities
would be required to include OID in ordinary income, on a current basis, over
the period that the instrument is held even though the Company would not be
making any actual cash payments during the Extension Period. The amount of OID
that would accrue, in the aggregate, during the Extension Period would be
approximately equal to the amount of the cash payment due at the end of such
period. Moreover, under the Regulations, if the option to defer the payment of
interest income with respect to the Subordinated Debentures was determined not
to be "remote," the Subordinated Debentures would be treated as having been
originally issued with OID. In such event, all of a holder's taxable interest
income would be accounted for as OID and any OID included in income would
increase the holder's adjusted tax basis in the Subordinated Debentures and the
holder's actual receipt of interest payments would reduce such basis.
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<PAGE> 42
Because income on the Preferred Securities will constitute interest income
for United States federal income tax purposes, corporate holders of the
Preferred Securities will not be entitled to claim a dividends received
deduction in respect of such income.
MARKET DISCOUNT AND ACQUISITION PREMIUM
Holders of the Preferred Securities other than a holder who purchased the
Preferred Securities upon original issuance may be considered to have acquired
their undivided interests in the Subordinated Debentures with "market
discount" or "acquisition premium" as such phrases are defined for United
States federal income tax purposes. Such holders are advised to consult their
tax advisors as to the income tax consequences of the acquisition, ownership
and disposition of the Preferred Securities.
RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF INTRUST CAPITAL
Under certain circumstances, as described under "Description of the
Preferred Securities--Redemption" and "--Liquidation Distribution Upon
Termination," the Subordinated Debentures may be distributed to holders of the
Preferred Securities upon a liquidation of INTRUST Capital. Under current
United States federal income tax law, such a distribution would be treated as a
nontaxable event to each such holder and would result in such holder having an
adjusted tax basis in the Subordinated Debentures received in the liquidation
equal to such holder's adjusted tax basis in the Preferred Securities
immediately before the distribution. A holder's holding period in the
Subordinated Debentures so received in liquidation of INTRUST Capital would
include the period for which such holder held the Preferred Securities.
If, however, a Tax Event were to occur which resulted in INTRUST Capital
being treated as an association taxable as a corporation, the distribution
would likely constitute a taxable event to holders of the Preferred Securities.
Under certain circumstances described herein, the Subordinated Debentures may
be redeemed for cash and the proceeds of such redemption distributed to holders
in redemption of their Preferred Securities. Under current law, such a
redemption would, for United States federal income tax purposes, constitute a
taxable disposition of the redeemed Preferred Securities, and a holder would
recognize gain or loss as if the holder sold such Preferred Securities for
cash. See "Description of the Preferred Securities--Redemption" and
"--Liquidation Distribution Upon Termination."
DISPOSITION OF PREFERRED SECURITIES
Upon the sale of the Preferred Securities, a holder will recognize a gain
or loss in an amount equal to the difference between its adjusted tax basis in
the Preferred Securities and the amount realized in the sale (except to the
extent of any amount received in respect of accrued but unpaid interest not
previously included in income). A holder's adjusted tax basis in the Preferred
Securities generally will be its initial purchase price increased by OID (if
any) previously includible in the holder's gross income to the date of
disposition and decreased by payments (if any) received on the Preferred
Securities in respect of OID to the date of disposition. Such gain or loss
generally will be a capital gain or loss. As a result of the recently enacted
Taxpayer Relief Act of 1997, in the case of non-corporate taxpayers, the tax
rates applicable to capital gains from the disposition of Preferred Securities
generally will vary depending upon whether, at the time of disposition, the
Preferred Securities have been held for more than twelve months or more than
eighteen months.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest (or OID if the Subordinated
Debentures are treated as having been issued, or reissued, with OID) with
respect to the underlying Subordinated Debentures. A holder who disposes of its
Preferred Securities between record dates for payments of distributions thereon
will be required to include in ordinary income (i) any portion of the amount
realized that is attributable to such accrued but unpaid interest to the extent
not previously included in income, or (ii) any amount of OID, in either case,
that has accrued on its pro rata share of the underlying Subordinated
Debentures during the taxable year of sale through the date of disposition. Any
such income inclusion will increase the holder's adjusted tax basis in its
Preferred Securities disposed of. To the extent that the amount realized in the
sale is less than the holder's adjusted tax basis, a holder will recognize a
capital loss. Subject to certain limited exceptions applicable to non-corporate
taxpayers, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
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<PAGE> 43
EFFECT OF RECENT CHANGES IN TAX LAWS
Certain legislative proposals were made in 1996 and 1997 which, if enacted,
could have adversely affected the ability of the Company to deduct interest
paid on the Subordinated Debentures. These proposals were not, however,
incorporated into the legislation enacted on August 5, 1997 as the Taxpayer
Relief Act of 1997. Nevertheless, there can be no assurance that other
legislation enacted after the date hereof will not otherwise adversely affect
the ability of the Company to deduct the interest payable on the Subordinated
Debentures. Consequently, there can be no assurance that a Tax Event will not
occur. A Tax Event would permit the Company, upon approval of the Federal
Reserve if then required under applicable capital guidelines or policies of the
Federal Reserve, to cause a redemption of the Preferred Securities before, as
well as after, January 31, 2003. See "Description of the Subordinated
Debentures--Redemption" and "Description of the Preferred Securities--
Redemption--Tax Event Redemption, Capital Treatment Event Redemption or
Investment Company Event Redemption."
BACKUP WITHHOLDING AND INFORMATION REPORTING
Interest paid on the Subordinated Debentures, or the amount of OID accrued
on the Subordinated Debentures, if applicable, held of record by individual
citizens or residents of the United States, or certain trusts, estates, and
partnerships, will be reported to the Internal Revenue Service on Forms 1099,
which forms should be mailed to such holders of the Preferred Securities by
January 31 following each calendar year. Payments made on, and proceeds from
the sale of, the Preferred Securities may be subject to a "backup"
withholding tax (currently at 31%) unless the holder complies with certain
identification and other requirements. Any amounts withheld under the backup
withholding rules will be allowed as a credit against the holder's United
States federal income tax liability, provided the required information is
provided to the Internal Revenue Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON THE
PARTICULAR SITUATION OF A HOLDER OF THE PREFERRED SECURITIES. HOLDERS OF THE
PREFERRED SECURITIES SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
("Plans"), generally may purchase Preferred Securities, subject to the
investing fiduciary's determination that the investment in Preferred Securities
satisfies ERISA's fiduciary standards and other requirements applicable to
investments by the Plan.
In any case, the Company and/or any of its affiliates may be considered a
"party in interest" (within the meaning of ERISA) or a "disqualified
person" (within the meaning of Section 4975 of the Code) with respect to
certain plans (generally, Plans maintained or sponsored by, or contributed to
by, any such persons with respect to which the Company or an affiliate is a
fiduciary or Plans for which the Company or an affiliate provides services).
The acquisition and ownership of Preferred Securities by a Plan (or by an
individual retirement arrangement or other Plans described in Section
4975(e)(1) of the Code) with respect to which the Company or any of its
affiliates is considered a party in interest or a disqualified person may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Code, unless such Preferred Securities are acquired pursuant to and in
accordance with an applicable exemption.
As a result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should not acquire
Preferred Securities unless such Preferred Securities are acquired pursuant to
and in accordance with an applicable exemption. Any other Plans or other
entities whose assets include Plan assets subject to ERISA or Section 4975 of
the Code proposing to acquire Preferred Securities should consult with their
own counsel.
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<PAGE> 44
UNDERWRITING
The Underwriters named below, represented by Stifel, Nicolaus & Company,
Incorporated (the "Representative"), have severally agreed, subject to the
terms and conditions set forth in the Underwriting Agreement, the form of which
is filed as an exhibit to the Registration Statement of which this Prospectus
forms a part, to purchase from INTRUST Capital the number of Preferred
Securities set forth opposite their respective names below. The several
Underwriters have agreed in the Underwriting Agreement, subject to the terms
and conditions set forth therein, to purchase all the Preferred Securities
offered hereby if any of the Preferred Securities are purchased. In the event
of default by an Underwriter, the Underwriting Agreement provides that, in
certain circumstances, purchase commitments of the nondefaulting Underwriters
may be increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER PREFERRED SECURITIES
----------- --------------------
<S> <C>
Stifel, Nicolaus & Company, Incorporated......................................
---------
Total......................................................................... 2,000,000
=========
</TABLE>
The Representative has advised INTRUST Capital that the Underwriters propose
initially to offer the Preferred Securities to the public at the public offering
price set forth on the cover page of this Prospectus, and to certain dealers at
such price less a concession not in excess of $ per Preferred Security.
The Underwriters may allow, and such dealers may reallow, a discount not in
excess of $ per Preferred Security to certain other dealers. After
the initial public offering, the public offering price, concession and
discount may be changed. Because the National Association of Securities
Dealers, Inc. ("NASD") is expected to view the Preferred Securities as
interests in a direct participation program, the offering of the Preferred
Securities is being made in compliance with the applicable provisions of Rule
2810 of the NASD's Conduct Rules.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debentures of the Company,
the Underwriting Agreement provides that the Company will pay as compensation
to the Underwriters for arranging the investment therein of such proceeds
$ per Preferred Security (or $ in the aggregate) for the
account of the several Underwriters.
INTRUST Capital has granted the Underwriters an option to purchase up to an
additional 300,000 Preferred Securities at the initial public offering price.
Such option, which expires 30 days from the date of this Prospectus, may be
exercised solely to cover over-allotments. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment,
subject to certain conditions, to purchase approximately the same percentage of
the additional Preferred Securities that the number of Preferred Securities to
be purchased initially by the Underwriter is of the 2,000,000 Preferred
Securities initially purchased by the Underwriter. To the extent that the
Underwriters exercise such option to purchase additional Preferred Securities,
INTRUST Capital will issue and sell to the Company additional Common Securities
in an aggregate Liquidation Amount equal to at least 3% of the total capital of
INTRUST Capital and the Company will issue and sell to INTRUST Capital
Subordinated Debentures in an aggregate principal amount equal to the aggregate
Liquidation Amount of the additional Preferred Securities being purchased
pursuant to the option.
Although the Preferred Securities have been approved for trading on the
American Stock Exchange, Inc., no assurances can be made as to the liquidity of
such Preferred Securities or that an active and liquid trading market will
develop or, if developed, that it will continue. The offering price and
distribution rate have been determined by negotiations among representatives of
the Company and the Representative, and the offering price of the Preferred
Securities may not be indicative of the market price following the offering.
INTRUST Capital and the Company have agreed to indemnify the Underwriters
against, or contribute to payments that the Underwriters may be required to
make in respect of, certain liabilities, including liabilities under the
Securities Act.
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<PAGE> 45
In connection with the offering of the Preferred Securities, the
Underwriters and any selling group members and their respective affiliates may
engage in transactions effected in accordance with Rule 104 of the Commission's
(as defined herein) Regulation M that are intended to stabilize, maintain or
otherwise affect the market price of the Preferred Securities. Such
transactions may include over-allotment transactions in which an Underwriter
creates a short position for its own account by selling more Preferred
Securities than it is committed to purchase from INTRUST Capital. In such
case, to cover all or part of the short position, the Underwriters may
exercise the over-allotment option described above or may purchase Preferred
Securities in the open market following completion of the initial offering of
the Preferred Securities. Each Underwriter also may engage in stabilizing
transactions in which it bids for, and purchases, Preferred Securities at a
level above that which might otherwise prevail in the open market for the
purpose of preventing or retarding a decline in the market price of the
Preferred Securities. The Underwriters also may reclaim any selling concessions
allowed to a dealer if the Underwriters repurchase Preferred Securities
distributed by that dealer. Any of the foregoing transactions may result in the
maintenance of a price for the Preferred Securities at a level above that which
might otherwise prevail in the open market. Neither the Company nor the
Underwriters make any representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the Preferred Securities. The Underwriters are not required to engage
in any of the foregoing transactions and, if commenced, such transactions may
be discontinued at any time without notice.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreement and the formation of
INTRUST Capital will be passed upon by Richards, Layton & Finger, special
Delaware counsel to the Company and INTRUST Capital. Certain legal matters for
the Company and INTRUST Capital, including the validity of the Guarantee and
the Subordinated Debentures, will be passed upon for the Company and INTRUST
Capital by Bryan Cave LLP, St. Louis, Missouri, counsel to the Company and
INTRUST Capital. Certain legal matters will be passed upon for the Underwriters
by Lewis, Rice & Fingersh, L.C., St. Louis, Missouri. Counsel for the Company,
INTRUST Capital and the Underwriters will rely on the opinion of Richards,
Layton & Finger as to matters of Delaware law. Certain matters relating to
United States federal income tax considerations will be passed upon for the
Company by Bryan Cave LLP.
EXPERTS
The audited consolidated financial statements of the Company and its
subsidiaries included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, and incorporated by reference in this Prospectus and
elsewhere in this Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with
respect thereto and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, previously filed by the Company with the
Commission pursuant to Section 15(d) of the Exchange Act, are incorporated
herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996; and
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997.
All reports filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Preferred
Securities offered hereby shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of 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 Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
41
<PAGE> 46
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER
THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY
REFERENCE IN SUCH DOCUMENTS). WRITTEN REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO JAY L. SMITH, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
INTRUST FINANCIAL CORPORATION, 105 NORTH MAIN STREET, BOX ONE, WICHITA, KANSAS
67202. TELEPHONE REQUESTS MAY BE DIRECTED TO (316) 383-1111.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company and INTRUST Capital with the Securities and
Exchange Commission (the "Commission") under the Securities Act, with respect
to the Preferred Securities, the Subordinated Debentures and the Guarantee.
This Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, although it does include a summary
of the material terms of the Trust Agreement, the Indenture and the Guarantee.
Reference is made to such Registration Statement and to the exhibits relating
thereto for further information with respect to the Company, INTRUST Capital,
the Preferred Securities, the Subordinated Debentures and the Guarantee. Any
statements contained herein concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the Commission
or incorporated by reference herein are not necessarily complete, and, in each
instance, reference is made to the copy of such document so filed for a more
complete description of the matter involved. Each such statement is qualified
in its entirety by such reference.
The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports and other information with the
Commission. INTRUST Capital is not currently subject to the information
reporting requirements of the Exchange Act and, although INTRUST Capital will
become subject to such requirements upon the effectiveness of the Registration
Statement, it is not expected that INTRUST Capital will be filing separate
reports under the Exchange Act. The Company's reports and other information can
be inspected and copied at the following public reference facilities maintained
by the Commission: 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World
Trade Center, Suite 1300, New York, New York 10048; and the Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material may also be obtained by mail from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at
prescribed rates. The Commission maintains an Internet web site that contains
reports, proxy and information statements and other information regarding
issuers who file electronically with the Commission. The address of that site
is http://www.sec.gov.
No separate financial statements of INTRUST Capital have been included
herein. The Company does not consider that such financial statements would be
material to holders of Preferred Securities because (i) all of the voting
securities of INTRUST Capital will be owned by the Company, a reporting company
under the Exchange Act; (ii) INTRUST Capital has no independent operations but
exists solely for the sole purpose of issuing securities representing undivided
beneficial interests in the assets of INTRUST Capital and investing the
proceeds thereof in Subordinated Debentures issued by the Company, and (iii)
the obligations of the Company described herein to provide certain indemnities
in respect of and be responsible for certain costs, expenses, debts and
liabilities of INTRUST Capital under the Indenture and pursuant to the Trust
Agreement, the Guarantee issued by Company with respect to the Preferred
Securities, the Subordinated Debentures purchased by INTRUST Capital and the
related Indenture, taken together, constitute, in the belief of the Company and
INTRUST Capital, a full and unconditional guarantee of payments due on the
Preferred Securities. See "Description of the Subordinated Debentures" and
"Description of the Guarantee."
42
<PAGE> 47
- --------------------------------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
Prospectus Summary.............................................................. 2
Summary Consolidated Financial Data............................................. 7
Risk Factors.................................................................... 8
Use of Proceeds................................................................. 14
Market for the Preferred Securities............................................. 14
Accounting Treatment............................................................ 14
Capitalization.................................................................. 15
Description of the Preferred Securities......................................... 16
Description of the Subordinated Debentures...................................... 25
Description of the Guarantee.................................................... 33
Relationship Among the Preferred Securities, the Subordinated Debentures and the
Guarantee..................................................................... 35
Certain Federal Income Tax Consequences......................................... 36
ERISA Considerations............................................................ 39
Underwriting.................................................................... 40
Validity of Securities.......................................................... 41
Experts......................................................................... 41
Incorporation of Certain Documents by Reference................................. 41
Available Information........................................................... 42
</TABLE>
------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY INTRUST
FINANCIAL CORPORATION, INTRUST CAPITAL TRUST OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF INTRUST FINANCIAL CORPORATION SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
- --------------------------------------------------
--------------------------------------------------
2,000,000 PREFERRED SECURITIES
INTRUST
CAPITAL TRUST
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED, AS DESCRIBED HEREIN, BY
INTRUST BANK
INTRUST
FINANCIAL
CORPORATION
-------------------
$50,000,000
% SUBORDINATED DEBENTURES
OF
INTRUST
FINANCIAL
CORPORATION
-------------------
Prospectus
, 1998
------------------------
STIFEL, NICOLAUS & COMPANY
INCORPORATED
---------------------------------------------
<PAGE> 48
PART II--INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14--OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC Registration Fee.............................. $ 17,424
NASD Filing Fee................................... 6,250
American Stock Exchange, Inc. Listing Fee......... 20,000
Blue Sky Qualification Fees and Expenses.......... 3,000
Accounting Fees and Expenses...................... 50,000
Legal Fees and Expenses........................... 70,000
Trustees' Fees and Expenses....................... 15,000
Printing and Engraving Expenses................... 36,000
Transfer and Registrar Fees....................... 7,000
Miscellaneous..................................... 25,326
--------
Total......................................... $250,000
========
</TABLE>
ITEM 15--INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 17-6305 of the Kansas general corporation code provides for
indemnification by a corporation or its officers and directors and certain
other persons as follows:
(a) A corporation shall have power to indemnify any person who was or
is a party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, other than an action by or in the right
of the corporation, by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, including attorney fees, if such
person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation; and,
with respect to any criminal action or proceeding, had no reasonable cause
to believe such person's conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that such person's
conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party, or is threatened to be made a party, to any threatened,
pending or completed action or suit by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that such person
is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses actually and reasonably
incurred by such person in connection with the defense or settlement of
such action or suit, including attorney fees, if such person acted in good
faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnify for such
expenses which the court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in the defense
of any action, suit or proceeding referred to in subsections (a) and (b),
or in defense of any claim, issue or matter therein, such director,
officer, employee or agent shall be indemnified against expenses actually
and reasonably incurred by such person in connection therewith, including
attorney fees.
II-1
<PAGE> 49
(d) Any indemnification under subsections (a) and (b), unless ordered
by a court, shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because such
director, officer, employee or agent has met the applicable standard or
conduct set forth in subsections (a) and (b). Such determination shall be
made (1) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or even if
obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses incurred by a director or officer in defending any civil
or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director or officer to
repay such amount if it is ultimately determined that the officer or
director is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses incurred by other employees and
agents may also be paid upon such terms and conditions, if any, as the
board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusively of any other rights to which those seeking
indemnifications or advancement of expense may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in a person's official capacity and as to
action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance
of behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or any other enterprise
against any liability asserted against such person and incurred by such
person in any such capacity, or arising out of such person's status as
such, whether or not the corporation would have the power to indemnify
such person against such liability under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as
such person would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the
corporation" shall include any service as a director, officer, employee
or agent of the corporation which imposes duties on, or involves services
by, such director, officer, employee, or agent with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acted in
good faith and in a manner such person reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 17-6002(b)(8) of the Kansas general corporation code provides that
a corporation's certificate of incorporation may contain:
(8) A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders, policy holders or members for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (A) for any
breach of the director's duty of loyalty to the
II-2
<PAGE> 50
corporation or its stockholders, policyholders or members, (B) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (C) under the provisions of K.S.A. 17-6424 [relating
to unlawful dividend payments or stock redemptions or repurchases] and
amendments thereto or (D) for any transaction from which the director derived
an improper personal benefit. No such provision shall eliminate or limit the
liability of a director for any act or omission occurring prior to the date
when such provision becomes effective. All references in this subsection to a
director shall also be deemed to refer to a member of the governing body of a
corporation which is not authorized to issue capital stock.
Article Ninth of the Company's Restated Articles of Incorporation provides:
Any person, or such person's heir, executor or administrator may be
indemnified or reimbursed by the Company for reasonable expenses actually
incurred in connection with any action, suit or proceeding, civil or criminal,
to which such person shall be made a party by reason of being or having been a
director, officer or employee of the Company or of any firm, corporation or
organization which such person served in any such capacity at the request of
the Company; provided, however, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit or pending as to
which such person shall finally be adjudged to have been guilty of or liable
for gross negligence, willful misconduct or criminal acts in the performance of
such person's duties to the Company; and, provided further, that no person
shall be so indemnified or reimbursed in relation to any matter in such action,
suit or proceeding which has been made the subject of a compromise settlement,
except with the approval of a court of competent jurisdiction, or the holders
of record of a majority of the outstanding shares of the Company, or the Board
of Directors, acting by vote of Directors not parties to the same or
substantially the same action, suit or proceeding, constituting a majority of
the whole number of Directors. The foregoing right of indemnification or
reimbursement shall specifically include all matters arising from merger and
acquisition decisions made by the director, officer or employee and shall not
be exclusive of other rights to which such person, or such person's heir,
executor or adminitrator may be entitled as a matter of law.
The Company may, upon the affirmative vote of a majority of its Board of
Directors, purchase insurance for the purpose of indemnifying its directors,
officers and other employees to the extent that such indemnification is allowed
in the preceding paragraph. Such insurance may, but need not, be for the
benefit of all directors, officers or employees.
II-3
<PAGE> 51
ITEM 16--EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
1.1 Form of Underwriting Agreement.
1.2 Form of Agreement Among Underwriters
4.1 Form of Indenture.
4.2 Form of Subordinated Debenture (included as an exhibit to
Exhibit 4.1).
4.3 Certificate of Trust of INTRUST Capital Trust.
4.4 Trust Agreement of INTRUST Capital Trust.
4.5 Form of Amended and Restated Trust Agreement.
4.6 Form of Preferred Security Certificate (included as an exhibit
to Exhibit 4.5).
4.7 Form of Preferred Securities Guarantee Agreement.
4.8 Form of Agreement as to Expenses and Liabilities (included as
an exhibit to Exhibit 4.5).
5.1 Opinion of Bryan Cave LLP, as to the validity of the issuance
of the Subordinated Debentures.
5.2 Opinion of Richards, Layton & Finger, special Delaware counsel,
as to the legality of the Preferred Securities.
8.1<F*> Opinion of Bryan Cave LLP, as to certain federal income tax
matters.
12.1 Statements Regarding Computation of Ratio of Earnings to Fixed
Charges.
23.1<F*> Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Bryan Cave LLP (included in their opinions filed
herewith as Exhibits 5.1 and 8.1).
23.3 Consent of Richards, Layton & Finger (included in their
opinions filed herewith as Exhibit 5.2).
24.1 Power of Attorney (included on the signature page).
25.1 Form T-1 Statement of Eligibility of State Street Bank and
Trust Company to act as trustee under the Indenture.
25.2 Form T-1 Statement of Eligibility of State Street Bank and
Trust Company to act as trustee under the Amended and Restated
Trust Agreement.
25.3 Form T-1 Statement of Eligibility of State Street Bank and
Trust Company to act as trustee under the Preferred Securities
Guarantee Agreement.
[FN]
- ---------------
<F*> Filed herewith. All other exhibits previously filed.
(b) Financial Statement Schedules--Not applicable as all required
information is contained in the financial statements and the notes thereto or
in the selected financial data.
II-4
<PAGE> 52
ITEM 17--UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company pursuant to the provisions
described under "Item 15--Indemnification of Directors and Officers" above, or
otherwise, the Company has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of
the Company in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
The Company hereby undertakes: (1) That for purposes of determining any
liability under the Securities Act, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Company pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared effective;
(2) That for the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; (3) That for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act)
that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof; and (4) To deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
INTRUST Capital hereby undertakes to provide to the Representative at
the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
II-5
<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Wichita, Kansas on January 6, 1998.
INTRUST FINANCIAL CORPORATION
By: /s/ C. Q. CHANDLER
------------------------------------
C. Q. Chandler
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the undersigned
registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Wichita, Kansas on January 6, 1998.
INTRUST CAPITAL TRUST
By: /s/ C. Q. CHANDLER IV
------------------------------------
C.Q. Chandler IV, Trustee
By: /s/ JAY L. SMITH
------------------------------------
Jay L. Smith, Trustee
By: /s/ BRIAN SULLIVAN
------------------------------------
Brian Sullivan, Trustee
II-6
<PAGE> 54
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
<F*> Chairman of the Board and January 6, 1998
- ------------------------------- Chief Executive Officer
C. Q. Chandler (Principal Executive Officer
/s/ JAY L. SMITH Senior Vice President and January 6, 1998
- ------------------------------- Chief Financial Officer
Jay L. Smith (Principal Financial and
Principal Accounting Officer)
<F*> Director January 6, 1998
- -------------------------------
Ronald L. Baldwin
<F*> Director January 6, 1998
- -------------------------------
C. Robert Buford
<F*> Director January 6, 1998
- -------------------------------
Frank L. Carney
Director January , 1998
- -------------------------------
Richard G. Chance
<F*> Director January 6, 1998
- -------------------------------
C. Q. Chandler IV
<F*> Director January 6, 1998
- -------------------------------
George T. Chandler
<F*> Director January 6, 1998
- -------------------------------
Stephen L. Clark
<F*> Director January 6, 1998
- -------------------------------
Robert L. Darmon
<F*> Director January 6, 1998
- -------------------------------
Charles W. Dieker
<F*> Director January 6, 1998
- -------------------------------
W. J. Easton
<F*> Director January 6, 1998
- -------------------------------
Martin K. Eby, Jr.
II-7
<PAGE> 55
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
<F*> Director January 6, 1998
- -------------------------------
Richard M. Kerschen
<F*> Director January 6, 1998
- -------------------------------
Thomas D. Kitch
<F*> Director January 6, 1998
- -------------------------------
Eric T. Knorr
Director January , 1998
- -------------------------------
Charles G. Koch
<F*> Director January 6, 1998
- -------------------------------
J. V. Lentell
<F*> Director January 6, 1998
- -------------------------------
William B. Moore
Director January , 1998
- -------------------------------
Paul A. Seymour, Jr.
<F*> Director January 6, 1998
- -------------------------------
Donald C. Slawson
<F*> Director January 6, 1998
- -------------------------------
John T. Stewart III
<FN>
<F*>By: /s/ JAY L. SMITH
------------------------
Jay L. Smith
Attorney-in-fact
</TABLE>
II-8
<PAGE> 56
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1.1 Form of Underwriting Agreement.
1.2 Form of Agreement Among Underwriters.
4.1 Form of Indenture.
4.2 Form of Subordinated Debenture (included as an exhibit to Exhibit 4.1).
4.3 Certificate of Trust of INTRUST Capital Trust.
4.4 Trust Agreement of INTRUST Capital Trust.
4.5 Form of Amended and Restated Trust Agreement.
4.6 Form of Preferred Security Certificate (included as an exhibit to Exhibit 4.5).
4.7 Form of Preferred Securities Guarantee Agreement.
4.8 Form of Agreement as to Expenses and Liabilities (included as an exhibit to Exhibit 4.5).
5.1 Opinion of Bryan Cave LLP, as to the validity of the issuance of the Subordinated Debentures.
5.2 Opinion of Richards, Layton & Finger, special Delaware counsel, as to the legality of the Preferred
Securities.
8.1<F*> Opinion of Bryan Cave LLP, as to certain federal income tax matters.
12.1 Statements Regarding Computation of Ratio of Earnings to Fixed Charges.
23.1<F*> Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Bryan Cave LLP (included in their opinions filed herewith as Exhibits 5.1 and 8.1).
23.3 Consent of Richards, Layton & Finger (included in their opinions filed herewith as Exhibit 5.2).
24.1 Power of Attorney (included on the signature page).
25.1 Form T-1 Statement of Eligibility of State Street Bank and Trust Company to act as trustee under the
Indenture.
25.2 Form T-1 Statement of Eligibility of State Street Bank and Trust Company to act as trustee under the
Amended and Restated Trust Agreement.
25.3 Form T-1 Statement of Eligibility of State Street Bank and Trust Company to act as trustee under the
Preferred Securities Guarantee Agreement.
<FN>
- ---------------
<F*> Filed herewith. All other exhibits previously filed.
</TABLE>
II-9
<PAGE> 1
[Bryan Cave LLP letterhead]
January 6, 1998
INTRUST Financial Corporation
105 North Main Street, Box One
Wichita, Kansas 67202
Attention: Board of Directors
Gentlemen:
We have acted as tax counsel to INTRUST Financial Corporation, a Kansas
corporation (the "Company"), in connection with the proposed issuance of (i)
Preferred Securities (the "Preferred Securities") of INTRUST Capital Trust, a
statutory business trust created under the laws of Delaware (the "Trust"),
pursuant to the terms of the Amended and Restated Trust Agreement between the
Company and State Street Bank and Trust Company, as trustee (the "Trust
Agreement"), to be offered in an underwritten public offering, (ii)
Subordinated Debentures (the "Debentures") of the Company pursuant to the
terms of an indenture from the Company to State Street Bank and Trust
Company, as trustee (the "Indenture"), to be sold by the Company to the
Trust, and (iii) the Preferred Securities Guarantee Agreement of the Company
with respect to the Preferred Securities (the "Guarantee") between the
Company and State Street Bank and Trust Company, as trustee. The Preferred
Securities and the Debentures are to be issued as contemplated by the
registration statement on Form S-3 (the "Registration Statement") to be filed
by the Company and the Trust to register the issuance of the Preferred
Securities, the Debentures and the Guarantee under the Securities Act of
1933, as amended (the "Act").
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of documents, corporate records and other instruments as
we have deemed necessary or appropriate for purposes of this opinion
including (i) the Registration Statement, (ii) the Form of Indenture attached
as an exhibit to the Registration Statement, (iii) the Form of the Debentures
attached as an exhibit to the Registration Statement (iv) the Form of Trust
Agreement attached as an exhibit to the Registration Statement, (v) the Form
of Guarantee attached as an exhibit to the Registration Statement, and (vi)
the Form of Preferred Security Certificate attached as an exhibit to the
Registration Statement (collectively the "Documents"). In such examination,
we have assumed the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies, the authenticity of the originals of
such latter documents, the genuineness of all signatures and the correctness
of all representations made therein. We have further assumed that there are
no agreements or understandings contemplated therein other than those
contained in the Documents.
<PAGE> 2
INTRUST Financial Corporation
January 6, 1998
Page 2
Based upon the foregoing, and assuming (i) the final Documents will be
substantially identical to the forms attached as exhibits to the Registration
Statement, and (ii) full compliance with all the terms of the final
documents, we are of the opinion that the statements contained in the
preliminary prospectus constituting part of the Registration Statement under
the caption "Certain Federal Income Tax Consequences," insofar as such
statements constitute matters of law or legal conclusions, as qualified
therein, fairly describe the material federal income tax consequences to such
holders and are true, correct and complete in all material respects.
The opinion expressed above is based on existing provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), existing Treasury
regulations, published interpretations of the Code and such Treasury
regulations by the Internal Revenue Service, and existing court decisions,
any of which could be changed at any time. Any such changes may or may not
be retroactively applied. We note that there is no authority directly on
point dealing with securities such as the Preferred Securities or of
transactions of the type described herein. Further, you should be aware that
opinions of counsel are not binding on the Internal Revenue Service or the
courts. We express no opinion as to any matters not specifically covered by
the foregoing opinions or as to the effect on the matters covered by this
opinion of the laws of any other jurisdiction. Additionally, we undertake no
obligation to update this opinion in the event there is either a change in
the legal authorities, in the facts (including the taking of any action by
any party to any of the transactions described in the Documents relating to
such transactions) or in the Documents on which this opinion is based, or an
inaccuracy in any of the representations or warranties upon which we have
relied in rendering this opinion.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm under the caption
"Certain Federal Income Tax Consequences" and "Validity of Securities" in the
preliminary prospectus constituting a part of the Registration Statement.
Very truly yours,
/s/ BRYAN CAVE LLP
2
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 14,
1997 included in the INTRUST Financial Corporation Annual Report on Form 10-K
for the year ended December 31, 1996 and to all references to our Firm included
in this Amendment No. 1 to Form S-3 registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma
January 6, 1998
