As filed with the Securities and Exchange Commission on November
29, 2000
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INTEGRA BANK CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 6711 35-1632155
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification Identification
incorporation or Code Number) Number)
227 MAIN STREET
P.O. BOX 868
EVANSVILLE, INDIANA 47705-0868
(812) 464-9800
(Address, including zip code and telephone number, including area
code, of Registrant's principal executive offices)
JAMES E. ADAMS
INTEGRA BANK CORPORATION
227 MAIN STREET
P.O. BOX 868
EVANSVILLE, INDIANA 47705-0868
(812) 464-9858
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
DAVID C. WORRELL, ESQ. DAVID L. BECKMAN, JR., ESQ.
BAKER & DANIELS FROST BROWN TODD LLC
300 NORTH MERIDIAN STREET 400 WEST MARKET STREET
SUITE 2700 32{ND} FLOOR
INDIANAPOLIS, INDIANA 46204 LOUISVILLE, KENTUCKY 40202
(317) 237-0300 (502) 589-5400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE
SECURITIES TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS
REGISTRATION STATEMENT.
If the securities being registered on this Form are being offered
in connection with the formation of a holding company and there
is compliance with General Instruction G, 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, 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(d) 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. [ ]
____________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED PROPOSED AMOUNT OF
SECURITIES TO BE REGISTERED MAXIMUM MAXIMUM REGISTRATION
REGISTERED OFFERING AGGREGATE FEE
PRICE PER OFFERING
UNIT PRICE
<S> <C> <C> <C> <C>
Common Stock,
without par value 1,500,000(1) (2) $21,370,734(2) $5,642
</TABLE>
(1) Based on the number of shares of Integra Bank Corporation
common stock to be issued in the merger.
(2) Calculated pursuant to Rule 457(f)(2) under the Securities
Act of 1933 based on the book value per share of the common
stock of Webster Bancorp, Inc. as of September 30, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS 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>
WEBSTER BANCORP, INC.
104 MAIN STREET
CLAY, KENTUCKY 42404
SPECIAL MEETING OF SHAREHOLDERS
A MERGER PROPOSAL - YOUR
VOTE IS VERY IMPORTANT
The board of directors of Webster Bancorp, Inc. has approved a
merger with Integra Bank Corporation, a $2.7 billion bank holding
company headquartered in Evansville, Indiana.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE
BEST INTERESTS OF WEBSTER, ITS SHAREHOLDERS, THE COMMUNITIES IT
SERVES AND OTHER CONSTITUENCIES. THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE TO APPROVE THE MERGER AGREEMENT. A VOTE
OF THE INTEGRA SHAREHOLDERS IS NOT REQUIRED TO APPROVE THE MERGER
AGREEMENT.
Webster is calling a special meeting of shareholders at which you
will be asked to approve the merger agreement. The affirmative
vote of the holders of a majority of the outstanding shares of
Webster common stock is required.
If the merger is completed, holders of Webster will receive
1,400.5602 shares of Integra common stock for each share of
Webster common stock. The issuance of Integra common stock in
the merger is expected to be tax-free for federal income tax
purposes.
If the merger is completed, Webster's subsidiary, West Kentucky
Bank, will concurrently merge with and into Integra Bank NA, a
subsidiary of Integra that has its principal office in
Evansville, Indiana.
The date, time and place of the special meeting are as follows:
January __, 2001
__:__ _.m.
West Kentucky Bank
104 Main Street
Clay, Kentucky
The attached proxy statement/prospectus provides you with
detailed information about the proposed merger. In addition, you
may obtain other information about Integra from documents filed
with the Securities and Exchange Commission. We encourage you to
read this entire document carefully.
Whether or not you plan to attend the special meeting, please
take the time to vote by completing and mailing the enclosed
proxy card to us. If you sign, date and mail your proxy without
indicating how you wish to vote, your proxy will count as a vote
in favor of the approval of the merger agreement. If you fail to
return your proxy, the effect will be a vote against approval of
the merger agreement. YOUR VOTE IS VERY IMPORTANT.
WE INVITE YOU TO ATTEND THE SPECIAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED. PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. IF
YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON, WHICH WILL REVOKE
YOUR SIGNED PROXY. YOU MAY ALSO REVOKE YOUR PROXY AT ANY TIME
BEFORE THE VOTING THEREOF AT THE SPECIAL MEETING.
ON BEHALF OF THE BOARD OF DIRECTORS OF WEBSTER, I URGE YOU TO
VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
SANDRA CLARK BERRY
Secretary
<PAGE>
TO THE SHAREHOLDERS OF WEBSTER BANCORP, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held
___________, January __, 2001
West Kentucky Bank
104 Main Street
Clay, Kentucky
The Board of Directors of Webster Bancorp, Inc. asks you to
attend a special meeting of Webster's shareholders. The special
meeting will be held at the offices of West Kentucky Bank, 104
Main Street, Clay, Kentucky. At the special meeting, Webster's
shareholders will vote on the following:
1. PROPOSED MERGER. Shareholders will be asked to approve
the Agreement and Plan of Reorganization dated July 5,
2000 and amended September 27, 2000, that provides for
the merger of Webster with Integra Bank Corporation. In
the merger, Webster shareholders will receive 1,400.5602
shares of Integra common stock for each share of Webster
common stock. The merger agreement is attached as
Appendix A to the accompanying proxy
statement/prospectus; and
2. OTHER BUSINESS. Shareholders will also consider and
vote on any other matters that properly come before
the special meeting or any adjournments or
postponements.
You are entitled to notice of and to vote at the special
meeting (or any adjournments or postponements of it) if you were
a Webster shareholder at the close of business on December __,
2000.
By Order of the Board of Directors,
Sandra Clark Berry
Secretary
December __, 2000
Clay, Kentucky
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL
OF THE MERGER AGREEMENT.
THE PROXY STATEMENT/PROSPECTUS DESCRIBES YOUR RIGHTS TO
DISSENT FROM THE MERGER AND THE PROCEDURES YOU MUST FOLLOW TO
EXERCISE THOSE RIGHTS.
WE INVITE YOU TO ATTEND THE SPECIAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED. PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. IF
YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON, WHICH WILL REVOKE
YOUR SIGNED PROXY. YOU MAY ALSO REVOKE YOUR PROXY AT ANY TIME
BEFORE THE VOTING THEREOF AT THE SPECIAL MEETING.
PLEASE DO NOT SEND IN YOUR STOCK CERTIFICATES AT THIS TIME.
<PAGE>
WEBSTER BANCORP, INC.
PROXY STATEMENT FOR SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD
JANUARY __, 2001
INTEGRA BANK CORPORATION
PROSPECTUS
FOR UP TO 1,500,000 SHARES OF COMMON STOCK
Integra Bank Corporation proposes to acquire Webster Bancorp,
Inc. through the merger of Webster into Integra.
The parties cannot complete the merger unless Webster's
shareholders approve the Agreement and Plan of Reorganization.
Webster shareholders will vote on the agreement at a special
meeting of shareholders of Webster on January __, 2001. This
proxy statement/prospectus is being furnished to Webster
shareholders in connection with the board of directors of
Webster's solicitation of proxies for use at the special meeting.
If Webster and Integra merge, Webster shareholders will
receive 1,400.5602 shares of Integra's common stock for each
share of Webster common stock. This proxy statement/prospectus
is also a prospectus of Integra relating to the shares of common
stock Integra will issue in the merger.
Integra's common stock trades on the Nasdaq National Market
Tier of the Nasdaq Stock Market under the symbol "IBNK."
THE "RISK FACTORS" SECTION OF THIS PROXY STATEMENT/PROSPECTUS
(BEGINNING ON PAGE 8) LISTS SOME OF THE FACTORS YOU SHOULD
CONSIDER IN EVALUATING AN INVESTMENT IN INTEGRA COMMON STOCK.
Neither the Securities and Exchange Commission nor any state
securities commission has approved the Integra common stock to be
issued in the merger or determined if this proxy
statement/prospectus is accurate or adequate. Any representation
to the contrary is a criminal offense.
Shares of Integra common stock are not savings or deposit
accounts or other obligations of any bank or non-bank subsidiary
of Integra, and they are not insured by the Federal Deposit
Insurance Corporation, the Bank Insurance Fund or any other
governmental agency.
Proxy statement/prospectus dated December __, 2000, and first
mailed to shareholders on December __, 2000.
<PAGE>
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES IMPORTANT
BUSINESS AND FINANCIAL INFORMATION ABOUT INTEGRA THAT IS NOT
INCLUDED IN OR DELIVERED WITH THIS DOCUMENT. SEE "WHERE YOU CAN
FIND MORE INFORMATION" ON PAGE 51 FOR A LIST OF THE DOCUMENTS
THAT INTEGRA HAS INCORPORATED INTO THIS PROXY
STATEMENT/PROSPECTUS. THE INCORPORATED DOCUMENTS ARE AVAILABLE
WITHOUT CHARGE TO WEBSTER SHAREHOLDERS UPON WRITTEN OR ORAL
REQUEST. REQUESTS SHOULD BE DIRECTED AS FOLLOWS:
INTEGRA BANK CORPORATION
227 MAIN STREET
P.O. BOX 868
EVANSVILLE, INDIANA 47705-0868
ATTN.: JAMES E. ADAMS
PH.: 812-464-9800
TO ENSURE RECEIPT BEFORE THE SPECIAL MEETING, PLEASE REQUEST THE
INFORMATION NO LATER THAN DECEMBER , 2000.
TABLE OF CONTENTS
PAGE
ABOUT THIS DOCUMENT.........................................iii
SUMMARY.......................................................1
INTEGRA SELECTED FINANCIAL DATA...............................5
SUMMARY COMPARATIVE HISTORICAL AND COMBINED PER SHARE DATA....7
RISK FACTORS..................................................8
Growing through Acquisitions Carries Risks 8
Changes of Interest Rates Could Affect Integra's Operations 8
Integra Faces Risks Arising from Credit Risk and Loan
Concentration.............................................8
Integra Faces Regulatory Risks 8
Integra is Exposed to Local Economic Conditions 9
Integra Faces Significant Competition 9
Integra Faces Risks as a Consequence of its Corporate
Structure.................................................9
WEBSTER SPECIAL MEETING.......................................9
Date, Time, Place and Purpose 9
Record Date 9
Vote Required 10
Voting and Revocation of Proxies 10
Solicitation of Proxies 11
THE MERGER...................................................11
General................................................. 11
Effect of the Merger; Concurrent Bank Merger............ 11
Background of the Merger................................ 11
Integra's Reasons for the Merger........................ 14
Webster's Reasons for the Merger........................ 14
Interests of Certain Persons in the Merger.............. 15
Opinion of Webster's Financial Advisor.................. 15
Recommendation of Webster's Board of Directors.......... 22
Closing and Effective Time.............................. 22
Conversion of Webster Common............................ 22
Procedures for Exchange of Certificates................. 22
Dissenters' Rights...................................... 23
Regulatory Approvals.................................... 25
Certain Federal Income Tax Consequences................. 26
Accounting Treatment.................................... 27
Resale of Integra Common Stock Issued in the Merger..... 27
Representations and Warranties.......................... 28
Covenants............................................... 28
Conditions to the Merger................................ 29
Termination and Waiver.................................. 30
No Solicitation; Fees and Expenses...................... 31
COMPARATIVE STOCK PRICES AND DIVIDENDS.......................32
INFORMATION CONCERNING INTEGRA...............................33
General................................................. 33
Management and Additional Information................... 33
Information on Integra's Web Site....................... 33
Competition............................................. 34
REGULATION AND SUPERVISION OF INTEGRA........................34
Introduction............................................ 34
Regulatory Agencies..................................... 34
Bank Holding Company Activities......................... 35
Dividend Restrictions................................... 35
Holding Company Structure............................... 36
Capital Requirements.................................... 36
Deposit Insurance Assessments........................... 38
Fiscal and Monetary Policies............................ 38
Privacy Provisions of Gramm-Leach-Bliley Act............ 39
Future Legislation...................................... 39
INFORMATION CONCERNING WEBSTER BANCORP, INC..................39
West Kentucky Bank...................................... 39
Legal Proceedings....................................... 40
Principal Shareholders.................................. 40
DESCRIPTION OF INTEGRA'S CAPITAL STOCK.......................41
Authorized Shares....................................... 41
Integra Common Stock.................................... 41
Integra Preferred Stock................................. 41
Certain Provisions of Articles of Incorporation
and Bylaws.......................................... 41
Certain Provisions of the IBCL.......................... 42
Transfer Agent.......................................... 42
COMPARISON OF SHAREHOLDER RIGHTS.............................42
Authorized Common Shares................................ 42
Authorized Preferred Shares............................. 42
Voting Rights........................................... 43
Cumulative Voting for Directors......................... 43
Size of Board of Directors.............................. 43
Staggered Terms for Directors........................... 43
Filling Vacancies on the Board of Directors............. 44
Removal of Directors.................................... 44
Nomination of Directors for Election.................... 44
Shareholder Vote Required for Business Combinations
Not Involving an Interested Shareholder.............45
Restrictions On Business Combinations Involving
an Interested Shareholder...........................45
Control Share Acquisitions.............................. 46
Amendment of Articles of Incorporation.................. 47
Amendment of Bylaws..................................... 47
Shareholder Action Without a Meeting.................... 47
Calling Special Meetings of Shareholders................ 48
Submission of Shareholder Proposals..................... 48
Notice of Shareholder Meetings.......................... 48
Dividends............................................... 48
Dissenters' Appraisal Rights............................ 49
Shareholder Preemptive Rights........................... 49
Shareholder Class Voting Rights......................... 49
Indemnification......................................... 50
Limitation of Liability of Directors.................... 50
LEGAL MATTERS................................................51
EXPERTS......................................................51
WHERE YOU CAN FIND MORE INFORMATION..........................51
FORWARD-LOOKING STATEMENTS...................................53
APPENDIX A -
Agreement and Plan of Reorganization
dated as of July 5, 2000.............................A-1
Amendment to Agreement and Plan of
Reorganization dated as of
September 27, 2000...................................A-48
APPENDIX B -
Fairness Opinion of Hovde Financial LLC,
dated July 5, 2000................................. B-1
Fairness Opinion of Hovde Financial LLC,
dated September 25, 2000........................... B-4
APPENDIX C -
Excerpts of the Kentucky Business
Corporation Act (Dissenters' Rights)....................C-1
<PAGE>
ABOUT THIS DOCUMENT
WHAT IS THE PURPOSE OF THIS DOCUMENT?
This document serves as both a proxy statement of Webster and
a prospectus of Integra. As a proxy statement, it's being
provided to you by Webster because Webster's board of directors
is soliciting your proxy for use at the special meeting of
shareholders called to vote on the proposed merger of Webster and
Integra. As a prospectus, it's being provided to you by Integra
because Integra is offering shares of its common stock in
exchange for your shares of Webster common stock if the merger is
completed.
DO I NEED TO READ THE ENTIRE DOCUMENT?
You should. Parts of this proxy statement/prospectus
summarize information that is presented in greater detail
elsewhere in this document or in the appendices to this document.
Each summary discussion is qualified by reference to the full
text. For example, the summary of the terms of the merger
agreement is qualified by the actual terms of the merger
agreement, as amended, a copy of which is included as Appendix A.
IS THERE OTHER INFORMATION I SHOULD CONSIDER?
Yes. Much of the business and financial information about
Integra that may be important to you is not physically included
in this document. Instead, this information is incorporated into
this document by reference to documents filed by Integra with the
Securities and Exchange Commission (the "SEC"). This means that
Integra may satisfy some of its disclosure obligations to you by
referring you to documents filed by it with the SEC. See "Where
You Can Find More Information" on page 51 for a list of documents
that Integra has incorporated by reference into this proxy
statement/prospectus and for instructions on how to obtain copies
of these documents. The documents are available to you without
charge.
WHAT IF THERE IS A CONFLICT BETWEEN DOCUMENTS?
You should rely on the most recently filed document.
Information in this proxy statement/prospectus may update
information contained in the Integra documents incorporated by
reference. Similarly, information in documents that Integra may
file after the date of this proxy statement/prospectus may update
information contained in this proxy statement/prospectus or
information contained in previously filed documents.
WHAT IF I CHOOSE NOT TO READ THE INCORPORATED DOCUMENTS?
Information contained in a document that is incorporated by
reference is part of this proxy statement/prospectus, unless it
is superseded by information contained directly in this proxy
statement/prospectus. Information that is incorporated from
another document is considered to have been disclosed to you
whether or not you choose to read the document.
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROXY
STATEMENT/PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION
THAT IS IMPORTANT TO YOU. TO UNDERSTAND THE MERGER FULLY AND FOR
A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS OF THE MERGER, YOU
SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT AND THE DOCUMENTS TO
WHICH WE HAVE REFERRED YOU. SEE "WHERE YOU CAN FIND MORE
INFORMATION" ON PAGE 51. WE HAVE INCLUDED PAGE REFERENCES IN
PARENTHESES TO DIRECT YOU TO A MORE COMPLETE DESCRIPTION OF THE
TOPICS PRESENTED IN THIS SUMMARY.
WEBSTER SPECIAL MEETING (PAGE 9)
Webster will hold a special meeting of shareholders at _____
_.m., Clay, Kentucky time, on January __, 2001, at the offices of
West Kentucky Bank, 104 Main Street, Clay, Kentucky. The
purposes of the meeting are to:
<circle> Vote on the merger agreement.
<circle> Act on any other matters that may properly come
before the meeting.
RECORD DATE; VOTE REQUIRED TO APPROVE MERGER (PAGES 9-10)
The record date for the special meeting is December __, 2000.
You can vote at the meeting if you owned Webster common stock at
the close of business on that date. On the record date, there
were 1,071 shares of Webster common stock outstanding and
entitled to vote. You can cast one vote for each share of
Webster common stock that you owned on the record date.
Approval of the merger agreement requires the affirmative
vote of a majority of the outstanding shares of Webster common
stock entitled to vote at the special meeting. Not voting will
have the same effect as voting against the merger. At the record
date for the special meeting, Webster's directors and executive
officers beneficially owned a total of 528 shares of Webster
common stock, representing approximately 49.3% of the shares
entitled to vote at the meeting.
The beneficial owners of 599 shares of Webster common stock
or approximately 55.9% of the shares entitled to vote at the
meeting have agreed to vote the shares in favor of the merger.
EFFECT OF THE MERGER; CONCURRENT BANK MERGER (PAGE 11)
In the proposed transaction, Webster will merge with and into
Integra. Integra will survive the merger and continue its
corporate existence. Each outstanding share of Webster common
stock will be converted into the right to receive shares of
Integra common stock. After the merger is completed, you will
own shares of Integra common stock.
The merger agreement, as amended, is included in this
document as Appendix A. Please read the merger agreement as it
is the document that governs the merger.
If the merger is completed, Webster's subsidiary, West
Kentucky Bank, will concurrently merge with and into Integra Bank
NA, a subsidiary of Integra that has its principal office in
Evansville, Indiana.
THE COMPANIES (PAGES 33-39 AND 39-40)
Integra Bank Corporation
227 Main Street
P.O. Box 868
Evansville, Indiana 47705-0868
(812) 464-9800
Integra Bank Corporation is a bank holding company whose only
banking subsidiary is Integra Bank NA, a national banking
association headquartered in Evansville, Indiana, which currently
operates 70 banking locations in Indiana, Kentucky, Illinois and
Ohio. At September 30, 2000 Integra had consolidated total
assets of $2.7 billion, consolidated total deposits of $1.6
billion and shareholders' equity of $237 million. Prior to May
17, 2000, Integra operated under the name "National City
Bancshares, Inc."
Webster Bancorp, Inc.
104 Main Street
Clay, Kentucky 42404
(270) 664-6482
Webster Bancorp, Inc. is a bank holding company whose only
banking subsidiary is West Kentucky Bank, a Kentucky banking
corporation headquartered in Madisonville, Kentucky. At
September 30, 2000 Webster had consolidated total assets of
$292.3 million, consolidated total deposits of $247.5 million and
shareholders' equity of $21.4 million.
OPINION OF FINANCIAL ADVISOR TO WEBSTER (PAGES 15-22; APPENDIX B)
Hovde Financial LLC, Webster's financial advisor, has
delivered to the Webster board of directors an opinion
(originally delivered July 5, 2000 and updated September 25,
2000) to the effect that, as of September 25, 2000 and based upon
the procedures and subject to the assumptions made, matters
considered and limitations and qualifications described therein,
the merger consideration is fair to the Webster shareholders from
a financial point of view. Hovde Financial LLC has not withdrawn
or modified its September 25, 2000 opinion as of the date of this
proxy statement/prospectus. The full text of the opinion is
included as Appendix B to this proxy statement/prospectus. You
are urged to read this opinion in its entirety.
WEBSTER'S BOARD RECOMMENDS APPROVAL OF THE MERGER (PAGE 22)
Webster's board of directors believes that the merger is in
the best interests of Webster shareholders and recommends that
Webster shareholders approve the merger. Webster's board
believes that the merger will provide Webster shareholders with
the potential for greater stock value appreciation and greater
investment liquidity than if Webster had remained independent.
ADDITIONAL MERGER BENEFITS TO WEBSTER'S MANAGEMENT (PAGE 15)
Webster's directors and executive officers may have interests
in the merger that are different from yours. These interests
include the following:
<circle>Integra has agreed to appoint Sandra Clark Berry, a
Webster director, to the board of directors of Integra
Bank NA after the merger; and
<circle>Webster has entered into termination benefits
agreements with three of its executive officers, Joye
Hunt, Albert B. Chancellor and Brian Stull.
The board of directors of Webster was aware of these
interests when it approved the merger agreement.
WHAT YOU WILL RECEIVE IN THE MERGER (PAGE 22)
Whole shares of Integra common stock. If the merger is
completed, Integra will issue shares of its common stock for
shares of Webster common stock. Integra will issue 1,400.5602
shares of Integra common stock for each share of Webster common
stock.
Integra will not issue any fractional shares in the merger.
If the total number of shares of Integra common stock you would
otherwise receive in the merger does not equal a whole number,
you will receive cash instead of the fractional share. For
example, if you own 100 shares of Webster common stock, you will
receive 140,056 shares of Integra common stock and cash instead
of the 0.2 fractional share interest.
MARKET PRICE OF INTEGRA COMMON STOCK WILL FLUCTUATE (PAGE 32)
Integra common stock is traded on the Nasdaq National Market
Tier of the Nasdaq Stock Market under the symbol "IBNK." Prior
to May 17, 2000, the symbol for the Integra common stock was
"NCBE." The following table shows the closing prices of Integra
common stock on July 3, 2000, the last trading day before Integra
and Webster announced the merger, and on December __, 2000. The
table also shows for those dates the implied equivalent value per
share of Webster common stock based on the conversion ratio of
1,400.5602 to 1.
Integra Implied Value Per Share of
CLOSING PRICE WEBSTER COMMON STOCK
July 3, 2000 $16.813 $23,547.62
December __, 2000 $______ $_________
No adjustments to the conversion ratio will be made to
reflect fluctuations in the price of Integra common stock.
The following table shows the cash dividends paid or declared
per share of Integra common stock and Webster common stock for
the quarters indicated.
Integra Webster
QUARTER ENDED COMMON STOCK COMMON STOCK
December 31, 1999 $0.21 $275.00
March 31, 2000 $0.21 $0.00
June 30, 2000 $0.21 $25.00
September 30, 2000 $0.21 $200.00
December 31, 2000 (1) $0.235 $75.00
________________
(1) Through December __, 2000.
MERGER GENERALLY TAX FREE TO WEBSTER SHAREHOLDERS (PAGES 26-27)
Webster shareholders generally will not recognize gain or
loss for U.S. federal income tax purposes from the exchange of
their shares of Webster common stock for shares of Integra common
stock. Webster shareholders will be taxed on cash they receive
instead of fractional shares.
The tax treatment described above may not apply to every
Webster shareholder. Determining the tax consequences of the
merger to you may be complicated. You should consult your own
advisor for a full understanding of the merger's tax
consequences.
Webster is not obligated to complete the merger unless it
receives an opinion from Integra's counsel that no gain or loss
will be recognized by the holders of Webster common stock upon
receipt of Integra common stock except for cash received instead
of fractional shares.
SURRENDER OF WEBSTER SHARES (PAGES 22-23)
To receive certificates for your shares of Integra common
stock, you will need to surrender your Webster share
certificates. After the merger is completed, Integra's stock
transfer agent will send you written instructions for exchanging
your stock certificates. Please do not send in your certificates
until you receive these instructions.
DISSENTERS' APPRAISAL RIGHTS AVAILABLE (PAGES 23-25; APPENDIX C)
Webster's shareholders who dissent from the merger are
entitled to receive the fair value in cash of their shares of
Webster common stock. To exercise this right, you must follow
the procedures outlined in Appendix C, including notifying
Webster in writing before Webster shareholders vote on the merger
at the special meeting that you intend to exercise your
dissenters' appraisal rights. You must also not vote for the
merger. If you sign and return your proxy without voting
instructions, and do not revoke the proxy, your proxy will be
voted for the merger and you will lose your dissenters' appraisal
rights. Also, you may lose your dissenters' appraisal rights if
you fail to comply with the other required procedures.
MERGER REQUIRES REGULATORY APPROVAL (PAGES 25-26)
The Office of the Comptroller of the Currency (the "OCC")
must approve the concurrent merger of Webster's banking
subsidiary, West Kentucky Bank, with and into Integra's banking
subsidiary, Integra Bank NA, before the transaction can be
completed. The OCC has not yet approved Integra's application
for approval of the bank merger. Although Integra expects that
the OCC will approve the bank merger, it cannot be certain when
or if, or on what terms and conditions, the required approval
will be given.
INTEGRA EXPECTS TO USE PURCHASE ACCOUNTING (PAGE 27)
Integra expects to account for the merger under the purchase
method of accounting. Integra will record, at fair value, the
acquired assets and assumed liabilities of Webster. To the
extent the total purchase price exceeds the fair value of the
assets acquired and liabilities assumed, Integra will record
goodwill.
OTHER CONDITIONS TO COMPLETING THE MERGER (PAGES 29-30)
In addition to the receipt of regulatory approval, there are
a number of other conditions that must be met before the merger
can be completed. These conditions include:
<circle>approval of the merger agreement by Webster
shareholders;
<circle>receipt by Webster of an opinion from Integra's
counsel concerning the tax consequences of the merger;
<circle>authorization for trading on the Nasdaq Stock Market
of the shares of Integra common stock to be issued in the
merger to Webster shareholders;
<circle>absence of any court order prohibiting the merger;
<circle>absence of any pending action or proceeding to
restrain the merger; and
<circle>performance and compliance by each party of its
obligations and agreements under the merger agreement.
Integra or Webster may waive a condition it is entitled to
assert so long as the law does not require the condition to be
met.
TERMINATION OF THE MERGER AGREEMENT (PAGES 30-31)
Integra and Webster can agree to terminate the merger
agreement at any time without completing the merger. Also,
either company can terminate the merger agreement without the
consent of the other in the following circumstances:
<circle>there is a breach in any of the representations or
warranties or a material breach of any of the agreements
of the other party that is not cured within the time
specified in the agreement;
<circle>any of the conditions to the party's obligation to
consummate the merger are not satisfied or waived by the
closing date; or
<circle>the merger is not completed by March 15, 2001, unless
the failure to complete the merger on or before that date
is due to the failure of the party seeking to terminate
the merger agreement to perform or observe in all
material respects the covenants and agreements to be
performed or observed by the party.
INTEGRA IS HEAVILY REGULATED (PAGES 34-39)
Integra and its subsidiaries are subject to extensive
regulation by a number of federal and state agencies. This
regulation, among other things, may restrict Integra's ability to
diversify into other areas of financial services, acquire
depository institutions in certain states and pay dividends on
its stock. It may also require Integra to provide financial
support to its subsidiary bank, maintain capital balances in
excess of those desired by management and pay higher deposit
premiums as a result of the deterioration in the financial
condition of depository institutions in general.
YOUR RIGHTS WILL DIFFER AS AN INTEGRA SHAREHOLDER (PAGES 41-51)
Your rights as a Webster shareholder are currently governed
by Kentucky law and Webster's articles of incorporation and
bylaws. Upon completion of the merger, you will become an
Integra shareholder, and your rights will be governed by Indiana
law and Integra's restated articles of incorporation and bylaws.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE (PAGE 53)
This proxy statement/prospectus, including information
incorporated by reference into this document, may contain
forward-looking statements about Integra. There are a number of
factors that may cause actual conditions, events or results to
differ significantly from those described in the forward-looking
statements. Some of these factors are described or referenced
in "Forward-Looking Statements" on page 53.
<PAGE>
INTEGRA SELECTED FINANCIAL DATA
The following financial information is to aid you in your
analysis of the financial aspects of the merger. The Integra
balance sheet data for 1995 through 1999 is derived from
Integra's audited consolidated balance sheets as of December 31,
1999, 1998, 1997, 1996 and 1995. The Integra income statement
data for 1995 through 1999 is derived from Integra's audited
consolidated statements of income for each of the years in the
five-year period ended December 31, 1999. The Integra income
statement and balance sheet data as of and for the nine months
ended September 30, 2000 and 1999 are derived from Integra's
unaudited financial statements. The information in the table is
only a summary and should be read with the full financial
statements and related notes of Integra, incorporated by
reference into this document. See "Where You Can Find More
Information." You should not rely on the information for the
nine months ended September 30, 2000 as being indicative of the
results expected for the entire year.
Integra Bank Corporation and Subsidiaries
(dollars in thousands, except per share amounts)
Nine Months
ENDED SEPTEMBER 30,
2000 1999
Net interest income $ 68,051 $ 67,201
Proforma net income 1 22,700 21,599
Diluted proforma net
income per share 1,2 1.30 1.21
Cash dividends declared
per share 2 .63 .57
Book value per share 2 13.71 13.12
Total assets 2,709,662 2,173,519
Deposits 1,659,985 1,643,486
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996
1995
<S> <C> <C> <C> <C> <C>
Net interest income $ 89,817 $ 87,897 $ 81,338 $ 75,618 $ 69,203
Proforma net income 1 22,644 21,454 27,474 24,713 21,895
Diluted proforma net
income per share 1,2 1.27 1.21 1.56 1.41 1.23
Cash dividends declared
per share 2 0.78 0.68 0.58 0.50 0.36
Book value per share 2 12.73 12.34 12.02 10.99 10.78
Total assets 2,203,477 2,195,224 1,985,178 1,816,935 1,689,120
Deposits 1,694,661 1,734,585 1,532,804 1,455,356 1,375,318
</TABLE>
1 Reflects pro forma adjustments to reflect pro forma taxes of
Subchapter S corporation acquired in 1998.
2 Restated to reflect all stock dividends and the two-for-one
stock split in 1996.
<PAGE>
SUMMARY COMPARATIVE HISTORICAL AND COMBINED PER SHARE DATA
The following summary presents selected comparative per
share data on (i) a historical basis for Integra and Webster,
(ii) a pro forma combined basis per share of Integra common
stock, giving effect to the merger, and (iii) an equivalent pro
forma basis per share of Webster common stock, giving effect to
the merger. The data presented are not necessarily indicative of
the results of the future operations of the combined organization
or the actual results that would have occurred if the merger had
been consummated prior to the periods indicated. The data
presented should be read in conjunction with the more detailed
information and financial statements included herein or
incorporated by reference in this proxy statement/prospectus.
See "Where You Can Find More Information."
NINE YEAR
MONTHS ENDED
ENDED DECEMBER
SEPTEMBER 31,
30,
2000 1999
NET INCOME PER COMMON SHARE:
Integra:
Basic $1.30 $1.28
Diluted 1.30 1.27
Webster:
Basic $1,657.62 $2,109.86
Diluted 1,657.62 2,109.86
Integra pro forma:
Basic $1.29 $1.29
Diluted 1.29 1.28
Webster equivalent pro forma (1):
Basic $1,806.72 $1,806.72
Diluted 1,806.72 1,792.72
DIVIDENDS PER COMMON SHARE:
Integra $0.63 $0.78
Webster 225.00 300.00
Webster equivalent pro forma (1)(2) 882.35 1,092.44
BOOK VALUE PER COMMON SHARE:
Integra $13.71 $12.73
Webster 19,953.53 17,663.62
Integra pro forma 13.97 13.06
Webster equivalent pro forma (1) 19,565.83 18,291.32
(1) Equivalent pro forma per share data represents the pro
forma per share data for Integra multiplied by
1,400.5602, the number of shares of Integra common stock
to be issued in the merger for each share of Webster
common stock.
(2) Integra has assumed that on a pro forma combined basis
pro forma cash dividends per share would be equivalent to
Integra's historical cash dividends per share, and has
multiplied such historical cash dividends per share by
1,400.5602, the number of shares of Integra common stock
to be issued in the merger for each share of Webster
common stock, to arrive at Webster's equivalent pro
forma.
<PAGE>
RISK FACTORS
IN CONSIDERING WHETHER TO APPROVE THE MERGER AGREEMENT,
WEBSTER SHAREHOLDERS SHOULD CAREFULLY CONSIDER, TOGETHER WITH THE
OTHER INFORMATION CONTAINED AND INCORPORATED BY REFERENCE IN THIS
PROXY STATEMENT/PROSPECTUS, THE FOLLOWING RISK FACTORS.
GROWING THROUGH ACQUISITIONS CARRIES RISKS
Integra has grown significantly as a result of acquisitions.
As the banking industry continues to consolidate, Integra expects
to pursue other acquisitions. The future profitability of
Integra will depend upon management's ability to improve the
profitability of acquired institutions and to realize expected
operational synergies. Acquisitions involve numerous risks,
including difficulties in assimilating operations of the acquired
company, diversion of management's attention from other business
concerns, risks of entering new geographic markets, loss of key
employees of the acquired company and assumption of undisclosed
liabilities. Future acquisitions may result in dilutive
issuances of equity securities, the incurrence of additional debt
and the amortization of expenses related to goodwill and
intangible assets, any of which could have a material adverse
effect on Integra. In addition, as consolidation of the banking
industry continues, the competition for suitable acquisition
candidates will increase. Integra competes with other banking
companies for acquisition opportunities and many of these
competitors have greater financial resources and acquisition
experience than Integra.
CHANGES OF INTEREST RATES COULD AFFECT INTEGRA'S OPERATIONS
Integra's banking operations depend principally on net
interest income, which is the difference between interest earned
on loans and investments and interest expense paid on deposits
and other borrowings. Like other financial institutions,
Integra's interest income and interest expense are affected by
general, regional and local economic conditions and by the
policies of regulatory authorities, including the monetary
policies of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"). While management has taken
measures intended to manage the risks of operating in a changing
interest rate environment, there can be no assurance that such
measures will effectively avoid undue interest rate risk.
INTEGRA FACES RISKS ARISING FROM CREDIT RISK AND LOAN
CONCENTRATION
As a lender, Integra is exposed to the risk that its
customers will be unable to repay their loans according to their
terms and that the collateral securing the payment of their loans
(if any) may not be sufficient to assure repayment. Credit losses
could have a material adverse effect on Integra's operating
results.
As of September 30, 2000, Integra's total loan portfolio was
approximately $1.6 billion or 60.8% of its total assets. The
three major components of the loan portfolio are real estate
loans, $1.1 billion or 66.7% of total loans, commercial and
industrial loans, $407.5 million or 24.7% of total loans, and
consumer loans, $149.1 million or 9.1% of total loans. Integra's
credit risk with respect to its consumer installment loan
portfolio and commercial loan portfolio relates principally to
the general creditworthiness of individuals and businesses within
its local market area. Integra's credit risk with respect to its
real estate mortgage and construction loan portfolio relates
principally to the general creditworthiness of individuals and
the value of real estate serving as security for the repayment of
the loans.
INTEGRA FACES REGULATORY RISKS
The banking industry is heavily regulated. See "Regulation
and Supervision of Integra" for more information. These
regulations are primarily intended to protect depositors and
federal deposit insurance funds, not Integra shareholders or
other creditors. Regulations affecting financial institutions are
undergoing continuous change, and the ultimate effect of such
changes cannot be predicted. Regulations and laws affecting
Integra and its subsidiaries may be modified at any time, and new
legislation affecting financial institutions may be proposed and
enacted. There is no assurance that such modifications or new
laws will not materially and adversely affect the business,
condition or operations of Integra.
INTEGRA IS EXPOSED TO LOCAL ECONOMIC CONDITIONS
The success of Integra depends to a certain extent upon the
general economic conditions of the local geographic markets it
serves in Indiana, Illinois, Kentucky and Ohio. Unlike larger
banks which are more geographically diversified, Integra provides
financial and banking services within a more limited geographic
area. No assurance can be given concerning the economic
conditions that will exist in such markets.
INTEGRA FACES SIGNIFICANT COMPETITION
Integra faces substantial competition for deposit, credit and
trust relationships, as well as other sources of funding in the
communities it serves. Competing providers include other banks,
thrifts and trust companies, insurance companies, mortgage
banking operations, credit unions, finance companies, money
market funds and other financial and nonfinancial companies which
may offer products functionally equivalent to those offered by
Integra. Competing providers may have greater financial resources
than Integra and offer services within and outside the market
areas served by Integra.
INTEGRA FACES RISKS AS A CONSEQUENCE OF ITS CORPORATE STRUCTURE
Integra is a legal entity separate and distinct from its
subsidiaries, although the principal source of Integra's cash
revenues is dividends from its subsidiaries. The right of Integra
to participate in the assets of any subsidiary upon the
subsidiary's liquidation, reorganization or otherwise will be
subject to the claims of the subsidiary's creditors, which will
take priority except to the extent that Integra may itself be a
creditor with a recognized claim. Integra's principal source of
funds is dividends received from its banking subsidiary.
Regulations limit the amount of dividends that Integra Bank NA
may pay without prior approval. During 2000, Integra Bank NA may
pay approximately $16.7 million plus any 2000 net profits in
dividends to Integra without prior regulatory approval.
WEBSTER SPECIAL MEETING
DATE, TIME, PLACE AND PURPOSE
This proxy statement/prospectus is being furnished to holders
of the common stock of Webster in connection with the
solicitation of proxies by the board of directors of Webster for
use at the special meeting to be held at the office of West
Kentucky Bank located at 104 Main Street, Clay, Kentucky, on
January __, 2001, at __:__ _.m., local time, and at any
adjournment or postponement thereof. At the special meeting,
the shareholders of Webster will be asked to consider and vote
upon the proposal to approve the Agreement and Plan of
Reorganization dated July 5, 2000, as amended September 27, 2000,
with Integra Bank Corporation, which provides for the merger of
Webster with and into Integra.
RECORD DATE
The Board of Directors of Webster has fixed December __,
2000, as the record date for determining the shareholders of
Webster entitled to receive notice of and to vote at the special
meeting. As of the close of business on the record date, there
were 1,071 shares of Webster common stock issued and outstanding.
Only holders of record at the close of business on the record
date are entitled to notice of and to vote at the special
meeting. No shares can be voted at the special meeting, unless
the record holder is present in person or represented by proxy at
the special meeting.
VOTE REQUIRED
The presence, in person or by proxy, of holders of a majority
of the issued and outstanding shares of Webster common stock
entitled to vote on the record date, or 536 shares, is necessary
to constitute a quorum at the special meeting. The affirmative
vote of the holders of at least a majority of the issued and
outstanding shares of Webster common stock, or 536 shares, is
required to approve the merger agreement. Each holder of Webster
common stock is entitled to one vote per share held at the close
of business on the record date.
At the same time that the merger agreement was signed,
certain Webster shareholders entered into a support agreement
with Integra. Under the support agreement, the shareholders
agreed, among other things, to vote all shares of Webster common
stock they own in favor of the merger. On the record date for
the special meeting, such shareholders owned a total of 599
shares of Webster common stock, representing approximately 55.9%
of the shares of Webster common stock entitled to vote at the
special meeting. If such shareholders vote their Webster shares
in favor of the merger as provided by the support agreement, the
merger will be approved.
VOTING AND REVOCATION OF PROXIES
Proxies for use at the special meeting accompany this proxy
statement/prospectus. You may use your proxy if you are unable
to attend the special meeting in person or you wish to have your
shares voted by proxy even if you attend the special meeting.
Shares represented by a proxy properly signed and returned no
later than the time of the special meeting, unless subsequently
revoked, will be voted at the special meeting in accordance with
instructions thereon. If a proxy is properly signed and returned
without voting instructions, any shares represented by such proxy
will be voted FOR approval of the merger agreement. You may
revoke any proxy given pursuant to this solicitation at any time
before the voting on the matters to be considered at the special
meeting by filing with the Secretary of Webster a written
revocation or a duly executed proxy bearing a later date. All
written notices of revocation and other communications with
respect to revocation of Webster proxies should be addressed to
Webster Bancorp, Inc., 104 Main Street, Clay, Kentucky 42404,
Attention: Sandra Clark Berry. If you sign and return a proxy
and then elect to attend the special meeting and to vote in
person, you may withdraw your proxy at any time before it is
exercised by giving notice of such revocation to the Secretary of
Webster at the special meeting and voting in person by ballot at
the special meeting; however, attendance at the special meeting
will not in and of itself revoke the proxy.
Webster intends to count the shares of Webster common stock
represented in person at the special meeting but not voted, and
shares for which Webster has received proxies but with respect to
which holders of shares have abstained, as present at the special
meeting for purposes of determining the presence or absence of a
quorum for the transaction of business. Brokers may give a proxy
to vote the shares they hold in street name for customers who are
the beneficial owners of such shares only if they receive
specific instructions from such customers. Since the affirmative
vote of the holders of a majority of the outstanding shares of
Webster common stock entitled to vote at the close of business on
the record date is required to approve the merger agreement,
abstentions and shares of Webster common stock that are not voted
or for which customers have not given specific voting
instructions will have the effect of a vote against the merger
agreement.
If sufficient proxies are not obtained to approve the merger
agreement, the persons named as proxies in the enclosed form of
proxy intend to propose and vote for one or more adjournments or
postponements of the special meeting to permit further
solicitation of proxies voting in favor of the merger agreement.
No proxy that is voted against the proposal to approve the merger
agreement will be voted in favor of any such adjournment or
postponement.
SOLICITATION OF PROXIES
In addition to solicitation of proxies from shareholders by
use of the mail, proxies also may be solicited personally or by
telephone by directors, officers and employees of Webster, who
will not be specifically compensated for such services.
Integra has agreed to bear the entire cost of printing this
proxy statement/prospectus and all filing fees paid to the SEC
and other regulatory filing fees incurred in connection with the
merger.
THE MERGER
GENERAL
This section of the proxy statement/prospectus describes
certain aspects of the proposed merger, including the principal
provisions of the merger agreement. The following information is
qualified in its entirety by reference to the other information
contained elsewhere in this proxy statement/prospectus, including
the appendices and the documents incorporated herein by
reference. A copy of the merger agreement, as amended (excluding
the Disclosure Schedule), is attached hereto as Appendix A and is
incorporated by reference in this proxy statement/prospectus.
Please refer to the merger agreement for a complete description
of the terms of the merger. Shareholders of Webster are urged to
read carefully the merger agreement in its entirety.
EFFECT OF THE MERGER; CONCURRENT BANK MERGER
As a result of the merger:
<circle>Each share of Webster common stock will be
converted into the right to receive 1,400.5602 shares
of Integra common stock.
<circle>Webster will merge with and into Integra.
Integra will survive the merger and continue its
corporate existence.
<circle>Webster shareholders will become Integra
shareholders, with their rights governed by Indiana
law and Integra's restated articles of incorporation
and bylaws. See "Comparison of Shareholder Rights."
West Kentucky Bank and Integra Bank NA have entered into a
merger agreement dated as of July 18, 2000 relating to the merger
of West Kentucky Bank with and into Integra Bank NA.
Under the bank merger agreement, West Kentucky Bank will be
merged into Integra Bank NA, with Integra Bank NA as the
surviving bank. The main office and branches of West Kentucky
Bank will thereafter be operated as branches of Integra Bank NA.
The bank merger agreement has been approved by the boards of
directors of West Kentucky Bank and Integra Bank NA and by
Webster and Integra as the sole shareholders of West Kentucky
Bank and Integra Bank NA, respectively.
The bank merger cannot be completed unless regulatory
approval is obtained. See "- Regulatory Approvals."
It is expected that the bank merger will become effective
concurrently with the merger.
BACKGROUND OF THE MERGER
Following the December 1998, death of Clarky Clark, former
President, Chief Executive Officer, and Chairman of the Board of
Webster, West Kentucky Bank and West Kentucky Insurance, Mr.
Clark's wife Linda and his two daughters, Sandra Clark Berry and
Lisa Whitledge, began considering Mrs. Clark's estate planning
alternatives. Mr. Clark had been the largest shareholder of
Webster then holding directly or indirectly approximately 33.5%
of Webster's outstanding stock. Mrs. Clark was concerned about
the potential estate tax liability that would be due upon her
death.
At approximately the same time, Anna Q. Hortin, then owner of
11.6% of Webster's stock, began her own estate planning and had
similar concerns about potential estate tax liability.
In September 1999, Linda Clark and Sandra Clark Berry met
with Mary Johnson (Anna Hortin's sister), a director of Webster
and who together with her husband holds 9.06% of Webster's
outstanding common stock, and Joye Hunt, Vice President of West
Kentucky Bank, to discuss a possible sale of Webster as a
solution to the estate liquidity problems of Mrs. Clark, Ms.
Johnson and other substantial shareholders.
On September 23, 1999, Linda Clark, Sandra Clark Berry, Mary
Johnson, Vernon Johnson (who is Mary Johnson's husband), Anna
Hortin, Webster Chairman Mark Mitchell, and Joye Hunt met with
senior executives of a regional bank holding company to discuss
mergers and acquisitions of financial institutions in general,
and especially how a then proposed merger involving that holding
company would affect Webster and West Kentucky Bank's future
operations and prospects.
In October 1999, Sandra Clark Berry was introduced to a
representative of a national investment banking firm to discuss
Webster's prospects as well as the prospects for a sale of
Webster. On October 14, 1999, Linda Clark, Sandra Clark Berry,
Mary Johnson, Vernon Johnson, and Joye Hunt met with the
investment banker to discuss Webster's future prospects and a
possible sale of Webster. They provided Webster's call reports,
financial statements, and other relevant information to the
investment banker for review and analysis.
In November 1999, the investment banker approached, without
success, a few regional bank holding companies whom the banker
thought might be interested in a potential transaction with
Webster. In December 1999, the investment banker introduced the
Webster shareholders to Steve Hovde of Hovde Financial with the
thought that Mr. Hovde's firm could better assist the
shareholders and Webster in locating a merger partner. Shortly
thereafter, Mr. Hovde sent an initial due diligence list to
Sandra Clark Berry to obtain information regarding Webster.
On January, 10, 2000, Mr. Hovde met with Linda Clark, Sandra
Clark Berry, Lisa Whitledge, Mary Johnson, Anna Hortin, Joye
Hunt, and Mrs. Clark's financial advisors to further discuss
planning for a potential sale of Webster as well as the estate
planning needs of substantial Webster shareholders.
On or about January 31, 2000, Linda Clark, Mary Johnson and
Sandra Clark Berry formally engaged Hovde Financial to assist
them in locating a potential merger partner for Webster.
During January and February 2000, Mr. Hovde and his staff
prepared and distributed a confidential memorandum describing
Webster and its operations to a select group of potential merger
partners. On or about March 10, 2000, Hovde Financial began
soliciting non-binding indications of interest from these
potential merger partners. Within several weeks thereafter,
Hovde Financial had received 3 written indications of interest
from interested potential merger partners.
On April 7, 2000, Matilda Fortenbery, the sister of Mary
Johnson and Anna Hortin, and holder of 11.67% of Webster's
outstanding common stock, became ill and was hospitalized for a
substantial period of time. This event intensified the
shareholders' concern about potential estate tax liability and
the illiquid nature of their investment in Webster stock.
During April and May 2000, Hovde Financial assembled and
delivered due diligence information requested by the three
potential merger partners who had delivered non-binding
indications of interest.
On May 19, 2000, Sandra Clark Berry, Linda Clark, Lisa
Whitledge, Anna Horton, Joye Hunt, and Mary Johnson, and Steve
Hovde and Gene Katz of Hovde Financial, met with representatives
of the three potential merger partners. Integra was represented
at the meeting by, among others, Michael T. Vea, Chairman,
President and Chief Executive Officer and James E. Adams,
Executive Vice President and Chief Financial Officer. Following
presentations from the potential merger partners, the group met
and instructed Mr. Hovde to pursue final indications of interest
from the three merger partners.
On or about June 15, 2000, Mr. Hovde presented final
indications of interest from Integra and the two other potential
merger partners to Linda Clark, Mary Johnson, Anna Hortin, Lisa
Whitledge, Sandra Clark Berry, and Joye Hunt. After discussing
the merits of each offer, the group instructed Mr. Hovde to
undertake final financial negotiations with Integra regarding the
total fixed number of shares Webster shareholders would receive
in the merger.
Mr. Hovde then contacted Mr. Vea and reached a final
agreement with Integra that Integra would exchange 1,750,000
shares of Integra common stock for all of Webster's outstanding
common stock, or an exchange ratio of 1,633.9869 Integra shares
for each outstanding Webster share, subject to Webster board
approval and the negotiation of a definitive merger agreement.
On or about June 18, 2000, at Mr. Hovde's recommendation,
Webster retained Frost Brown Todd LLC (formerly, Brown, Todd &
Heyburn PLLC) to serve as counsel to Webster in connection with
the negotiation and execution of a definitive merger agreement
with Integra.
On July 3, 2000, Sandra Clark Barry, Linda Clark and Mary
Johnson met with Mark Mitchell, Chairman of Webster, Brian Stull,
President and Chief Executive Officer of Webster, and Al
Chancellor, Executive Vice President of West Kentucky Bank, and
informed them of the majority shareholders' desire that Webster
execute a definitive merger agreement with Integra. Messrs.
Mitchell, Stull and Chancellor were each then provided with draft
copies of the proposed definitive merger agreement with Integra.
On July 5, 2000, the terms of the definitive merger agreement
and related agreements were presented to Webster's Board of
Directors. At the meeting, representatives of Frost Brown Todd
reviewed the terms of the proposed merger agreement, and
representatives of Hovde Financial made presentations analyzing
the financial terms of the proposed merger and delivered Hovde
Financial's opinion that the terms of the merger agreement were
fair to Webster's shareholders from a financial point of view.
After extensive discussion, the merger agreement and related
agreements were approved unanimously by the board of directors of
Webster and were signed on behalf of Webster and Integra shortly
thereafter. Integra issued a press release to announce the
signing of the merger agreement before the beginning of trading
on July 6, 2000.
After the execution of the merger agreement, Integra
conducted investigations of the financial condition, prospects
and operations of Webster, West Kentucky Bank, and West Kentucky
Insurance. As a result of these investigations, Integra brought
to Webster's attention several issues relating to Webster's loan
portfolio, among other things. Webster reviewed the merits of
these issues with Webster's legal, accounting and financial
advisors and compiled responses and additional information
addressing Integra's issues. Webster's executives and advisors
also met several times with executives of Integra and its
advisors to discuss Integra's issues and to consider various
alternatives and compromises. Based on the alternatives then
available to Webster and considering the advice of Webster's
legal and financial advisors, certain significant Webster
shareholders and members of Webster's board of directors
authorized Hovde Financial and Frost Brown Todd to negotiate
revised terms and conditions for the proposed merger with Integra
and its representatives. A revised exchange ratio reducing the
number of shares of Integra common stock to be issued in the
merger to 1,500,000 was presented to and approved by the board of
directors of Webster on September 25, 2000, and an amendment to
the merger agreement was executed by Webster and Integra on
September 27, 2000.
INTEGRA'S REASONS FOR THE MERGER
In reaching its decision to approve the merger agreement, the
board of directors of Integra considered the following factors,
without assigning relative weights to them: the consistency of
the acquisition with Integra's goal to grow through acquisition
of financial institutions in Integra's primary markets; the
number of shares of Integra common stock to be issued in the
merger relative to Integra's valuation of Webster and
consideration paid in other, recent, similar, reported
transactions; and information concerning the business, financial
condition, results of operations and prospects for Webster.
WEBSTER'S REASONS FOR THE MERGER
In reaching their decision to initiate a sale of Webster,
certain shareholders of Webster owning and controlling a majority
of Webster's outstanding common stock consulted with their legal
and financial advisors and with certain of Webster's and West
Kentucky Bank's senior executives. Those shareholders and
subsequently the board of directors considered a number of
factors in reaching their decision, including the factors listed
below that they deemed material, but did not assign any specific
weight or priority to the factors considered.
<circle>THE GREATER LIQUIDITY AFFORDED BY INTEGRA STOCK. The
board and the controlling shareholders noted that Integra
common stock is traded on the Nasdaq National Market,
which would give Webster shareholders much more liquidity
than continued ownership of Webster common stock, for
which no active trading market exists. Greater liquidity
would reduce the estate planning issues facing Webster's
majority shareholders and avoid a forced sale of Webster
to generate the funds needed to meet potential estate tax
obligations.
<circle>THE FINANCIAL TERMS OF THE MERGER. The board and the
controlling shareholders noted that Webster shareholders
would be likely to realize increases in earnings per
share and dividends per share as a result of the merger,
based on financial analyses prepared by its financial
advisor. In addition, they noted that Integra common
stock was then trading at multiples lower than peer
institutions identified by its financial advisor, which
they believed indicated that a transaction for a fixed
number of shares of Integra common stock presented an
opportunity for appreciation.
<circle>THE EFFECT ON SHAREHOLDER VALUE OF WEBSTER MERGING
WITH INTEGRA COMPARED TO CONTINUING AS AN INDEPENDENT
ENTITY. The board and the controlling shareholders
concluded that in the current banking environment, the
merger with Integra would be more likely to enhance long-
term shareholder value than would remaining independent.
Integra is a regional financial institution operating in
geographically and economically diverse markets, which
the board believed would offer more opportunities for
growth and long-term stock appreciation than a financial
institution with operations limited to Webster and
Hopkins counties.
<circle>THE EFFECT OF THE MERGER ON WEBSTER'S EMPLOYEES AND
THE CUSTOMERS AND COMMUNITIES WEBSTER SERVES. The board
and the controlling shareholders noted that Integra could
offer customers a wider range of financial products and
services than could Webster as an independent
institution. The board and the controlling shareholders
also considered the banking and business philosophies of
Integra and Webster to be compatible and believed that
Integra has a reputation of commitment to its employees,
customers and the communities it serves.
<circle>THE OPINION OF WEBSTER'S FINANCIAL ADVISER THAT THE
MERGER CONSIDERATION IS FAIR TO HOLDERS OF WEBSTER COMMON
STOCK FROM A financial POINT OF VIEW. See "Opinion of
Webster's Financial Advisor."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the Webster board of directors and certain
Webster senior executives have interests in the transactions
contemplated by the merger agreement that are in addition to
their interests as Webster shareholders and employees, including
those referred to below.
Under the merger agreement, Integra agreed to take all
actions necessary to expand the board of directors of Integra
Bank NA by one member as of the Effective Time and to elect
Sandra Clark Berry, a member of the Webster board of directors,
as a director of Integra Bank NA for not less than three years
after the Effective Time.
On the same date it entered into the merger agreement,
Webster entered into termination benefits agreements with three
of its executive officers, Albert B. Chancellor, Brian Stull and
Joye Hunt. Under these agreements, Webster agreed to provide
certain benefits to each of Mr. Chancellor, Mr. Stull and Ms.
Hunt if such executive officer's employment is terminated
following a change in control of Webster, subject to certain
limitations, conditions and exceptions set forth in the
agreements.
OPINION OF WEBSTER'S FINANCIAL ADVISOR
Hovde Financial LLC ("Hovde") has delivered to the Webster
board its opinion that, based upon and subject to the various
considerations set forth in its written opinion dated July 5,
2000 (the "Original Fairness Opinion") and updated on September
25, 2000 (the "Updated Fairness Opinion"), the exchange ratio is
fair from a financial point of view to the holders of Webster
common stock as of such date. In requesting Hovde's advice and
opinion, no limitations were imposed by Webster upon Hovde with
respect to the investigations made or procedures followed by it
in rendering its opinion. THE FULL TEXT OF THE OPINIONS OF
HOVDE, DATED JULY 5, 2000 AND SEPTEMBER 25, 2000, WHICH DESCRIBE
THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, ARE ATTACHED HERETO AS
APPENDIX B. WEBSTER SHAREHOLDERS SHOULD READ THESE OPINIONS IN
THEIR ENTIRETY.
Hovde is a nationally recognized investment banking firm and,
as part of its investment banking business, is continually
engaged in the valuation of financial institutions in connection
with mergers and acquisitions, private placements and valuations
for other purposes. As a specialist in securities of financial
institutions, Hovde has experience in, and knowledge of, banks,
thrifts and bank and thrift holding companies. Webster's board of
directors selected Hovde to act as its financial advisor in
connection with the merger on the basis of the firm's reputation
and expertise in transactions such as the merger.
Hovde will receive a fee contingent upon the completion of
the merger for services rendered in connection with advising
Webster regarding the merger, including the fairness opinion and
financial advisory services provided to Webster. Based on the
contract entered into by Webster, Hovde was due to receive
$10,000 as initial retainer, $75,000 at the time of the signing
of the definitive agreement, and a completion fee equal to 1.75%
of total consideration implied to Webster shareholders at the
time of the closing of the transaction. As of the date of this
joint proxy statement/prospectus, such fee would have been
approximately $____ based on Integra's closing price of $_____ on
December __, 2000, and Hovde has received $85,000 of such fee to
date.
HOVDE'S OPINIONS ARE DIRECTED ONLY TO THE FAIRNESS, FROM A
FINANCIAL POINT OF VIEW, OF THE EXCHANGE RATIO, AND DO NOT
CONSTITUTE A RECOMMENDATION TO ANY WEBSTER SHAREHOLDERS AS TO HOW
THE SHAREHOLDER SHOULD VOTE AT THE WEBSTER MEETING. THE SUMMARY
OF THE OPINIONS OF HOVDE SET FORTH IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE FULL TEXT OF THE OPINIONS.
The following is a summary of the analyses performed by Hovde
in connection with its Original Fairness Opinion. Certain of
these analyses were presented to the Webster board by Hovde on
July 5, 2000. The summary set forth below does not purport to be
a complete description of either the analyses performed by Hovde
in rendering its Original Fairness Opinion or the presentation
made by Hovde to the Webster board, but it does summarize all of
the material analyses performed and presented by Hovde.
On September 25, 2000, Hovde issued an Updated Fairness
Opinion to reflect the proposed decrease in the exchange ratio
from 1,633.9869 Integra shares for each outstanding Webster
share, the level assumed in its Original Fairness Opinion, to
1,400.5602 Integra shares for each outstanding share of Webster.
Hovde based its decision on a number of additional factors, not
previously factored into the Original Fairness Opinion, such as
the possibility of substantial loan losses, increased reserves
and reduced interest income at Webster, and an increase in
nominal offer value implied to Webster common stock based on an
increase of the trading price of Integra common stock. After
these analyses, Hovde reaffirmed its position that the exchange
ratio is fair from a financial point of view to the Webster
shareholders. The last closing price of Integra common stock was
$20.125 on September 22, 2000 versus $16.50 on July 5, 2000. The
total nominal consideration implied to the shareholders of
Webster as of September 25, 2000 was $28,186.27 per share versus
$26,960.78 per share as of July 5, 2000.
The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of
financial analyses and the application of those methods to the
particular circumstances. In arriving at its opinion, Hovde did
not attribute any particular weight to any analysis and factor
considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. Hovde
may have given various analyses more or less weight than other
analyses. Accordingly, Hovde believes that its analyses and the
following summary must be considered as a whole and that
selecting portions of its analyses, without considering all
factors and analyses, could create an incomplete view of the
process underlying the analyses set forth in its report to the
Webster board and its fairness opinion.
In performing its analyses, Hovde made numerous assumptions
with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond
the control of Webster and Integra. The analyses performed by
Hovde are not necessarily indicative of actual value or actual
future results, which may be significantly more or less favorable
than suggested by such analyses. Such analyses were prepared
solely as part of Hovde's analysis of the fairness of the
exchange ratio, from a financial point of view, to the Webster
shareholders. The analyses do not purport to be an appraisal or
to reflect the prices at which a company might actually be sold
or the prices at which any securities may trade at the present
time or at any time in the future. Hovde's opinion does not
address the relative merits of the merger as compared to any
other business combination in which Webster might engage. In
addition, as described above, Hovde's opinion to the Webster
board was one of many factors taken into consideration by the
Webster board in making its determination to approve the merger
agreement.
During the course of its engagement, and as a basis for
arriving at its opinion, Hovde reviewed and analyzed material
bearing upon the financial and operating condition of Webster and
Integra and material prepared in connection with the merger,
including, among other things, the following:
<circle>the merger agreement;
<circle>certain historical publicly available information
concerning Webster and Integra;
<circle>the nature and terms of recent merger transactions;
and
<circle>financial and other information provided to Hovde by
the management of Webster and Integra. Hovde conducted
meetings and had discussions with members of senior
management of Webster and Integra for purposes of
reviewing the future prospects of Webster and Integra.
Hovde also took into account its experience in other
transactions, as well as its knowledge of the commercial
banking industry and its general experience in securities
valuations.
In rendering its opinion, Hovde assumed, without independent
verification, the accuracy and completeness of the financial and
other information and relied upon the accuracy of the
representations of the parties contained in the merger agreement.
Hovde also assumed that the financial forecasts furnished to or
discussed with Hovde by Webster or Integra were reasonably
prepared and reflected the best currently available estimates and
judgments of senior management of Webster and Integra as to the
future financial performance of Webster, Integra or the combined
entity, as the case may be. Hovde has not made any independent
evaluation or appraisal of any properties, assets or liabilities
of Webster. Hovde assumed and relied upon the accuracy and
completeness of the publicly available and other financial and
other information provided to it, relied upon the representations
and warranties of Webster and Integra made pursuant to the merger
agreement, and did not independently attempt to verify any of
such information.
THE SHAREHOLDERS OF WEBSTER SHOULD BE AWARE THAT THE
FOLLOWING ANALYSES WERE DONE IN CONJUNCTION WITH HOVDE ISSUING
ITS ORIGINAL FAIRNESS OPINION ON JULY 5, 2000, BASED ON AN
EXCHANGE RATIO OF 1,633.9869 INTEGRA SHARES FOR EACH OUTSTANDING
WEBSTER SHARE. THE EXCHANGE RATIO AT THE TIME OF THESE ANALYSES
WAS HIGHER THAN THE ADJUSTED EXCHANGE RATIO OF 1,400.5602 INTEGRA
SHARES TO BE ISSUED IN THE MERGER FOR EACH OUTSTANDING WEBSTER
SHARE AS REFLECTED IN THE SEPTEMBER 25, 2000 UPDATED FAIRNESS
OPINION.
IMPLIED OFFER VALUE ANALYSIS BASED ON INTEGRA HISTORICAL
TRADING VALUATION. Hovde reviewed the implied offer value per
share to Webster common stock based on the price of Integra
common stock at different intervals prior to June 28, 2000, using
the 5-day, 15-day, 30-day, 45-day, 60-day, 90-day and year-to-
date average closing price of Integra common stock during such
period. Using such average closing prices, Hovde observed that
the implied value per share to Webster common stock was as
follows:
Integra Implied Value
Average for Webster
Closing Price Common Stock
June 27, 2000 $17.75 $29,003.27
Last 5 Trading Days $17.70 $28,926.67
Last 15 Trading Days $18.06 $29,512.19
Last 30 Trading Days $18.80 $30,721.51
Last 45 Trading Days $19.49 $31,846.29
Last 60 Trading Days $19.87 $32,473.79
Last 90 Trading Days $21.04 $34,370.46
All Trading Days Year-to-Date $21.90 $35,786.57
Hovde advised the Webster board that although the Webster
board should be aware of what an approximate announced
transaction value would be for Webster, it was more appropriate
to analyze a potential transaction with Integra based on the 60-
day or 90-day trading average of Integra common stock.
Hovde also provided a sensitivity analysis of potential
decreases and increases in Integra's common stock price up to 25%
from its June 27, 2000 closing price of $17.75 and the impact to
the implied offer value for Webster. Assuming Integra common
stock decreased 25% to $13.31 per share, the implied offer value
to Webster common stock would be $21,572.45 per share. Assuming
Integra common stock increased 25% to $22.19 per share, the
implied offer value to Webster common stock would be $36,254.08
per share.
ANALYSIS OF SELECTED MERGERS. As part of its analysis, Hovde
reviewed comparable mergers announced since January 1, 1992,
involving banks in Kentucky in which the seller's assets were
between $50 million and $1 billion and the seller's return on
average equity was between 0.50% and 1.50%. This Kentucky merger
group consisted of the following 30 transactions:
Buyer Seller
Commonwealth Bancshares Inc., Commonwealth Financial Corp.,
Shelbyville, KY Louisville, KY
Premier Financial Bancorp Inc., Mt. Vernon Bancshares, Inc.,
Georgetown, KY Mount Vernon, KY
Union Planters Corp., First & Farmers Bkshrs, Inc.,
Memphis, TN Somerset, KY
Area Bancshares Corp., Peoples Bncp, Winchester, Inc.,
Owensboro, KY Winchester, KY
Union Planters Corp., Southeast Bancorp Inc.,
Memphis, TN Corbin, KY
Integra Bank Corporation, Trigg Bancorp, Inc.,
Evansville, IN Cadiz, KY
Citizens National Corporation, Josephine Bancshares, Inc.,
Paintsville, KY Prestonburg, KY
Area Bancshares Corp., Cardinal Bancshares Inc.,
Owensboro, KY Lexington, KY
Commercial Bancshares, Inc., Commercial Bank,
West Liberty, KY West Liberty, KY
Classic Bancshares Inc., First Paintsville Bkshrs, Inc.,
Ashland, KY Paintsville, KY
Premier Financial Bancorp Inc., Farmers Deposit Bancorp,
Georgetown, KY Eminence, KY
Matewan BancShares Inc., Bank One-Pikeville, NA,
Matewan, WV Pikeville, KY
Old National Bancorp, City National Bancorp, Inc.,
Evansville, IN Fulton, KY
National City Corp., United Bncp of Kentucky, Inc.,
Cleveland, OH Lexington, KY
Community Trust Bancorp, Woodford Bancorp, Inc.,
Pikeville, KY Versailles, KY
Community Trust Bancorp, Commercial Bank,
Pikeville, KY Middlesboro, KY
United Bncp of Kentucky Inc., American Fidelity B&TC,
Lexington, KY Corbin, KY
Greensburg Bancorp, Inc., Peoples Bncrp-Green,
Shepherdsville, KY Greensburg, KY
Peoples First Corp., Libsab Bancorp, Inc.,
Paducah, KY Mayfield, KY
CBT Corporation, BMC Bankcorp, Inc.,
Paducah, KY Benton, KY
Fifth Third Bancorp, Natl Bncp of KY, Inc.,
Cincinnati, OH Cynthiana, KY
CNB Bancshares Inc., Union Bank & Trust Company,
Evansville, IN Morganfield, KY
Trans Financial Inc., Kentucky Community Bncp, Inc.,
Bowling Green, KY Maysville, KY
Union Planters Corp., Mid-South Bancorp, Inc.,
Memphis, TN Franklin, KY
Trans Financial Inc., Trans Kentucky Bancorp,
Bowling Green, KY Pikeville, KY
First Breckinridge Bkshrs, Inc., Bank of Clarkson,
Irvington, KY Clarkston, KY
Area Bancshares Corp., Commonwealth Bancorp,
Owensboro, KY Glasgow, KY
Trans Financial Inc., Dawson Springs Bancorp, Inc.,
Bowling Green, KY Maysville, KY
Area Bancshares Corp., Southern Deposit Bank,
Owensboro, KY Russellville, KY
CNB Bancshares Inc., First Corporation,
Evansville, IN Henderson, KY
Hovde calculated the medians and averages for the following
relevant transaction ratios in the Kentucky merger group: the
multiple of the offer value to the acquired company's earnings
per share for the twelve months preceding the announcement date
of the transaction; the multiple of the offer value to the
acquired company's book value per share and tangible book value
per share; and the tangible book value premium to core deposits,
each as of the announcement date of the transaction. The results
of this analysis are as follows:
Announced Announced Announced Announced
Deal Price/ Deal Price/ Deal Price/ Tangible
Book Value Tangible 4-Qtr EPS Book Value
(%) Book Value (x) Premium/
(%) Core Deposits
(%)
Median 173.71 197.71 15.4 8.64
Average 194.00 205.66 15.9 11.20
High 370.31 370.31 32.2 36.93
Low 106.63 106.63 9.4 0.98
These results were then compared to the implied pricing
multiples of Integra's offer to Webster shareholders based on
Integra's closing price as of June 27, 2000, Integra's 60-day
trading average, Integra's year-to-date high closing price and
Integra's all-time high closing price. For the purposes of this
analysis and inline with how this transaction would be reported
to the market, Webster's latest available public data including
book value, tangible book value and core deposits as of December
31, 1999 and net income for the twelve months ending December 31,
1999, were utilized. The results of this analysis are as
follows:
Announced Announced Announced Announced
Deal Deal Deal Tangible
Price/ Price/ Price/ Book Value
Book Tangible 4-Qtr EPS Premium/
Value Book (x) Core Deposits
(%) Value (%)
(%)
June 27, 2000 164.20 164.20 13.7 4.84
60-day average 183.84 183.84 15.4 6.32
Year-to-date high 252.07 252.07 21.1 11.46
All-time high 415.53 415.53 34.8 23.78
DISCOUNTED CASH FLOW ANALYSIS. Hovde performed a discounted
cash flow analysis to determine a present value per share of
Webster common stock assuming Webster continued to operate as a
stand-alone entity and was acquired at a later date. This
present value was determined by projecting Webster's after-tax
net income for the five calendar years ending December 31, 2000
through 2004. For purposes of this analysis, Hovde assumed that
Webster's earnings per share for these five calendar years would
be $2,756.19, $3,062.04, $3,291.70, $3,538.57 and $3,803.97,
respectively, based upon Webster's 2000 budgeted net income and
then applying historical growth rates for Webster to estimate
future years' earnings per share. These projections were shared
by Hovde with senior management of Webster, who did not object to
the estimates used by Hovde. The "terminal value" per share,
meaning the projected 2004 value per share, of Webster common
stock was determined by applying a price to earnings multiple of
11.5 times against Webster's projected earnings at December 31,
2004. The present value of the terminal value was then
determined using an annual discount rate of 13.50%, which Hovde
viewed as the appropriate discount rate for a company with
Webster's risk characteristics. The above calculations resulted
in a net present value per share of Webster common stock of
$28,861.50. As part of this analysis, Hovde also provided a
table, set forth immediately below, that utilized a discount rate
ranging from 12.00% to 15.50% and varied the terminal multiple
value from 10.0 to 14.0 times Webster's projected earnings at
December 31, 2004.
NPV PER SHARE ( DISCOUNT RATE VS. TERMINAL VALUE MULTIPLE)
Discount Rate
12.00 12.50 13.00 13.50
10.00 26,594.84 26,137.06 25,689.29 25,251.28
10.50 27,864.02 27,383.83 26,914.14 26,454.69
11.00 29,133.20 28,630.60 28,138.99 27,658.10
Terminal
11.50 30,402.38 29,877.36 29,363.84 28,861.50
Value
12.00 31,671.56 31,124.13 30,588.69 30,064.91
Multiple
12.50 32,940.74 32,370.90 31,813.53 31,268.32
13.00 34,209.93 33,617.67 33,038.38 32,471.72
13.50 35,479.11 34,864.44 34,263.23 33,675.13
14.00 36,748.29 36,111.21 35,488.08 34,878.54
Discount Rate
14.00 14.50 15.00 15.50
10.00 24,822.77 24,403.51 23,993.25 23,591.78
10.50 26,005.20 25,565.42 25,135.09 24,713.98
11.00 27,187.63 26,727.33 26,276.93 25,836.17
Terminal
11.50 28,370.07 27,889.25 27,418.77 26,958.36
Value
12.00 29,552.50 29,051.16 28,560.61 28,080.56
Multiple
12.50 30,734.93 30,213.07 29,702.44 29,202.75
13.00 31,917.36 31,374.99 30,844.28 30,324.94
13.50 33,099.80 32,536.90 31,986.12 31,447.14
14.00 34,282.23 33,698.82 33,127.96 32,569.33
CONTRIBUTION ANALYSIS. Hovde prepared a contribution
analysis showing percentages of assets, loans, deposits, common
equity and tangible common equity at May 31, 2000 for Webster,
and as of March 31, 2000 for Integra and actual fiscal year 1999
GAAP basis net income and estimated fiscal years 2000 and 2001
GAAP and cash basis net income that would be contributed to the
combined company on a pro-forma basis by
Webster and Integra. In addition, this analysis showed that
holders of Webster common stock would own approximately 9.07% of
the pro forma common shares outstanding of Integra.
Webster Webster
Contribution Ownership
to Integra in Integra
Total Assets 11.30% 9.07%
Loans 9.36% 9.07%
Deposits 12.87% 9.07%
Equity 8.14% 9.07%
Tangible Equity 9.50% 9.07%
Net Income GAAP - 1999 9.33% 9.07%
Net Income GAAP - Estim. 2000 8.25% 9.07%
Net Income Cash - Estim. 2000 7.48% 9.07%
Net Income GAAP - Estim. 2001 8.35% 9.07%
Net Income Cash - Estim. 2001 7.63% 9.07%
FINANCIAL IMPLICATIONS TO WEBSTER SHAREHOLDERS. Hovde
prepared an analysis of the financial implications of the Integra
offer to a holder of Webster common stock. This analysis
indicated that on a pro forma equivalent basis, assuming realized
after-tax cost savings and revenue enhancements of $500,000 in
2001 and $750,000 in 2002 and on, a stockholder of Webster would
achieve approximately 9.9% accretion in GAAP earnings per share,
an increase of approximately 21.2% in cash earnings per share, an
increase in dividends per share of approximately 357.5% and an
increase in book value per share of approximately 1.7% in 2000 as
a result of the consummation of the merger. Assuming that the
projected earnings per share and dividends per share do not
materially change from historical growth rate levels, the holders
of Webster common stock will experience an increase of
approximately 24.7% in GAAP earnings per share, an increase of
approximately 33.0% in cash earnings per share, an increase of
approximately 619.9% in dividends per share, and a decrease of
approximately 10.3% in book value per share in 2004 as a result
of the consummation of the merger. The table below summarizes
the results discussed above:
GAAP EPS
2000 2004
Webster standalone $2,756.30 $3,803.92
Pro Forma $3,028.43 $4,745.33
% Acc/Dil 9.9% 24.7%
CASH EPS
2000 2004
Webster standalone $2,756.30 $3,803.92
Pro Forma $3,341.62 $5,058.52
% Acc/Dil 21.2% 33.0%
DIVIDENDS PER SHARE
2000 2004
Webster standalone $300.00 $300.00
Pro Forma $1,372.55 $2,159.74
% Acc/Dil 357.5% 619.9%
BOOK VALUE PER SHARE
1999 2003
Webster standalone $20,201.09 $32,696.70
Pro Forma $20,539.52 $29,331.70
% Acc/Dil 1.7% -10.3%
COMPARATIVE SHAREHOLDER RETURNS. Hovde presented an analysis
of comparative theoretical shareholder returns in several
scenarios, including Webster remaining independent, Webster being
acquired in 2004, Webster being acquired by Integra through the
merger and Webster being acquired by Integra through the merger
with Integra in turn being acquired in 2004. This analysis,
which was based on the net present value of projected dividend
streams and projected common stock valuations, using historical
operating and acquisition price-to-earnings multiples, indicated
total shareholder returns of 1.51% if Webster remained
independent, 13.79% for a merger in 2004, 23.61% based on the
acceptance of the offer from Integra, and 31.42% based on the
acceptance of the offer from Integra and Integra in turn being
acquired in 2004.
COMPARISON OF SELECTED COMPARABLE COMPANIES. Hovde compared
selected operating and stock market characteristics of Integra to
the publicly available corresponding data of certain other
companies that Hovde deemed to be relevant, including 1{st}
Source Corporation, AMCORE Financial, Inc., Area Bancshares
Corporation, Brenton Banks, Inc., Chemical Financial Corporation,
Community Trust Bancorp, First Financial Bancorp, First Financial
Corporation, First Merchants Corporation, German American
Bancorp, Mid-America Bancorp, Old National Bancorp and S.Y.
Bancorp, Inc. (collectively, the "Peer Group"). The comparison
showed with regard to stock trading multiples, among other
things, that based on financial data as of March 31, 2000,
earnings estimates from Zacks Investment Research as of June 27,
2000 and market prices as of June 27, 2000 (i) Integra's market
price as a multiple of book value was 1.36x, compared with the
median of 1.49x and the average of 1.73x for the Peer Group, (ii)
Integra's market price as a multiple of tangible book value was
1.61x, compared with the median of 1.55x and the average of 1.87x
for the Peer Group, (iii) Integra's market price as a multiple of
2000 estimated EPS was 9.5x, compared with the median of 11.6x
and the average of 12.0x for the Peer Group and (iv) Integra's
market price as a multiple of 2001 estimated EPS was 8.7x,
compared with the median of 10.5x and the average of 11.0x for
the Peer Group.
Based upon the foregoing analyses and other investigations
and assumptions set forth in its opinion, without giving specific
weightings to any one factor or comparison, Hovde determined that
the exchange ratio was fair from a financial point of view to the
Webster shareholders.
THE SUMMARY OF THE PRESENTATION BY HOVDE TO THE WEBSTER BOARD
OF DIRECTORS AS SET FORTH ABOVE DOES NOT PURPORT TO BE A COMPLETE
DESCRIPTION OF SUCH PRESENTATION. THE PREPARATION OF A FAIRNESS
OPINION INVOLVES VARIOUS DETERMINATIONS AS TO THE MOST
APPROPRIATE AND RELEVANT METHODS OF FINANCIAL ANALYSES AND THE
APPLICATION OF THOSE METHODS TO THE PARTICULAR CIRCUMSTANCES,
AND, THEREFORE, SUCH AN OPINION IS NOT READILY SUSCEPTIBLE TO
SUMMARY DESCRIPTION. FURTHERMORE, IN ARRIVING AT ITS OPINION,
HOVDE DID NOT ATTRIBUTE ANY PARTICULAR WEIGHT TO ANY ANALYSIS OR
FACTOR CONSIDERED BY IT, BUT RATHER MADE QUALITATIVE JUDGMENTS AS
TO THE SIGNIFICANCE AND RELEVANCE OF EACH ANALYSIS AND FACTOR.
ACCORDINGLY, HOVDE BELIEVES THAT ITS ANALYSES AND THE SUMMARY SET
FORTH ABOVE MUST BE CONSIDERED AS A WHOLE AND THAT SELECTING
PORTIONS OF ITS ANALYSES, WITHOUT CONSIDERING ALL FACTORS AND
ANALYSES, COULD CREATE AN INCOMPLETE VIEW OF THE PROCESS
UNDERLYING THE ANALYSES SET FORTH IN ITS REPORT TO THE WEBSTER
BOARD OF DIRECTORS AND ITS FAIRNESS OPINION. IN PERFORMING ITS
ANALYSES, HOVDE MADE NUMEROUS ASSUMPTIONS WITH RESPECT TO
INDUSTRY PERFORMANCE, GENERAL BUSINESS AND ECONOMIC CONDITIONS
AND OTHER MATTERS, MANY OF WHICH ARE BEYOND THE CONTROL OF
WEBSTER OR INTEGRA. THE ANALYSES PERFORMED BY HOVDE ARE NOT
NECESSARILY INDICATIVE OF ACTUAL VALUES OR ACTUAL FUTURE
PERFORMANCE.
RECOMMENDATION OF WEBSTER'S BOARD OF DIRECTORS
For the reasons described above, the board of directors of
Webster believes that the affiliation with Integra through the
merger is in the best interest of Webster, its shareholders, the
communities it serves and other constituencies.
THE WEBSTER BOARD OF DIRECTORS RECOMMENDS THAT WEBSTER
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
CLOSING AND EFFECTIVE TIME
The merger agreement provides that, unless otherwise agreed
and assuming all conditions have been satisfied or waived, the
closing of the merger will be held on the date fixed by agreement
of Integra and Webster as soon as practicable following the date
on which all required approvals are received and any required
waiting periods have expired.
If the merger agreement is approved by the requisite vote of
Webster shareholders, all other conditions of the merger
agreement are satisfied or waived and the closing is held, the
merger will become effective at the date and time (the "Effective
Time") specified in the articles of merger that are required to
be filed with the Offices of the Secretaries of State of Kentucky
and Indiana. It is presently contemplated that the Effective
Time will occur during the first quarter of 2001. The merger
agreement may be terminated by either party if, among other
things, the closing does not occur on or before March 15, 2001.
See "-Termination and Waiver."
CONVERSION OF WEBSTER COMMON
As a result of the merger, each share of Webster common stock
issued and outstanding immediately before the Effective Time,
other than shares whose holders have properly exercised their
dissenters' rights under Kentucky law, will be converted into the
right to receive 1,400.5602 shares of Integra common stock.
No fractional shares of Integra common stock will be issued
in the merger. Webster shareholders will receive cash in lieu of
fractional interests in a share of Integra common stock equal to
the product of the fractional interest and the closing price of a
share of Integra common stock as reported in THE WALL STREET
JOURNAL (Midwest Edition) on the Nasdaq National Market Tier of
the Nasdaq Stock Market for the last trading day prior to the
closing. The shares of Integra common stock to be issued in the
merger and cash paid in lieu of fractional interests are referred
to as the "Merger Consideration."
PROCEDURES FOR EXCHANGE OF CERTIFICATES
The conversion of Webster common stock into the right to
receive the Merger Consideration will occur by operation of law
at the Effective Time. After the Effective Time, certificates
that represented shares of Webster common stock before the
Effective Time will be deemed, for all corporate purposes other
than the payment of dividends and other distributions on such
shares, to evidence ownership of and entitlement to receive such
shares of Integra common stock.
As soon as reasonably practicable after the Effective Time,
an exchange agent appointed by Integra will send a transmittal
letter and instructions to each record holder of certificates for
Webster common stock whose shares were converted into the right
to receive the Merger Consideration, advising such holder of the
number of shares of Integra common stock such holder is entitled
to receive pursuant to the merger, the amount of cash such holder
is due in lieu of any fractional share, and the procedures for
surrendering Webster stock certificates, and a check for the cash
amount (if any) such holder is entitled to receive in lieu of a
fractional share. The letter of transmittal will also specify
that delivery will be effected, and risk of loss and title to the
certificates for Webster common stock will pass, only upon proper
delivery of the certificates for Webster common stock to the
exchange agent. The letter of transmittal will be in such form
and have such other provisions as the merger agreement contains
and as Integra may reasonably specify. After the receipt by the
exchange agent of a holder's certificates for Webster common
stock, together with a duly executed letter of transmittal and
any other required documents, the exchange agent will deliver to
such holder the Merger Consideration such holder is entitled to
receive under the merger agreement.
WEBSTER SHAREHOLDERS SHOULD NOT SURRENDER THEIR CERTIFICATES
FOR EXCHANGE UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL.
Unless a shareholder delivers his or her certificates for
Webster common stock to the exchange agent, together with a duly
executed letter of transmittal and any other required documents,
dividends or other distributions on the shares of Integra common
stock issuable to the shareholder and any cash payments for
fractional shares that would otherwise be payable will not be
delivered to the shareholder. In such a case, cash payment for
fractional shares and any dividends or other distributions on
such shares of Integra common stock with a record date following
the Effective Time will be paid to the shareholder only upon
surrender of the certificates for Webster common stock, together
with a duly executed letter of transmittal and any other required
documents. No interest on any such cash payment or dividends
will accrue or be paid.
If a shareholder has lost his or her certificate for Webster
common stock, the exchange agent will issue the Merger
Consideration payable on the shares represented by the lost
certificate only upon receipt of an affidavit as to such loss,
and an indemnity agreement, if required by Integra.
DISSENTERS' RIGHTS
The rights of Webster shareholders who choose to dissent from
the merger are governed by the provisions of the Kentucky
Business Corporation Act (the "KBCA"). A copy of the provisions
of the KBCA governing dissenters' rights (KRS 271B.13-010 to
271B.13-310) is attached as Appendix C to this proxy
statement/prospectus.
Any shareholder who wishes to assert dissenters' rights must
deliver to Webster a written notice indicating that shareholder's
intent to demand payment for his or her shares if the merger is
completed. This notice should be addressed to Webster Bancorp,
Inc., 104 Main Street, Clay, Kentucky 42404, Attn: Sandra
Clark Berry. The shareholder's notice must be delivered to
Webster before the vote is taken at the special meeting and the
shareholder must not vote in favor of the proposed merger.
Shareholders who wish to exercise dissenters' rights must
exercise them as to all shares they beneficially own.
Shareholders who own shares beneficially but not of record must,
in addition to the other requirements described herein, submit to
Webster the consent of the record holder of such shares no later
than the time dissenters' rights are asserted. Any shareholder
who fails to deliver the shareholder's notice or votes in favor
of the merger will forfeit the right to receive payment for his
or her shares as a dissenting shareholder under the KBCA.
If the merger is approved at the special meeting, Webster
will deliver a written dissenters' notice to all shareholders who
satisfied the requirements set forth above. This dissenters'
notice must be sent no later than 10 days after approval of the
merger by shareholders and must:
<circle>state where demand for payment should be sent and
where and when certificates for certificated shares
should be deposited;
<circle>inform holders of uncertificated shares of the extent
of transfer restrictions imposed upon such shares after
the demand for payment is received;
<circle>supply a form for demanding payment for shares that
includes the date of the first announcement to the news
media or to shareholders of the terms of the proposed
merger, which occurred on July 5, 2000 with respect to
the merger, and requires that the person asserting
dissenters' rights certify whether or not the person
acquired beneficial ownership of the shares before that
date;
<circle>establish a date by which Webster must receive a
demand for payment, which date shall be no less than 30
nor more than 60 days after the dissenters' notice is
delivered; and
<circle>be accompanied by a copy of the provisions of the
KBCA pertaining to dissenters' rights.
A dissenting shareholder must demand payment, certify whether
beneficial ownership of his shares was acquired before the date
set forth in the dissenters' notice and deposit his certificates
in accordance with the terms of such notice. Any shareholder who
demands payment and deposits shares in accordance with the terms
of the dissenters' notice shall retain all other rights as a
shareholder until the rights are canceled or modified by
consummation of the merger. Any shareholder who fails to demand
payment or deposit shares as required by the dissenters' notice
by the respective dates set forth therein will not be entitled to
payment for his shares under the dissenters' statute, but will be
entitled to receive the Merger Consideration.
If a dissenting shareholder was the beneficial owner of his
shares on or before the date of the first announcement to news
media or to shareholders of the terms of the proposed merger,
which occurred on July 5, 2000 with respect to the merger, the
KBCA requires Webster to pay any pre-announcement shareholder the
amount Webster estimates to be the fair value of his shares plus
accrued interest. Payment must be made as soon as the merger is
consummated and must be accompanied by year-end and interim
financial statements of Webster, a statement of Webster's
estimate of the fair value of the shares, an explanation of how
interest was calculated, a statement of the dissenting
shareholder's right to demand payment, and a copy of the
provisions of the KBCA pertaining to dissenters' rights. If a
dissenting shareholder was not the beneficial owner of his shares
prior to the date of the first announcement to the news media or
to shareholders of the proposed merger, Webster may elect to
withhold payment of the fair value of such shareholder's shares.
To the extent such payment is withheld, Webster is required to
estimate the fair value of the dissenting shareholder's rights
plus interest and offer to pay this amount to each such
shareholder who agrees to accept it in full satisfaction of his
demand. The offer must be accompanied by a statement of
Webster's estimate of value, an explanation of how interest was
calculated and a statement of the dissenting shareholder's right
to demand payment under the KBCA.
The KBCA provides that a dissenting shareholder may notify
Webster in writing of his estimate of the fair value of his
shares and interest due and demand payment of the amount of such
estimate (less any payment already made by Webster), or reject
Webster's offer to a pre-announcement shareholder and demand
payment of the fair value of his shares if:
<circle>the dissenter believes the amount paid or offered is
less than the fair value of his shares, or if the
interest due is incorrectly calculated,
<circle>Webster fails to pay any pre-announcement
shareholders, within 60 days after the date set for
demanding payment, or
<circle>if the proposed merger is not consummated, Webster
fails to return the deposited certificates or release
transfer restrictions imposed on uncertificated shares
within 60 days after the date set for demanding payment.
In order to exercise these rights, a dissenter must notify
Webster in writing within 30 days after Webster made or offered
payment for the dissenter's shares.
If a demand for payment by a dissenting shareholder remains
unsettled within 60 days after Webster's receipt of the demand
for payment, Webster must commence a proceeding in the circuit
court of Webster County, Kentucky and petition the court to
determine the fair value of the shares and accrued interest. If
such a proceeding is not commenced within the 60-day period,
Webster must pay each dissenting shareholder whose demand remains
unsettled the amount demanded. All dissenting shareholders whose
demands remain unsettled must be made parties to the proceeding
and must be served with a copy of the petition. The court may
appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. In any such
proceeding, each dissenting shareholder made a party is entitled
to a judgment in the amount of the difference between the fair
value found by the court and the amount paid by Webster plus
interest on such difference, in the case of a pre-announcement
shareholder; or the fair value, plus accrued interest, of the
dissenting shareholder's shares for which Webster elected to
withhold payment in the case of other dissenting shareholders.
The court in an appraisal proceeding will determine and assess
the costs of the proceeding, including the compensation and
expenses of court-appointed appraisers, against Webster, except
the court may assess costs against dissenters to the extent the
dissenters acted arbitrarily, vexatiously, or not in good faith
in demanding payment. The court may also assess fees and
expenses of attorneys and experts for the parties against Webster
if the court finds that Webster did not substantially comply with
the requirements of the KBCA regarding dissenters' rights, or
against any party if the court finds that such party acted
arbitrarily, vexatiously or not in good faith. The KBCA also
makes provision for compensation of attorneys for any dissenting
shareholder whose services benefitted other dissenting
shareholders similarly situated to be paid out of the amounts
awarded the dissenting shareholders who were benefitted, if not
assessed against Webster.
THE FOREGOING SUMMARY DOES NOT PURPORT TO BE A COMPLETE
STATEMENT OF THE PROVISIONS OF THE KBCA RELATING TO THE RIGHTS OF
DISSENTING SHAREHOLDERS OF WEBSTER, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE EXCERPTS FROM THE KBCA INCLUDED
HEREIN AS APPENDIX C.
REGULATORY APPROVALS
Integra agreed, in the merger agreement, to file all
regulatory applications to obtain the requisite regulatory
approvals for the merger. The merger cannot proceed without such
regulatory approvals.
Although the merger of Webster into Integra is subject to
approval by the Federal Reserve Board under the Bank Holding
Company Act of 1956, as amended (the "Bank Holding Company Act"),
the Federal Reserve Board waived that requirement on October 30,
2000, because of the need to obtain regulatory approval of the
concurrent merger of Webster's subsidiary, West Kentucky Bank,
into Integra's subsidiary, Integra Bank NA. Under the Bank
Merger Act, as amended (the "Merger Act"), the bank merger must
be approved by the OCC.
The Merger Act provides that the OCC may not approve any
transaction (i) that would result in a monopoly, or that would be
in furtherance of any combination or conspiracy to monopolize or
to attempt to monopolize the business of banking in any part of
the United States, or (ii) the effect of which in any section of
the country may be substantially to lessen competition, or to
tend to create a monopoly, or that in any other manner would be
in restraint of trade, unless the OCC finds that the
anticompetitive effects of the proposed transaction are clearly
outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the
communities to be served. In conducting its review of any
application for approval, the OCC is required to consider the
financial and managerial resources and future prospects of the
company or companies and the banks concerned, and the convenience
and needs of the communities to be served. Under the Bank
Holding Company Act as interpreted by the OCC and the courts, the
OCC may deny any application if it determines that the financial
or managerial resources of the acquiring bank holding company are
inadequate.
Integra has filed an application with the OCC and expects the
OCC to act on the application prior to the special meeting;
however, approval cannot be assured. Separate approval of the
bank merger is not required from the Kentucky Department of
Financial Institutions ("KDFI"); however, the KDFI and the
Federal Reserve Board have received a copy of the OCC application
and will have an opportunity to comment on it.
The merger may not be consummated until 30 days following OCC
approval, during which time the Department of Justice ("DOJ") may
challenge the merger on antitrust grounds and seek the
divestiture of certain assets and liabilities. With the approval
of the OCC and the DOJ, the waiting period may be reduced to no
less than fifteen days. The commencement of an antitrust action
by the DOJ would stay the effectiveness of OCC approval of the
merger unless a court specifically orders otherwise. In
reviewing the merger, the DOJ could analyze the effect of the
merger on competition differently than the OCC and, thus, it is
possible that the DOJ could reach a different conclusion than the
OCC regarding the competitive effects of the merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal
income tax consequences of the merger to certain Webster
shareholders and is not a complete analysis or listing of all
potential tax considerations or consequences relevant to a
decision whether to vote for the approval of the merger
agreement. The discussion does not address all aspects of
federal income taxation that may be applicable to Webster
shareholders in light of their status or personal investment
circumstances, nor does it address the federal income tax
consequences of the merger that are applicable to Webster
shareholders subject to special federal income tax treatment
including, without limitation, foreign persons, insurance
companies, tax-exempt entities, retirement plans, dealers in
securities, persons who acquired their Webster common stock
pursuant to the exercise of employee stock options or otherwise
as compensation. In addition, the discussion does not address
the effect of any applicable state, local or foreign tax laws, or
the effect of any federal tax laws other than those pertaining to
the federal income tax. As a result, each Webster shareholder is
urged to consult his or her own tax advisor to determine the
specific tax consequences of the merger to such shareholder. The
discussion assumes that shares of Webster common stock are held
as capital assets (within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code")) at the
Effective Time.
It is a condition to the merger that the parties receive an
opinion from Baker & Daniels, counsel to Integra ("Counsel"), to
the effect that, assuming the merger occurs in accordance with
the merger agreement, the merger will constitute a reorganization
for federal income tax purposes under Section 368(a) of the Code,
with the following federal income tax consequences:
<circle>Webster shareholders will recognize no gain or loss
as a result of the exchange of their Webster common stock
solely for shares of Integra common stock pursuant to the
merger, except with respect to cash received in lieu of
fractional share interests, if any, as discussed below.
<circle>The aggregate adjusted tax basis of the shares of
Integra common stock received by each Webster shareholder
in the merger (including any fractional share of Integra
common stock deemed to be received, as described below)
will be equal to the aggregate adjusted tax basis of the
shares of Webster common stock surrendered.
<circle>The holding period of the shares of Integra common
stock received by each Webster shareholder in the merger
(including any fractional share of Integra common stock
deemed to be received, as described below) will include
the holding period of the shares of Webster common stock
exchanged therefor.
<circle>A Webster shareholder who receives cash in lieu of a
fractional share of Integra common stock will be treated
as if the fractional share had been received by such
shareholder in the merger and then redeemed by Integra in
return for the cash amount. The receipt of such cash
will cause the recipient to recognize capital gain or
loss equal to the difference between the amount of cash
received and the portion of such holder's adjusted tax
basis in the shares of Integra common stock allocable to
the fractional share.
<circle>Cash received by Webster shareholders exercising
dissenters' rights will be treated as a distribution in
full payment of such shares, resulting in capital gain or
loss, or ordinary income, as the case may be, depending
upon such shareholder's individual situation.
Counsel's opinion will be subject to certain conditions and
customary assumptions and will rely upon various representations
made by Integra and Webster. If any of these representations or
assumptions is inaccurate, the tax consequences of the merger
could differ from those described herein. Counsel's opinion will
also be based upon the Code, regulations proposed or promulgated
thereunder, judicial precedent relating thereto, and current
administrative rulings and practice, all of which are subject to
change. Any such change, which may or may not be retroactive,
could alter the tax consequences discussed herein. An opinion of
counsel, unlike a private letter ruling from the Internal Revenue
Service, has no binding effect. The Internal Revenue Service
could take a position contrary to Counsel's opinion and, if the
matter were litigated, a court could reach a decision contrary to
the opinion. Neither Integra nor Webster has requested an
advance ruling as to the federal income tax consequences of the
merger.
Based upon the advice of Counsel, the parties believe that
the merger will qualify as a reorganization for federal income
tax purposes. Accordingly, the material federal income tax
consequences to a holder of Webster common stock will be as
described above.
THE FOREGOING IS A GENERAL SUMMARY OF THE MATERIAL FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER TO SHAREHOLDERS OF WEBSTER
WITHOUT REGARD TO THE PARTICULAR FACTS AND CIRCUMSTANCES OF EACH
SHAREHOLDER'S TAX SITUATION AND STATUS. EACH SHAREHOLDER OF
WEBSTER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM OR HER, INCLUDING
THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND OTHER TAX
LAWS AND THE POSSIBLE EFFECT OF CHANGES IN FEDERAL AND OTHER TAX
LAWS.
ACCOUNTING TREATMENT
Integra will account for the merger as a purchase. Integra
will record, at fair value, the acquired assets and assumed
liabilities of Webster. To the extent the total purchase price
exceeds the fair value of the assets acquired and liabilities
assumed, Integra will record goodwill. Integra will include in
its results of operations the results of Webster's operations
after the merger.
RESALE OF INTEGRA COMMON STOCK ISSUED IN THE MERGER
The Integra common stock issued in the merger will be freely
transferable under the Securities Act, except for shares issued
to Webster shareholders who are considered to be "affiliates" of
Webster or Integra under Rule 145 under the Securities Act or of
Integra under Rule 144 under the Securities Act. The definition
of "affiliate" is complex and depends on the specific facts, but
generally includes directors, executive officers, 10%
shareholders and other persons with the power to direct the
management and policies of the company in question.
Affiliates of Webster may not sell the shares of Integra
common stock received in the merger except:
<circle>pursuant to an effective registration statement under
the Securities Act,
<circle>in compliance with an exemption from the registration
requirements of the Securities Act, or
<circle>in compliance with Rule 144 and Rule 145 under the
Securities Act. Generally, those rules permit resales of
stock received by affiliates so long as Integra has
complied with certain reporting requirements and the
selling shareholder complies with certain volume and
manner of sale restrictions.
Webster has agreed to use its best efforts to deliver to
Integra signed representations by each person who may be deemed
to be an affiliate of Webster that the person will not sell,
transfer or otherwise dispose of the shares of Integra common
stock to be received by the person in the merger except in
compliance with the applicable provisions of the Securities Act
and the rules and regulations promulgated thereunder.
This proxy statement/prospectus does not cover any resales of
Integra common stock received by affiliates of Webster.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains various representations and
warranties which are customary in these transactions, including,
among other things:
<circle>Representations and warranties by Integra and Webster
related to organization and corporate power;
capitalization; authorization, execution and delivery of
the merger agreement; compliance of the merger agreement
with organizational documents, agreements, laws and
regulations; absence of any undisclosed liabilities;
absence of any change in financial condition, results of
operations or business; absence of any litigation, claim
or other proceeding; compliance with applicable laws and
regulations; belief that the merger will qualify as a
tax-free reorganization; absence of any untrue statements
or omissions of material fact in the merger agreement and
related documents; absence of enforcement actions and
other regulatory-related matters; filing of tax returns
and payment of taxes; and absence of any obligation to
pay brokers' or finders' fees in connection with the
merger other than Webster's obligation to Hovde Financial
LLC.
<circle>Further representations and warranties by Integra
related to authorization and nonassessability of the
shares of Integra common stock to be issued in the
merger; delivery and accuracy of reports filed with the
SEC, the Federal Reserve Board, the OCC, the FDIC, Nasdaq
and any other regulatory agency; conformity of financial
statements in those reports to generally accepted
accounting principles ("GAAP"); and absence of any
requirement to obtain the approval of Integra's
shareholders in connection with the merger.
<circle>Further representations and warranties by Webster
related to ownership and organization of subsidiaries;
conformity of financial statements of Webster and its
subsidiaries to GAAP; title to properties; insurance;
labor and employment matters; delivery and accuracy of
reports filed by Webster and its subsidiaries with the
Federal Reserve Board, the FDIC, the KDFI and any other
regulatory agency; loan portfolio; investment portfolio;
interest rate risk management instruments; compliance of
employee benefit plans with applicable laws, rules and
regulations; environmental-related conditions or events;
non-banking activities; trust administration; compliance
with fair lending and community reinvestment statutes;
and material contracts and agreements to which Webster or
its subsidiaries are party or by which it or they are
bound.
COVENANTS
The merger agreement contains covenants that the parties will
take, or refrain from taking, certain actions prior to the
Effective Time.
<circle>As to Integra, these covenants include, among other
things, agreements to file all regulatory applications
required to consummate the merger and keep Webster
informed of the status of such applications; file a
registration statement on Form S-4 with the SEC relating
to the shares of Integra common stock to be issued in the
merger; file any application to list on Nasdaq the shares
of Integra common stock to be issued in the merger;
notify Webster of any event that would cause or
constitute a breach of any of its representations or
agreements contained in the merger agreement; use its
reasonable best efforts to maintain in effect for three
years after the Effective Time the current policies of
directors' and officers' liability insurance maintained
by Webster; provide Webster with access to books and
records relating to Integra's assets, properties,
operations and liabilities; and take necessary action to
expand the board of directors of Integra Bank NA by one
member as of the Effective Time and elect Sandra Clark
Berry as a director of Integra Bank NA for not less than
three years after the Effective Time (see "- Interests of
Certain Persons in the Merger").
<circle>The covenants made by Webster include, among other
things, agreements by Webster and its subsidiaries not to
declare or pay any dividend or make any other
distribution to shareholders except for cash dividends on
the Webster common stock in the amounts specified in the
merger agreement (however, holders of Webster common
stock may receive cash dividends attributable either to
Webster or Integra, but not both, for the quarter in
which the Effective Time occurs); to conduct their
business in the ordinary course and maintain existing
business organization and relationships; to notify
Integra of any event that may have a material adverse
effect on Webster or would cause or constitute a breach
of any of Webster's representations or agreements
contained in the merger agreement; to provide Integra
with access to books and records relating to their
assets, properties, operations and liabilities; to cause
a special meeting of Webster shareholders to be held and
recommend approval of the merger agreement subject to the
exercise of directors' fiduciary duties; to use their
reasonable best efforts to obtain any and all necessary
third party consents for the transfer or assumption of
leases, contracts and rights pursuant to the merger; to
furnish Integra with the information in Webster's
possession that is required for any regulatory
applications in connection with the merger; and to pay to
Integra a termination fee of $1,500,000 upon the
occurrence of certain specified events (see "-No
Solicitation; Fees and Expenses").
CONDITIONS TO THE MERGER
In addition to the approval of Webster shareholders, the
obligations of both parties to consummate the merger are subject
to the satisfaction or waiver of certain other conditions,
including, among others:
<circle>that all required regulatory approvals have been
obtained;
<circle>that no court order preventing consummation of the
merger is in effect;
<circle>that no action or proceeding to restrain the merger
is pending;
<circle>that there has been no action taken or any statute,
rule, regulation or order enacted which would make the
consummation of the merger illegal; and
<circle>the effectiveness of the Registration Statement and
the absence of a stop order with respect thereto.
The obligation of Integra to consummate the merger is further
conditioned on the following:
<circle>the continued accuracy, subject to the materiality
standard set forth in the merger agreement, of the
representations and warranties of Webster in the merger
agreement;
<circle>the performance and compliance in all material
respects of all obligations and agreements to be
performed by Webster under the merger agreement;
<circle>the receipt of all documents required to be received
from Webster; and
<circle>the receipt of an opinion of Baker & Daniels to the
effect that the merger will constitute a tax-free
reorganization.
The obligation of Webster to consummate the merger is further
conditioned on the following:
<circle>the continued accuracy, subject to the materiality
standard set forth in the merger agreement, of the
representations and warranties of Integra in the merger
agreement;
<circle>the performance and compliance in all material
respects of all obligations and agreements to be
performed by Integra under the merger agreement;
<circle>the receipt of all documents required to be received
from Integra;
<circle>the receipt of a copy of the tax opinion of Integra's
counsel, Baker & Daniels;
<circle>the approval for listing on Nasdaq of the shares of
Integra common stock issuable pursuant to the merger
agreement; and
<circle>the confirmation or non-withdrawal, as of the date of
mailing this proxy statement/prospectus, of an opinion
from its financial advisor to the effect that the Merger
Consideration is fair, from a financial viewpoint, to the
Webster shareholders.
TERMINATION AND WAIVER
The merger agreement may be terminated and the merger
abandoned prior to the Effective Time, before or after approval
of the merger agreement by the Webster shareholders:
<circle>by mutual consent of Webster and Integra;
<circle>by Integra, if there is a breach, subject to the
materiality standard set forth in the merger agreement,
in any of Webster's representations, warranties or
agreements that is not cured within 30 days after Integra
notifies Webster to cure the breach;
<circle>by Webster, if there is a breach, subject to the
materiality standard set forth in the merger agreement,
in any of Integra's representations, warranties or
agreements that is not cured within 30 days after Webster
notifies Integra to cure the breach;
<circle>by Integra, if any of the conditions to its
obligation to consummate the merger have not been
satisfied or waived by the closing date;
<circle>by Webster, if any of the conditions to its
obligation to consummate the merger have not been
satisfied or waived by the closing date;
<circle>if any necessary regulatory approval is finally
denied;
<circle>by Integra, if its board of directors reasonably
determines in good faith that any of the requisite
regulatory approvals imposes a burdensome condition that
would render consummation of the merger inadvisable;
<circle>by Integra, if Webster or its subsidiaries become
subject to any new or amended regulatory enforcement
action or proceeding which would have a material adverse
effect on Webster; and
<circle>by either party, if the closing date does not occur
on or prior to March 15, 2001, unless the failure to
complete the merger on or before that date is due to the
failure of the party seeking to terminate the merger
agreement to perform or observe its covenants or
agreements set forth in the merger agreement.
Webster and Integra may, by written instrument, amend or
modify the merger agreement in whole or in part, or waive
compliance with any of the covenants or conditions of the merger
agreement, before or after approval of the merger agreement by
the Webster shareholders, to the extent authorized by applicable
law.
NO SOLICITATION; FEES AND EXPENSES
The merger agreement prohibits Webster, its subsidiaries and
their officers, directors and representatives, from soliciting,
initiating or encouraging, or (subject to the fiduciary duties of
the board of directors as advised by counsel) holding discussions
or negotiations with, or providing any information to any person
in connection with any proposal from any third parties regarding
an acquisition of Webster, its subsidiaries, or all or any
substantial portion of their business, assets, shares of Webster
common stock or other securities of Webster or its subsidiaries.
Webster is required to communicate to Integra the terms of any
such proposal.
Except as described below or as otherwise expressly provided
in the merger agreement, each party is to pay its own fees and
expenses incurred in connection with the merger, the merger
agreement and the transactions contemplated therein.
Webster is required to pay Integra a termination fee of
$1,500,000 upon the occurrence of any of the following events
without the prior written consent of Integra:
<circle>the acquisition by anyone other than Integra of
beneficial ownership of 15% or more of any shares of
voting capital stock of Webster or any of its
subsidiaries, but only if the acquirer has publicly
announced its opposition to or its intention not to vote
in favor of the merger agreement, or the acquirer has
proposed or entered into an agreement relating to a
merger or other combination with Webster or any of its
subsidiaries, or the acquirer has commenced or indicated
its intention to commence an offer for any shares of
capital stock of Webster or its subsidiaries;
<circle>the board of directors of Webster has failed to
recommend to Webster shareholders approval of the merger
agreement, or withdrawn or conditioned its recommendation
to Webster shareholders of approval of the merger
agreement, or changed its recommendation to Webster
shareholders of approval of the merger agreement in a
manner materially adverse to Integra, or failed to
solicit proxies in favor of the merger agreement from
Webster shareholders;
<circle>Webster or any of its subsidiaries has approved any
proposal or executed any agreement with anyone other than
Integra to acquire Webster, or in connection with any
offer for any shares of capital stock of Webster or its
subsidiaries; or
<circle>the board of directors of Webster has approved and
anyone other than Integra has filed documents with any
regulatory agency with respect to any merger or other
combination involving Webster or any of its subsidiaries,
or any offer for any shares of capital stock of Webster
or any of its subsidiaries.
The above termination fee provisions terminate upon any
termination of the merger agreement, except in the following
situations:
<circle>if one of the events described above occurs prior to
the termination of the merger agreement, then Webster
remains obligated to pay to Integra the termination fee;
and
<circle>if Integra terminates the merger agreement based upon
a willful breach, subject to the materiality standard set
forth in the merger agreement, by Webster of any
representation, warranty, covenant or agreement contained
in the merger agreement, then Webster may remain
obligated to pay to Integra the termination fee.
In addition, if Webster terminates the merger agreement based
upon a willful breach, subject to the materiality standard set
forth in the merger agreement, by Integra of any representation,
warranty or covenant contained in the merger agreement, then
Webster will not be obligated to pay the termination fee.
COMPARATIVE STOCK PRICES AND DIVIDENDS
Shares of Integra common stock are traded on the Nasdaq
National Market Tier of the Nasdaq Stock Market under the symbol
"IBNK." Prior to May 17, 2000, the symbol for the Integra common
stock was "NCBE." The following table sets forth the high and
low sales prices of Integra common stock and cash dividends
declared for the periods indicated. Prices and dividends have
been adjusted to reflect stock dividends and splits. There is no
established public trading market for the shares of Webster
common stock. However, management of Webster is aware of certain
transactions involving Webster common stock that have occurred
since January 1, 1998, including the issuance by Webster of 71
shares for $25,000 per share. To the knowledge of Webster's
management, all shares of Webster common stock have traded at a
price of $25,000 per share since January 1, 1998.
Integra Common Stock
Low High CASH
DIVIDENDS
Declared
1998
First Quarter $34.92 $41.27 $0.1633
Second Quarter 33.56 40.82 0.1633
Third Quarter 29.71 36.85 0.1633
Fourth Quarter 32.43 37.26 0.1905
1999
First Quarter 22.86 36.19 0.1905
Second Quarter 23.10 33.33 0.1905
Third Quarter 22.80 32.26 0.1905
Fourth Quarter 23.33 29.88 0.2100
2000
First Quarter 18.50 28.00 0.2100
Second Quarter 16.375 22.625 0.2100
Third Quarter 16.25 22.188 0.2100
Fourth Quarter (1) __.__ __.__ 0.2350
Webster Common Stock
Low High CASH
DIVIDENDS
Declared
1998
First Quarter $25,000 $25,000 $0.00
Second Quarter --- --- 25.00
Third Quarter 25,000 25,000 0.00
Fourth Quarter 25,000 25,000 275.00
1999
First Quarter 25,000 25,000 0.00
Second Quarter 25,000 25,000 25.00
Third Quarter --- --- 0.00
Fourth Quarter --- --- 275.00
2000
First Quarter 25,000 25,000 0.00
Second Quarter --- --- 25.00
Third Quarter --- --- 200.00
Fourth Quarter (1) ________ ________ [75.00]
____________
(1)Through December __, 2000.
On July 3, 2000, the last trading day before the public
announcement of the merger, the closing sale price of Integra
common stock was $16.813 per share and the equivalent per share
price of Webster common stock would have been $23,547.62. The
equivalent per share price for Webster common stock is calculated
by multiplying the specified closing sale price of Integra common
stock by 1,400.5602, the number of shares of Integra common stock
to be issued for each share of Webster common stock in the
merger.
On December __, 2000, the closing sale price of Integra
common stock was $_____ per share. Based on the per share price
of Integra common stock on such date, the equivalent per share
price for Webster common stock would have been $________.
As of December __, 2000, there were _______ holders of record
of Integra common stock and ________ holders of record of Webster
common stock.
Both Integra and Webster depend upon dividends from their
financial institution subsidiaries to pay dividends to their
shareholders. The ability of the financial institution
subsidiaries to pay such dividends is limited by applicable
banking laws and regulations.
Shareholders of Webster are advised to obtain current market
quotations for Integra common stock.
INFORMATION CONCERNING INTEGRA
GENERAL
Integra is a bank holding company whose only banking
subsidiary is Integra Bank NA, a national banking association
headquartered in Evansville, Indiana, which as of December 1,
2000, operated 70 banking locations in Indiana, Kentucky,
Illinois and Ohio and provides 24-hour banking convenience
through a network of 120 ATMs and its online banking service BANK
ANYTIME. At September 30, 2000 Integra had consolidated total
assets of $2.7 billion, consolidated total deposits of $1.6
billion and stockholders' equity of $237 million.
Prior to May 17, 2000, Integra operated under the name
"National City Bancshares, Inc." and the Nasdaq trading symbol
for its common stock was "NCBE."
Integra has expanded its business by acquiring other banking
institutions. Integra continues to explore opportunities to
acquire banking institutions and other companies permitted by the
Bank Holding Company Act. Discussions are continually being
carried on related to such acquisitions. It is not presently
known whether, or on what terms, such discussions will result in
further acquisitions. It is the policy of Integra not to comment
on such discussions or possible acquisitions until a definitive
agreement with respect thereto has been signed.
Integra is a legal entity separate and distinct from its
banking and nonbanking subsidiaries. As a result, the right of
Integra, and thus the right of Integra's creditors, to
participate in any distribution of assets or earnings of any
subsidiary, other than in its capacity as a creditor of such
subsidiary, is subject to the prior payment of claims of
creditors of such subsidiary. The principal sources of Integra's
revenues are dividends and fees from its subsidiaries. See
"Regulation And Supervision Of Integra - Dividend Restrictions"
for a discussion of the restrictions on its subsidiary bank's
ability to pay dividends to Integra.
Integra's executive offices are located at 227 Main Street,
Evansville, Indiana, 47708 and its telephone number is (812)
464-9800.
MANAGEMENT AND ADDITIONAL INFORMATION
Information concerning executive compensation, the principal
holders of voting securities, certain relationships and related
transactions, and other related matters concerning Integra is
included or incorporated by reference in its annual report on
Form 10-K for the year ended December 31, 1999. Integra's annual
report on Form 10-K is incorporated by reference into this proxy
statement/prospectus. Webster shareholders who want a copy of
this annual report or any document incorporated by reference into
the report may contact Integra at the address or phone number
indicated below under "Where You Can Find More Information."
INFORMATION ON INTEGRA'S WEB SITE
Information on the Internet web site of Integra is not part
of this proxy statement/prospectus, and you should not rely on
that information in deciding whether to approve the merger unless
that information is also in this document or in any document that
is incorporated by reference into this proxy
statement/prospectus.
COMPETITION
The financial services industry is highly competitive.
Integra's subsidiary competes with financial services providers,
such as banks, savings and loan association, credit unions,
finance companies, mortgage banking companies, insurance
companies, and money market and mutual fund companies. It also
faces increased competition from non-banking institutions such as
securities firms and insurance companies, as well as from
financial services subsidiaries of commercial and manufacturing
companies. Many of these competitors enjoy the benefits of
advanced technology, fewer regulatory constraints and lower cost
structures.
Securities firms and insurance companies that elect to become
"financial holding companies" may acquire banks and other
financial institutions. This may significantly change the
competitive environment in which Integra and its banking
subsidiary conduct business. The financial services industry is
also likely to become more competitive as further technological
advances enable more companies to provide financial services.
These technological advances may diminish the importance of
depository institutions and other financial intermediaries in the
transfer of funds between parties.
REGULATION AND SUPERVISION OF INTEGRA
To the extent that the following information describes
statutory and regulatory provisions, it is qualified in its
entirety by reference to the full text of those provisions.
Also, such statutes, regulations and policies are continually
under review by Congress and state legislatures and federal and
state regulatory agencies. A change in statutes, regulations or
regulatory policies applicable to Integra could have a material
effect on the business of Integra.
INTRODUCTION
Integra, its banking subsidiary and its nonbanking
subsidiaries are subject to extensive regulation by federal and
state agencies. The regulation of bank holding companies and
their subsidiaries is intended primarily for the protection of
depositors, federal deposit insurance funds and the banking
system as a whole and not for the protection of security holders.
As discussed in more detail below, this regulatory
environment, among other things, may restrict Integra's ability
to diversify into certain areas of financial services, acquire
depository institutions in certain states and pay dividends on
its capital stock. It may also require Integra to provide
financial support to its banking subsidiary, maintain capital
balances in excess of those desired by management and pay higher
deposit insurance premiums as a result of the deterioration in
the financial condition of depository institutions in general.
Additional information about the regulation and supervision
of Integra is contained in Integra's annual and quarterly reports
filed with the SEC. See "Where You Can Find More Information."
REGULATORY AGENCIES
BANK HOLDING COMPANY. Integra Bank Corporation, as a bank
holding company, is subject to regulation under the Bank Holding
Company Act and to inspection, examination and supervision by the
Federal Reserve Board.
SUBSIDIARY BANK. Integra Bank NA, Integra's national banking
subsidiary, is subject to regulation and examination primarily by
the OCC and secondarily by the Federal Reserve Board and the
Federal Deposit Insurance Corporation (the "FDIC").
NONBANK SUBSIDIARIES. Some of Integra's nonbank subsidiaries
also are subject to regulation by the Federal Reserve Board and
other applicable federal and state agencies. Other nonbank
subsidiaries of Integra are subject to the laws and regulations
of both the federal government and the various states in which
they conduct business.
BANK HOLDING COMPANY ACTIVITIES
Under the Bank Holding Company Act, without the prior
approval of the Federal Reserve Board, Integra may not acquire
direct or indirect control of more than 5% of the voting stock or
substantially all of the assets of any company, including a bank,
and may not merge or consolidated with another bank holding
company. In addition, the Bank Holding Company Act generally
prohibits Integra from engaging in any nonbanking business unless
such business is determined by the Federal Reserve Board to be so
closely related to banking as to be a proper incident thereto.
Under the Bank Holding Company Act, the Federal Reserve Board has
the authority to require a bank holding company to terminate any
activity or relinquish control of a non-bank subsidiary (other
than a nonbank subsidiary of a bank) upon the Federal Reserve
Board's determination that such activity or control constitutes a
serious risk to the financial soundness and stability of any bank
subsidiary of the bank holding company.
INTERSTATE BANKING. Under the Riegle-Neal Interstate Banking
and Branching Act (the "Riegle-Neal Act"), a bank holding company
may acquire banks in states other than its home state, subject to
any state requirement that the bank has been organized and
operating for a minimum period of time, not to exceed five years,
and the requirement that the bank holding company not control,
prior to or following the proposed acquisition, more than 10% of
the total amount of deposits of insured depository institutions
nationwide or, unless the acquisition is the bank holding
company's initial entry into the state, more than 30% of such
deposits in the state, or such lesser or greater amount set by
the state.
The Riegle-Neal Act also authorizes banks to merge across
state lines, thereby creating interstate branches. States were
permitted for a period of time to opt out of the interstate
merger authority provided by the Riegle-Neal Act and, by doing
so, prohibit interstate mergers in the state. Integra would be
unable to consolidate its banking operations in one state with
those of another state if either state in question has opted out
of the Riegle-Neal Act. Banks are also permitted to acquire and
to establish de novo branches in other states where authorized
under the laws of those states.
REGULATORY APPROVAL. In determining whether to approve a
proposed bank acquisition, federal banking regulators will
consider, among other factors, the effect of the acquisition on
competition, the public benefits expected to be received from the
acquisition, the projected capital ratios and levels on a post-
acquisition basis, and the acquiring institution's record of
addressing the credit needs of the communities it serves,
including the needs of low and moderate income neighborhoods,
consistent with the safe and sound operation of the bank, under
the Community Reinvestment Act of 1977.
DIVIDEND RESTRICTIONS
Integra is a legal entity separate and distinct from its
subsidiary bank and other subsidiaries. Its principal source of
funds to pay dividends on its common and preferred stock and debt
service on its debt is dividends from its bank subsidiary.
Federal statutory provisions and regulations limit the amount of
dividends that Integra Bank NA may pay without regulatory
approval to the lesser of the bank's undivided profits and the
bank's retained net income for the current year plus its retained
net income for the preceding two years (less any required
transfers to capital surplus) up to the date of any dividend
declaration in the current calendar year.
Integra Bank NA can declare and pay approximately $16.7
million plus any 2000 net profits in dividends in 2000 without
the prior approval of the OCC.
Federal bank regulatory agencies have the authority to
prohibit Integra's subsidiary bank from engaging in unsafe or
unsound practices in conducting its business. The payment of
dividends, depending on the financial condition of the bank in
question, could be deemed an unsafe or unsound practice. The
ability of Integra's subsidiary bank to pay dividends in the
future is currently influenced, and could be further influenced,
by bank regulatory policies and capital guidelines.
HOLDING COMPANY STRUCTURE
TRANSFER OF FUNDS FROM BANKING SUBSIDIARY. Integra's banking
subsidiary is subject to restrictions under federal law that
limits the transfer of funds or other items of value from that
subsidiary to Integra and its nonbanking subsidiaries, including
affiliates, whether in the form of loans and other extensions of
credit, investments and asset purchases, or as other transactions
involving the transfer of value from a subsidiary to an affiliate
or for the benefit of an affiliate. Unless an exemption applies,
transactions by a banking subsidiary with a single affiliate are
limited to 10% of the subsidiary bank's capital and surplus and,
with respect to all covered transactions with affiliates in the
aggregate, to 20% of the subsidiary bank's capital and surplus.
Moreover, loans and extensions of credit to affiliates generally
are required to be secured in specified amounts. A bank's
transactions with its nonbank affiliates are also generally
required to be on arm's-length terms.
SOURCE OF STRENGTH DOCTRINE. Under current Federal Reserve
Board policy, Integra is expected to act as a source of financial
and managerial strength to its subsidiary bank and, under
appropriate circumstances, to commit resources to support such
subsidiary bank. This support could be required at times when
Integra might not have the resources to provide it. In addition,
the OCC may order the pro rata assessment of Integra if the
capital of its bank subsidiary were to become impaired. If
Integra failed to pay the assessment within three months, the OCC
could order the sale of its stock in the subsidiary to cover the
deficiency.
Capital loans from Integra to its subsidiary bank are
subordinate in right of payment to deposits and certain other
indebtedness of the subsidiary bank. In the event of Integra's
bankruptcy , any commitment by Integra to a federal bank
regulatory agency to maintain the capital of a subsidiary bank
will be assumed by the bankruptcy trustee and entitled to a
priority of payment.
DEPOSITOR PREFERENCE. The Federal Deposit Insurance Act
provides that, in the event of the "liquidation or other
resolution" of an insured depository institution, the claims of
depositors of the institution, including the claims of the FDIC
as subrogee of insured depositors, and certain claims for
administrative expenses of the FDIC as a receiver will have
priority over other general unsecured claims against the
institution. If an insured depository institution fails, insured
and uninsured depositors, along with the FDIC, will have priority
in payment ahead of unsecured, nondeposit creditors, including
Integra, with respect to any extensions of credit they have made
to such insured depository institution.
LIABILITY OF COMMONLY CONTROLLED INSTITUTIONS. FDIC-insured
depository institutions can be held liable for any loss incurred,
or reasonably expected to be incurred, by the FDIC due to the
default of an FDIC-insured depository institution controlled by
the same bank holding company, or for any assistance provided by
the FDIC to an FDIC-insured depository institution controlled by
the same bank holding company that is in danger of default.
"Default" means generally the appointment of a conservator or
receiver. "In danger of default" means generally the existence
of certain conditions indicating that a default is likely to
occur in the absence of regulatory assistance.
CAPITAL REQUIREMENTS
GENERAL. Integra is subject to risk-based capital
requirements and guidelines imposed by the Federal Reserve Board.
These are substantially similar to the capital requirements and
guidelines imposed by the OCC and the FDIC on the depository
institutions under their jurisdictions. For this purpose, a
depository institution's or holding company's assets, and some of
its specified off-balance sheet commitments and obligations, are
assigned to various risk categories. A depository institution's
or holding company's capital, in turn, is classified in one of
three tiers, depending on type:
Core ("Tier 1")
CAPITAL
<circle> Common equity
<circle> Retained earnings
<circle> Qualifying noncumulative perpetual preferred stock
<circle> A limited amount of qualifying cumulative perpetual preferred
stock at the holding company level
<circle> Minority interests in equity accounts of consolidated
subsidiaries
<circle> Less goodwill, most intangible assets and certain other assets
Supplementary ("Tier 2")
CAPITAL
Among other items:
<circle> Perpetual preferred stock not meeting the Tier 1 definition
<circle> Qualifying mandatory convertible securities
<circle> Allowances for loan and lease losses, subject to limitations
Market Risk ("Tier 3")
CAPITAL
<circle> Qualifying unsecured subordinated debt
Integra, like other bank holding companies, currently is
required to maintain Tier 1 capital and "total capital" (the sum
of Tier 1, Tier 2 and Tier 3 capital) equal to at least 4% and
8%, respectively, of its total risk-weighted assets (including
various off-balance sheet items, such as standby letters of
credit). For a holding company to be considered "well
capitalized" for regulatory purposes, its Tier 1 and total
capital ratios must be 6% and 10% on a risk-adjusted basis,
respectively. At September 30, 2000, Integra met both
requirements, with Tier 1 and total capital equal to 13.55% and
14.80% of its respective total risk-weighted assets.
Federal Reserve Board, FDIC and OCC rules require Integra to
incorporate market and interest rate risk components into its
risk-based capital standards. Under these market risk
requirements, capital is allocated to support the amount of
market risk related to a financial institution's ongoing trading
activities.
The Federal Reserve Board also requires bank holding
companies to maintain a minimum "leverage ratio" (Tier 1 capital
to adjusted total assets) of 3% if the holding company has the
highest regulatory rating and meets other requirements, or of 3%
plus an additional "cushion" of at least 100 to 200 basis points
(one to two percentage points) if the holding company does not
meet these requirements. Integra's leverage ratio at September
30, 2000 was 9.28%.
The Federal Reserve Board may set capital requirements higher
than the minimums described above for holding companies whose
circumstances warrant it. For example, holding companies
experiencing or anticipating significant growth may be expected
to maintain capital positions substantially above the minimum
supervisory levels without significant reliance on intangible
assets. The Federal Reserve Board has also indicated that it
will consider a "tangible Tier 1 capital leverage ratio"
(deducting all intangibles) and other indications of capital
strength in evaluating proposals for expansion or new activities.
Integra's banking subsidiary is subject to similar risk-based
and leverage capital requirements adopted by the OCC. Integra's
management believes that Integra's subsidiary bank meets all
capital requirements to which it is subject.
Failure to meet capital requirements could subject a bank to
a variety of enforcement remedies, including the termination of
deposit insurance by the FDIC, and to restrictions on its
business. The Federal Deposit Insurance Corporation Improvement
Act of 1991 (the "FDICIA"), among other things, identifies five
capital categories for insured depository institutions: well
capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized.
It requires U.S. federal bank regulatory agencies to implement
systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements based
on these categories. The FDICIA imposes progressively more
restrictive constraints on operations, management and capital
distributions, depending on the category in which an institution
is classified. Unless a bank or thrift is well capitalized, it
is subject to restrictions on its ability to offer brokered
deposits and on other aspects of its operations. The FDICIA
generally prohibits a bank from paying any dividend or making any
capital distribution or paying any management fee to its holding
company if the bank would thereafter be undercapitalized. An
undercapitalized bank or thrift must develop a capital
restoration plan, and its parent holding company must guarantee
the bank's or thrift's compliance with the plan up to the lesser
of 5% of the bank's or thrift's assets at the time it became
undercapitalized and the amount needed to comply with the plan.
As of September 30, 2000, Integra believes that its bank
subsidiary was well capitalized, based on the prompt corrective
action ratios and guidelines described above. A bank's capital
category is determined solely for the purpose of applying the
OCC's prompt corrective action regulations, and the capital
category may not constitute an accurate representation of the
bank's overall financial condition or prospects for other
purposes.
DEPOSIT INSURANCE ASSESSMENTS
Through the Bank Insurance Fund ("BIF"), the FDIC insured the
deposits of Integra's banking subsidiary up to prescribed limits
for each depositor. The amount of FDIC assessments paid by each
BIF member institution is based on its relative risk of default
as measured by regulatory capital ratios and other factors.
Specifically, the assessment rate is based on the institution's
capitalization risk category and supervisory subgroup category.
An institution's capitalization risk category is based on the
FDIC's determination of whether the institution is well
capitalized, adequately capitalized or less than adequately
capitalized. An institution's supervisory subgroup category is
based on the FDIC's assessment of the financial condition of the
institution and the probability that FDIC intervention or other
corrective action will be required.
The BIF assessment rate currently ranges from zero to 27
cents per $100 of domestic deposits. The FDIC may increase or
decrease the assessment rate schedule on a semi-annual basis. An
increase in the BIF assessment rate could have a material adverse
effect on Integra's earnings, depending on the amount of the
increase. The FDIC is authorized to terminate a depository
institution's deposit insurance upon a finding by the FDIC that
the institution's financial condition is unsafe or unsound or
that the institution has engaged in unsafe or unsound practices
or has violated any applicable rule, regulation, order or
condition enacted or imposed by the institution's regulatory
agency. The termination of deposit insurance for Integra's
subsidiary bank would have a material adverse effect on Integra's
earnings.
All FDIC-insured depository institutions must pay an annual
assessment to provide funds for the payment of interest on bonds
issued by the Financing Corporation, a federal corporation
chartered under the authority of the Federal Housing Finance
Board. The bonds, commonly referred to as FICO bonds, were
issued to capitalize the Federal Savings and Loan Insurance
Corporation. The FDIC established the FICO assessment rates
effective for the third quarter of 2000 at approximately $.0052
per $100 annually for BIF-assessable deposits. The FICO
assessments are adjusted quarterly to reflect changes in the
assessment bases of the FDIC's insurance funds and do not vary
depending on a depository institution's capitalization or
supervisory evaluations.
FDIC-insured depository institutions pay an assessment rate
equal to the rate assessed on deposits insured by the Savings
Association Insurance Fund.
FISCAL AND MONETARY POLICIES
Integra's business and earnings are affected significantly by
the fiscal and monetary policies of the federal government and
its agencies. Integra is particularly affected by the policies
of the Federal Reserve Board, which regulates the supply of money
and credit in the United States. Among the instruments of
monetary policy available to the Federal Reserve Board are (a)
conducting open market operations in United States government
securities, (b) changing the discount rates of borrowings of
depository institutions, (c) imposing or changing reserve
requirements against depository institutions' deposits, and (d)
imposing or changing reserve requirements against certain
borrowing by banks and their affiliates. These methods are used
in varying degrees and combinations to directly affect the
availability of bank loans and deposits, as well as the interest
rates charged on loans and paid on deposits. For that reason
alone, the policies of the Federal Reserve Board have a material
effect on the earnings of Integra.
PRIVACY PROVISIONS OF GRAMM-LEACH-BLILEY ACT
Under the Gramm-Leach-Bliley Act, federal banking regulators
are required to adopt rules that will limit the ability of banks
and other financial institutions to disclose non-public
information about consumers to nonaffiliated third parties.
These limitations require disclosure of privacy policies to
consumers and, in some circumstances, allow consumers to prevent
disclosure of certain personal information to a nonaffiliated
third party. Federal banking regulators issued final rules May
10, 2000. The rules became effective November 13, 2000 but
compliance is optional until July 1, 2001. The privacy
provisions of the Gramm-Leach-Bliley Act will affect how consumer
information is transmitted through diversified financial
companies and conveyed to outside vendors. It is not possible at
this time to assess the impact of the privacy provisions on
Integra's financial condition or results of operations.
FUTURE LEGISLATION
Various legislation, including proposals to substantially
change the financial institution regulatory system and to expand
or contract the powers of banking institutions and bank holding
companies, is from time to time introduced in the Congress. This
legislation may change banking statutes and the operating
environment of Integra and its subsidiaries in substantial and
unpredictable ways. If enacted, such legislation could increase
or decrease the cost of doing business, limit or expand
permissible activities or affect the competitive balance among
banks, savings associations, credit unions, and other financial
institutions. Integra cannot predict whether any of this
potential legislation will be enacted, and if enacted, the effect
that it, or any implementing regulations, would have on the
financial condition or results of operations of Integra or any of
its subsidiaries.
INFORMATION CONCERNING
WEBSTER BANCORP, INC.
Webster Bancorp, Inc. is a Kentucky corporation with its
principal office in Clay, Kentucky. Webster is a registered
bank holding company that holds 100% of the outstanding stock of
West Kentucky Bank, Clay, Kentucky. At September 30, 2000,
Webster had consolidated total assets of approximately $292.3
million, consolidated deposits of approximately $247.5 million
and shareholders' equity of approximately $21.4 million.
Webster derives its revenues from cash dividends paid by West
Kentucky Bank. Dividend payments by the bank are determined
after consideration of the bank's earnings, deposit growth and
capital requirements.
WEST KENTUCKY BANK
West Kentucky Bank is a Kentucky banking corporation with its
main office located in Madisonville, Kentucky. It has two branch
offices in Sebree and one branch office in each of Clay,
Madisonville, Providence and Dawson Springs. West Kentucky Bank
serves a wide range of commercial and consumer borrowing needs
within its market area, including retail, commercial, corporate
and mortgage banking services. West Kentucky Bank's market area
consists of Hopkins County and Webster County, Kentucky. West
Kentucky Bank competes with numerous financial institutions in
its market area, including commercial banks, savings and loan
associations, savings banks, mortgage companies, commercial bank
loan production offices, insurance companies, consumer finance
companies and credit unions.
LEGAL PROCEEDINGS
In the normal course of its business, West Kentucky Bank is
from time to time involved in legal proceedings. Webster's
management is not aware of any pending or threatened legal
proceeding which, upon resolution, would have a material adverse
effect on the financial condition or results of operations of
Webster or West Kentucky Bank.
PRINCIPAL SHAREHOLDERS
The following table shows as of the record date for the
special meeting the number of shares of Webster common stock
beneficially owned by each director and executive officer of
Webster and by each person known by Webster to be the beneficial
owner of more than 5% of the outstanding shares of Webster common
stock.
<TABLE>
<CAPTION>
Percent
of Total
Number of Outstand-
Shares of ing
Stock Shares
Name Address of Beneficially (if more
more-than-5% Shareholder Owned than 1%)
<S> <C> <C> <C>
Sandra Clark Berry 47 4.4%
Albert B. Chancellor 1 ---
Linda L. Clark 148 Russell Street 330 30.8%
Clay, KY 42404
Max Collins 30(1) 2.8%
Matilda Fortenbery 3207 Cloverfield Road
Charlotte, NC 28211 125 11.7%
Anna Q. Hortin 4 College Boulevard 94 8.8%
Carmi, IL 62821
Greg D. Hudson 1 ---
Mary Q. Johnson 207 Northwind Drive 97(2) 9.1%
Goodlettsville, TN 37072
Douglas Neil McDowell 10 ---
Frank Mitchell 10 ---
Mark R. Mitchell 10 ---
William E. Mitchell 6 ---
Brian Stull 1 ---
Larry K. Wright 1 ---
All directors and executive officers
as a group (13 persons) 544 50.8%
</TABLE>
(1) Includes 20 shares with respect to which Mr. Collins shares
voting and dispositive power with his spouse.
(2) Includes 80 shares held in a trust of which Ms. Johnson is
the trustee and has investment control, and 16 shares held in a
trust of which Ms. Johnson's spouse is the trustee and has voting
control.
<PAGE>
DESCRIPTION OF INTEGRA'S CAPITAL STOCK
AUTHORIZED SHARES
Integra's restated articles of incorporation presently
authorize the issuance of 29,000,000 shares of Integra common
stock and 1,000,000 shares of preferred stock, without par value.
As of November 1, 2000, there were 16,835,007 shares of Integra
common stock issued and outstanding and no shares of preferred
stock issued and outstanding.
INTEGRA COMMON STOCK
The holders of Integra common stock are entitled to one vote
for each share held of record on all matters submitted to a vote
of shareholders. Subject to preferences that may be applicable
to any outstanding Integra preferred stock, holders of Integra
common stock are entitled to receive ratably such dividends as
may be declared by the Integra board out of funds legally
available therefor. In the event of a liquidation or dissolution
of Integra, holders of Integra common stock are entitled to share
ratably in all assets remaining after payment of liabilities and
the liquidation preference of any outstanding Integra preferred
stock.
Holders of Integra common stock have no preemptive rights and
have no rights to convert their Integra common stock into any
other securities. All of the outstanding shares of Integra
common stock are, and the shares of Integra common stock to be
issued pursuant to the merger will be, duly authorized, validly
issued, fully paid and nonassessable.
INTEGRA PREFERRED STOCK
The Integra board is authorized to designate any series of
Integra preferred stock and the powers, preferences and rights of
the shares of such series and the qualifications, limitations or
restrictions thereof without further action by the holders of
Integra common stock. As of the record date, no shares of
Integra preferred stock were issued or outstanding.
The Integra board may create and issue a series of Integra
preferred stock with rights, privileges or restrictions, and
adopt a shareholder rights plan, having the effect of
discriminating against an existing or prospective holder of such
securities as a result of such security holder beneficially
owning or commencing a tender offer for a substantial amount of
Integra common stock. One of the effects of authorized but
unissued and unreserved shares of capital stock may be to render
more difficult or discourage an attempt by a potential acquiror
to obtain control of Integra by means of a merger, tender offer,
proxy contest or otherwise, and thereby protect the continuity of
Integra's management. The issuance of such shares of capital
stock may have the effect of delaying, deferring or preventing a
change in control of Integra without any further action by the
shareholders of Integra. Integra has no present intention to
adopt a shareholder rights plan, but could do so without
shareholder approval at any future time.
CERTAIN PROVISIONS OF ARTICLES OF INCORPORATION AND BYLAWS
Certain provisions of Integra's restated articles of
incorporation and bylaws may delay or make more difficult
unsolicited acquisitions or changes of control of Integra. Such
provisions could have the effect of discouraging third parties
from making proposals involving an unsolicited acquisition or
change in control of Integra, although such proposals, if made,
might be considered desirable by a majority of Integra's
shareholders. Such provisions may also have the effect of making
it more difficult for third parties to cause the replacement of
the current management of Integra without the concurrence of the
board of directors. These provisions include: (i) the
classification of the board of directors into three classes, each
class serving "staggered" terms of office of three years; (ii)
the requirement that any business combination be approved by the
holders of 80% of the shares entitled to vote thereon, unless the
transaction has been approved by Integra's board of directors;
and (iii) requirements for advance notice for making nominations
at shareholders' meetings. See "Comparison of Shareholder
Rights."
Integra's bylaws establish an advance notice procedure with
regard to the nomination, other than by or at the direction of
the board of directors, of candidates for election as directors.
Although Integra's bylaws do not give the board of directors any
power to approve or disapprove shareholder nominations for the
election of directors or proposals for action, they may have the
effect of precluding a contest for the election of directors or
the consideration of shareholder proposals if the proper
procedures are not followed, and of discouraging or deterring a
third party from conducting a solicitation of proxies to elect
its own slate of directors or to approve its proposals without
regard to whether consideration of such nominees or proposals
might be harmful or beneficial to Integra and its shareholders.
CERTAIN PROVISIONS OF THE IBCL
As an Indiana corporation, Integra is governed by the Indiana
Business Corporation Law (the "IBCL"). Certain provisions of the
IBCL may delay, prevent or make more difficult changes of control
of Integra. Such provisions also may have the effect of
preventing changes in the management of Integra. It is possible
that such provisions could make it more difficult to accomplish
transactions which shareholders may otherwise deem to be in their
best interests. See "Comparison of Shareholder Rights - Business
Combinations Involving Interested Shareholder" and "Comparison of
Shareholder Rights - Control Share Acquisitions."
TRANSFER AGENT
The transfer agent for shares of Integra common stock is
Integra Bank NA, Evansville, Indiana.
COMPARISON OF SHAREHOLDER RIGHTS
The rights of holders of shares of Integra common stock are
governed by the IBCL and by Integra's restated articles of
incorporation and bylaws. The rights of holders of shares of
Webster common stock are governed by the KBCA and Webster's
articles of incorporation and bylaws. The rights of shareholders
of Integra differ in certain respects from the rights of
shareholders of Webster. A summary of the material differences
between the respective rights of the shareholders of Integra and
Webster is set forth below.
AUTHORIZED COMMON SHARES
INTEGRA.
<circle>Authorized: 29,000,000 shares of common stock.
<circle>Outstanding as of November 1, 2000: 16,835,007
shares of common stock.
WEBSTER.
<circle>Authorized: 2,000 shares of common stock.
<circle>Outstanding as of November 1, 2000: 1,071 shares
of common stock.
AUTHORIZED PREFERRED SHARES
INTEGRA. Integra's restated articles of incorporation
authorize Integra to issue up to 1,000,000 preferred shares in
multiple series without shareholder approval. Prior to issuance,
Integra's board of directors would set the preferred shares'
voting rights (which may be limited or unlimited), dividend or
distribution rights, rights to priority in relation to common
shares or other series of preferred shares, redemption or
conversion prices, liquidation preferences and sinking fund
provisions. Integra currently has no preferred shares
outstanding. Depending upon the terms of the preferred shares
issued, an issuance may dilute the voting rights of common
shareholders and any other preferred shareholders who hold shares
with preferences and rights superior to the rights of common
shareholders. The authorized preferred shares may also have
possible antitakeover effects, because Integra could use the
shares in the adoption of a shareholder rights plan or other
defensive measures.
WEBSTER. Webster's articles of incorporation do not
authorize any preferred shares.
VOTING RIGHTS
INTEGRA. Under the IBCL, unless the articles of
incorporation provide otherwise, shareholders of an Indiana
corporation are entitled to one vote per share on each matter to
be voted upon by the shareholders. Integra's restated articles
of incorporation do not provide otherwise.
WEBSTER. The KBCA is substantially the same as the IBCL,
except that cumulative voting is required in the election of
directors as discussed below.
CUMULATIVE VOTING FOR DIRECTORS
Cumulative voting entitles each shareholder to cast an
aggregate number of votes equal to the number of voting shares
held, multiplied by the number of directors to be elected. Each
shareholder may cast all of his or her votes for one nominee or
distribute them among two or more nominees. The candidates (up
to the number of directors to be elected) receiving the highest
number of votes are elected.
INTEGRA. Under the IBCL, shareholders of Indiana
corporations do not have the right to cumulate their votes in the
election of directors unless that right is granted in the
articles of incorporation. Integra's restated articles of
incorporation expressly state that shares of common stock shall
not have cumulative voting rights.
WEBSTER. Under the KBCA, shareholders of Kentucky
corporations have the right to cumulate their votes in the
election of directors.
SIZE OF BOARD OF DIRECTORS
INTEGRA. The IBCL provides that the board of directors of an
Indiana corporation must consist of one or more individuals, with
the number specified in or fixed in accordance with the articles
of incorporation or bylaws. Under Integra's restated articles of
incorporation, the number of directors may not exceed 15.
Integra's bylaws provide for a board of directors consisting of
not less than five nor more than 15 persons. The bylaws
currently fix the number of directors of Integra at 12.
WEBSTER. The KBCA is substantially the same as the IBCL.
Webster's articles of incorporation provide for a board of
directors consisting of not less than seven persons nor more than
12, the exact number to be set in the manner provided in the
bylaws. Webster's bylaws fix the number of directors at 12.
STAGGERED TERMS FOR DIRECTORS
The purpose of staggering the terms of members of a board of
directors is to promote stability and continuity within the
board. However, staggering the terms of directors also has the
effect of decreasing the number of directors that may otherwise
be elected by shareholders in a given year and, therefore, may
have the effect of precluding a contest for the election of
directors or may delay, prevent or make more difficult changes in
control of a corporation.
INTEGRA. The IBCL provides that the articles of
incorporation of an Indiana corporation or, if the articles of
incorporation so authorize, the bylaws, may provide for
staggering the terms of directors. Integra's restated articles
of incorporation authorize the bylaws to provide for staggered
terms for directors. Integra's bylaws divide the board of
directors into three classes, as nearly equal in number as
possible, with each class of directors serving a staggered term
of three years.
WEBSTER. The KBCA provides that the articles of
incorporation of a Kentucky corporation may provide for
staggering the terms of directors. Webster's articles of
incorporation do not so provide.
FILLING VACANCIES ON THE BOARD OF DIRECTORS
INTEGRA. The IBCL provides that, unless the articles of
incorporation provide otherwise, the board of directors of an
Indiana corporation may fill vacancies on the board, including
vacancies resulting from an increase in the number of directors.
If the remaining directors constitute less than a quorum of the
board, then the remaining directors may fill vacancies by a
majority vote. Integra's restated articles of incorporation
provide that vacancies shall be filled in the manner provided in
the bylaws. Integra's bylaws provide that the remaining members
of the board of directors, whether or not they constitute a
quorum of the board, may fill vacancies, including vacancies
resulting from an increase in the number of directors.
WEBSTER. The KBCA provides that, unless the articles of
incorporation provide otherwise, shareholders or the board of
directors of a Kentucky corporation may fill vacancies on the
board, including vacancies resulting from an increase in the
number of directors. If the remaining directors constitute less
than a quorum of the board, then the remaining directors may fill
vacancies by majority vote. Webster's articles of incorporation
do not provide otherwise. Webster's bylaws provide that the
remaining directors may fill any vacancy occurring in the board
by majority vote, even if they constitute less than a quorum of
the board.
REMOVAL OF DIRECTORS
INTEGRA. Under the IBCL, directors of an Indiana corporation
may be removed in any manner provided in the corporation's
articles of incorporation. In addition, the IBCL provides that,
unless the articles of incorporation provide otherwise, the
shareholders or directors may remove one or more directors with
or without cause. Integra's restated articles of incorporation
provide that shareholders may remove directors, only for good
cause and only at a meeting of the shareholders called expressly
for that purpose, by the affirmative vote of the holders of
outstanding shares representing at least sixty-six and two-thirds
percent (66-2/3%) of all the votes then entitled to be cast at an
election of directors.
WEBSTER. The KBCA provides that shareholders may remove one
or more directors of a Kentucky corporation with or without
cause, unless the articles of incorporation provide that
directors may be removed only for cause. Webster's articles of
incorporation do not contain any provisions changing the KBCA
provisions.
NOMINATION OF DIRECTORS FOR ELECTION
INTEGRA. Under Integra's bylaws, the board of directors or
any shareholder entitled to vote in the election of directors who
complies with the notice procedures in Integra's bylaws may
nominate one or more persons for Integra's board. The notice
procedures in Integra's bylaws require shareholders to give
notice to Integra at least 90 days prior to the first anniversary
of the prior year's annual meeting (for elections to be held at
an annual meeting) or the close of business on the seventh day
following the date on which notice of a special meeting is first
given to shareholders (for elections to be held at a special
meeting).
WEBSTER. Webster's articles of incorporation and bylaws do
not set forth a procedure to nominate directors for election.
Any shareholder may at or prior to a meeting held for the purpose
of electing directors nominate one or more candidates for the
board. Directors are generally nominated by shareholders at the
annual meeting.
SHAREHOLDER VOTE REQUIRED FOR BUSINESS COMBINATIONS NOT INVOLVING
AN INTERESTED SHAREHOLDER
INTEGRA. Under the IBCL, a majority of the shares entitled
to vote on a proposed plan of merger or share exchange is
required for approval unless any class or series of shares is
entitled to vote separately as a class on the plan. However,
the vote of the shareholders of the surviving corporation on a
plan of merger is not required if:
<circle>the articles of incorporation of the surviving
corporation will not differ from its articles before the
merger;
<circle>each shareholder of the surviving corporation whose
shares were outstanding immediately before the effective
date of the merger will hold the same proportionate
number of shares held by all such shareholders (except
for shares of the surviving corporation received solely
as a result of the shareholder's proportionate
shareholdings in the other corporations party to the
merger), with identical designations, preferences,
limitations and relative rights, immediately after the
merger;
<circle>the number of voting shares outstanding immediately
after the merger, plus the number of voting shares
issuable as a result of the merger (either by the
conversion of securities issued pursuant to the merger or
the exercise of rights and warrants issued pursuant to
the merger), will not exceed by more than 20% the total
number of voting shares of the surviving corporation
outstanding immediately before the merger; and
<circle>the number of participating shares outstanding
immediately after the merger, plus the number of
participating shares issuable as a result of the merger
(either by the conversion of securities issued pursuant
to the merger or the exercise of rights and warrants
issued pursuant to the merger), will not exceed by more
than 20% the total number of participating shares of the
surviving corporation outstanding immediately before the
merger.
Integra's restated articles of incorporation require the
affirmative vote of 80% of the shares entitled to vote on any
merger, consolidation or acquisition of Integra by another
corporation that is not approved by Integra's board of directors.
Integra's shareholders are not required to vote to approve the
merger agreement with Webster.
WEBSTER. The KBCA is substantially the same as the IBCL.
The affirmative vote of the holders of a majority of the
outstanding shares of Webster common stock is required to approve
the merger agreement with Integra.
RESTRICTIONS ON BUSINESS COMBINATIONS INVOLVING AN INTERESTED
SHAREHOLDER
INTEGRA. The IBCL restricts the ability of a "resident
domestic corporation" to engage in any combination with an
"interested shareholder" for five years after the interested
shareholder's date of acquiring shares unless the combination or
the purchase of shares by the interested shareholder on the
interested shareholder's date of acquiring shares is approved by
the board of directors of the resident domestic corporation
before that date. If the combination was not previously
approved, the interested shareholder may effect a combination
after the five-year period only if the shareholder receives
approval from a majority of the disinterested shares or the offer
meets certain fair price criteria. A corporation may elect out
of these provisions in an amendment to its articles of
incorporation approved by a majority of the disinterested shares.
Such an amendment, however, would not become effective for 18
months after its passage and would apply only to stock
acquisitions occurring after its effective date. Integra's
restated articles of incorporation do not elect out of these
provisions.
<circle>"Resident domestic corporation" means an Indiana
corporation that has 100 or more shareholders.
<circle>"Interested shareholder" means any person, other than
the resident domestic corporation or its subsidiaries,
who is:
<circle>the beneficial owner, directly or indirectly, of
10% or more of the voting power of the outstanding
voting shares of the resident domestic corporation, or
<circle>an affiliate or associate of the resident
domestic corporation and at any time within the five-
year period immediately before the date in question
was the beneficial owner of 10% or more of the voting
power of the outstanding shares of the resident
domestic corporation.
WEBSTER. The KBCA's shareholder vote and board approval
requirements for business combinations involving an interested
shareholder do not apply to any business combination of a bank or
bank holding company unless the articles of incorporation of the
corporation provide otherwise. Webster's articles of
incorporation do not provide otherwise.
CONTROL SHARE ACQUISITIONS
INTEGRA. The IBCL's control share acquisition provisions
give the disinterested shareholders of certain Indiana
corporations a right to vote collectively on whether to accord
voting power to shares that would give their acquirer a
significant level of influence or control over the future
governance of the corporation. Under the IBCL, an acquiring
person who makes a "control share acquisition" in an "issuing
public corporation" may not exercise voting rights on any
"control shares" unless such voting rights are conferred by a
majority vote of the disinterested shareholders of the issuing
public corporation at a special meeting of such shareholders held
upon the request and at the expense of the acquiring person.
Unless otherwise provided in a corporation's articles of
incorporation or bylaws before a control share acquisition has
occurred, in the event that control shares acquired in a control
share acquisition are accorded full voting rights and the
acquiring person acquires control shares with a majority or more
of all voting power, all shareholders of the issuing public
corporation have dissenters' rights to receive the fair value of
their shares.
<circle>"Control shares" means shares acquired by a person
that, when added to all other shares of the issuing
public corporation owned by that person or in respect of
which that person may exercise or direct the exercise of
voting power, would otherwise entitle that person to
exercise voting power of the issuing public corporation
in the election of directors within any of the following
ranges:
<circle>one-fifth or more but less than one-third,
<circle>one-third or more but less than a majority, or
<circle>a majority or more.
<circle>"Control share acquisition" means, subject to certain
exceptions, the acquisition, directly or indirectly, by
any person of ownership of, or the power to direct the
exercise of voting power with respect to, issued and
outstanding control shares. Shares acquired within 90
days or pursuant to a plan to make a control share
acquisition are considered to have been acquired in the
same acquisition.
<circle>"Issuing public corporation" means a corporation
which is organized in Indiana, has 100 or more
shareholders, its principal place of business, its
principal office or substantial assets within Indiana and
either:
<circle>more than 10% of its shareholders resident in
Indiana,
<circle>more than 10% of its shares owned by Indiana
residents, or
<circle>10,000 shareholders resident in Indiana.
These provisions do not apply if, before a control share
acquisition is made, the corporation's articles of incorporation
or bylaws (including a board adopted bylaw) provide that they do
not apply. Integra's restated articles of incorporation and
bylaws do not exclude Integra from the restrictions imposed by
these provisions. Further, Integra's restated articles of
incorporation opt into a provision of the IBCL that allows
Integra to redeem an acquiring person's control shares under
certain circumstances, including the person's failure to file an
acquiring person statement regarding the control shares.
WEBSTER. There is no similar provision under the KBCA.
AMENDMENT OF ARTICLES OF INCORPORATION
INTEGRA. The IBCL provides that, unless a greater vote is
required under a specific provision of the IBCL or by a
corporation's articles of incorporation or its board of
directors, a corporation may amend its articles of incorporation
upon the affirmative vote of the holders of a greater number of
shares cast in favor of the amendment than the holders of shares
cast against the amendment, unless the amendment would create
dissenters' rights in which case a favorable vote of the holders
of a majority of the outstanding shares is required. Under the
IBCL, a corporation's board of directors may condition its
submission of a proposed amendment to the shareholders of the
corporation on any basis, including the requirement of the
affirmative vote of holders of a greater percentage of the voting
shares of the corporation than otherwise would be required under
the IBCL. Integra's restated articles of incorporation provide
that any amendment to the provisions concerning business
combinations must be approved by the holders of eighty percent
(80%) of the outstanding voting shares.
WEBSTER. The KBCA is substantially the same as the IBCL.
AMENDMENT OF BYLAWS
INTEGRA. Under the IBCL, unless the articles of
incorporation provide otherwise, only the board of directors of
an Indiana corporation may amend or repeal the corporation's
bylaws. Integra's restated articles of incorporation do not
provide otherwise. Integra' bylaws expressly state that the
bylaws may be amended, altered or repealed at any regular meeting
of the board of directors by a vote of a majority of the full
board.
WEBSTER. Under the KBCA, the shareholders of a Kentucky
corporation may amend or repeal the corporation's bylaws, and,
unless the articles of incorporation, other provisions of the
KBCA or the shareholders provide otherwise, the corporation's
board of directors may also amend or repeal the corporation's
bylaws. Webster's articles of incorporation provide that the
bylaws may be amended or repealed by the board of directors,
subject to repeal or change by the shareholders.
SHAREHOLDER ACTION WITHOUT A MEETING
INTEGRA. Under the IBCL, action required or permitted to be
taken at a shareholders' meeting of an Indiana corporation may be
taken without a meeting if the action is taken by all the
shareholders entitled to vote on the action. The action must be
evidenced by one or more written consents describing the action
taken, signed by all the shareholders entitled to vote on the
action, and delivered to the corporation for inclusion with the
minutes or filing with the corporate records. Integra's restated
articles of incorporation contain provisions identical to the
IBCL.
WEBSTER. Under the KBCA, unless the articles of
incorporation provide otherwise, action required or permitted to
be taken at a shareholders' meeting of a Kentucky corporation may
be taken without a meeting if the action is taken by all the
shareholders entitled to vote on the action. The action taken
must be evidenced by one or more written consents describing the
action taken, signed by the shareholders, and delivered to the
corporation for inclusion in the minutes or filing with the
corporate records. Webster's articles of incorporation do not
provide otherwise. Webster's bylaws contain provisions
substantially the same as the KBCA.
CALLING SPECIAL MEETINGS OF SHAREHOLDERS
INTEGRA. The IBCL provides that an Indiana corporation with
more than 50 shareholders must hold a special meeting of
shareholders on demand of its board of directors or the persons
specifically authorized to do so by the articles of incorporation
or bylaws. Integra's restated articles of incorporation and
bylaws provide that the chairman of the board of directors, the
president, or a majority of the board of directors may call a
special meeting of shareholders. Further, the board of directors
will call a special meeting of the shareholders upon the receipt
of a written request describing in reasonable detail the purpose
of the meeting from the holders of shares representing at least
eighty percent (80%) of all the votes entitled to be cast (so
long as Integra has more than 50 shareholders) on any issue
proposed to be considered at the proposed special meeting.
WEBSTER. The KBCA provides that a Kentucky corporation must
hold a special meeting of shareholders on call of its board of
directors or the persons authorized to do so in the articles of
incorporation or bylaws or at the request of the holders of at
least thirty-three and one-third percent (33 1/3 %) (or such
higher or lower percentage specified in the articles of
incorporation) of the votes entitled to be cast on any issue
proposed to be considered at the proposed special meeting.
Webster's articles of incorporation contain no provisions
regarding the calling of special meetings of shareholders.
Webster's bylaws provide that the president, a majority of the
members of the board of directors or the holders of at least
twenty percent (20%) of all the shares entitled to vote at the
meeting may call a special meeting.
SUBMISSION OF SHAREHOLDER PROPOSALS
INTEGRA. Integra's bylaws provide that in order for a
shareholder to bring business before the annual meeting, the
shareholder must give timely notice of the proposal to Integra.
To be considered timely, Integra must receive the shareholder's
notice at least 90 days prior to the meeting. However, if
Integra gives notice to shareholders, or makes prior public
disclosure, of the date of the meeting less than 70 days before
the meeting, then to be considered timely Integra must receive
the shareholder's notice on or before the tenth day after the day
on which Integra mailed the notice or made the public disclosure.
WEBSTER. Webster's bylaws do not set forth a procedure to be
followed by a shareholder who wishes to bring business before the
annual meeting.
NOTICE OF SHAREHOLDER MEETINGS
INTEGRA. The IBCL requires Indiana corporations to notify
shareholders of the date, time and place of each annual and
special shareholders' meeting at least 10 days, but not more than
60 days, before the meeting date. Unless another provision of
the IBCL or the articles of incorporation require otherwise,
Indiana corporations are required to give notice only to
shareholders entitled to vote at the meeting. Integra's bylaws
provide that Integra will notify all shareholders of record, who
do not waive notice, at least 10 days but not more than 30 days
before any meeting.
WEBSTER. The KBCA is substantially the same as the IBCL.
Webster's bylaws provide that Webster will notify all
shareholders of record entitled to vote at a meeting at least 10
days (or at least 20 days in the case of a meeting called for the
purpose of electing directors) but not more than 50 days before a
meeting.
DIVIDENDS
INTEGRA. Under the IBCL, Indiana corporations may not pay
dividends or make other distributions if, after giving effect to
the distribution, the corporation would not be able to pay its
debts as they become due in the usual course of business, or if
the corporation's total assets would be less than the sum of its
total liabilities plus (unless the articles of incorporation
permit otherwise) the amount that would be needed, if the
corporation were to be dissolved at the time of the distribution,
to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those
receiving the distribution. Integra is also subject to Federal
Reserve Board policies regarding payment of dividends, which
generally limit dividends to operating earnings. See "Regulation
and Supervision of Integra."
WEBSTER. The KBCA is substantially the same as the IBCL, and
Webster is also subject to Federal Reserve Board policies.
DISSENTERS' APPRAISAL RIGHTS
INTEGRA. The IBCL provides shareholders of an Indiana
corporation that is involved in certain mergers, share exchanges
or sales or exchanges of all or substantially all of its property
the right to dissent from that action and obtain payment of the
fair value of their shares. However, appraisal rights are not
available to holders of shares listed on a national securities
exchange or traded on the Nasdaq National Market or a similar
market. Dissenters' rights are not available to the Integra
shareholders with respect to the merger with Webster because the
IBCL does not require that Integra shareholders vote to approve
the merger agreement. Moreover, Integra common stock is traded
on the Nasdaq National Market. As a result, as long as it
continues to be so traded, holders of Integra common stock will
not have appraisal rights in connection with mergers involving
Integra.
WEBSTER. The KBCA is substantially the same as the IBCL.
Because the KBCA requires that Webster shareholders vote to
approve the merger agreement with Integra, Webster shareholders
entitled to vote on the merger have dissenters' rights in
connection with the merger. See "The Merger - Dissenters'
Rights."
SHAREHOLDER PREEMPTIVE RIGHTS
INTEGRA. The IBCL provides that shareholders of an Indiana
corporation do not have a preemptive right to acquire the
corporation's unissued shares except to the extent the articles
of incorporation so provide. Integra's restated articles of
incorporation expressly state that shareholders do not have
preemptive rights to acquire shares.
WEBSTER. The KBCA provides that shareholders of a Kentucky
corporation shall not have a preemptive right to acquire the
corporation's unissued shares except to the extent the articles
of incorporation so provide, unless the corporation existed on
January 1, 1989 and on that date its articles of incorporation
did not contain a provision specifically addressing preemptive
rights, in which case the shareholders shall have a preemptive
right to acquire the corporation's unissued shares, except to the
extent the KBCA limits that right. Webster's articles of
incorporation expressly state that shareholders are entitled to
preemptive rights to acquire additional shares of common stock.
SHAREHOLDER CLASS VOTING RIGHTS
INTEGRA. Under the IBCL, the holders of the outstanding
shares of a class are entitled to vote as a separate voting
group, only if shareholder voting is otherwise required by the
IBCL, on a proposed amendment to an Indiana corporation's
articles of incorporation that would affect that class in any of
several specified ways. The ways include, among others,
increasing or decreasing the aggregate number of authorized
shares of the class; changing the designations, rights,
preferences or limitations of all or part of the shares of the
class; and creating a new class of shares having rights or
preferences with respect to distributions or to dissolution that
are prior, superior or substantially equal to the shares of the
class. Holders of outstanding shares of a class are also
entitled to vote as a separate voting group on a resolution
granting voting rights to control shares if a proposed control
share acquisition would, if fully carried out, result in any of
the changes to that class referred to above.
WEBSTER. The KBCA is substantially the same as the IBCL with
respect to voting on proposed amendments to the articles of
incorporation. The KBCA does not contain any control share
acquisition provisions.
INDEMNIFICATION
INTEGRA. Under the IBCL, an Indiana corporation is obligated
to indemnify officers and directors in connection with
liabilities arising from legal proceedings resulting from that
person's service to the corporation in certain circumstances. An
Indiana corporation may also voluntarily undertake to indemnify
certain persons acting on its behalf in certain circumstances.
The IBCL provides for mandatory indemnification of directors and
officers of an Indiana corporation and permissive indemnification
of directors, officers, employees and agents of an Indiana
corporation who are made parties to proceedings as a result of
their relationship with the corporation. The IBCL also applies
to individuals who are serving at the corporation's request as
directors, officers, employees and agents of the corporation's
subsidiaries.
<circle>The IBCL requires Indiana corporations, unless
limited by their articles of incorporation, to indemnify
any director or officer against reasonable expenses
incurred in connection with any proceeding to which such
person was a party if the individual is wholly successful
on the merits.
<circle>The IBCL authorizes corporations to indemnify any
director against liability incurred in such a proceeding
generally if the director's conduct was in good faith and
he or she reasonably believed, in the case of conduct in
the director's official capacity, that his or her conduct
was in the corporation's best interests and in all other
cases that his or her conduct was not opposed to the best
interests of such corporation, and in the case of any
criminal proceeding, the director either had reasonable
cause to believe his or her conduct was lawful or had no
reasonable cause to believe his or her conduct was
unlawful.
<circle>The IBCL further authorizes any court of competent
jurisdiction, unless the articles of incorporation
provide otherwise, to order indemnification generally if
the court determines a director or officer of a
corporation is entitled to mandatory indemnification or
is otherwise fairly and reasonably entitled to
indemnification in view of all the relevant
circumstances.
<circle>The IBCL also authorizes corporations to advance
reasonable expenses to a director in advance of final
disposition of a proceeding generally if the director
affirms in writing a good faith belief that he or she
satisfies the standard of conduct for permissive
indemnification, he or she undertakes in a signed writing
to repay the advance if it is determined he or she does
not satisfy the standard of conduct for permissive
indemnification and the corporation determines that the
facts then known do not preclude indemnification.
<circle>The IBCL further authorizes Indiana corporations,
unless their articles of incorporation provide otherwise,
to indemnify and advance expenses to an officer, employee
or agent of the corporation to the same extent as to a
director.
<circle>Finally, the IBCL authorizes further indemnification
to the extent that the corporation may provide in its
articles of incorporation, bylaws, a resolution of the
board of directors or the shareholders or any other
authorization, whenever adopted, after notice, by a
majority vote of holders of all the voting shares then
issued and outstanding.
Integra's restated articles of incorporation do not contain
provisions altering the statutory provisions.
WEBSTER. The KBCA is substantially similar to the IBCL.
Webster's bylaws contain provisions authorizing indemnification
of directors, officers, employees or agents to the fullest extent
permitted or required by law.
LIMITATION OF LIABILITY OF DIRECTORS
INTEGRA. The IBCL provides that a director is not liable for
any action taken as a director, or any failure to act, unless the
director has breached or failed to perform the duties of the
director's office in compliance with the IBCL and the breach or
failure to perform constitutes willful misconduct or
recklessness. Subject to this standard, a director who votes for
or assents to distributions in violation of the IBCL is
personally liable to the corporation for the amount of the
illegal distribution and is entitled to contribution from the
other directors who voted for or assented to such distribution
and the shareholders who received the distribution. Integra's
restated articles of incorporation do not contain any provisions
that would alter the statutory provisions.
WEBSTER. The KBCA provisions are substantially the same as
the IBCL provisions, except that the recklessness standard
applies to actions for monetary damages only. In addition, the
KBCA provides that a corporation may set forth in its articles of
incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its shareholders
for monetary damages for breach of his duty as a director,
provided that such provision shall not eliminate or limit the
liability of a director:
<circle>for any transaction in which the director's personal
financial interest is in conflict with the financial
interests of the corporation or its shareholders;
<circle>for acts or omissions not in good faith or which
involve intentional misconduct or are known to the
director to be a violation of law;
<circle>for any vote for or assent to an unlawful
distribution to shareholders as prohibited under Kentucky
law; or
<circle>for any transaction from which the director derived
an improper personal benefit.
Webster has not adopted such a provision in its articles of
incorporation.
LEGAL MATTERS
The legality of the securities offered by this proxy
statement/prospectus and the federal income tax consequences of
the merger will be passed upon by Baker & Daniels, Indianapolis,
Indiana. Certain matters on behalf of Webster in connection with
the merger will be passed upon by Frost Brown Todd LLC,
Louisville, Kentucky.
EXPERTS
The consolidated financial statements of Integra Bank
Corporation and subsidiaries incorporated in this proxy
statement/prospectus by reference to the Annual Report on Form
10-K for the year ended December 31, 1999, have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Integra files annual, quarterly and current reports, proxy
statements and other information with the SEC. Shareholders may
read and copy any reports, statements or other information that
Integra files at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information about the public
reference rooms. Integra's public filings are also available
from commercial document retrieval services and at the Internet
web site maintained by the SEC at http://www.sec.gov.
Integra has filed a registration statement to register the
shares of Integra common stock to be issued to shareholders in
the merger with the SEC. This proxy statement/prospectus is a
part of that registration statement and constitutes a prospectus
of Integra, as well as a proxy statement of Webster for the
special meeting.
As allowed by SEC rules, this proxy statement/prospectus does
not contain all the information that shareholders can find in the
registration statement or the exhibits to the registration
statement.
The SEC allows Integra to "incorporate by reference"
information into this proxy statement/prospectus, which means
that it can disclose important information to shareholders by
referring them to another document filed separately with the SEC.
The information incorporated by reference is deemed to be part of
this proxy statement/prospectus. This proxy statement/prospectus
incorporates by reference the documents set forth below that
Integra has previously filed with the SEC. These documents
contain important information about Integra and its financial
condition.
INTEGRA SEC FILINGS (FILE NO. 0-13585) PERIOD OR DATE
FILED
Annual Report on Form 10-K . . . . . . . Year ended December 31,
1999
Quarterly Reports on Form 10-Q . . . . . Quarters ended March
31, 2000,
June 30, 2000 and
September 30, 2000
Proxy Statement . . . . . . . . . . . . Filed April 19, 2000
Additional documents that Integra may file with the SEC
between the date of this proxy statement/prospectus and the date
of the special meeting are also incorporated by reference. These
include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K,
as well as proxy statements.
Integra has supplied all information contained or
incorporated by reference in this proxy statement/prospectus
relating to Integra, and Webster has supplied all information
relating to Webster.
Copies of any of these documents may be obtained from Integra
or the SEC or the SEC's Internet web site described above.
Documents incorporated by reference are available from Integra
without charge, excluding all exhibits unless Integra has
specifically incorporated by reference an exhibit in this proxy
statement/prospectus, by requesting them in writing or by
telephone from Integra at the following address:
Integra Bank Corporation
227 Main Street
P.O. Box 868
Evansville, Indiana 47705-0868
Attention: James E. Adams
Telephone: (812) 464-9800
Please request documents by December __, 2000 to ensure
receipt before the special meeting.
WEBSTER SHAREHOLDERS SHOULD RELY ONLY ON THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS TO VOTE THEIR SHARES AT THE SPECIAL MEETING.
NO ONE HAS BEEN AUTHORIZED TO PROVIDE ANY INFORMATION THAT IS
DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS. WEBSTER SHAREHOLDERS SHOULD NOT ASSUME
THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS
IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND NEITHER THE
MAILING OF THIS PROXY STATEMENT/PROSPECTUS TO SHAREHOLDERS NOR
THE ISSUANCE OF INTEGRA COMMON STOCK IN THE MERGER WILL CREATE
ANY IMPLICATION TO THE CONTRARY.
FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus, including information
incorporated by reference into this document, may contain
forward-looking statements about Integra, including one or more
of the following:
<circle>projections of revenues, income, earnings per
share, capital expenditures, dividends, capital
structure or other financial items;
<circle>descriptions of plans or objectives of management
for future operations, products or services;
<circle>forecasts of future economic performance;
<circle>descriptions of assumptions underlying or
relating to any of the foregoing.
Forward-looking statements can be identified by the fact that
they do not relate strictly to historical or current facts. They
often include words such as "believe," "expect," "anticipate,"
"intend," "plan," "estimate," or words of similar meaning, or
future or conditional verbs such as "will," "would," "should,"
"could" or "may."
Forward-looking statements consist of expectations or
predictions of future conditions, events or results. They are
not guarantees of future performance. By their nature, forward-
looking statements are subject to risks and uncertainties. There
are a number of factors - many of which are beyond the control of
Integra - that could cause actual conditions, events or results
to differ significantly from those described in the forward-
looking statements. Those factors are described in this proxy
statement/prospectus under "Risk Factors," "Information
Concerning Integra" and "Regulation and Supervision of Integra"
and may also be described in information incorporated by
reference into this document.
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"")
is made as of July 5, 2000, by and between INTEGRA BANK
CORPORATION, an Indiana corporation ("IBNK"), and WEBSTER
BANCORP, INC., a Kentucky corporation ("Webster").
RECITALS
A. IBNK owns all of the outstanding capital stock of
Integra Bank National Association, a national banking association
("Integra Bank") and Webster owns all of the outstanding capital
stock of West Kentucky Bank, a Kentucky banking corporation
("WKB").
B. The Boards of Directors of IBNK and Webster have
approved, and deem it advisable and in the best interests of
their respective shareholders to consummate, the business
combination transaction provided for herein in which (i) WKB
shall, subject to the terms and conditions set forth herein and
in the Merger Agreement in the form attached hereto as Exhibit A,
merge with and into Integra Bank (the "Bank Merger") and (ii)
Webster shall, subject to the terms and conditions set forth
herein, merge with and into IBNK (the "Holding Company Merger"
and together with the Bank Merger, the "Mergers").
C. The Board of Directors of IBNK and Webster have each
determined that the Mergers and the other transactions
contemplated hereby are consistent with, and in furtherance of,
their respective business strategies and goals.
D. For federal income tax purposes, it is intended that
the Mergers shall constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and, as such, the holders of common stock,
no par value, of Webster ("Webster Common") shall receive certain
federal income tax-deferral benefits with respect to shares of
common stock, stated value $1.00 per share of IBNK (the "IBNK
Common") to be received in the Holding Company Merger. This
Agreement shall constitute a "plan of reorganization" for
purposes of the Code.
E. IBNK and Webster desire to make certain
representations, warranties and agreements in connection with the
Mergers and also to prescribe certain conditions to the Mergers.
F. In consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth
herein, IBNK and Webster hereby agree as follows:
ARTICLE ONE
TERMS OF MERGERS AND CLOSING
SECTION 1.01. THE BANK MERGER. Upon the terms and
subject to the conditions set forth in this Agreement and the
Merger Agreement to be executed after the date of this Agreement
by Integra Bank and WKB in the form attached hereto as Exhibit A
(the "Bank Merger Agreement"), and in accordance with the
National Bank Act, Chapter 287 of the Kentucky Revised Statutes
and the Kentucky Business Corporation Act (the "Banking Laws"),
and immediately prior to the Holding Company Merger, WKB will be
merged with and into Integra Bank. WKB shall be the merging
association under the Bank Merger and its separate corporate
existence shall cease as of the effective time of the Bank
Merger. Integra Bank shall be the surviving association under
the Bank Merger and shall succeed to and assume all rights and
obligations of the Bank in accordance with the Banking Laws. The
Bank Merger shall have the other consequences provided for in the
Bank Merger Agreement and under the Banking Laws.
SECTION 1.02. THE HOLDING COMPANY MERGER.
(a) GENERAL. Upon the terms and subject to the
conditions of this Agreement, immediately following the
Bank Merger and at the Effective Time (as defined in
Section 1.08 hereof), Webster shall be merged with and
into IBNK. IBNK shall survive the Holding Company Merger
("Surviving Corporation") and shall continue its
corporate existence under the laws of the State of
Indiana pursuant to the provisions of and with the effect
provided in the Indiana Business Corporation Law and the
Kentucky Business Corporation Act (the "Corporate Laws").
(b) NAME, OFFICES AND MANAGEMENT. The name of the
Surviving Corporation shall be "Integra Bank
Corporation." Its principal office shall be located at
227 Main Street, Evansville, Indiana 47708. The Board of
Directors of the Surviving Corporation, until such time
as their successors have been elected and have qualified
or until their earlier resignation, death or removal from
office, shall consist of the Board of Directors of IBNK
serving at the Effective Time. The officers of IBNK
serving at the Effective Time shall be the officers of
the Surviving Corporation until such time as their
successors shall have been duly elected and have
qualified or until their earlier resignation, death or
removal from office.
(c) CAPITAL STRUCTURE. At the Effective Time, the
capital of the Surviving Corporation shall be not less
than the capital of IBNK immediately prior to the
Effective Time.
(d) ARTICLES OF INCORPORATION AND BY-LAWS. The
Articles of Incorporation and By-Laws of IBNK in
existence at the Effective Time shall remain the Articles
of Incorporation and By-Laws of the Surviving Corporation
following the Effective Time, until such Articles of
Incorporation and By-Laws shall be further amended as
provided by applicable law.
(e) EFFECT OF HOLDING COMPANY MERGER. The effect of
the Holding Company Merger upon consummation thereof
shall be as set forth in the Corporate Laws.
SECTION 1.03. TAX FREE REORGANIZATION. IBNK, Webster,
Integra Bank and WKB intend for the Mergers to qualify as a
reorganization within the meaning of Section 368(a) and related
sections of the Code, and agree to cooperate and to take such
actions as may be reasonably necessary to assure such result.
SECTION 1.04. CONVERSION OF SHARES.
(a) As of the Effective Time, each issued and
outstanding share of Webster Common other than Dissenting
Shares (as hereafter defined) shall be converted into the
right to receive 1,633.9869 shares of IBNK Common (the
"Conversion Ratio"). The Conversion Ratio shall be
subject to adjustment as set forth in Section 1.05
hereof.
(b) The shares of IBNK Common to be issued pursuant
to Section 1.04(a), together with any cash payment in
lieu of fractional shares, as provided below in this
Section 1.04(b), is referred to herein as the "Merger
Consideration." No fractional shares of IBNK Common
shall be issued and, in lieu thereof, holders of shares
of Webster Common who would otherwise be entitled to a
fractional share interest (after taking into account all
shares of Webster Common held by such holder) shall be
paid an amount in cash equal to the product of such
fractional share interest and the closing price of a
share of IBNK Common as reported in THE WALL STREET
JOURNAL (Midwest Edition) on the Nasdaq Stock Market's
National Market ("Nasdaq") for the trading day
immediately preceding the Closing Date (as defined in
Section 1.08 hereof).
(c) At the Effective Time, all of the shares of
Webster Common other than Dissenting Shares, by virtue of
the Holding Company Merger and without any action on the
part of the holders thereof, shall no longer be
outstanding and shall be canceled and retired and shall
cease to exist, and each holder of any certificate or
certificates which immediately prior to the Effective
Time represented outstanding shares of Webster Common
(the "Certificates") shall thereafter cease to have any
rights with respect to such shares, except the right of
such holders to receive, without interest the Merger
Consideration upon the surrender of such Certificate or
Certificates in accordance with Section 1.07 hereof.
(d) At the Effective Time, each share of Webster
Common, if any, held in the treasury of Webster or by any
direct or indirect subsidiary of Webster (other than
shares held in trust accounts for the benefit of others
or in other fiduciary, nominee or similar capacities and
shares held by Webster or any of its subsidiaries in
respect to a debt previously contracted) immediately
prior to the Effective Time shall be canceled.
(e) "Dissenting Shares" shall mean shares of Webster
Common held by any person who properly exercises and
perfects rights under the Kentucky Business Corporation
Act as a dissenting shareholder. Holders of Dissenting
Shares shall have the rights accorded to them under the
Kentucky Business Corporation Act and shall not receive
any part of the Merger Consideration.
(f) Each share of IBNK Common outstanding immediately
prior to the Effective Time shall remain outstanding
unaffected by the Holding Company Merger.
SECTION 1.05. SHARE ADJUSTMENTS. If between the date
hereof and the Effective Time a share of IBNK Common shall be
changed into a different number of shares of IBNK Common or a
different class of shares (a "Share Adjustment") by reason of
reclassification, recapitalization, splitup, exchange of shares
or readjustment, or if a stock dividend thereon shall be declared
with a record date within such period, then the number of shares
of IBNK Common into which a share of Webster Common shall be
converted pursuant to Section 1.04(a) hereof shall be
appropriately and proportionately adjusted so that each
shareholder of Webster shall be entitled to receive such number
of shares of IBNK Common as such shareholder would have received
pursuant to such Share Adjustment had the record date therefor
been immediately following the Effective Time.
SECTION 1.06. CLOSING. The closing of the Mergers (the
"Closing") shall take place at a location mutually agreeable to
the parties at 10:00 a.m., Central Time, on the Closing Date.
SECTION 1.07. EXCHANGE PROCEDURES; SURRENDER OF
CERTIFICATES.
(a) The Trust Department of Integra Bank shall act as
Exchange Agent in the Holding Company Merger (the
"Exchange Agent").
(b) As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each
record holder of any Certificate or Certificates whose
shares were converted into the right to receive the
Merger Consideration, a letter of transmittal (which
shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other
provisions as IBNK may reasonably specify) (each such
letter, the "Merger Letter of Transmittal") and
instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration.
Upon surrender to the Exchange Agent of a Certificate,
together with a Merger Letter of Transmittal duly
executed and any other required documents, the holder of
such Certificate shall be entitled to receive in exchange
therefor solely the Merger Consideration, plus dividends
paid with respect to the Merger Consideration having a
record date after the Effective Time as provided in
Section 1.07(d) hereof. No interest on the Merger
Consideration issuable upon the surrender of the
Certificates shall be paid or accrued for the benefit of
holders of Certificates. If the Merger Consideration is
to be issued to a person other than a person in whose
name a surrendered Certificate is registered, it shall be
a condition of issuance that the surrendered Certificate
shall be properly endorsed or otherwise in proper form
for transfer and that the person requesting such issuance
shall pay to the Exchange Agent any required transfer
taxes or other taxes or establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not
applicable.
(c) Notwithstanding anything to the contrary
contained herein, no Merger Consideration shall be
delivered to a person who is an "affiliate" (as such term
is used in Section 4.07 hereof) of Webster unless such
"affiliate" shall have theretofore executed and delivered
to IBNK the agreement referred to in Section 4.07 hereof.
(d) No dividends that are otherwise payable on shares
of IBNK Common constituting the Merger Consideration
shall be paid to persons entitled to receive such shares
of IBNK Common until such persons surrender their
Certificates. Upon such surrender, there shall be paid
to the person in whose name the shares of IBNK Common
shall be issued any dividends which shall have become
payable with respect to such shares of IBNK Common
(without interest and less the amount of taxes, if any,
which may have been imposed thereon), between the
Effective Time and the time of such surrender.
(e) In the event that any Certificate shall have been
lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if
required by IBNK in its reasonable discretion, the
posting by such person of a bond in such amount as IBNK
may determine is reasonably necessary as indemnity
against any claim that may be made against it with
respect to such Certificate, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in
respect thereof pursuant hereto.
(f) At or after the Effective Time there shall be no
transfers on the stock transfer books of Webster of any
shares of Webster Common. If, after the Effective Time,
Certificates are presented for transfer, they shall be
canceled and exchanged for the Merger Consideration as
provided in, and subject to the provisions of, this
Section 1.07.
SECTION 1.08. CLOSING DELIVERIES. At IBNK's election,
the Closing shall take place on (i) the last business day of, or
(ii) the first business day of the month following, in either
case, the month during which each of the conditions in Sections
6.01(d) and 6.02(d) hereof is satisfied or waived by the
appropriate party or on such other date after such satisfaction
or waiver as Webster and IBNK may agree (the "Closing Date").
The Holding Company Merger shall be effective upon the filing of
Articles of Merger with the Secretaries of State of the State of
Indiana and the Commonwealth of Kentucky (the "Effective Time"),
which the parties shall use their reasonable efforts to cause to
occur on the Closing Date.
SECTION 1.09. CLOSING DELIVERIES.
(a) At the Closing, Webster shall deliver to IBNK:
(i) a certified copy of the Articles of
Incorporation and Bylaws of Webster and each of
its subsidiaries; and
(ii) a Certificate signed by an appropriate
officer of Webster stating that, to the best
knowledge and belief of such officer, (A) each of
the representations and warranties contained in
Article Two hereof (subject to the standard in
Section 1.10 hereof) is true and correct at the
time of the Closing with the same force and
effect as if such representations and warranties
had been made at Closing, and (B) all of the
conditions set forth in Section 6.01(b) hereof
have been satisfied or waived as provided
therein; and
(iii) a certified copy of the resolutions of
the Boards of Directors and shareholders of
Webster and WKB as required for valid approval of
the execution of this Agreement and the
consummation of the Mergers and the other
transactions contemplated hereby; and
(iv) Certificate of the Secretary of State of
the Commonwealth of Kentucky, dated a recent
date, stating that Webster is in good standing
and certificates from appropriate state or
federal authorities stating that each of the
subsidiaries of Webster is in good standing ; and
(v) Articles of Merger executed by Webster, if
required, reflecting the terms and provisions
hereof and in proper form for filing with the
Secretaries of State of the State of Indiana and
the Commonwealth of Kentucky in order to cause
the Holding Company Merger to become effective
pursuant to the Corporate Laws; and
(vi) Any documents required to be executed by
Webster or WKB in order to cause the Bank Merger
to become effective pursuant to the Banking Laws;
and
(vii) a legal opinion from counsel for
Webster, in form reasonably acceptable to counsel
for IBNK, opining with respect to the matters
listed on Exhibit C hereto.
(b) At the Closing, IBNK shall deliver to Webster:
(i) a Certificate signed by an appropriate
officer of IBNK stating that, to the best
knowledge and belief of such officer, (A) each of
the representations and warranties contained in
Article Three hereof (subject to the standard in
Section 1.10 hereof) is true and correct at the
time of the Closing with the same force and
effect as if such representations and warranties
had been made at Closing, and (B) all of the
conditions set forth in Section 6.02(b) and
6.02(d) hereof (but excluding the approval of
Webster's shareholders) have been satisfied or
waived as provided therein; and
(ii) a certified copy of the resolutions of
the Boards of Directors and shareholders of IBNK
and Integra Bank, as required for valid approval
of the execution of this Agreement and the
consummation of the transactions contemplated
hereby; and
(iii) a legal opinion from counsel for IBNK,
in form reasonably acceptable to counsel for
Webster, opining with respect to the matters
listed on Exhibit D hereto; and
(iv) a certified copy of the Articles of
Incorporation and Bylaws of IBNK; and
(v) Certificate of the Secretary of State of
the State of Indiana, dated a recent date,
stating that IBNK is in existence; and
(vi) Articles of Merger executed by IBNK,
reflecting the terms and provisions hereof and in
proper form for filing with the Secretaries of
State of the State of Indiana and the
Commonwealth of Kentucky, in order to cause the
Holding Company Merger to become effective
pursuant to the Corporate Laws; and
(vii) Any documents required to be executed by
IBNK or Integra Bank in order to cause the Bank
Merger to become effective pursuant to the
Banking Laws; and
(viii) Evidence that IBNK shall have delivered
the Merger Consideration to the Exchange Agent
for delivery to the shareholders of Webster as
contemplated by Section 1.07 hereof.
SECTION 1.10. DISCLOSURE SCHEDULE; STANDARD.
(a) Webster has delivered to IBNK a confidential
schedule (the "Disclosure Schedule"), executed by Webster
concurrently with the delivery and execution hereof,
setting forth, among other things, items the disclosure
of which shall be necessary or appropriate either in
response to an express disclosure requirement contained
in a provision hereof or as an exception to one or more
representations or warranties contained in Article Two
hereof; provided, that (a) no such item shall be required
to be set forth in the Disclosure Schedule as an
exception to a representation or warranty if its absence
would not be reasonably likely to result in the related
representation or warranty being deemed untrue or
incorrect under the standard established by Section
1.10(b) hereof, and (b) the mere inclusion of an item in
the Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an
admission by Webster that such item represents a material
exception or a fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse
Effect (as defined in Section 1.10(b) hereof).
(b) No representation or warranty of Webster
contained in Article Two hereof or IBNK contained in
Article Three hereof shall be deemed untrue or incorrect,
and Webster and IBNK, as the case may be, shall not be
deemed to have breached a representation or warranty, as
a consequence of the existence of any fact, event or
circumstance unless such fact, event or circumstance,
individually or taken together with all other facts,
events or circumstances inconsistent with any
representation or warranty contained in Article Two
hereof, in the case of Webster, or Article Three hereof,
in the case of IBNK, has had or is reasonably likely to
have a Material Adverse Effect on the party making such
representation or warranty. As used herein, the term
"Material Adverse Effect" means, with respect to Webster
or IBNK, any effect that (i) is, or is reasonably
expected to be, material and adverse to the financial
position, results of operations or business of Webster
and its subsidiaries taken as a whole, or IBNK and its
subsidiaries taken as a whole, respectively, or (ii)
would materially impair the ability of either Webster or
IBNK to perform its obligations under this Agreement or
otherwise materially threaten or materially impede the
consummation of the Mergers and the other transactions
contemplated by this Agreement; provided, however, that
Material Adverse Effect shall not be deemed to include
the impact of (a) changes in banking and similar laws of
general applicability or interpretations thereof by
courts or governmental authorities, (b) changes in
generally accepted accounting principles or regulatory
accounting requirements applicable to banks and their
holding companies generally, (c) any modifications or
changes to valuation or reserve policies and practices in
connection with or in anticipation of the Mergers or
restructuring charges taken in connection with the
Mergers, in each case in accordance with generally
accepted accounting principles, (d) changes in general
economic conditions, including without limitation,
interest rates, which affect financial institutions
generally, and (e) any fees incurred or to be incurred by
Webster in connection with the transactions contemplated
by this Agreement, including investment banking,
accounting and legal fees.
(c) Webster shall be permitted to update and
supplement the Disclosure Schedule so as to disclose
exceptions to one or more representations or warranties
contained in Article Two hereof which shall have arisen
between the date hereof and the Closing Date; provided,
however, that, anything herein to the contrary
notwithstanding, the exceptions and other information set
forth on any such updated or supplemented Disclosure
Schedule shall not be taken into consideration in
determining, for purposes of this Agreement, whether the
condition set forth in Section 6.01(a) hereof shall have
been satisfied.
SECTION 1.11. RIGHT TO REVISE TRANSACTION. IBNK may, at
any time, change the method of effecting the Mergers (including,
without limitation, the provisions of this Article One) if and to
the extent IBNK deems such change to be desirable, including,
without limitation, to provide for the merger of Webster and a
wholly-owned subsidiary of IBNK or the merger of WKB into another
wholly-owned subsidiary of IBNK; PROVIDED, HOWEVER, that no such
change shall (A) alter or change the amount or kind of the Merger
Consideration to be received by the shareholders of Webster, (B)
adversely affect the tax treatment to shareholders of Webster, as
generally described in Section 6.01(g) hereof, or (C) materially
impede or delay receipt of' any approvals referred to in Section
6.01(d) hereof or the consummation of the transactions
contemplated by this Agreement.
ARTICLE TWO
REPRESENTATIONS AND WARRANTIES OF WEBSTER
Subject to Section 1.10 hereof and except as disclosed in
a Section of the Disclosure Schedule corresponding to the
relevant Section in this Article Two, Webster hereby makes the
following representations and warranties:
SECTION 2.01. ORGANIZATION AND CAPITAL STOCK.
(a) Webster is a corporation duly organized, validly
existing and in good standing under the laws of the
Commonwealth of Kentucky and has the corporate power to
own all of its property and assets, to incur all of its
liabilities and to carry on its business as now being
conducted. Webster is a bank holding company registered
with the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") under the Bank Holding
Company Act of 1956, as amended (the "BHCA"). True,
complete and correct copies of the Articles of
Incorporation and Bylaws of Webster, as amended and as in
effect on the date of this Agreement, have been
previously made available to IBNK by Webster.
(b) The authorized capital stock of Webster consists
only of 2,000 shares of Webster Common, of which, as of
the date hereof, 1,071 shares are issued and outstanding
as of the date hereof. All of the issued and outstanding
shares of Webster Common are duly and validly issued and
outstanding and are fully paid and non-assessable and are
subject to preemptive rights as specified in Webster's
Articles of Incorporation. None of the outstanding
shares of Webster Common has been issued in violation of
any preemptive rights of the current or past shareholders
of Webster. To the best knowledge of Webster, each
Certificate issued by Webster in replacement of any
Certificate theretofore issued by it which was claimed by
the record holder thereof to have been lost, stolen or
destroyed was issued by Webster only upon receipt of an
affidavit of lost stock certificate and indemnity
agreement of such shareholder indemnifying Webster
against any claim that may be made against it on account
of the alleged loss, theft or destruction of any such
Certificate or the issuance of such replacement
Certificate.
(c) (i) There are no shares of capital stock or other
equity securities of Webster outstanding and no
outstanding options, warrants, rights to subscribe for,
calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for, shares of Webster Common or other
capital stock of Webster or contracts, commitments,
understandings or arrangements by which Webster is or may
be obligated to issue additional shares of its capital
stock or options, warrants or rights to purchase or
acquire any additional shares of its capital stock, and
(ii) there are no outstanding stock appreciation, phantom
stock or similar rights.
(d) The minute books of Webster accurately reflect
all corporate actions taken by its shareholders and Board
of Directors (including committees of the Board of
Directors) since January 1, 1997.
SECTION 2.02. AUTHORIZATION; NO DEFAULTS. The Board of
Directors of Webster has, by all appropriate action, approved
this Agreement and the Mergers and authorized the execution
hereof and thereof on its behalf by its duly authorized officers
and the performance by Webster of its obligations hereunder. The
Board of Directors of Webster has directed that the plan or
agreement of merger (within the meaning of the Corporate Laws)
contained in this Agreement and the transactions contemplated by
this Agreement, including the Mergers, be submitted to the
shareholders of Webster for approval at the Shareholders' Meeting
(as defined in Section 4.03 hereof), and, except for the adoption
and approval of this Agreement by the affirmative vote of the
holders of a majority of the outstanding shares of Webster Common
and the approval of the Bank Merger Agreement and the Bank Merger
by the Board of Directors of WKB, no other corporate proceedings
on the part of Webster or WKB are necessary to approve this
Agreement, the Bank Merger Agreement, and to consummate the
transactions contemplated by this Agreement, including the
Mergers. Nothing in the Articles of Incorporation or By-laws of
Webster, as amended, or any other agreement, instrument, decree,
proceeding, law or regulation (except as specifically referred to
in or contemplated by this Agreement) by or to which it or any of
its subsidiaries are bound or subject would prohibit or inhibit
Webster or WKB from consummating this Agreement and the Mergers
on the terms and conditions herein contained. This Agreement has
been duly and validly executed and delivered by Webster and
constitute legal, valid and binding obligations of Webster,
enforceable against Webster in accordance with its terms. Webster
and its subsidiaries are neither in default under nor in
violation of any provision of their Articles of Incorporation or
Association, as the case may be, Bylaws, or any promissory note,
indenture or any evidence of indebtedness or security therefor,
lease, contract, insurance policy, purchase or other commitment
or any other agreement or arrangement (however evidenced),
whether written or oral, and there has not occurred any event
that, with the lapse of time or giving of notice or both, would
constitute such a default or violation.
SECTION 2.03. SUBSIDIARIES. Each of the banking
subsidiaries of Webster and its other direct or indirect
subsidiaries (collectively, the "subsidiaries") the name and
jurisdiction of incorporation of which is disclosed in Section
2.03 of the Disclosure Schedule, is duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation and has the corporate power to own its
respective properties and assets, to incur its respective
liabilities and to carry on its respective business as now being
conducted. The deposits of each subsidiary of the Webster that
is an insured institution (within the meaning of the Federal
Deposit Insurance Act) are insured by the Federal Deposit
Insurance Corporation (the "FDIC") in accordance with the Federal
Deposit Insurance Act, as amended, up to applicable limits. The
number of issued and outstanding shares of capital stock of each
such subsidiary is disclosed in Section 2.03 of the Disclosure
Schedule, all of which shares are owned by Webster or
subsidiaries of Webster, as the case may be, free and clear of
all liens, encumbrances, rights of first refusal, options or
other restrictions of any nature whatsoever, except for
directors'
qualifying shares and assessability under 12 U.S.C. <section>55
and comparable state laws, if applicable. There are no options,
warrants or rights outstanding to acquire any capital stock of
any of Webster's wholly-owned subsidiaries and no person or
entity has any other right to purchase or acquire any unissued
shares of stock of any of Webster's wholly-owned subsidiaries,
nor does any such wholly-owned subsidiary have any obligation of
any nature with respect to its unissued shares of stock. Neither
Webster nor any of its subsidiaries is a party to any partnership
or joint venture or owns an equity interest in any other business
or enterprise. The Articles of Incorporation or Association and
By-Laws of each subsidiary of Webster, as amended, copies of
which have previously been made available to IBNK by Webster, are
true, complete and correct copies of such documents as in effect
on the date of this Agreement.
SECTION 2.04. FINANCIAL INFORMATION. The (i) audited
consolidated balance sheets of Webster and its subsidiaries as of
December 31, 1999 and 1998, and related consolidated income
statements and statements of changes in shareholders' equity and
of cash flows for the three (3) years ended December 31, 1999,
together with the notes thereto, and the unaudited, consolidated
balance sheets of Webster and its subsidiaries as of March 31,
2000 and the related unaudited consolidated income statements and
statements of changes in shareholders' equity and cash flows for
the three months then ended, and (ii) the year-end and quarterly
Reports of Condition and Reports of Income of each of the
subsidiary banks of Webster identified on Section 2.04 of the
Disclosure Schedule (individually, a "Subsidiary Bank,"
collectively, the "Subsidiary Banks") for 1999 and March 31,
2000, respectively, as currently on file with the applicable
Regulatory Agency (as defined in Section 2.06 hereof) (together,
the "Webster Financial Statements"), have been prepared in
accordance with generally accepted accounting principles applied
on a consistent basis (except as may be disclosed therein and
except for regulatory reporting differences required by the
reports of the Subsidiary Banks) and fairly present the
consolidated financial position and the consolidated results of
operations, changes in shareholders' equity and cash flows of the
respective entity and its respective consolidated subsidiaries as
of the dates and for the periods indicated (subject, in the case
of interim financial statements, to normal recurring year-end
adjustments, none of which shall be material, and the addition of
footnotes). The books and records of Webster and its
subsidiaries since January 1, 1997, have been, and are being,
maintained in accordance with generally accepted accounting
principles and any other applicable legal and accounting
requirements and reflect only actual transactions.
SECTION 2.05. ABSENCE OF CHANGES. Since December 31,
1999, there has not been any change in the financial condition,
the results of operations or the business of Webster and its
subsidiaries taken as a whole which would have a Material Adverse
Effect on Webster. Since the date of its most recent regulatory
examination report, there has been no change in the financial
condition, the results of operations or the business of any
Subsidiary Bank which would have a Material Adverse Effect on
such Subsidiary Bank, except as disclosed by such Subsidiary Bank
since the date of such most recent regulatory examination report
in its quarterly Reports of Condition and Reports of Income filed
with the applicable Regulatory Agency.
SECTION 2.06. REGULATORY ENFORCEMENT MATTERS. Neither
Webster, any Subsidiary Bank nor any other subsidiaries is
subject or is party to, or has received any notice or advice that
it may become subject or party to, any investigation with respect
to, any cease-and-desist order, agreement, consent agreement,
memorandum of understanding or other regulatory enforcement
action, proceeding or order with or by, or is a party to any
commitment letter or similar undertaking to, or is subject to any
directive by, or has been a recipient of any supervisory letter
from, or has adopted any board resolutions at the request of, any
Regulatory Agency that currently restricts the conduct of its
business or that currently affects its capital adequacy, its
credit policies, its management or its business (each, a
"Regulatory Agreement"), nor has Webster, any Subsidiary Bank or
any other subsidiaries been advised by any Regulatory Agency that
it is considering issuing or requesting any such Regulatory
Agreement. There is no unresolved violation, criticism or
exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of Webster, any Subsidiary
Bank, any other subsidiaries, or any corporations or financial
institutions merged with and into Webster or the Subsidiary
Banks. The term "Regulatory Agency" as used herein, means any
federal or state agency charged with the supervision or
regulation of banks or bank holding companies, or engaged in the
insurance of bank deposits, or any court, administrative agency
or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with
respect to Webster or any of its subsidiaries.
SECTION 2.07 TAX MATTERS.
(a) Each of Webster and its subsidiaries has filed
with the appropriate governmental agencies all foreign,
federal, state and local Tax (as defined below in this
Section 2.07) returns, declarations, estimates,
information returns, statements and reports
(collectively, "Tax Returns") required to be filed by it.
All such Tax Returns were correct and complete in all
respects. All Taxes owed by any of Webster and its
subsidiaries (whether or not shown on any Tax Return)
have been paid or appropriate reserves have been
established. Neither Webster nor its subsidiaries are
(a) delinquent in the payment of any Taxes shown on such
Tax Returns or on any assessments received by it for such
Taxes, (b) subject to any agreement extending the period
for assessment or collection of any Tax, or (c) a party
to any action or proceeding with, nor has any claim been
asserted or threatened against any of them by, any
governmental authority for assessment or collection of
Taxes or for the refund of Taxes previously paid. The
income Tax Returns of Webster and its subsidiaries have
been audited or otherwise closed without audit by the
Internal Revenue Service (the "IRS") and comparable state
agencies and any liability with respect thereto has been
satisfied for all years to and including 1996. The
reserve for Taxes in the financial statements of Webster
for the year ended December 31, 1999, is adequate to
cover all of the liabilities for Taxes of Webster and its
subsidiaries that may become payable in future years with
respect to any transactions consummated prior to December
31, 1999. The term "Taxes" as used herein, means any
federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental,
customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-
on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition
thereto, whether disputed or undisputed.
(b) Any amount that could be received (whether in
cash or property or the vesting of property) as a result
of any of the transactions contemplated by this Agreement
by any employee, officer or director of Webster or any of
its affiliates who is a "Disqualified Individual" (as
such term is defined in proposed Treasury Regulation
Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or
Webster Employee Plan (as defined in Section 2.14(c)
hereof) currently in effect would not be characterized as
an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code).
SECTION 2.08 LITIGATION AND RELATED MATTERS. Section
2.08 of the Disclosure Schedule describes all litigation, claims
or other proceedings or investigations of any nature pending or,
to the knowledge of Webster, threatened, against Webster or any
of its subsidiaries, or of which the property of Webster or any
of its subsidiaries is or would be subject. There is no
injunction, order, judgment, decree or regulatory restriction
imposed upon Webster, or any of its subsidiaries or the assets of
Webster of any of its subsidiaries. Since January 1, 1997,
Webster and its subsidiaries have continuously maintained
fidelity bonds insuring them against acts of dishonesty in such
amounts as are customary, usual and prudent for organizations of
their size and business. There are no facts known to Webster
which would form the basis of a claim or claims under such bonds.
Neither Webster nor any of its subsidiaries has reason to believe
that its respective fidelity coverage would not be renewed by the
carrier on substantially the same terms as the existing coverage,
except for possible premium increases unrelated to Webster's and
its subsidiaries' past claim experience.
SECTION 2.09. EMPLOYMENT AGREEMENTS. Section 2.09 of
the Disclosure Schedule lists each agreement, arrangement,
commitment or contract (whether written or oral) for the
employment, election, retention or engagement, or with respect to
the severance, of any present or former officer, employee, agent,
consultant or other person or entity to which Webster or any of
its subsidiaries is a party to or bound by and which, by its
terms, is not terminable by Webster or such subsidiary on thirty
(30) days written notice or less without the payment of any
amount by reason of such termination. Copies of each written (and
summaries of each oral) agreement, arrangement, commitment or
contract listed in Section 2.09 of the Disclosure Schedule have
been previously made available to IBNK by Webster.
SECTION 2.10. REPORT. Since January 1, 1997, Webster
and each of its subsidiaries has filed all reports and
statements, together with any amendments required to be made with
respect thereto, if any, that it was required to file with (i)
the Federal Reserve Board, (ii) the FDIC, (iii) the Kentucky
Department of Financial Institutions, and (iv) any other
Regulatory Agency with jurisdiction over Webster or any of its
subsidiaries, and have paid all fees and assessments due and
payable in connection therewith. As of their respective dates,
each of such reports and documents, as amended, including any
financial statements, exhibits and schedules thereto, complied
with the relevant statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were
filed, and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
SECTION 2.11. LOAN PORTFOLIO.
(a) Section 2.11 of the Disclosure Schedule lists
each loan of WKB in excess of $50,000 that has been
classified by bank regulators or management as "Other
Loans Specially Mentioned," "Substandard," "Doubtful" or
"Loss" or in excess of $50,000 that has been identified
by accountants or auditors (internal or external) as
having a significant risk of uncollectability. The most
recent loan watch list of WKB and a list of all loans in
excess of $50,000 which WKB has determined to be thirty
(30) days or more past due with respect to principal or
interest payments or has placed on nonaccrual status has
been provided to IBNK.
(b) All loans and discounts shown on the Webster
Financial Statements or which were entered into after the
date of the most recent balance sheet included in the
Webster Financial Statements were and shall be made for
good, valuable and adequate consideration in the ordinary
course of the business of Webster and its subsidiaries,
in accordance with sound banking practices, and are not
subject to any known defenses, setoffs or counterclaims,
including without limitation any such as are afforded by
usury or truth in lending laws, except as may be provided
by bankruptcy, insolvency or similar laws or by general
principles of equity. The notes or other evidences of
indebtedness evidencing such loans and all forms of
pledges, mortgages and other collateral documents and
security agreements are and shall be, enforceable, valid,
true and genuine and what they purport to be. Webster
and its subsidiaries have complied and shall prior to the
Closing Date comply with all laws and regulations
relating to such loans (including, without limitation,
Regulation O (12 C.F.R. Section 215 et. seq.).
(c) The reserves, the allowance for possible
loan and lease losses and the carrying value for
real estate owned which are shown on the Webster
Financial Statements are to the best of Webster's
knowledge, adequate in all respects under the
requirements of generally accepted accounting
principles applied on a consistent basis to
provide for possible losses on items for which
reserves were made, on loans and leases
outstanding and real estate owned as of the
respective dates.
SECTION 2.12. INVESTMENT PORTFOLIO. All investment
securities held by Webster or its subsidiaries, as reflected in
the consolidated balance sheets of Webster included in the
Webster Financial Statements, are carried in accordance with
generally accepted accounting principles.
SECTION 2.13. INTEREST RATE RISK MANAGEMENT
INSTRUMENTS. Section 2.13 of the Disclosure Schedule describes
all interest rate swaps, caps, floors, or other interest rate
risk management arrangements or agreements, whether entered into
for the account of Webster or its subsidiaries or for the account
of a customer of Webster or one of its subsidiaries. All such
arrangements and agreements disclosed in Section 2.13 of the
Disclosure Schedule were entered into in the ordinary course of
business and in accordance with prudent banking practice and
applicable rules, regulations and policies and with
counterparties believed to be financially responsible at the time
and are legal, valid and binding obligations of Webster or one of
its subsidiaries enforceable in accordance with their terms
(subject to the provisions of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting
the enforceability of creditors' rights generally from time to
time in effect, and equitable principles relating to the granting
of specific performance and other equitable remedies as a matter
of judicial discretion), and are in full force and effect.
Webster and each of its subsidiaries have duly performed all of
their obligations thereunder to the extent that such obligations
to perform have accrued; and, to the knowledge of Webster, there
are no breaches, violations or defaults or allegations or
assertions of such by any party thereunder.
SECTION 2.14. EMPLOYEE MATTERS AND ERISA.
(a) Neither Webster nor any of its
subsidiaries has entered into any collective
bargaining agreement with any labor organization
with respect to any group of employees of Webster
or any of its subsidiaries and, to the knowledge
of Webster, there is no present effort nor
existing proposal to attempt to unionize any
group of employees of Webster or any of its
subsidiaries.
(b) (i) Webster and its subsidiaries are and
have been in compliance with all applicable laws
respecting employment and employment practices,
terms and conditions of employment and wages and
hours, including, without limitation, any such
laws respecting employment discrimination and
occupational safety and health requirements, and
neither Webster nor any of its subsidiaries is
engaged in any unfair labor practice, (ii) there
is no unfair labor practice complaint against
Webster or any subsidiary pending or, to the
knowledge of Webster, threatened before the
National Labor Relations Board, (iii) there is no
labor dispute, strike, slowdown or stoppage
actually pending or, to the knowledge of Webster,
threatened against or directly affecting Webster
or any subsidiary, and (iv) neither Webster nor
any subsidiary has experienced any work stoppage
or other labor difficulty during the past five
(5) years.
(c) Section 2.14(c) of the Disclosure
Schedule describes each employee benefit plan, as
defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), and each nonqualified employee
benefit plan, deferred compensation, bonus, stock
and incentive plan, and each other employee
benefit and fringe benefit program for the
benefit of former or current employees of Webster
or any subsidiary (the "Webster Employee Plans")
which Webster and its subsidiaries maintain,
contribute to or participate in or have any
liability under. No present or former employee of
Webster or any subsidiary has been charged with
breaching, or to the knowledge of Webster has
breached, a fiduciary duty under any of the
Webster Employee Plans. Neither Webster nor any
of its subsidiaries participates in, nor has it
in the past five (5) years participated in, nor
has it any present or future obligation or
liability under, any multi-employer plan (as
defined at Section 3(37) of ERISA). Section
2.14(c) of the Disclosure Schedule describes all
plans that provide health, major medical,
disability or life insurance benefits to former
employees of Webster or any subsidiary that
Webster and any subsidiary maintain, contribute
to, or participate in.
(d) All liabilities of the Webster Employee
Plans have been funded on the basis of consistent
methods in accordance with sound actuarial
assumptions and practices, and no Webster
Employee Plan, at the end of any plan year, or at
December 31, 1999, had or has had an accumulated
funding deficiency. No actuarial assumptions
have been changed since the last written report
of actuaries on such Webster Employee Plans. All
insurance premiums (including premiums to the
Pension Benefit Guaranty Corporation) have been
paid in full, subject only to normal
retrospective adjustments in the ordinary course.
Except as may be noted on the Webster Financial
Statements, Webster and its subsidiaries have no
contingent or actual liabilities under Title IV
of ERISA as of December 31, 1999. No accumulated
funding deficiency (within the meaning of Section
302 of ERISA or Section 412 of the Code) has been
incurred with respect to any of the Webster
Employee Plans, whether or not waived. No
reportable event (as defined in Section 4043 of
ERISA) has occurred with respect to any of the
Webster Employee Plans as to which a notice would
be required to be filed with the Pension Benefit
Guaranty Corporation. No claim is pending, or,
to the knowledge of the Webster, threatened or
imminent with respect to any Webster Employee
Plan (other than a routine claim for benefits for
which plan administrative review procedures have
not been exhausted) for which Webster or any of
its subsidiaries would be liable after December
31, 1999, except as reflected on the Webster
Financial Statements. After December 31, 1999,
Webster and its subsidiaries do not have any
liabilities for excise taxes under Sections 4971,
4975, 4976, 4977, 4979 or 4980B of the Code or
for a fine under Section 502 of ERISA with
respect to any Webster Employee Plan. All
Webster Employee Plans have been operated,
administered and maintained in accordance with
the terms thereof and in compliance with the
requirements of all applicable laws, including,
without limitation, ERISA and the Code.
(e) Neither the execution and delivery of
this Agreement nor the consummation of the
transactions contemplated hereby (either alone or
upon the occurrence of any additional acts or
events) would (i) result in any payment
(including, without limitation, severance,
unemployment compensation, golden parachute or
otherwise) becoming due to any director, officer
or employee of Webster or any of its affiliates
from Webster or any of its affiliates under any
Webster Employee Plan or otherwise, (ii) increase
any benefits otherwise payable under any Webster
Employee Plan, or (iii) result in any
acceleration of the time of payment or vesting of
any such benefits.
(f) Copies of each Webster Employee Plan
described in Section 2.14(c) of the Disclosure
Schedule, and all amendments or supplements
thereto, have been previously made available to
IBNK by Webster. Webster has made available to
IBNK for each Webster Employee Plan, all of the
following with respect thereto: (i) summary plan
descriptions, (ii) all current participants and
all participants with benefit entitlements, (iii)
contracts relating to plan documents, (iv)
actuarial valuations for any defined benefit
plan, (v) valuations for any plan as of the most
recent date, (vi) determination letters from the
IRS, (vii) the most recent annual report filed
with the IRS, (viii) registration statements and
prospectuses, and (ix) trust agreements.
SECTION 2.15. TITLE TO PROPERTIES; INSURANCE. (i)
Webster and its subsidiaries have marketable title, insurable at
standard rates, free and clear of all liens, charges and
encumbrances (except Taxes which are a lien but not yet payable
and liens, charges or encumbrances reflected in the Webster
Financial Statements and easements, rights-of-way, and other
restrictions and imperfections not material in nature, and
further excepting in the case of Other Real Estate Owned (as such
real estate is internally classified on the books of Webster or
its subsidiaries) rights of redemption under applicable law) to
all of their owned real properties, (ii) all leasehold interests
for real property and personal property used by Webster and its
subsidiaries in their businesses are held pursuant to lease
agreements which are valid and enforceable in accordance with
their terms, (iii) all such properties comply with all applicable
private agreements, zoning requirements and other governmental
laws and regulations relating thereto and there are no
condemnation proceedings pending or, to the knowledge of Webster,
threatened with respect to such properties, (iv) Webster and its
subsidiaries have valid title or other ownership rights under
licenses to all intangible personal or intellectual property
necessary to conduct the business and operations of Webster and
its subsidiaries as presently conducted, free and clear of any
claim, defense or right of any other person or entity, subject
only to rights of the licensors pursuant to applicable license
agreements, which rights do not adversely interfere with the use
of such property, (v) all insurable properties owned or held by
Webster and its subsidiaries are adequately insured by
financially sound and reputable insurers in such amounts and
against fire and other risks insured against by extended coverage
and public liability insurance, as is customary with bank holding
companies of similar size, and there are presently no claims
pending under such policies of insurance and no notices have been
given by Webster or any of its subsidiaries under such policies,
and (vi) all tangible properties used in the businesses of
Webster and its subsidiaries are in good condition, reasonable
wear and tear excepted, and are useable in the ordinary course of
business consistent with past practices. Section 2.15 of the
Disclosure Schedule sets forth, for each policy of insurance
maintained by Webster and its subsidiaries, the amount and type
of insurance, the name of the insurer and the amount of the
annual premium.
SECTION 2.16. ENVIRONMENTAL MATTERS.
(a) The term "Environmental Laws" as used
herein, shall mean all local, state and federal
environmental, health and safety laws and
regulations and common law standards in all
jurisdictions in which Webster and its
subsidiaries have done business or owned, leased
or operated property, including, without
limitation, the Federal Resource Conservation and
Recovery Act, the Federal Comprehensive
Environmental Response, Compensation and
Liability Act, the Federal Clean Water Act, the
Federal Clean Air Act, and the Federal
Occupational Safety and Health Act.
(b) To the knowledge of Webster, neither the
conduct nor operation of Webster or its
subsidiaries nor any condition of any property
presently or previously owned, leased or operated
by any of them violates or violated or may
violate, Environmental Laws in a manner or to any
extent exposing Webster or its subsidiaries to
liability or potential liability and, to the
knowledge of Webster, no condition has existed or
event has occurred with respect to any of them or
any such property that, with notice or the
passage of time, or both, would constitute or may
constitute, a violation of Environmental Laws in
a manner or to any extent that would obligate (or
potentially obligate) Webster or its subsidiaries
to remedy, stabilize, neutralize or otherwise
alter the environmental condition of any such
property. Neither Webster nor any of its
subsidiaries has received any notice from any
person or entity that Webster or its subsidiaries
or the operation or condition of any property
owned, leased or operated by any of them since
January 1, 1997 are or were in violation of any
Environmental Laws in a manner or to any extent
exposing Webster or its subsidiaries to liability
or potential liability or that any of them are
responsible (or potentially responsible) for the
cleanup or other remediation of any pollutants,
contaminants, or hazardous or toxic wastes,
substances or materials at, on or beneath any
such property and, to the knowledge of Webster,
Webster and its subsidiaries and the operation
and condition of any property ever owned, leased
or operated by any of them are not and were not
in violation of any Environmental Laws in a
manner or to any extent exposing Webster or its
subsidiaries to liability or potential liability
and none of them are responsible (or potentially
responsible) for the cleanup or other remediation
of any pollutants, contaminants, or hazardous or
toxic wastes, substances or materials at, on or
beneath any such property.
SECTION 2.17. COMPLIANCE WITH LAW. Webster and its
subsidiaries have all licenses, franchises, permits and other
governmental authorizations that are legally required to enable
them to conduct their respective businesses and are in compliance
with all applicable laws and regulations.
SECTION 2.18. BROKERAGE. There are no existing
claims or agreements for brokerage commissions, finders' fees, or
similar compensation in connection with the transactions
contemplated by this Agreement payable by Webster or its
subsidiaries, other than the agreement with Hovde Financial LLC,
a copy of which has previously been made available to IBNK by
Webster.
SECTION 2.19. INTERIM EVENTS. Since December 31,
1999, neither Webster nor its subsidiaries has paid or declared
any dividend or made any other distribution to shareholders or
taken any action which if taken after the date hereof would
require the prior written consent of IBNK pursuant to Section
4.01(b) hereof.
SECTION 2.20. NON-BANKING ACTIVITIES OF WEBSTER AND
SUBSIDIARIES. Neither Webster nor any of its subsidiaries that
is neither a bank, a bank operating subsidiary or a bank service
corporation, directly or indirectly, engages in any activity
prohibited by the Federal Reserve Board or the BHCA or which is
not listed at 12 C.F.R. 225.22. Without limiting the generality
of the foregoing, any equity investment of Webster and each of
its subsidiaries that is not a bank, a bank operating subsidiary
or a bank service corporation, is not prohibited by the
regulations of the Federal Reserve Board or the BHCA.
SECTION 2.21. TRUST ADMINISTRATION. During the
applicable statute of limitations period, (i) the Subsidiary
Banks and each other subsidiary of Webster which is a trust
company or otherwise acts in a fiduciary capacity has properly
administered all accounts for which it acts as a fiduciary or
agent, including but not limited to accounts for which it serves
as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with
the terms of the governing documents and applicable state and
federal law and regulation and common law, and (ii) neither
Webster, any subsidiary of Webster, nor any director, officer or
employee of Webster or any of its subsidiaries acting on behalf
of Webster or any of its subsidiaries, has committed any breach
of trust with respect to any such fiduciary or agency account,
and the accountings for each such fiduciary or agency account are
true and correct and accurately reflect the assets of such
fiduciary or agency account. There is no investigation or
inquiry by any Regulatory Agency pending, or to the knowledge of
Webster, threatened, against or affecting Webster or any of its
subsidiaries relating to the compliance by Webster or any such
subsidiary with sound fiduciary principles and applicable
regulations.
SECTION 2.22. TAX-FREE REORGANIZATION. Webster has
no reason to believe that the Mergers shall not qualify as a
tax-free reorganization within the meaning of Section 368(a) of
the Code.
SECTION 2.23. MATERIAL CONTRACTS AND AGREEMENTS.
Neither Webster nor any of its subsidiaries is a party to, or is
bound by, any material contract (as defined in Item 601(b)(10) of
Regulation S-K of the Securities and Exchange Commission ("SEC"))
or any other material contract or similar arrangement whether or
not made in the ordinary course of business (other than loans or
loan commitments and funding transactions in the ordinary course
of business of Webster's subsidiaries) that is not otherwise
listed in the Disclosure Schedule. Section 2.23 of the Disclosure
Schedule lists (i) each agreement restricting the nature or
geographic scope of any line of business or activity of Webster
or its subsidiaries, and (ii) each agreement, indenture or other
instrument relating to the borrowing of money by Webster
(excluding deposit liabilities of WKB) or any of its subsidiaries
or the guarantee by Webster or any of its subsidiaries of any
such obligation, other than instruments relating to transactions
entered into in the ordinary course of business. Copies of each
of the contracts and agreements listed in Section 2.23 of the
Disclosure Schedule have been previously furnished to IBNK by
Webster.
SECTION 2.24. NO UNDISCLOSED LIABILITIES. Webster
and its subsidiaries do not have any liability, whether known or
unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due, including any
liability for Taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present
or future action, suit or proceeding, hearing, charge, complaint,
claim or demand against Webster or its subsidiaries giving rise
to any such liability), except (i) for liabilities set forth in
the Webster Financial Statements, and (ii) normal fluctuation in
the amount of the liabilities referred to in clause (i) above
occurring in the ordinary course of business of Webster and its
subsidiaries since the date of the March 31, 2000 balance sheet
included in the Webster Financial Statements.
SECTION 2.25 STATEMENTS TRUE AND CORRECT. None of
the information supplied or to be supplied by Webster or its
subsidiaries for inclusion in (i) the Registration Statement (as
defined in Section 4.05 hereof), (ii) the Proxy
Statement/Prospectus (as defined in Section 4.03 hereof), and
(iii) any other documents to be filed with the SEC, Nasdaq or any
other Regulatory Agency in connection with the transactions
contemplated by this Agreement shall, at the respective times
such documents are filed, and, in the case of the Registration
Statement, when it becomes effective, and, with respect to the
Proxy Statement/Prospectus, when first mailed to the shareholders
of Webster and at the time of the Shareholders' Meeting, contain
any untrue statement of a material fact, or omit to state any
material fact necessary in order to make the statements made
therein, in light of the circumstances under which they are made,
not misleading. All documents that Webster shall be responsible
for filing with any Regulatory Agency in connection with the
transactions contemplated by this Agreement shall comply as to
form in all material respects with the provisions of applicable
law and the applicable rules and regulations thereunder.
SECTION 2.26. STATE TAKEOVER LAWS. The Board of
Directors of Webster has taken all such action required to be
taken by it to provide that this Agreement and the transactions
contemplated by this Agreement shall be exempt from the
requirements of any "moratorium," "control share," "fair price"
or other anti-takeover laws or regulations of the Commonwealth of
Kentucky.
SECTION 2.27. FAIR LENDING; COMMUNITY REINVESTMENT
ACT; INSURANCE ACTIVITIES. With the exception of routine
investigation of consumer complaints, neither Webster nor any of
its subsidiaries has been advised by any Regulatory Agency that
it is or may be in violation of the Equal Credit Opportunity Act
or the Fair Housing Act or any similar federal or state statute.
Each of Webster's depository institution subsidiaries received a
Community Reinvestment Act ("CRA") rating of "Outstanding" or
"Satisfactory" in its most recent CRA examination. The insurance
activities currently being conducted by West Kentucky Insurance,
Inc. (the "Insurance Subsidiary") comply with applicable banking
and insurance laws and regulations of the Commonwealth of
Kentucky.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF IBNK
Subject to Section 1.10 hereof, IBNK hereby makes
the following representations and warranties:
SECTION 3.01. ORGANIZATION AND CAPITAL STOCK.
(a) IBNK is a corporation duly organized,
validly existing and in good standing under the
laws of the State of Indiana and has the
corporate power to own all of its property and
assets, to incur all of its liabilities and to
carry on its business as now being conducted.
IBNK is a bank holding company registered with
the Federal Reserve Board under the BHCA.
(b) The authorized capital stock of IBNK
consists of (i) 29,000,000 shares of IBNK Common,
of which, as of May 31, 2000, 17,362,408 shares
were issued and outstanding, and (ii) 1,000,000
shares of preferred stock, no par value per
share, of which none are issued and outstanding.
All of the issued and outstanding shares of IBNK
Common are duly and validly issued and
outstanding and are fully paid and nonassessable
and free of preemptive rights.
(c) The shares of IBNK Common that are to be
issued to the shareholders of Webster pursuant to
the Holding Company Merger have been duly
authorized and, when so issued in accordance with
the terms hereof, shall be validly issued and
outstanding, fully paid and non-assessable, with
no personal liability attaching to the ownership
thereof.
SECTION 3.02. AUTHORIZATION. The Board of
Directors of IBNK has, by all appropriate action, approved this
Agreement, and the Mergers and authorized the execution hereof
and thereof on its behalf by its duly authorized officers and the
performance by IBNK of its obligations hereunder. Nothing in the
Articles of Incorporation or Bylaws of IBNK, as amended, or any
other agreement, instrument, decree, proceeding, law or
regulation (except as specifically referred to in or contemplated
by this Agreement) by or to which IBNK or any of its subsidiaries
are bound or subject would prohibit or inhibit IBNK from entering
into and consummating this Agreement and the Mergers on the terms
and conditions herein contained. This Agreement has been duly
and validly executed and delivered by IBNK and constitutes a
legal, valid and binding obligation of IBNK, enforceable against
IBNK in accordance with its terms and, except for the approval of
the Bank Merger Agreement and the Bank Merger by the Board of
Directors of Integra Bank, no other corporate acts or proceedings
are required to be taken by IBNK to authorize the execution,
delivery and performance of this Agreement. Except for the
requisite approval of the Federal Reserve Board and the OCC no
notice to, filing with, authorization by, or consent or approval
of, any federal or state bank regulatory authority is necessary
for the execution and delivery of this Agreement or consummation
of the Mergers by IBNK and Integra Bank.
SECTION 3.03. SUBSIDIARIES. Each of IBNK's
significant subsidiaries (as such term is defined in Rule 1-02 of
Regulation S-X promulgated by the SEC) is duly organized and
validly existing under the laws of the jurisdiction of its
incorporation and has the corporate power to own its respective
properties and assets, to incur its respective liabilities and to
carry on its respective business as now being conducted.
SECTION 3.04. FINANCIAL INFORMATION. The
consolidated balance sheets of IBNK and its subsidiaries as of
December 31, 1999 and 1998, and related consolidated statements
of income, changes in shareholders' equity and cash flows for the
three (3) years ended December 31, 1999, together with the notes
thereto, included in IBNK's Annual Report on Form 10-K for the
year ended December 31, 1999, filed with the SEC, and the
unaudited consolidated balance sheets of IBNK and its
subsidiaries as of March 31, 2000, and the related unaudited
consolidated income statements and statements of changes in
shareholders' equity and cash flows for the three (3) months then
ended included in IBNK's Quarterly Report on Form 10-Q for the
quarter then ended, as currently on file with the SEC, and the
year-end and quarterly Reports of Condition and Reports of Income
of each of the subsidiary banks of IBNK for 1999 and March 31,
2000, as currently on file with the applicable Regulatory Agency
(together, the "IBNK Financial Statements"), have been prepared
in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be disclosed therein
and except for regulatory reporting differences required by the
reports of the subsidiary banks of IBNK) and fairly present in
all material respects the consolidated financial position and the
consolidated results of operations, changes in shareholders'
equity and cash flows of IBNK and its consolidated subsidiaries
as of the dates and for the periods indicated (subject, in the
case of interim financial statements, to normal recurring
year-end adjustments, none of which shall be material).
SECTION 3.05. ABSENCE OF CHANGE. Since December
31, 1999, there has not been any change in the financial
condition, the results of operations or the business of IBNK and
its subsidiaries, except as disclosed by IBNK through the date
hereof in its periodic reports filed with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
SECTION 3.06. LITIGATION. There is no litigation,
claim or other proceeding pending or, to the knowledge of IBNK,
threatened, against IBNK or any of its subsidiaries, or of which
the property of IBNK or any of its subsidiaries is or would be
subject, and there is no injunction, order, judgment, decree or
regulatory restriction imposed upon IBNK, or any of its
subsidiaries or the assets of IBNK of any of its subsidiaries.
SECTION 3.07. REPORTS. IBNK and each of its
significant subsidiaries has filed all material reports and
statements, together with any amendments required to be made with
respect thereto, that it was required to file with (i) the SEC,
(ii) the Federal Reserve Board, (iii) the OCC, (iv) the FDIC, (v)
Nasdaq, and (vi) any other Regulatory Agency with jurisdiction
over IBNK or any of its significant subsidiaries, and have paid
all fees and assessments due and payable in connection therewith.
As of their respective dates, each of such reports and documents,
as amended, including any financial statements, exhibits and
schedules thereto, complied with the relevant statutes, rules and
regulations enforced or promulgated by the regulatory authority
with which they were filed and did not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
SECTION 3.08. COMPLIANCE WITH LAW. IBNK and its
significant subsidiaries have all licenses, franchises, permits
and other governmental authorizations that are legally required
to enable them to conduct their respective businesses and are in
compliance with all applicable laws and regulations.
SECTION 3.09. TAX-FREE REORGANIZATION. IBNK has no
reason to believe that the Mergers shall not qualify as a tax-
free reorganization within the meaning of Section 368(a) of the
Code.
SECTION 3.10. STATEMENTS TRUE AND CORRECT. None of
the information supplied or to be supplied by IBNK for inclusion
in (i) the Registration Statement, (ii) the Proxy
Statement/Prospectus, and (iii) any other documents to be filed
with the SEC, Nasdaq or any other Regulatory Agency in connection
with the transactions contemplated by this Agreement shall, at
the respective times such documents are filed, and, in the case
of the Registration Statement when it becomes effective, and with
respect to the Proxy Statement/Prospectus, when first mailed to
the shareholders of Webster and at the time of the Shareholders'
Meeting, contain any untrue statement of a material fact, or omit
to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under
which they are made, not misleading. All documents that IBNK
shall be responsible for filing with the SEC, Nasdaq or any other
Regulatory Agency in connection with the transactions
contemplated by this Agreement shall comply as to form in all
material respects with the provisions of applicable law and the
applicable rules and regulations thereunder.
SECTION 3.11. REGULATORY ENFORCEMENT MATTERS.
Neither IBNK nor any of its significant subsidiaries is subject
or is party to, or has received any notice or advice that it may
become subject or party to, any Regulatory Agreement, nor has
IBNK or any of its significant subsidiaries been advised by any
Regulatory Agency that it is considering issuing or requesting
any such Regulatory Agreement.
SECTION 3.12. TAX MATTERS. Each of IBNK and its
subsidiaries has filed with the appropriate governmental agencies
all foreign, federal, state and local Tax Returns required to be
filed by it. Neither IBNK nor its subsidiaries are (a)
delinquent in the payment of any Taxes shown on such Tax Returns
or on any assessments received by it for such Taxes, (b) subject
to any agreement extending the period for assessment or
collection of any Tax, or (c) a party to any action or proceeding
with, nor has any claim been asserted or threatened against any
of them by, any governmental authority for assessment or
collection of Taxes or for the refund of Taxes previously paid.
The income Tax Returns of IBNK and its subsidiaries have been
audited or otherwise closed by the IRS and comparable state
agencies and any liability with respect thereto has been
satisfied for all years to and including 1996 and either no
deficiencies were asserted as a result of such examination for
which IBNK does not have adequate reserves or all such
deficiencies have been satisfied. The reserve for Taxes in the
financial statements of IBNK for the year ended December 31,
1999, is adequate to cover all of the liabilities for Taxes of
IBNK and its subsidiaries that may become payable in future years
with respect to any transactions consummated prior to December
31, 1999.
SECTION 3.13. BROKERAGE. There are no existing
claims or agreements for brokerage commissions, finders' fees, or
similar compensation in connection with the transactions
contemplated by this Agreement payable by IBNK or its
subsidiaries.
SECTION 3.14. SHAREHOLDER APPROVAL. Approval by
IBNK's shareholders of the Holding Company Merger or for any
other actions contemplated by this Agreement is not required.
SECTION 3.15. NO UNDISCLOSED LIABILITIES. As of
the date hereof, IBNK and its subsidiaries do not have any
liability, whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or
to become due, including any liability for Taxes (and there is no
past or present fact, situation, circumstance, condition or other
basis for any present or future action, suit or proceeding,
hearing, charge, complaint, claim or demand against IBNK or its
subsidiaries giving rise to any such liability), except (i) for
liabilities set forth in the IBNK Financial Statements, and (ii)
normal fluctuation in the amount of the liabilities referred to
in clause (i) above occurring in the ordinary course of business
of IBNK and its subsidiaries since the date of the March 31, 2000
balance sheet included in the IBNK Financial Statements.
ARTICLE FOUR
AGREEMENTS OF WEBSTER
SECTION 4.01. BUSINESS IN ORDINARY COURSE.
(a) Webster shall not declare or pay any
dividend or make any other distribution to
shareholders, whether in cash, stock or other
property, after the date hereof, except that
Webster may declare and pay a quarterly dividend
for the third quarter of 2000 not to exceed
$200.00 per share and for any quarter thereafter
not to exceed $75.00 per share, provided,
however, that Webster and IBNK shall cooperate
with each other to coordinate the record and
payment dates of their respective dividends for
the quarter in which the Effective Time occurs
such that Webster shareholders shall receive a
quarterly dividend from either Webster or IBNK
but not from both during or with respect to such
period.
(b) Webster shall, and shall cause each of
its subsidiaries to, (1) continue to carry on
after the date hereof its respective business and
the discharge or incurrence of obligations and
liabilities, only in the usual, regular and
ordinary course of business, as heretofore
conducted, (2) use reasonable best efforts to
maintain and preserve intact its respective
business organization, employees and advantageous
business relationships and retain the services of
its officers and key employees, and (3) by way of
amplification and not limitation, Webster and
each of its subsidiaries shall not, without the
prior written consent of IBNK (which shall not be
unreasonably withheld):
(i) issue any Webster Common or
other capital stock or any options,
warrants, or other rights to subscribe
for or purchase Webster Common or any
other capital stock or any securities
convertible into or exchangeable for
any capital stock of Webster or any of
its subsidiaries; or
(ii) directly or indirectly
redeem, purchase or otherwise acquire
any Webster Common or any other capital
stock of Webster or effect a
reclassification, recapitalization,
splitup, exchange of shares,
readjustment or other similar change in
or to any capital stock or otherwise
reorganize or recapitalize Webster; or
(iii) directly or indirectly
redeem, purchase or otherwise acquire
any capital stock of subsidiaries of
the Webster or effect a
reclassification, recapitalization,
splitup, exchange of shares,
readjustment or other similar change in
or to any capital stock or otherwise
reorganize or recapitalize any
subsidiary of Webster; or
(iv) change its Articles of
Incorporation or Association, as the
case may be, or Bylaws; or
(v) grant any increase, other than
ordinary and normal increases
consistent with past practices, in the
compensation payable or to become
payable to officers or salaried
employees, grant any stock options or,
except as required by law or as
required by existing contractual
obligations which shall have been
described in Section 2.11 of the
Disclosure Schedule, adopt or make any
material change in any bonus,
insurance, pension, or other Webster
Employee Plan, agreement, payment or
arrangement made to, for or with any of
such officers or employees; or
(vi) borrow or agree to borrow any
material amount of funds except in the
ordinary course of business, or
directly or indirectly guarantee or
agree to guarantee any material
obligations of others, except in the
ordinary course of business; or
(vii) make or commit to make any
new loan or letter of credit or any new
or additional discretionary advance
under any existing line of credit in
principal amounts in excess of $250,000
or that would increase the aggregate
credit outstanding to any one borrower
(or group of affiliated borrowers) to
more than $500,000 (excluding for this
purpose any accrued interest or
overdrafts), without the prior written
consent of IBNK, acting through Curtis
D. Ritterling or such other designee as
IBNK may give notice of to Webster; or
(viii) purchase or otherwise
acquire any investment security for its
own account, except in a manner and
pursuant to policies consistent with
past practice; or
(ix) materially increase or
decrease the rate of interest paid on
time deposits, or on certificates of
deposit, except in a manner and
pursuant to policies consistent with
past practices; or
(x) enter into any agreement,
contract or commitment of a material
nature out of the ordinary course of
business; or
(xi) except in the ordinary course
of business, place on any of its
material assets or properties any
mortgage, pledge, lien, charge, or
other encumbrance of a material nature;
or
(xii) except in the ordinary
course of business, cancel or
accelerate any material indebtedness
owing to Webster or its subsidiaries or
any claims which Webster or its
subsidiaries may possess or waive any
material rights with respect thereto;
or
(xiii) sell or otherwise dispose
of any material real property or any
material amount of any tangible or
intangible personal property other than
in the ordinary course of business and
other than properties acquired in
foreclosure or otherwise in the
ordinary collection of indebtedness to
Webster and its subsidiaries; or
(xiv) foreclose upon or otherwise
take title to or possession or control
of any real property without first
obtaining a phase one environmental
report thereon which indicates that the
property is free of pollutants,
contaminants or hazardous or toxic
waste materials; provided, however,
that Webster and its subsidiaries shall
not be required to obtain such a report
with respect to single family,
non-agricultural residential property
of one acre or less to be foreclosed
upon unless it has reason to believe
that such property might contain any
such waste materials or otherwise might
be contaminated; or
(xv) commit any act or fail to do
any act which would cause a breach of
any agreement, contract or commitment
and which would have a Material Adverse
Effect on Webster; or
(xvi) incur any commitment or
obligation to make any other capital
expenditure in excess of $25,000 other
than capital expenditures described in
Section 4.01(b) of the Disclosure
Schedule; or
(xvii) affirmatively take, or
cause to be taken, any action, whether
before or after the Effective Time,
which would disqualify the Mergers as a
"reorganization" within the meaning of
Section 368(a) of the Code; or
(xviii) take any action which
would materially and adversely effect
or delay the ability of either IBNK or
Webster to obtain any necessary
approvals of any Regulatory Agency or
other governmental authority required
for the transactions contemplated by
this Agreement or to perform its
covenants and agreements under this
Agreement.
(c) Webster and its subsidiaries shall not,
without the prior written consent of IBNK, engage
in any transaction or take any action that would
render untrue (under the standard of Section 1.10
hereof) any of the representations and warranties
of Webster contained in Article Two hereof, if
such representations and warranties were given as
of the date of such transaction or action.
(d) Webster shall promptly notify IBNK in
writing of the occurrence of any matter or event
known to and directly involving Webster, which
would not include any changes in conditions that
affect the banking industry generally, that would
have, either individually or in the aggregate, a
Material Adverse Effect on Webster.
(e) Webster and its subsidiaries shall not,
and shall not authorize or permit any of their
respective officers, directors, employees or
agents to, on or before the earlier of the
Closing Date or the date of termination of this
Agreement, directly or indirectly solicit,
initiate or encourage or (subject to the
fiduciary duties of its directors as advised by
counsel) hold discussions or negotiations with or
provide any information to any person in
connection with any proposal from any person for
the acquisition of all or any substantial portion
of the business, assets, shares of Webster Common
or other securities of Webster or its
subsidiaries. Webster shall promptly (which for
this purpose shall mean within twenty-four (24)
hours) advise IBNK of its receipt of any such
proposal or inquiry concerning any possible such
proposal, the substance of such proposal or
inquiry, and the identity of such person.
SECTION 4.02. BREACHES. Webster shall, in the
event it has knowledge of the occurrence, or impending or
threatened occurrence, of any event or condition which would
cause or constitute a breach (or would have caused or constituted
a breach had such event occurred or been known prior to the date
hereof) of any of its representations or agreements contained or
referred to herein, subject to the standard set forth in Section
1.10, give prompt written notice thereof to IBNK and use its
reasonable efforts to prevent or promptly remedy the same.
SECTION 4.03. SUBMISSION TO SHAREHOLDERS. Webster
shall cause to be duly called and held, on a date selected by
Webster with the approval of IBNK, a special meeting of its
shareholders (the "Shareholders' Meeting") for submission of this
Agreement and the Holding Company Merger for approval of such
Webster shareholders. In connection with the Shareholders'
Meeting, (i) Webster shall cooperate and assist IBNK in preparing
and filing a Proxy Statement/Prospectus (the "Proxy Statement/
Prospectus") with the SEC and Webster shall mail it to its
shareholders, (ii) Webster shall furnish IBNK all information
concerning itself that
IBNK may reasonably request in connection with such Proxy
Statement/Prospectus, and (iii) the Board of Directors of Webster
(subject to compliance with its fiduciary duties as advised by
counsel) shall recommend to its shareholders the approval of this
Agreement and the Holding Company Merger contemplated hereby and
use its reasonable efforts to obtain such shareholder approval.
SECTION 4.04. CONSENTS TO CONTRACTS AND LEASES.
Webster shall use its reasonable efforts to obtain all necessary
consents with respect to all interests of Webster and its
subsidiaries in any material leases, licenses, contracts,
instruments and rights which require the consent of another
person for their transfer or assumption pursuant to the Mergers,
if any.
SECTION 4.05. CONSUMMATION OF AGREEMENT. Webster
shall use its reasonable efforts to perform and fulfill all
conditions and obligations on its part to be performed or
fulfilled under this Agreement and to effect the Mergers and the
other transactions contemplated hereby in accordance with the
terms and provisions hereof and to effect the transition and
integration of the business and operations of Webster and its
subsidiaries with the business and operations of IBNK and its
subsidiaries. Webster shall furnish to IBNK in a timely manner
all information, data and documents in the possession of Webster
requested by IBNK as may be required to obtain any necessary
regulatory or other approvals of the Mergers and to file with the
SEC a registration statement on Form S-4 (the "Registration
Statement") relating to the shares of IBNK Common to be issued to
the shareholders of Webster pursuant to the Holding Company
Merger and this Agreement and shall otherwise cooperate fully
with IBNK to carry out the purpose and intent of this Agreement.
SECTION 4.06. ENVIRONMENTAL REPORTS. The parties
shall jointly obtain, as soon as reasonably practical, but not
later than forty-five (45) days after the expiration of the
period of time during which IBNK may terminate this Agreement
under Section 4.11, a report of a phase one environmental
investigation on the real property owned, leased or operated by
Webster or its subsidiaries as of the date hereof (and on any
other real property owned, leased or
operated by Webster or its subsidiaries with respect to which
Webster shall have previously received a phase one environmental
investigation), and within ten (10) days after the acquisition or
lease of any real property acquired or leased by Webster or its
subsidiaries after the date hereof (but excluding space in office
or retail and similar establishments leased by Webster or its
subsidiaries for automatic teller machines or bank branch
facilities or other office uses where the space leased comprises
less than 50% of the total space leased to all tenants of such
property), except as otherwise provided in Section 4.01(b)(xiv)
hereof. If required by the phase one investigation in IBNK's
reasonable opinion, the parties shall obtain a report of a phase
two investigation on properties requiring such additional study.
IBNK shall have fifteen (15) business days from the receipt of
any such phase two investigation report to notify Webster of any
dissatisfaction with the contents of such report. Should the
cost of taking all remedial or other corrective actions and
measures (i) required by applicable law or reasonably likely to
be required by applicable law, or (ii) recommended or suggested
by such report or reports or prudent in light of serious life,
health or safety concerns, in the aggregate, exceed the sum of
$1,000,000 as reasonably estimated by an environmental expert
retained for such purpose by IBNK and reasonably acceptable to
Webster, or if the cost of such actions and measures cannot be so
reasonably estimated by such expert to be such amount or less
with any reasonable degree of certainty, then IBNK shall have the
right pursuant to Section 7.03 hereof, for a period of fifteen
(15) business days following receipt of such estimate or
indication that the cost of such actions and measures can not be
so reasonably estimated, to terminate this Agreement, which shall
be IBNK's sole remedy in such event. The parties agree to each
bear one-half of the costs of any phase one and phase two
investigations conducted pursuant to this Section.
SECTION 4.07. RESTRICTION ON RESALES. Webster has
delivered to IBNK concurrently with the execution of this
Agreement, a signed agreement, in the form of Exhibit B hereto,
of each person who may reasonably be deemed an "affiliate" of
Webster within the meaning of such term as used in Rule 145 under
the Securities Act of 1933, as amended (the "Securities Act").
SECTION 4.08. ACCESS TO INFORMATION. Webster shall
permit IBNK reasonable access in a manner which shall avoid undue
disruption or interference with Webster's normal operations to
its properties and shall disclose and make available to IBNK all
books, documents, papers, records and computer systems
documentation and files relating to its assets, stock ownership,
properties, operations, obligations and liabilities, including,
but not limited to, all books of account (including the general
ledger), tax records, minute books of directors' and
shareholders' meetings, organizational documents, material
contracts and agreements, loan files, filings with any regulatory
authority, accountants' workpapers (if available and subject to
the respective independent accountants' consent), litigation
files (but only to the extent that such review would not result
in a material waiver of the attorney-client or attorney work
product privileges under the rules of evidence), Employee Benefit
Plans, and any other business activities or prospects in which
IBNK may have a reasonable and legitimate interest in furtherance
of the transactions contemplated by this Agreement. IBNK shall
hold any such information which is nonpublic in confidence in
accordance with the provisions of Section 8.01 hereof.
SECTION 4.09. BANK MERGER AGREEMENT; PLAN OF
MERGER; INSURANCE ACTIVITIES. Webster shall cause the Board of
Directors of WKB to approve and, the authorized officers of WKB
to execute and deliver, the Bank Merger Agreement within thirty
(30) days after execution hereof. At the request of IBNK,
Webster or WKB shall enter into a separate plan of merger or
articles of merger reflecting the terms of the Mergers for
purposes of any filing requirement of the Corporate Laws or the
Banking Laws. At the request of IBNK, Webster or WKB shall take
such actions as are reasonably required to permit Integra Bank to
continue the insurance activities currently conducted by the
Insurance Subsidiary or, in the alternative, arrange for the sale
or other disposition of the Insurance Company prior to the
Effective Time.
SECTION 4.10. TERMINATION FEE.
(a) Webster acknowledges that IBNK has
committed substantial time, effort, resources and
expenses in pursuing the Mergers and that IBNK
would not enter into this Agreement without
Webster agreeing to the Termination Fee (as
hereinafter defined). Webster agrees that it
shall immediately pay to IBNK a termination fee
in the amount of One Million Five Hundred
Thousand Dollars ($1,500,000) in immediately
available funds ("Termination Fee"), in the event
that any of the following events occurs or has
occurred without the prior written consent of
IBNK:
(i) the acquisition, following the
date of this Agreement, by any entity,
person or group, other than IBNK, of
beneficial ownership, or the right to
acquire beneficial ownership, of
fifteen percent (15%) or more (in the
aggregate) of any shares of voting
capital stock of Webster (including,
without limitation, shares of Webster
Common or any shares of capital stock
of any Webster subsidiaries (for
purposes of this Section, the terms
"group" and "beneficial ownership"
shall have the same meanings assigned
thereto in Section 13(d) of the
Exchange Act, and the rules and
regulations promulgated thereunder),
but only if (A) such entity, person or
group has publicly announced its
opposition to this Agreement or the
Mergers or its intention not to vote
the capital stock of Webster or any of
the Webster subsidiaries beneficially
owned by the entity, person or group in
favor of this Agreement or the Mergers;
or (B) such entity, person or group has
proposed, indicated an intention to
propose or entered into a letter of
intent, agreement in principle or other
agreement (whether binding or
non-binding) relating to a merger,
consolidation, share exchange or other
combination with, or an acquisition of
Webster or any of the Webster
subsidiaries; or (C) such entity,
person or group has commenced or
indicated its intention to commence a
tender, exchange or other offer for any
shares of capital stock of Webster
(including, without limitation, shares
of Webster Common) or any shares of
capital stock of any of the Webster
subsidiaries; or
(ii) the Board of Directors of
Webster, in connection with its
consideration, acceptance or approval
of any merger, consolidation, share
exchange or combination involving
Webster or any of the Webster
subsidiaries or any purchase of all or
substantially all of Webster's or any
of the Webster subsidiaries' assets or
capital stock or any other similar
acquisition or transaction, or in
connection with any tender, exchange or
other offer for any shares of capital
stock of Webster (including, without
limitation, shares of Webster Common)
or any shares of capital stock of any
of the Webster subsidiaries, has (A)
failed to recommend to Webster
shareholders approval and adoption of
this Agreement and the Holding Company
Merger; or (B) withdrawn or conditioned
its recommendation to Webster
shareholders of approval and adoption
of this Agreement and the Holding
Company Merger; or (C) modified or
changed its recommendation to Webster
shareholders of approval and adoption
of this Agreement and the Holding
Company Merger in a manner materially
adverse in any respect to the interests
of IBNK; or (D) failed to solicit
proxies in favor of this Agreement and
the Holding Company Merger from the
shareholders of Webster; or
(iii) the acceptance or approval
by Webster or any of the Webster
subsidiaries of any proposal (however
conditional or future) of, or the
execution by Webster or any of the
Webster subsidiaries of any letter of
intent, agreement in principle or other
agreement (whether binding or
non-binding) with, any entity, person
or group, other than IBNK, (A) to
acquire Webster by merger,
consolidation, share exchange,
combination, purchase of all or
substantially all of Webster's or any
of the Webster subsidiaries' assets of
capital stock or any other similar
acquisition or transaction, or (B) in
connection with any tender, exchange or
other offer for any shares of capital
stock of Webster (including, without
limitation, shares of Webster Common)
or any shares of capital stock of any
of the Webster subsidiaries; or
(iv) the Board of Directors of
Webster shall have accepted or
approved, and any entity, person or
group shall have filed an application,
notice, registration statement, proxy
statement or other materials or
documents with the Federal Reserve
Board, the FDIC, the OCC, the SEC or
any other Regulatory Agency with
respect to, (A) any merger,
consolidation, share exchange or other
combination involving, or any purchase
of all or substantially all of the
assets or capital stock of, Webster or
any of the Webster subsidiaries, or any
similar acquisition or transaction, or
(B) any tender, exchange or other offer
for any shares of capital stock of
Webster (including, without limitation,
shares of Webster Common) or any shares
of the capital stock of any of the
Webster subsidiaries.
The provisions of this Section 4.10(a) shall
terminate upon any termination of this Agreement,
except (i) if one of the events described in this
Section 4.10(a) occurs or shall have occurred
prior to the termination of this Agreement, or
(ii) if IBNK terminates this Agreement based upon
a willful breach by Webster of any
representation, warranty, covenant or agreement
contained in this Agreement, subject to the
standard contained in Section 1.10; then, in the
case of clause (i) of this paragraph, the
obligation of Webster to pay IBNK the Termination
Fee shall survive any termination of this
Agreement and continue in full force and effect
until the Termination Fee has been paid in full
to IBNK; and in the case of clause (ii) of this
paragraph, the obligation of Webster to pay the
Termination Fee shall survive such termination
and continue in full force and effect until the
Termination Fee has been paid in full to IBNK,
but only if any of the events described in this
Section 4.10(a)(i), (iii) and (iv) shall have
occurred during the twelve (12) month period
immediately following such termination by IBNK.
In addition, Webster shall not be obligated to
pay the Termination Fee in the event that Webster
terminates this Agreement based upon a willful
breach of any representation, warranty or
covenant contained in this Agreement by IBNK,
subject to the standard contained in Section
1.10.
(b) The Termination Fee shall be immediately
paid to IBNK upon the occurrence of any of the
events set forth in Section 4.10(a) hereof. If
the Termination Fee is not immediately paid as
provided, then IBNK shall be entitled to recover
interest at the highest prime rate set forth in
The Wall Street Journal (Midwest Edition) under
the section entitled "Money Rates" on the unpaid
amount of the Termination Fee from the time that
the Termination Fee is due until paid-in-full,
together with all costs of collection thereof,
including reasonable attorneys' fees and
expenses.
(c) The parties hereby understand,
acknowledge and agree that the Termination Fee
shall reasonably compensate IBNK for, among other
things, (i) certain expenses incurred for
attorneys, accountants, financial advisors and
consultants in developing the Mergers and
drafting this Agreement, (ii) IBNK and Integra
Bank's management time and expense in
investigating, analyzing, developing and pursuing
the Mergers, and (iii) the fact that IBNK would
not enter into this Agreement without Webster
agreeing to the payment of the Termination Fee as
provided herein. Webster further acknowledges
that the amount of the Termination Fee is fair
and reasonable and not a penalty.
(d) For purposes of this Section 4.10, the
terms "person" and "entity" shall include an
individual, partnership, limited liability
company, corporation, trust, firm, association,
unincorporated organization and any other entity.
SECTION 4.11. COMPLETION OF DUE DILIGENCE REVIEW.
IBNK shall have thirty (30) days to complete its due diligence
review of Webster and WKB's financial condition and operations,
including but not limited to on-site review of records and
management interviews. If, on the basis of such review, IBNK
determines, in its reasonable discretion, that there are facts,
events or circumstances inconsistent with any representation or
warranty of Webster contained in Article Two that has now or is
reasonably likely to have a Material Adverse Effect with respect
to Webster, then IBNK shall have the right pursuant to Section
7.03 hereof for a period of ten (10) business days following the
expiration of the thirty-day review period to terminate this
Agreement, which shall be IBNK's sole remedy in such event. It is
understood that IBNK may not make such a determination if it has
knowledge of the facts, events or circumstances by reason of the
information previously provided in writing to IBNK prior to
execution hereof.
SECTION 4.12. VALUATION ADJUSTMENT. Consistent
with generally accepted accounting principles, Webster agrees
that on or before the Effective Time based on a review of WKB's
loan losses, current classified assets and commercial,
multi-family and residential mortgage loans and investment
portfolio, Webster will work with IBNK with the goal of
establishing collection procedures, internal valuation reviews,
credit policies and practices and general valuation allowances
which are consistent with the guidelines used by Integra Bank,
provided that no adjustment to general valuation allowances or
reserves shall be made until immediately prior to the Effective
Time and all conditions precedent to the obligations of the
parties hereto have either been satisfied or waived as confirmed
by such parties in writing. IBNK shall provide such assistance
and direction to Webster as is necessary in conforming to such
policies, practices, procedures and asset dispositions which are
mutually agreeable between the date of this Agreement and the
Effective Time. The making of such an adjustment shall not be
the basis of any breach of any representation or warranty of
Webster contained in Article Two hereof.
ARTICLE FIVE
AGREEMENTS OF IBNK
SECTION 5.01. REGULATORY APPROVALS AND REGISTRATION
STATEMENT.
(a) IBNK shall file all regulatory
applications required in order to consummate the
Mergers, including but not limited to the
necessary applications for the prior approval of
the Federal Reserve Board and OCC. IBNK shall
keep Webster reasonably informed as to the status
of such applications and make available to
Webster for review prior to filing with the
applicable Regulatory Agencies from time to time
copies of such applications and any
supplementally filed materials.
(b) IBNK shall file with the SEC the
Registration Statement relating to the shares of
IBNK Common to be issued to the shareholders of
Webster pursuant hereto, and shall use its best
efforts to cause the Registration Statement to
become effective. At the time the Registration
Statement becomes effective, IBNK shall cause the
Registration Statement to comply in all material
respects with the provisions of the Securities
Act and the published rules and regulations
thereunder, and not contain any untrue statement
of a material fact or omit to state a material
fact required to be stated therein or necessary
to make the statements therein not false or
misleading. IBNK covenants with Webster that at
the time of mailing thereof to the shareholders
of Webster, at the time of the Shareholders'
Meetings and at the Effective Time, the Proxy
Statement/Prospectus included as part of the
Registration Statement, as amended or
supplemented by any amendment or supplement,
shall not contain any untrue statement of a
material fact or omit to state any material fact
necessary to make the statements therein not
false or misleading. IBNK shall timely file all
documents required to obtain all necessary Blue
Sky permits and approvals, if any, required to
carry out the transactions contemplated by this
Agreement, shall pay all expenses incident
thereto and shall use its best efforts to obtain
such permits and approvals on a timely basis.
IBNK shall promptly and properly prepare and file
(i) any application required to list on Nasdaq
the shares of IBNK Common to be issued pursuant
to the Holding Company Merger, and (ii) any
filings required under the Exchange Act relating
to the Mergers and the transactions contemplated
herein.
SECTION 5.02. BREACHES. IBNK shall, in the event
it has knowledge of the occurrence, or impending or threatened
occurrence, of any event or condition which would cause or
constitute a breach (or would have caused or constituted a breach
had such event occurred or been known prior to the date hereof)
of any of its representations or agreements contained or referred
to herein, give prompt written notice thereof to Webster and use
its best efforts to prevent or promptly remedy the same.
SECTION 5.03. CONSUMMATION OF AGREEMENT. IBNK
shall use its best efforts to perform and fulfill all conditions
and obligations on its part to be performed or fulfilled under
this Agreement, including all regulatory applications and filings
to be made with the SEC, and to effect the Mergers in accordance
with the terms and conditions of this Agreement as soon as
reasonably practicable.
SECTION 5.04. DIRECTORS AND OFFICERS' LIABILITY
INSURANCE AND INDEMNIFICATION.
(a) For a period of three (3) years after
the Effective Time, IBNK shall use its reasonable
best efforts to cause to be maintained in effect
the current policies of directors' and officers'
liability insurance maintained by Webster
(provided that IBNK may substitute therefor
policies of comparable coverage with respect to
claims arising from facts or events which
occurred before the Effective Time); provided,
however, that in no event shall IBNK be obligated
to expend, in order to maintain or provide
insurance coverage pursuant to this Section
5.04(a), any amount per annum in excess of 150%
of the amount of the annual premiums paid as of
the date hereof by Webster for such insurance
(the "Maximum Amount"). If the amount of the
annual premiums necessary to maintain or procure
such insurance coverage exceeds the Maximum
Amount, IBNK shall use all reasonable efforts to
maintain the most advantageous policies of
directors' and officers' insurance obtainable for
an annual premium equal to the Maximum Amount.
Notwithstanding the foregoing, prior to the
Effective Time, IBNK may request Webster to, and
Webster shall, purchase insurance coverage, on
such terms and conditions as shall be acceptable
to IBNK, extending for a period of three (3)
years Webster's directors' and officers'
liability insurance coverage in effect as of the
date hereof (covering past or future claims with
respect to periods before the Effective Time) and
such coverage shall satisfy IBNK's obligations
under this Section 5.04(a).
(b) For the applicable statute of
limitations period, IBNK shall indemnify, defend
and hold harmless the present and former
officers, directors, employees and agents of
Webster and its subsidiaries (each, an
"Indemnified Party") against all losses,
expenses, claims, damages or liabilities arising
out of actions or omissions occurring on or prior
to the Effective Time (including, without
limitation, the transactions contemplated by this
Agreement) to the full extent then permitted
under the Kentucky Business Corporation Act and
by Webster's Articles of Incorporation as in
effect on the date hereof (and, with respect to
predecessors of Webster, the applicable laws,
articles of incorporation and bylaws pertaining
thereto), including provisions relating to
advances of expenses incurred in the defense of
any action or suit.
SECTION 5.05. EMPLOYEE BENEFITS. IBNK shall, with
respect to each employee of Webster or its subsidiaries at the
Effective Time who shall continue in employment with Webster,
IBNK or their respective subsidiaries (each a "Continued
Employee"), provide the benefits described in this Section 5.05.
Subject to the right of subsequent amendment, modification or
termination in IBNK's sole discretion, each Continued Employee
shall be entitled to participate in such employee benefit plans,
as defined in Section 3(3) of ERISA, or any non-qualified
employee benefit plans or deferred compensation, stock option,
bonus or incentive plans, or other employee benefit or fringe
benefit programs that may be in effect generally for employees of
all of IBNK's subsidiaries (the "IBNK Employee Plans") and shall
be eligible and, if required, selected for participation therein
under the terms thereof if the Continued Employee is not
otherwise participating in a similar plan of Webster which is
maintained after the Effective Time. Webster employees shall be
eligible to participate on the same basis as similarly situated
employees of other IBNK subsidiaries. All such participation
shall be subject to such terms of such IBNK Employee Plans as may
be in effect from time to time and this Section 5.06 is not
intended to give Continued Employees any rights or privileges
superior to those of other employees of IBNK's subsidiaries
(except as provided in the following sentence with respect to
credit for past service). IBNK may terminate or modify all
Webster Employee Plans except insofar as benefits thereunder
shall have vested at the Effective Time and cannot be modified
and IBNK's obligation under this Section 5.05 shall not be deemed
or construed so as to provide duplication of similar benefits
but, subject to that qualification, IBNK shall, for purposes of
vesting and any age or period of service requirements for
commencement of participation with respect to any IBNK Employee
Plans in which Continued Employees may participate (but not for
benefit accruals under any defined benefit plan), credit each
Continued Employee with his or her term of service with Webster
and its subsidiaries and its and their predecessors.
SECTION 5.06. ACCESS TO INFORMATION. IBNK shall
permit Webster reasonable access in a manner which shall avoid
undue disruption or interference with IBNK's normal operations to
its properties and shall disclose and make available to Webster
all books, documents, papers and records relating to its assets,
stock ownership, properties, operations, obligations and
liabilities, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of
directors' and shareholders' meetings, organizational documents,
material contracts and agreements, loan files, filings with any
regulatory authority, accountants' work papers (if available and
subject to the respective independent accountants' consent),
litigation files (but only to the extent that such review would
not result in a material waiver of the attorney-client or
attorney work product privileges under the rules of evidence),
plans affecting employees, and any other business activities or
prospects in which Webster may have a reasonable and legitimate
interest in furtherance of the transactions contemplated by this
Agreement. Webster shall hold any such information which is
nonpublic in confidence in accordance with the provisions of
Section 8.01 hereof.
SECTION 5.07. BANK MERGER AGREEMENT. IBNK shall
cause the Board of Directors of Integra Bank to approve, and the
authorized officers of Integra Bank to execute and deliver, the
Bank Merger Agreement within thirty (30) days after execution
hereof.
SECTION 5.08. ADDITIONAL DIRECTOR OF INTEGRA BANK.
IBNK shall take such actions as are necessary to expand the Board
of Directors of Integra Bank by one member as of the Effective
Time and to cause the appointment of Sandra Clark Berry to fill
such vacancy. IBNK further agrees that it will cause the
reelection of such person as a director of Integra Bank for a
period of not less than three (3) years after the Effective Date.
ARTICLE SIX
CONDITIONS PRECEDENT TO MERGERS
SECTION 6.01 CONDITIONS TO IBNK'S OBLIGATIONS. The
obligations of IBNK to effect the Mergers shall be subject to the
satisfaction (or waiver by IBNK) prior to or on the Closing Date
of the following conditions:
(a) The representations and warranties made
by Webster in this Agreement shall be true and
correct (subject to the standard in Section 1.10
hereof) on and as of the Closing Date with the
same effect as though such representations and
warranties had been made or given on and as of
the Closing Date (except for any such
representations and warranties made only as of a
specified date which shall be true and correct
(subject to the standard in Section 1.10 hereof)
as of such date); and
(b) Webster shall have performed and
complied in all material respects with all of its
obligations and agreements required to be
performed on or prior to the Closing Date under
this Agreement; and
(c) No temporary restraining order,
preliminary or permanent injunction or other
order issued by any court of competent
jurisdiction or other legal restraint or
prohibition (an "Injunction") preventing the
consummation of the Mergers shall be in effect,
nor shall any proceeding by any Regulatory Agency
or other person seeking any of the foregoing be
pending. There shall not be any action taken, or
any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the
Mergers which makes the consummation of the
Mergers illegal; and
(d) All necessary regulatory approvals,
consents, authorizations and other approvals,
including the requisite approval of this
Agreement and the Holding Company Merger by the
shareholders of Webster, required by law or
Nasdaq for consummation of the Mergers shall have
been obtained and all waiting periods required by
law shall have expired, and no regulatory
approval shall have imposed any condition,
requirement or restriction which the Board of
Directors of IBNK reasonably determines in good
faith would so materially adversely impact the
economic or business benefits of the transactions
contemplated by this Agreement to IBNK and its
shareholders as to render inadvisable the
consummation of the Mergers (any such condition,
requirement or restriction, a "Burdensome
Condition"); and
(e) IBNK shall have received all documents
required to be received from Webster and WKB on
or prior to the Closing Date, all in form and
substance reasonably satisfactory to IBNK; and
(f) The Registration Statement shall be
effective under the Securities Act and no stop
orders suspending the effectiveness of the
Registration Statement shall be in effect or
proceedings for such purpose pending before or
threatened by the SEC or any state securities
agency; and
(g) IBNK shall have received an opinion of
its counsel, Baker & Daniels, to the effect that
if the Mergers are consummated in accordance with
the terms set forth in this Agreement (i) the
Mergers shall constitute a reorganization within
the meaning of Section 368(a) of the Code, (ii)
no gain or loss shall be recognized by the
holders of shares of Webster Common upon receipt
of Merger Consideration (except for cash received
in lieu of fractional shares), (iii) the basis of
shares of IBNK Common received by the
shareholders of Webster shall be the same as the
basis of shares of Webster Common exchanged
therefor, and (iv) the holding period of the
shares of IBNK Common received by such
shareholders shall include the holding period of
the shares of Webster Common exchanged therefor,
provided such shares were held as capital assets
as of the Effective Time.
SECTION 6.02. CONDITIONS TO WEBSTER'S OBLIGATIONS.
The obligations of Webster to effect the Mergers shall be subject
to the satisfaction (or waiver by Webster) prior to or on the
Closing Date of the following conditions:
(a) The representations and warranties made
by IBNK in this Agreement shall be true and
correct (subject to the standard in Section 1.10
hereof) on and as of the Closing Date with the
same effect as though such representations and
warranties had been made or given on and as of
the Closing Date (except for any such
representations and warranties made only as of a
specified date which shall be true and correct
(subject to the standard in Section 1.10 hereof)
as of such date); and
(b) IBNK shall have performed and complied
in all material respects with all of its
obligations and agreements hereunder required to
be performed on or prior to the Closing Date
under this Agreement; and
(c) No Injunction preventing the
consummation of the Mergers shall be in effect,
nor shall any proceeding by any Regulatory Agency
or any other person seeking any of the foregoing
be pending. There shall not be any action taken,
or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable
to the Mergers which makes the consummation of
the Mergers illegal; and
(d) All necessary regulatory approvals,
consents, authorizations and other approvals,
including the requisite approval of this
Agreement and the Holding Company Merger by the
shareholders of Webster, required by law or
Nasdaq for consummation of the Mergers shall have
been obtained and all waiting periods required by
law shall have expired; and
(e) Webster shall have received all
documents required to be received from IBNK and
Integra Bank on or prior to the Closing Date, all
in form and substance reasonably satisfactory to
Webster; and
(f) The Registration Statement shall be
effective under the Securities Act and no stop
orders suspending the effectiveness of the
Registration Statement shall be in effect or
proceedings for such purpose pending before or
threatened by the SEC or any state securities
agency; and
(g) Webster shall have received a copy of
the federal income tax opinion of IBNK's counsel,
addressed to Webster, contemplated by Section
6.01(g) hereof; and
(h) The shares of IBNK Common issuable
pursuant to this Agreement shall have been
approved for listing on Nasdaq; and
(i) The opinion from Hovde Financial LLC
received by Webster as of the date of this
Agreement to the effect that the terms of the
Mergers are fair, from a financial point of view,
to the shareholders of Webster, shall have been
confirmed or not withdrawn as of the date the
Proxy Statement/Prospectus is mailed to the
shareholders of Webster.
ARTICLE SEVEN
TERMINATION OR ABANDONMENT
SECTION 7.01. MUTUAL AGREEMENT. This Agreement may
be terminated by the mutual written agreement of IBNK and Webster
at any time prior to the Closing Date, regardless of whether
approval of this Agreement and the Merger by the shareholders of
Webster shall have been previously obtained.
SECTION 7.02. BREACH OF AGREEMENTS. In the event
that there is a breach in any of the representations and
warranties (subject to the standard in Section 1. 10 hereof) or a
material breach of any of the agreements of IBNK or Webster,
which breach is not cured within thirty (30) days after written
notice to cure such breach is given to the breaching party by the
non-breaching party, then the non-breaching party, regardless of
whether shareholder approval of this Agreement and the Holding
Company Merger shall have been previously obtained, may terminate
and cancel this Agreement by providing written notice of such
action to the other party hereto.
SECTION 7.03. ENVIRONMENTAL REPORTS AND DUE
DILIGENCE REVIEW. IBNK may terminate this Agreement to the
extent provided by Section 4.06 or Section 4.11 hereof and this
Section 7.03 by giving timely written notice thereof to Webster.
SECTION 7.04. FAILURE OF CONDITIONS. In the event
any of the conditions to the obligations of either party are not
satisfied or waived on or prior to the Closing Date, and if any
applicable cure period provided in Section 7.02 hereof has
lapsed, then such party may, regardless of whether approval of
this Agreement and the Holding Company Merger by the shareholders
of Webster shall have been previously obtained, terminate and
cancel this Agreement by delivery of written notice of such
action to the other party on such date.
SECTION 7.05. REGULATORY APPROVAL DENIAL;
BURDENSOME CONDITION. If any regulatory application filed
pursuant to Section 5.01(a) hereof should be finally denied or
disapproved by the respective regulatory authority, then this
Agreement thereupon shall be deemed terminated and canceled;
provided, however, that a request for additional information or
undertaking by IBNK, as a condition for approval, shall not be
deemed to be a denial or disapproval so long as IBNK diligently
provides the requested information or undertaking. In the event
an application is denied pending an appeal, petition for review,
or similar such act on the part of IBNK (hereinafter referred to
as the "appeal") then the application shall be deemed denied
unless IBNK prepares and timely files such appeal and continues
the appellate process for purposes of obtaining the necessary
approval. IBNK may terminate this Agreement if its Board of
Directors shall have reasonably determined in good faith that any
of the requisite regulatory approvals imposes a Burdensome
Condition, and IBNK shall deliver written notice of such
determination to Webster not later than thirty (30) days after
receipt by IBNK of notice of the imposition of such Burdensome
Condition from the applicable Regulatory Agency (unless an appeal
of such determination is being pursued by IBNK, in which event
the foregoing notice shall be given within thirty (30) days of
the termination of any such appeal by IBNK or the denial of such
appeal by the appropriate Regulatory Agency).
SECTION 7.06. SHAREHOLDER APPROVAL DENIAL,
WITHDRAWAL/MODIFICATION OF BOARD RECOMMENDATION. If this
Agreement and the relevant transactions contemplated by this
Agreement, including the Holding Company Merger, are not approved
by the requisite vote of the shareholders of Webster at the
Shareholders' Meeting, then either party may terminate this
Agreement. IBNK may terminate this Agreement if Webster's Board
of Directors shall have failed to approve or recommend this
Agreement or the Holding Company Merger, or shall have withdrawn
or modified in any manner adverse to IBNK its approval or
recommendation of this Agreement or the Holding Company Merger,
or shall have resolved or publicly announced an intention to do
either of the foregoing.
SECTION 7.07. REGULATORY ENFORCEMENT MATTERS. In
the event that Webster or any of its subsidiaries shall, after
the date hereof, become a party or subject to any new or amended
written agreement, memorandum of understanding, cease and desist
order, imposition of civil money penalties or other regulatory
enforcement action or proceeding with a Regulatory Agency, which
would have a Material Adverse Effect on Webster, then IBNK may
terminate this Agreement.
SECTION 7.08. FALL-APART DATE. If the Closing Date
does not occur on or prior to January 31, 2001, then this
Agreement may be terminated by either party by giving written
notice thereof to the other, unless the failure of the Closing to
occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth in this
Agreement.
ARTICLE EIGHT
GENERAL
SECTION 8.01. CONFIDENTIAL INFORMATION. The
parties acknowledge the confidential and proprietary nature of
the "Information" (as described below in this Section 8.01) which
has heretofore been exchanged and which shall be received from
each other hereunder and agree to hold and keep the same
confidential. Such Information shall include any and all
financial, technical, commercial, marketing, customer or other
information concerning the business, operations and affairs of a
party that may be provided to the other, irrespective of the form
of the communications, by such party's employees or agents. Such
Information shall not include information which is or becomes
generally available to the public other than as a result of a
disclosure by a party or its representatives in violation of this
Agreement. The parties agree that the Information shall be used
solely for the purposes contemplated by this Agreement and that
such Information shall not be disclosed to any person other than
employees and agents of a party who are directly involved in
evaluating the transaction. The Information shall not be used in
any way detrimental to a party, including use directly or
indirectly in the conduct of the other party's business or any
business or enterprise in which such party may have an interest,
now or in the future, and whether or not now in competition with
such other party.
SECTION 8.02. PUBLICITY. IBNK and Webster shall
cooperate with each other in the development and distribution of
all news releases and other public disclosures concerning this
Agreement and the Mergers and shall not issue any news release or
make any other public disclosure without the prior consent of the
other party, unless it reasonably believes such is required by
law upon the advice of counsel or is in response to published
newspaper or other mass media reports regarding the transactions
contemplated by this Agreement, in which such latter event the
parties shall give reasonable notice, and to the extent
practicable, consult with each other regarding such responsive
public disclosure.
SECTION 8.03. RETURN OF DOCUMENTS. Upon
termination of this Agreement without the Mergers becoming
effective, each party (i) shall deliver to the other originals
and all copies of all Information made available to such party,
(ii) shall not retain any copies, extracts or other reproductions
in whole or in part of such Information, and (iii) shall destroy
all memoranda, notes and other writings prepared by any party
based on the Information.
SECTION 8.04. NOTICES. Any notice or other
communication shall be in writing and shall be deemed to have
been given or made on the date of delivery, in the case of hand
delivery, or three (3) business days after deposit in the United
States Registered Mail, postage prepaid, or upon receipt if
transmitted by facsimile telecopy or any other means, addressed
(in any case) as follows:
(a) if to IBNK:
Integra Bank Corporation
227 Main Street
P.O. Box 868
Evansville, Indiana 47705-0868
Attention: James E. Adams
Facsimile: (812) 464-9825
with a copy to:
Baker & Daniels
300 North Meridian Street, Suite 2700
Indianapolis, Indiana 46204-1782
Attention: David C. Worrell
Facsimile: (317) 237-1000
and
(b) if to Webster:
Webster Bancorp, Inc.
104 Main Street
Clay, Kentucky 42404
Attention: Sandra Clark Berry and Joye
Hunt
Facsimile: (270) 664-9157
with a copy to:
Brown, Todd & Heyburn PLLC
400 West Market Street, 32{nd} Floor
Louisville, Kentucky 40202-3363
Attention: R. James Straus/David L.
Beckman, Jr.
Facsimile: (502) 581-1087
or to such other address as any party may from time to time
designate by notice to the others.
SECTION 8.05. LIABILITIES AND EXPENSES. Except as
provided in Sections 4.06 and 4.10, in the event that this
Agreement is terminated pursuant to the provisions of Article
Seven hereof, no party hereto shall have any liability to any
other party for costs, expenses, damages or otherwise; provided,
however, that, notwithstanding the foregoing, in the event that
this Agreement is terminated pursuant to Article Seven hereof on
account of a willful breach of any of the representations and
warranties set forth herein or any willful breach of any of the
agreements set forth herein, then the non-breaching party shall
be entitled to recover appropriate damages from the breaching
party, including, without limitation, reimbursement to the
non-breaching party of its costs, fees and expenses (including
attorneys', accountants' and advisors' fees and expenses)
incident to the negotiation, preparation, execution and
performance of this Agreement and related documentation;
provided, however, that nothing in this proviso shall be deemed
to constitute liquidated damages for the willful breach by a
party of the terms of this Agreement or otherwise limit the
rights of the non-breaching party.
SECTION 8.06. NONSURVIVAL OF REPRESENTATIONS,
WARRANTIES AND AGREEMENTS. Except for, and as provided in, this
Section 8.06, no representation, warranty or agreement contained
herein shall survive the Effective Time or the earlier
termination of this Agreement; provided, however, that no such
representation, warranty or covenant shall be deemed to be
terminated or extinguished so as to deprive IBNK or Webster (or
any director, officer or controlling person thereof) of any
defense in law or equity which otherwise would be available
against the claims of any person, including, without limitation,
any shareholder or former shareholder of either IBNK or Webster,
the aforesaid representations, warranties and covenants being
material inducements to the consummation by IBNK and Webster of
the transactions contemplated herein. The agreements set forth
in Sections 4.06 and 4.10 shall survive the termination of this
Agreement, the agreements set forth in Sections 1.07, 5.04, 5.05,
5.06, 5.07 and 5.08 hereof shall survive the Effective Time and
the agreements set forth in Sections 8.01, 8.02, 8.03 and 8.05
hereof and this Section 8.06 shall survive the Effective Time or
the earlier termination of this Agreement.
SECTION 8.07. ENTIRE AGREEMENT. This Agreement
constitutes the entire agreement between the parties and
supersede and cancel any and all prior discussions, negotiations,
undertakings, agreements in principle or other agreements between
the parties relating to the subject matter hereof.
SECTION 8.08. HEADINGS AND CAPTIONS. The captions
of Articles and Sections hereof are for convenience only and
shall not control or affect the meaning or construction of any of
the provisions of this Agreement.
SECTION 8.09. WAIVER, AMENDMENT OR MODIFICATION.
The conditions of this Agreement which may be waived may only be
waived by notice to the other party waiving such condition. The
failure of any party at any time or times to require performance
of any provision hereof shall in no manner affect the right at a
later time to enforce the same. This Agreement may be amended or
modified by the parties hereto, at any time before or after
shareholder approval of the Agreement; provided, however, that
after any such approval no such amendment or modification shall
alter the amount or change the form of the Merger Consideration
contemplated by this Agreement to be received by shareholders of
Webster. This Agreement shall not be amended or modified except
by a written document duly executed by the parties hereto.
SECTION 8.10. RULES OF CONSTRUCTION. Unless the
context otherwise requires: (i) a term has the meaning assigned
to it, (ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles, (iii) "of" is not exclusive, (iv) words in
the singular may include the plural and in the plural include the
singular, and (v) "knowledge" of a party means the actual
knowledge of any director or executive officer of such party or
any of its subsidiaries.
SECTION 8.11. COUNTERPARTS. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed an original and all of which shall be deemed one and the
same instrument. For purposes of executing this Agreement, a
document (or signature page thereto) signed and transmitted by
facsimile machine or telecopier is to be treated as an original
document. The signature of any party thereon, for purposes
hereof, is to be considered as an original signature, and the
document transmitted is to be considered to have the same binding
effect as an original signature on an original document. At the
request of any party, any facsimile or telecopy document shall be
re-executed in original form by the parties who executed the
facsimile or telecopy document. No party may raise the use of a
facsimile machine or telecopier or the fact that any signature
was transmitted through the use of a facsimile or telecopier
machine as a defense to the enforcement of this Agreement or any
amendment or other document executed in compliance with this
Section 8.11.
SECTION 8.12. SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefit of the
parties hereto. This Agreement may not be assigned by any of the
parties hereto. There shall be no third party beneficiaries
hereof, except for the intended third party beneficiaries of
Sections 5.04, 5.05 and 5.08 hereof.
SECTION 8.13. SEVERABILITY. In the event that any
provisions of this Agreement or any portion thereof shall be
finally determined to be unlawful or unenforceable, such
provision or portion thereof shall be deemed to be severed from
this Agreement, and every other provision, and any portion of a
provision, that is not invalidated by such determination, shall
remain in full force and effect. To the extent that a provision
is deemed unenforceable by virtue of its scope but may be made
enforceable by limitation thereof, such provision shall be
enforceable to the fullest extent permitted under the laws and
public policies of the State whose laws are deemed to govern
enforceability. It is declared to be the intention of the
parties that they would have executed the remaining provisions
without including any that may be declared unenforceable.
SECTION 8.14. GOVERNING LAW. This Agreement shall
be governed by the laws of the State of Indiana and applicable
federal laws and regulations.
SECTION 8.15. ENFORCEMENT OF AGREEMENT. The
parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties
hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States
or any state having jurisdiction and such right shall be in
addition to any other remedy to which they shall be entitled at
law or in equity.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
INTEGRA BANK CORPORATION
By /S/ MICHAEL T. VEA
Michael T. Vea, Chairman,
President
and Chief Executive Officer
WEBSTER BANCORP, INC.
By /S/ BRIAN STULL
Brian Stull, President and Chief
Executive Officer
<PAGE>
Execution Copy
AMENDMENT TO AGREEMENT
AND PLAN OF REORGANIZATION
THIS AMENDMENT ("AMENDMENT") IS MADE AND DATED AS OF
SEPTEMBER 27, 2000 BY AND BETWEEN INTEGRA BANK CORPORATION, AN
INDIANA CORPORATION ("IBNK"), AND WEBSTER BANCORP, INC., A
KENTUCKY CORPORATION ("WEBSTER").
RECITALS
WHEREAS, IBNK and Webster are parties to the Agreement
and Plan of Reorganization dated as of July 5, 2000 (the
"Agreement"); and
WHEREAS, the parties desire to amend certain provisions
of the Agreement pursuant to Section 8.09 thereof;
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. All capitalized terms used in this Amendment and not
defined herein shall have the meanings provided in the Agreement.
2. Section 1.04(a) of the Agreement is hereby amended
to provide that the Conversion Ratio is hereby changed from
1,633.9869 to 1,400.5602.
3. The Disclosure Schedule referred to in Section 1.10
of the Agreement shall be deemed to refer to the Disclosure
Schedule delivered by Webster to IBNK concurrently with the
execution of this Amendment, and such Disclosure Schedule and all
exceptions and other information set forth thereon shall be taken
into consideration in determining, for purposes of the Agreement,
whether the condition set forth in Section 6.01(a) of the
Agreement shall have been satisfied.
4. The last sentence of Section 1.10(b) is hereby
amended by deleting the word "and" prior to subpart (e) thereof
and adding to end of such sentence the following:
; (f) any changes to the financial condition of Webster
or its subsidiaries or the adequacy of the loan loss
reserves of Webster or its subsidiaries which may
result from matters addressed in the findings of IBNK's
due diligence investigations of Webster's loan
portfolio communicated, in part, to Webster management
in that certain report as of July 10, 2000, a copy of
which is included in Webster's Disclosure Schedule and
all supplemental schedules and materials to that report
including a listing of loan loss reserve increases
requested by IBNK, a listing of impaired loans, and a
listing of all classified or "watch" list loans as
determined by IBNK; (g) any changes to the financial
condition of Webster or its subsidiaries which may
result from matters addressed in the findings of IBNK's
due diligence investigations of Webster's accounting
practices, including, without limitation, the impact of
applying FASB Statement No. 91 with respect to the
recognition of income and expense on the origination of
loans, the impact of deferring the recognition of
income from the sale of credit life and accident and
health insurance over the life of a borrower's loan,
the impact on the earnings of Webster and its
subsidiaries of the application of FASB Statements Nos.
114 and 118 with respect to impaired loans, and the
impact of any charge against income related to the
alleged impairment of goodwill as a result of the
ongoing operations of West Kentucky Insurance; and (h)
the impact on the amount of goodwill recognition by
IBNK due to any increase in loan loss reserves of
Webster.
5. A new Section 3.16 is hereby added to the Agreement
to read in its entirety as follows:
SECTION 3.16. DUE DILIGENCE. As of September 27,
2000, IBNK is not aware of any matters, facts, events,
omissions, or other information which would cause
Webster to be in breach (with the lapse of time or
otherwise) of any of Webster's representations,
warranties, or covenants contained in this Agreement.
6. IBNK hereby confirms that it has completed its due
diligence review permitted pursuant to Section 4.11 of the
Agreement and hereby waives any right to terminate the Agreement
pursuant to Section 4.11.
7. Section 7.08 of the Agreement is hereby amended to
provide that the date after which either party may terminate the
Agreement if the Closing shall not have occurred prior thereto be
March 15, 2001.
8. Except as expressly amended herein, the Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused such
Amendment to be duly executed as of the day and year first above
written.
INTEGRA BANK CORPORATION
By: /S/ MICHAEL T. VEA
Michael T. Vea, Chairman,
President
and Chief Executive Officer
WEBSTER BANCORP, INC.
By: /S/ SANDRA CLARK BERRY
Sandra Clark Berry, Secretary
<PAGE>
[LETTERHEAD OF HOVDE FINANCIAL LLC]
July 5, 2000
Board of Directors
Webster Bancorp, Inc.
104 Main Street
Clay , KY 42404
Members of the Board:
Webster Bancorp, Inc. ("Webster"), a Kentucky corporation,
and Integra Bank Corporation ("IBNK"), an Indiana corporation,
have entered into an Agreement and Plan of Reorganization (the
"Agreement") dated July 5, 2000, pursuant to which Webster will
be merged with and into IBNK (the "Bank Merger"). As is set
forth in Section 1.04(a) of the Agreement, at the effective time
of the Bank Merger each of the outstanding shares of Webster
common stock ("Webster Common") will be converted into and have
the right to receive 1,633.9869 shares (the "Conversion Ratio")
of IBNK common stock ("IBNK Common"). In connection therewith,
you have requested our opinion as to the fairness, from a
financial point of view, of the Conversion Ratio to the
shareholders of Webster.
Hovde Financial LLC ("Hovde") specializes in providing
investment banking and financial advisory services to commercial
bank and thrift institutions. Our principals are experienced in
the independent valuation of securities in connection with
negotiated underwritings, subscription and community offerings,
private placements, merger and acquisition transactions and
recapitalizations. We are familiar with Webster, having acted as
its financial advisor in connection with, and having participated
in the negotiations leading to, the Agreement.
We were retained by Webster to act as its exclusive financial
advisor with respect to a review of Webster's strategic
alternatives and the possible sale, merger, consolidation, or
other business combination, in one or a series of transactions,
involving all or a substantial amount of the business, securities
or assets of Webster. We will receive compensation from Webster
in connection with our services, a significant portion of which
is contingent upon the consummation of the Bank Merger. At your
direction, we solicited the interest of third parties regarding a
possible business combination with Webster. The Agreement is the
result of this solicitation.
During the course of our engagement, we reviewed and analyzed
material bearing upon the financial and operating conditions of
Webster and IBNK and material prepared in connection with the
proposed transaction, including the following: the Agreement;
certain historical publicly available information concerning
Webster and IBNK; the terms of recent merger and acquisition
transactions involving banks and bank holding companies that we
considered relevant; historical market prices and trading volumes
for IBNK Common; and financial and other information provided to
us by the managements of Webster and IBNK.
In addition, we have conducted meetings with members of the
senior management of Webster and IBNK for the purpose of
reviewing the future prospects of Webster and IBNK. We also
evaluated the pro forma ownership of IBNK Common by Webster's
shareholders relative to the pro forma contribution of Webster's
assets, liabilities, equity and earnings to the pro forma
company, and conducted such other studies, analyses and
examinations as we deemed appropriate. We also took into account
our assessment of general economic, market and financial
conditions and our experience in other transactions, as well as
our knowledge of the banking industry and our general experience
in securities valuations.
In rendering this opinion, we have assumed, without
independent verification, the accuracy and completeness of the
financial and other information and representations contained in
the materials provided to us by Webster and IBNK and in the
discussions with Webster and IBNK management. We did not
independently verify and have relied on and assumed that the
aggregate allowances for loan losses set forth in the balance
sheets of each of Webster and IBNK at May 31, 2000, and at March
31, 2000, respectively, were adequate to cover such losses and
complied fully with applicable law, regulatory policy and sound
banking practices as of the date of such financial statements.
We were not retained to and did not conduct a physical inspection
of any of the properties or facilities of Webster or IBNK, nor
did we make any independent evaluation or appraisal of the
assets, liabilities or prospects of Webster or IBNK, nor were we
furnished with any such evaluation or appraisal, and we were not
retained to and did not review any individual credit files.
We have assumed that the Bank Merger is, and will be, in
compliance with all laws and regulations that are applicable to
Webster and IBNK. In rendering this opinion, we have been
advised by Webster and IBNK and we have assumed that there are no
factors that would impede any necessary regulatory or
governmental approval for the Bank Merger and we have further
assumed that in the course of obtaining the necessary regulatory
and governmental approvals, no restriction will be imposed on
IBNK or the surviving corporation that would have a material
adverse effect on IBNK or the contemplated benefits of the Bank
Merger. We have also assumed that there would not occur any
change in the applicable law or regulation that would cause a
material adverse change in the prospects or operations of IBNK or
the surviving corporation after the Bank Merger.
Our opinion is based solely upon the information available to
us and the economic, market and other circumstances as they exist
as of the date hereof. Events occurring and information that
becomes available after the date hereof could materially affect
the assumptions and analyses used in preparing this opinion. We
have not undertaken to reaffirm or revise this opinion or
otherwise comment upon any events occurring or information that
becomes available after the date hereof.
We are not expressing any opinion herein as to the prices at
which shares of IBNK Common issued in the Bank Merger may trade
if and when they are issued or at any future time, nor does our
opinion constitute a recommendation to any holder of Webster
Common as to how such holder should vote with respect to the
Agreement at any meeting of holders of Webster Common.
This letter is solely for the information of the Board of
Directors of Webster and is not to be used, circulated, quoted or
otherwise referred to for any other purpose, nor is it to be
filed with, included in or referred to in whole or in part in any
registration statement, proxy statement or any other document,
except in each case in accordance with our prior written consent
which shall not be unreasonably withheld; provided, however, that
we hereby consent to the inclusion and reference to this letter
in any registration statement, proxy statement, information
statement or tender offer document to be delivered to the holders
of Webster Common in connection with the Bank Merger if and only
if this letter is quoted in full or attached as an exhibit to
such document and this letter has not been withdrawn prior to the
date of such document.
Subject to the foregoing and based on our experience as
investment bankers, our activities and assumptions as described
above, and other factors we have deemed relevant, we are of the
opinion as of the date hereof that the Conversion Ratio is fair,
from a financial point of view, to the shareholders of Webster.
Sincerely,
/s/ Steve Hovde
HOVDE FINANCIAL LLC
<PAGE>
[LETTERHEAD OF HOVDE FINANCIAL LLC]
September 25, 2000
Board of Directors
Webster Bancorp, Inc.
104 Main Street
Clay , KY 42404
Members of the Board:
Webster Bancorp, Inc. ("Webster"), a Kentucky corporation,
and Integra Bank Corporation ("IBNK"), an Indiana corporation,
entered into Agreement and Plan of Reorganization (the
"Agreement") dated July 5, 2000. For the reasons set forth
below, Webster and IBNK entered into an Amendment to the
Agreement (the "Amendment") dated September 25, 2000. As is set
forth in Section 2 of the Amendment, the Conversion Ratio will
change from 1,633.9869 shares of IBNK issued for each share of
Webster (1,750,000 shares of IBNK common stock in the aggregate
to have been issued to Webster's shareholders) to 1,400.5602
shares (1,500,000 shares of IBNK common stock in the aggregate
will now be issued to Webster's shareholders). In connection
therewith, you have requested our opinion as to the fairness,
from a financial point of view, of the revised Conversion Ratio
as described in the Amendment to the shareholders of Webster.
After the signing of the Agreement on July 5, 2000, detailed
due diligence of Webster's loan portfolio was undertaken by IBNK.
This detailed due diligence review revealed substantial alleged
weaknesses in the Webster's loan portfolio. In particular, IBNK
felt that in the future Webster might experience significantly
higher loan losses and lower interest income from the loan
portfolio. Moreover, IBNK believed that an immediate increase in
Webster's loan loss reserve (estimated to be approximately $4.82
million) was needed. This increase in reserves would adversely
impact Webster's common equity account and, therefore, increase
the annual goodwill amortization expense to be incurred by IBNK
on a pro forma basis.
As provided by Sections 4.11 and 7.03 of the Agreement, IBNK
had a right to terminate the Agreement if material adverse issues
were discovered during the course of the detailed due diligence.
IBNK was of the opinion that such issues had been discovered and
it was likely to exercise its termination right. Between the
date of the Agreement and the current date of the Amendment,
Webster independently placed certain previously accruing loans
into the non-performing category. While Webster did not fully
agree with IBNK's due diligence findings, its only recourse in
the event IBNK did terminate the Agreement was to proceed with
legal action to allege that any such termination was improperly
taken. Both Webster and IBNK believed that their respective
positions were supportable. However, rather than pursue a course
of action that could involve a substantial expenditure of time,
money and human resources, the parties agreed to compromise on
their positions. Accordingly, Webster and IBNK decided to
renegotiate the Conversion Ratio.
In evaluating the revised Conversion Ratio, we have taken
into consideration the possibility of substantial future loan
losses, increased reserves and reduced interest income for
Webster; we are unable at this time to determine whether these
future events are remote or likely. We have also taken into
consideration the recent increase in IBNK's common stock price
(currently trading in the rage of $19.00 to $20.50) as compared
to the level it was trading at the time of the signing of the
Agreement (which was $16.50 per share). At the time the
Agreement was signed, the aggregate transaction value to Webster
shareholders was approximately $28.9 million. Based on the
revised Conversion Ratio and IBNK's current stock price, the
aggregate transaction value is approximately $30.2 million.
Subject to the foregoing and based on our experience as
investment bankers, our activities and assumptions as previously
described, and other factors we have deemed relevant, we are of
the opinion as of the date hereof that the revised Conversion
Ratio as provided by the Amendment is fair, from a financial
point of view, to the shareholders of Webster.
Sincerely,
/s/ Steve Hovde
HOVDE FINANCIAL LLC
<PAGE>
APPENDIX C
Excerpts of the Kentucky Business Corporation Act
(Dissenters' Rights)
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
271B.13-010 DEFINITIONS. - As used in this subtitle:
(1) "Corporation" means the issuer of the shares held by
a dissenter, except that in the case of a merger where the
issuing corporation is not the surviving corporation, then, after
consummation of the merger, "corporation" shall mean the
surviving corporation.
(2) "Dissenter" means a shareholder who is entitled to
dissent from corporate action under KRS 271B.13-020 and who
exercises that right when and in the manner required by KRS
271B.13-200 to 271B.13-280.
(3) "Fair value," with respect to a dissenter's shares,
means the value of the shares immediately before the effectuation
of the corporate action to which the dissenter objects, excluding
any appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable. In any transaction
subject to the requirements of KRS 271B.12-210 or exempted by KRS
271B.12-220(2), "fair value" shall be at least an amount required
to be paid under KRS 271B.12-220(2) in order to be exempt from
the requirements of KRS 271B.12-210.
(4) "Interest" means interest from the effective date of
the corporate action until the date of payment, at the average
rate currently paid by the corporation on its principal bank
loans or, if none, at a rate that is fair and equitable under all
the circumstances.
(5) "Record shareholder" means the person in whose name
shares are registered in the records of a corporation or the
beneficial owner of shares to the extent of the rights granted by
a nominee certificate on file with a corporation.
(6) "Beneficial shareholder" means the person who is a
beneficial owner of shares held in a voting trust or by a nominee
as the record shareholder.
(7) "Shareholder" means the record shareholder or the
beneficial shareholder.
271B.13-020 RIGHT TO DISSENT - (1) A shareholder shall
be entitled to dissent from, and obtain payment of the fair
value of his shares in the event of, any of the following
corporate actions:
(a) Consummation of a plan of merger to which the
corporation is a party:
1. If shareholder approval is required for the merger by
KRS 271B.11-040 or the articles of incorporation and the
shareholder is entitled to vote on the merger; or
2. If the corporation is a subsidiary that is merged with
its parent under KRS 271B.11-040;
(b) Consummation of a plan of share exchange to which
the corporation is a party as the corporation whose shares will
be acquired, if the shareholder is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or
substantially all, of the property of the corporation other than
in the ususal and regular course of business, if the shareholder
is entitled to vote on the sale or exchange, including a sale in
dissolution, but not including a sale pursuant to court order or
a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the
shareholders within one (1) year after the date of sale;
(d) An amendment of the articles of incorporation that
materially and adversely affects rights in respect of a
dissenter's shares because it:
1. Alters or abolishes a preferential right of the shares
to a distribution or in dissolution;
2. Creates, alters, or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for
the redemption or repurchase, of the shares;
3. Excludes or limits the right of the shares to vote on
any matter other than a limitation by dilution through issuance
of shares or other securities with similar voting rights; or
4. Reduces the number of shares owned by the shareholder
to a fraction of a share if the fractional share so created is to
be acquired for cash under KRS 271B.6-040;
(e) Any transaction subject to the requirements of KRS
271B.12-210 or exempted by KRS 271B.12-220(2); or
(f) Any corporate action taken pursuant to a shareholder
vote to the extent the articles of incorporation, bylaws, or a
resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment
for their shares.
(2) A shareholder entitled to dissent and obtain payment
for his shares under this chapter shall not challenge the
corporate action creating his entitlement unless the action is
unlawful or fraudulent with respect to the shareholder or the
corporation.
271B.13-030 DISSENT BY NOMINEE AND BENEFICIAL OWNERS -
(1) A record shareholder may assert dissenters' rights as to
fewer than all the shares registered in his name only if he shall
dissent with respect to all shares beneficially owned by any one
(1) person and notify the corporation in writing of the name and
address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection
shall be determined as if the shares as to which he dissents and
his other shares were registered in the names of different
shareholders.
(2) A beneficial shareholder may assert dissenters' rights
as to shares held on his behalf only if:
(a) He submits to the corporation the record
shareholder's written consent to the dissent not later than the
time the beneficial shareholder asserts dissenters' rights; and
(b) He does so with respect to all shares of which he is
the beneficial shareholder or over which he has power to direct
the vote.
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
271B.13-200 NOTICE OF DISSENTERS' RIGHTS - (1) If
proposed corporate action creating dissenters' rights under KRS
271B.13-020 is submitted to a vote at a shareholders' meeting,
the meeting notice must state that shareholders are or may be
entitled to assert dissenters' rights under this subtitle and the
corporation shall undertake to provide a copy of this subtitle to
any shareholder entitled to vote at the shareholders' meeting
upon request of that shareholder.
(2) If corporate action creating dissenters' rights under
KRS 271B.13-020 is taken without a vote of shareholders, the
corporation shall notify in writing all shareholders entitled to
assert dissenters' rights that the action was taken and send them
the dissenters' notice described in KRS 271B.13-220.
271B.13-210 NOTICE OF INTENT TO DEMAND PAYMENT - (1) If
proposed corporate action creating dissenters' rights under KRS
271B.13-020 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights:
(a) Shall deliver to the corporation before the vote is
taken written notice of his intent to demand payment for his
shares if the proposed action is effectuated; and
(b) Shall not vote his shares in favor of the proposed
action.
(2) A shareholder who does not satisfy the requirements of
subsection (1) of this section shall not be entitled to payment
for his shares under this chapter.
271B.13-220 DISSENTERS' NOTICE - (1) If proposed
corporate action creating dissenters' rights under KRS 271B.13-
020 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders
who satisfied the requirements of KRS 271B.13-210.
(2) The dissenters' notice shall be sent no later than ten
(10) days after the date the proposed corporate action was
authorized by the shareholders or, if no shareholder
authorization was obtained, by the board of directors, and shall:
(a) State where the payment demand must be sent and where
and when certificates for certificated shares must be deposited;
(b) Inform holders of uncertificated shares to what
extent transfer of the shares will be restricted after the
payment demand is received;
(c) Supply a form for demanding payment that includes the
date of the first announcement to news media or to shareholders
of the terms of the proposed corporate action and requires that
the person asserting dissenters' rights certify whether or not he
acquired beneficial ownership of the shares before that date;
(d) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than thirty (30), nor
more than sixty (60) days after the date the notice provided in
subsection (1) of this section is delivered; and
(e) Be accompanied by a copy of this subtitle.
271B.13-230 DUTY TO DEMAND PAYMENT - (1) A shareholder
who is sent a dissenters' notice described in KRS 271B.13-220
shall demand payment, certify whether he acquired beneficial
ownership of the shares before the date required to be set forth
in the dissenters' notice pursuant to subsection (2)(c) of KRS
271B.13-220, and deposit his certificates in accordance with the
terms of the notice.
(2) The shareholder who demands payment and deposits his
share certificates under subsection (1) of this section shall
retain all other rights of a shareholder until these rights are
cancelled or modified by the taking of the proposed corporate
action.
(3) A shareholder who does not demand payment or deposit
his share certificates where required, each by the date set in
the dissenters' notice, shall not be entitled to payment for his
shares under this subtitle.
271B.13-240 SHARE RESTRICTIONS - (1) The corporation may
restrict the transfer of uncertificated shares from the date the
demand for their payment is received until the proposed corporate
action is taken or the restrictions released under KRS 271B.13-
260.
(2) The person for whom dissenters' rights are asserted as
to uncertificated shares shall retain all other rights of a
shareholder until these rights are cancelled or modified by the
taking of the proposed corporate action.
271B.13-250 PAYMENT - (1) Except as provided in KRS
271B.13-270, as soon as the proposed corporate action is taken,
or upon receipt of a payment demand, the corporation shall pay
each dissenter who complied with KRS 271B.13-230 the amount the
corporation estimates to be the fair value of his shares, plus
accrued interest.
(2) The payment shall be accompanied by:
(a) The Corporation's balance sheet as of the end of a
fiscal year ending not more than sixteen (16) months before the
date of payment, an income statement for that year, a statement
of changes in shareholders' equity for that year, and the latest
available interim financial statements, if any;
(b) A statement of the corporation's estimate of the fair
value of the shares;
(c) An explanation of how the interest was calculated;
and
(d) A statement of the dissenters' right to demand
payment under KRS 271B.13-280.
271B.13-260 FAILURE TO TAKE ACTION - (1) If the
corporation does not take the proposed action within sixty (60)
days after the date set for demanding payment and depositing
share certificates, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on
uncertificated shares.
(2) If after returning deposited certificates and
releasing transfer restrictions, the corporation takes the
proposed action, it shall send a new dissenters' notice under KRS
271B.13-220 and repeat the payment demand procedure.
271B.13-270 AFTER-ACQUIRED SHARES - (1) A corporation may
elect to withhold payment required by KRS 271B.13-250 from a
dissenter unless he was the beneficial owner of the shares before
the date set forth in the dissenters' notice as the date of the
first announcement to news media or to shareholders of the terms
of the proposed corporate action.
(2) To the extent the corporation elects to withhold
payment under subsection (1) of this section, after taking the
proposed corporate action, it shall estimate the fair value of
the shares, plus accrued interest, and shall pay this amount to
each dissenter who agrees to accept it in full satisfaction of
his demand. The corporation shall send with its offer a
statement of its estimate of the fair value of the shares, an
explanation of how the interest was calculated, and a statement
of the dissenters' right to demand payment under KRS 271B.13-280.
271B.13-280 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH
PAYMENT OR OFFER - (1) A dissenter may notify the corporation in
writing of his own estimate of the fair value of his shares and
amount of interest due, and demand payment of his estimate (less
any payment under KRS 271B.13-250), or reject the corporation's
offer under KRS 271B.13-270 and demand payment of the fair value
of his shares and interest due, if:
(a) The dissenter believes that the amount paid under KRS
271B.13-250 or offered under KRS 271B.13-270 is less than the
fair value of his shares or that the interest due is incorrectly
calculated;
(b) The corporation fails to make payment under KRS
271B.13-250 within sixty (60) days after the date set for
demanding payment; or
(c) The corporation, having failed to take the proposed
action, does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated shares within
sixty (60) days afer the date set for demanding payment.
(2) A dissenter waives his right to demand payment under
this section unless he shall notify the corporation of his demand
in writing under subsection (1) of this section within thirty
(30) days after the corporation made or offered payment for his
shares.
JUDICIAL APPRAISAL OF SHARES
271B.13-300 COURT ACTION - (1) If a demand for payment
under KRS 271B.13-280 remains unsettled, the corporation shall
commence a proceeding within sixty (60) days after receiving the
payment demand and petition the court to determine the fair value
of the shares and accrued interest. If the corporation does not
commence the proceeding within the sixty (60) day period, it
shall pay each dissenter whose demand remains unsettled the
amount demanded.
(2) The corporation shall commence the proceeding in the
circuit court of the county where a corporation's principal
office (or, if none in this state, its registered office) is
located. If the corporation is a foreign corporation without a
registered office in this state, it shall commence the proceeding
in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.
(3) The corporation shall make all dissenters (whether or
not residents of this state) whose demands remain unsettled
parties to the proceeding as in an action against their shares
and all parties shall be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The jurisdiction of the court in which the proceeding
is commenced under subsection (2) of this section shall be
plenary and exclusive. The court may appoint one (1) or more
persons as appraisers to receive evidence and recommend decision
on the question of fair value. The appraisers have the powers
described in the order appointing them, or in any amendment to
it. The dissenters shall be entitled to the same discovery
rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding shall be
entitled to judgment:
(a) For the amount, if any, by which the court finds the
fair value of his shares, plus interest, exceeds the amount paid
by the corporation; or
(b) For the fair value, plus accrued interest, of his
after-acquired shares for which the corporation elected to
withhold payment under KRS 271B.13-270.
271B.13-310 COURT COSTS AND COUNSEL FEES - (1) The court
in an appraisal proceeding commenced under KRS 271B.13-300 shall
determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court.
The court shall assess the costs against the corporation, except
that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent
the court finds the dissenters acted arbitrarily, vexatiously, or
not in good faith in demanding payment under KRS 271B.13-280.
(2) The court may also assess the fees and expenses of
counsel and experts for the respective parties, in amounts the
court finds equitable:
(a) Against the corporation and in favor of any or all
dissenters, if the court finds the corporation did not
substantially comply with the requirements of KRS 271B.13-200 to
271B.13-280; or
(b) Against either the corporation or a dissenter, in
favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this subtitle.
(3) If the court finds that the services of counsel for
any dissenter were of substantial benefit to other dissenters
similarly situated, and that the fees for those services should
not be assessed against the corporation, the court may award to
these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefitted.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20.Indemnification of Directors and Officers.
The Indiana Business Corporation Law provides that a
corporation, unless limited by its Articles of Incorporation, is
required to indemnify its directors and officers against
reasonable expenses incurred in the successful defense of any
proceeding to which the director or officer was a party because
of serving as a director or officer of the corporation.
The Registrant may also voluntarily undertake to provide
for indemnification of directors, officers and employees of the
Registrant against any and all liability and reasonable expense
that may be incurred by them, arising out of any claim or action,
civil, criminal, administrative or investigative, in which they
may become involved by reason of being or having been a director,
officer, or employee. To be entitled to indemnification, those
persons must have been wholly successful in the claim or action
or the board of directors must have determined that such persons
acted in good faith in what they reasonably believed to be the
best interests of the Registrant (or at least not opposed to its
best interests) and, in addition, in any criminal action, had
reasonable cause to believe their conduct was lawful (or had no
reasonable cause to believe that their conduct was unlawful).
In addition, the Registrant has a directors' and
officers' liability and company reimbursement policy that insures
against certain liabilities, including liabilities under the
Securities Act, subject to applicable retentions.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits: The list of exhibits is incorporated by
reference to the Index to Exhibits on page E-1.
(b) Financial Statement Schedules: All financial
statements schedules are omitted since the required
information is not applicable or is not present in
amounts sufficient to require submission of the
schedules.
Item 22. Undertakings.
1. The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar
value of securities offered would not exceed that which
was registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b), if, in the
aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration
Statement;
(b) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment 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.
(c) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
2. The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by
reference in the 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.
3. The undersigned Registrant hereby undertakes as
follows: that prior to any public reoffering of the securities
hereunder through use of a prospectus which is a part of this
Registration Statement, by a person or party who is deemed to be
an underwriter within the making of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters,
in addition to the information called for by other Items of the
applicable form.
4. The Registrant undertakes that every prospectus (i)
that is filed pursuant to paragraph (3) immediately preceding, or
(ii) that purports to meet the requirements of section 10(a)(3)
of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used
until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each
such post-effective amendment 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.
5. Insofar as indemnification by the Registrant for
liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable, in the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant 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 registrant 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 Act and will be governed by the final
adjudication of such issue.
6. The undersigned Registrant hereby undertakes to
respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or
13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of
the Registration Statement through the date of responding to the
request.
7. The undersigned Registrant hereby undertakes to
supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the
Registration Statement when it became effective.
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF
1933, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF EVANSVILLE, STATE OF INDIANA, ON
NOVEMBER 27, 2000.
Integra Bank Corporation
By: /S/ MICHAEL T. VEA
Michael T. Vea,
Chairman of the
Board, President
and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose
signature appears below constitutes and appoints Michael T. Vea
and James E. Adams and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution, for
him and in his name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED ON NOVEMBER 27, 2000
BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
/S/MICHAEL T. VEA Chairman of the Board, President, Chief Executive
Officer and Director (Principal Executive Officer)
Michael T. Vea
/S/ JAMES E. ADAMS Executive Vice President, Chief Financial Officer,
Secretary and Treasurer (Principal Financial Officer
and Principal Accounting Officer)
James E. Adams
/S/ JANICE L. BEESLEY Director
Janice L. Beesley
Director
Ben L. Cundiff
/S/ SUSANNE R. EMGE Director
Susanne R. Emge
/S/ DONALD G. HARRIS Director
Donald G. Harris
/S/ H. RAY HOOPS Director
Dr. H. Ray Hoops
/S/ JOHN D. LIPPERT Director
John D. Lippert
/S/ GEORGE D. MARTIN
George D. Martin Director
Director
Ronald G. Reherman
/S/ LAURENCE R. STEENBERG Director
Laurence R. Steenberg
/S/ ROBERT D. VANCE Director
Robert D. Vance
/S/ RICHARD F. WELP Director
Richard F. Welp
</TABLE>
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
2 Agreement and Plan of Reorganization dated July 5,
2000 between the Registrant and Webster Bancorp, Inc.
as amended by the Amendment to Agreement and Plan of
Reorganization dated September 27, 2000(incorporated
by reference to Appendix A to the proxy
statement/prospectus included in this Registration
Statement).
3(a) Restated Articles of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 to Form
8-A/A dated June 12, 1998).
3(b) Articles of Amendment of the Restated Articles of
Incorporation of the Registrant dated May 17, 2000
(incorporated by reference to Exhibit 3(a) to Quarterly
Report on Form 10-Q for the quarter ended September 30, 2000).
3(c) Bylaws of the Registrant, as amended (incorporated by
reference to Exhibit 3(ii) to Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999).
5 Opinion of Baker & Daniels, counsel for Registrant,
regarding legality of securities offered hereby.
8 Opinion of Baker & Daniels, counsel for Registrant,
regarding tax matters.
23(a) Consent of PricewaterhouseCoopers LLP.
23(b) Consent of Hovde Financial LLC.
23(c) Consent of Baker & Daniels - included in its opinions
filed as Exhibits 5 and 8.
24 Power of Attorney - included on page II-3.
99 Form of Webster proxy.
