<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
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/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
WFS BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/X/ Fee paid previously with preliminary materials.
/X/ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
$7,913
(2) Form, Schedule or Registration Statement No.:
File No. 0-23824
(3) Filing Party:
WFS Bancorp, Inc.
(4) Date Filed:
April 5, 1996
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"PRELIMINARY COPIES"
WFS
May , 1996
To the Shareholders of
WFS Bancorp, Inc.:
You are cordially invited to attend a Special Meeting of the Shareholders
(the "Special Meeting") of WFS Bancorp, Inc. ("WFS") to be held at the William
L. Graham Center located at 435 South Broadway, Wichita, Kansas, at 1:00 P.M.,
local time, on June 25, 1996, notice of which is enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve an Amended and Restated Agreement and Plan of Merger (the
"Agreement") by and between WFS and Emprise Bank, Wichita ("Emprise Bank") and
which has been assigned under an Assignment of Rights and Assumption of
Obligations under Amended and Restated Merger Agreement (the "Assignment") by
Emprise to its parent Emprise Financial Corporation ("EFC"). The Agreement, as
modified by the Assignment, provides for the merger (the "Merger") of WFS with a
newly formed wholly-owned subsidiary of EFC, with the effect that WFS shall be
the surviving corporation resulting from the Merger. Upon consummation of the
Merger, each share of WFS common stock issued and outstanding (including those
shares held by the Employee Stock Ownership Plan of WFS and those shares held by
the Management Recognition and Retention Plan of WFS but excluding shares held
by shareholders who perfect their statutory rights of appraisal) will be
canceled in exchange for a cash payment in the amount of $23.25 (the "Merger
Cash Price"). The Merger will be effected in accordance with an Agreement and
Plan of Merger (the "Plan") to be entered into by WFS and Emprise Acquisition
Sub, Inc., a newly-formed, wholly-owned subsidiary of EFC. (All references
herein to the Agreement shall include the Plan.)
All stock options under WFS's 1994 Stock Option and Incentive Plan will be
deemed vested and exercisable and will be canceled and the holders of such
options will be entitled to receive a cash payment for each share subject to
such option equal to the difference between the Merger Cash Price for each such
share and the price the holder was required to pay for such share upon exercise
of the option.
Enclosed are the (i) Notice of Special Meeting, (ii) Proxy Statement, (iii)
Proxy for the Special Meeting, (iv) WFS's Annual Report on Form 10-KSB for the
year ended September 30, 1995, and (v) WFS's Quarterly Report on Form 10-QSB for
the quarter ended March 31, 1996. The Proxy Statement describes in more detail
the Agreement and the proposed Merger, including a description of the conditions
to consummation of the Merger and the effects of the Merger on the rights of WFS
shareholders. Please read these materials carefully and consider thoughtfully
the information set forth in them.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AGREEMENT AND
CONSUMMATION OF THE MERGER CONTEMPLATED THEREBY, AND UNANIMOUSLY RECOMMENDS THAT
YOU VOTE FOR APPROVAL OF THE AGREEMENT.
It is important to understand that approval of the Agreement will require
the affirmative vote of a majority of the votes entitled to be cast at the
Special Meeting by the holders of the issued and outstanding shares of WFS
common stock. Accordingly, whether or not you plan to attend the Special
Meeting, you are urged to complete, sign, and return promptly the enclosed proxy
card. If you attend the Special Meeting, you
<PAGE> 3
may vote in person if you wish, even if you previously have returned your proxy
card. The proposed Merger with EFC is a significant step for WFS and your vote
on this matter is of great importance.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR APPROVAL OF THE
AGREEMENT BY MARKING THE ENCLOSED PROXY CARD "FOR" ITEM ONE.
We look forward to seeing you at the Special Meeting.
Sincerely,
Burton G. Dunlap
President and Chief Executive Officer
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WFS BANCORP, INC.
340 South Broadway
Wichita, Kansas 28801
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AT 1:00 P.M. ON JUNE 25, 1996
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders (the
"Special Meeting") of WFS Bancorp, Inc. ("WFS") will be held at the William L.
Graham Center located at 435 South Broadway, Wichita, Kansas, at 1:00 P.M.,
local time, on June 25, 1996, for the following purposes:
1. Merger. To consider and vote upon a proposal to approve an Amended
and Restated Agreement and Plan of Merger, dated as of November 30, 1995,
and amended and restated as of January 31, 1996 (the "Agreement"), by and
between WFS and Emprise Bank, Wichita, a Kansas state bank ("Emprise
Bank"), as assigned by Emprise Bank to Emprise Financial Corporation
("EFC"), the holder of approximately 94% of the outstanding shares of
Emprise Bank, pursuant to an Assignment of Rights and Assumption of
Obligations under Amended and Restated Merger Agreement, dated March 21,
1996 (the "Assignment"), and the related Agreement and Plan of Merger (the
"Plan") to be entered into by WFS and Emprise Acquisition Sub, Inc., a
newly-formed, wholly-owned subsidiary of EFC, which provide that (i) WFS
will merge (the "Merger") with a newly formed wholly-owned subsidiary of
EFC, with WFS as the surviving entity, (ii) each share of the $0.01 par
value common stock of WFS ("WFS Common Stock") issued and outstanding at
the effective time of the Merger (with certain exceptions) will be canceled
in exchange for a cash payment of $23.25 (the "Merger Cash Price"), and
(iii) all stock options under WFS's 1994 Stock Option and Incentive Plan
will be deemed vested and exercisable and will be canceled and the holders
of such options will be entitled to receive a cash payment for each share
subject to such option equal to the difference between the Merger Cash
Price for each such share and the price the holder was required to pay for
such share upon exercise of the option, all as more fully described in the
accompanying Proxy Statement. Copies of the Agreement and the Assignment
are set forth in Appendix A and a copy of the Plan is set forth in Appendix
B to the accompanying Proxy Statement and are hereby incorporated by
reference herein.
2. Other Business. To transact such other business as may come
properly before the Special Meeting or any adjournments or postponements of
the Special Meeting.
Notice of Appraisal Rights. If Proposal 1 above is approved and the Merger
contemplated thereby is consummated, each holder of shares of WFS Common Stock
would have the right to demand appraisal of such holder's shares of WFS Common
Stock and would be entitled to the rights and remedies of Section 262 of the
Delaware General Corporation Law ("DGCL"). The right of any such shareholder to
any such rights and remedies is contingent upon consummation of the Merger. In
addition, the right of any such shareholder to such rights and remedies is
contingent upon strict compliance with the requirements set forth in Section 262
of the DGCL, the full text of which is attached as Appendix C to the
accompanying Proxy Statement. For a summary of the requirements of Section 262
of the DGCL, see "DESCRIPTION OF TRANSACTION -- Dissenters' Rights" in the
accompanying Proxy Statement.
Only shareholders of record at the close of business on May 17, 1996, will
be entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof. Approval of the Agreement
<PAGE> 5
requires the affirmative vote of a majority of the votes entitled to be cast at
the Special Meeting by holders of the issued and outstanding shares of WFS
Common Stock.
THE BOARD OF DIRECTORS OF WFS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF THE AGREEMENT.
BY ORDER OF THE BOARD OF DIRECTORS
Robert V. McGrath
Secretary
Wichita, Kansas
May , 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE,
AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE PAID RETURN ENVELOPE IN ORDER TO
ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT
THE SPECIAL MEETING.
<PAGE> 6
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS OF
WFS BANCORP, INC.
This Proxy Statement ("Proxy Statement") of WFS Bancorp, Inc., a savings
and loan holding company organized and existing under the laws of the State of
Delaware ("WFS"), is being furnished to the shareholders of WFS in connection
with the solicitation of proxies by the Board of Directors of WFS for use at its
special meeting of shareholders (including any adjournment or postponement
thereof, the "Special Meeting"), to be held on June 25, 1996, to consider and
vote upon the proposed merger (the "Merger") described herein by which WFS will
merge with a newly formed, wholly-owned subsidiary of Emprise Financial
Corporation, a bank holding company organized and existing under the laws of the
State of Kansas ("EFC"), with WFS as the surviving entity, pursuant to the terms
of the Amended and Restated Agreement and Plan of Merger, dated as of November
30, 1995, and amended and restated as of January 31, 1996 (the "Agreement"), by
and between WFS and Emprise Bank, Wichita ("Emprise Bank"), a Kansas state bank
and subsidiary of EFC, as assigned to EFC pursuant to an Assignment of Rights
and Assumption of Obligations under Amended and Restated Merger Agreement, dated
March 21, 1996 (the "Assignment"), by and between Emprise and EFC, and the other
transactions contemplated therein. The Merger will be effected in accordance
with an Agreement and Plan of Merger (the "Plan") to be entered into by WFS and
Emprise Acquisition Sub, Inc., a newly-formed, wholly-owned subsidiary of EFC.
(All references herein to the Agreement shall include the Plan.)
At the effective time of the Merger (the "Effective Time"), except as
described herein, each issued and outstanding share of common stock, par value
$0.01 per share, of WFS ("WFS Common Stock"), will be canceled in exchange for a
cash payment in the amount of $23.25.
Each holder of shares of WFS Common Stock has the right to dissent from the
Merger and to demand appraisal and payment of the fair value of such holder's
shares of WFS Common Stock if the Merger is approved and consummated. The right
of any such shareholder to such rights and remedies is contingent upon strict
compliance with the requirements set forth in Section 262 of the Delaware
General Corporation Law ("DGCL"), the full text of which is attached as Appendix
C to this Proxy Statement. A shareholder of WFS who wishes to dissent from the
Merger must not vote any shares of WFS Common Stock in favor of the Merger. See
"DESCRIPTION OF TRANSACTION -- Dissenters' Rights."
This Proxy Statement and related materials enclosed herewith are being
mailed to shareholders of WFS on or about May 22, 1996.
The date of this Proxy Statement is May , 1996.
<PAGE> 7
AVAILABLE INFORMATION
WFS is subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and, in accordance therewith, is
required to file reports, proxy and information statements, and other
information with the Securities and Exchange Commission (the "SEC"). Copies of
such reports, proxy and information statements, and other information can be
obtained, at prescribed rates, from the SEC by addressing written requests for
such copies to the Public Reference Section at the SEC at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, such reports, proxy
and information statements, and other information can be inspected at the public
reference facilities referred to above and at the regional offices of the SEC at
7 World Trade Center, 13th Floor, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
All information contained in this Proxy Statement with respect to EFC and
Emprise Bank was supplied by EFC and Emprise Bank, respectively, and all
information contained in this Proxy Statement or incorporated herein by
reference with respect to WFS was supplied by WFS.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS PROXY STATEMENT IN ANY JURISDICTION TO OR FROM ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT NOR ANY DISTRIBUTION
OF THE SECURITIES BEING OFFERED PURSUANT TO THIS PROXY STATEMENT SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF EFC, EMPRISE BANK, OR WFS OR THE INFORMATION SET FORTH OR
INCORPORATED BY REFERENCE HEREIN SINCE THE DATE OF THIS PROXY STATEMENT.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by WFS pursuant to
the Exchange Act are hereby incorporated by reference herein:
(a) WFS's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1995 (provided that any information included or incorporated
by reference in response to Items 402(a)(8), (i), (k) or (1) of Regulation
S-K of the SEC shall not be deemed to be incorporated herein and is not a
part of this Proxy Statement);
(b) WFS's Quarterly Report on Form 10-QSB for the quarterly periods
ended December 31, 1995, and March 31, 1996; and
(c) WFS's Current Reports on Form 8-K dated December 5, 1995, January
1, 1996, January 18, 1996, and February 1, 1996.
WFS will provide without charge, upon the written or oral request of any
person, including any beneficial owner, to whom this Proxy Statement is
delivered, a copy of any and all information (excluding certain exhibits)
relating to WFS that has been incorporated by reference in this Proxy Statement.
Such requests should be directed to Robert V. McGrath, Secretary, WFS Bancorp,
Inc., 340 South Broadway, Wichita, Kansas 67202 (telephone (316) 383-8404). In
order to ensure timely delivery of the documents, any request should be made by
June 18, 1996.
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TABLE OF CONTENTS
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SUMMARY............................................................................... 1
The Parties......................................................................... 1
Meeting of Shareholders............................................................. 1
The Merger.......................................................................... 2
Market Prices of Common Stock....................................................... 5
Selected Financial Data............................................................. 6
SPECIAL MEETING OF WFS SHAREHOLDERS................................................... 8
Date, Place, Time, and Purpose...................................................... 8
Record Dates, Voting Rights, Required Votes, and Revocability of Proxies............ 8
Solicitation of Proxies............................................................. 8
Recommendation...................................................................... 9
DESCRIPTION OF TRANSACTION............................................................ 10
General............................................................................. 10
Effect of the Merger on Stock Options............................................... 11
Background of and Reasons for the Merger............................................ 11
Opinion of WFS's Financial Advisor.................................................. 14
Effective Time of the Merger........................................................ 16
Distribution of Merger Cash Price................................................... 16
Conditions to Consummation of the Merger............................................ 17
Regulatory Approvals................................................................ 17
Waiver, Amendment, and Termination.................................................. 18
"No-Shop" Covenant.................................................................. 19
Dissenters' Rights.................................................................. 19
Conduct of Business Pending the Merger.............................................. 22
Management and Operations After the Merger.......................................... 24
Interests of Certain Persons in the Merger.......................................... 24
Certain Federal Income Tax Consequences............................................. 27
Accounting Treatment................................................................ 27
Expenses and Fees................................................................... 28
MARKET PRICES AND DIVIDENDS........................................................... 29
BUSINESS OF WFS....................................................................... 30
General............................................................................. 30
Certain Regulatory Considerations................................................... 30
BUSINESS OF EFC....................................................................... 32
DESCRIPTION OF WFS CAPITAL STOCK...................................................... 32
OTHER MATTERS......................................................................... 32
Miscellaneous....................................................................... 32
Solicitation........................................................................ 32
SHAREHOLDER PROPOSALS................................................................. 32
INDEPENDENT ACCOUNTANTS............................................................... 33
APPENDICES:
Appendix A -- Amended and Restated Agreement and Plan of Merger, dated as of
November 30, 1995, and amended and restated as of January 31, 1996, by
and between WFS Bancorp, Inc. and Emprise Bank, Wichita and Assignment
of Rights and Assumption of Obligations Under Amended and Restated
Merger Agreement, dated March 21, 1996, by and between Emprise Bank,
Wichita and Emprise Financial Corporation.
Appendix B -- Agreement and Plan of Merger between Emprise Acquisition Sub, Inc. and
WFS Bancorp, Inc.
Appendix C -- Section 262 of the Delaware General Corporation Law Relating to
Appraisal Rights
Appendix D -- Opinion of Charles Webb & Company
Appendix E -- Form of Proxy
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ii
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SUMMARY
The following is a summary of certain information contained in this Proxy
Statement and the documents incorporated herein by reference. This summary is
not intended to be a complete description of the matters covered in this Proxy
Statement and is qualified in its entirety by the more detailed information
appearing elsewhere or incorporated by reference in this Proxy Statement.
Shareholders are urged to read carefully the entire Proxy Statement, including
the Appendices. As used in this Proxy Statement, the terms "WFS" and "EFC" refer
to those entities, respectively, and, where the context requires, to those
entities and their respective subsidiaries.
THE PARTIES
WFS. WFS, a Delaware corporation, is a savings and loan holding company
registered with Office of Thrift Supervision ("OTS") under the Home Owners Loan
Act ("HOLA"). Through its wholly-owned subsidiary, Wichita Federal Savings and
Loan Association ("Wichita Federal"), WFS operates three savings and loan
offices in Wichita, Kansas and one savings and loan office in Valley Center,
Kansas and offers a variety of financial services. As of March 31, 1996, WFS had
total consolidated assets of approximately $276 million, total consolidated
deposits of approximately $197 million, and total consolidated shareholders'
equity of approximately $33 million.
WFS was organized at the direction of Wichita Federal in 1994 for the
purpose of owning all of the outstanding stock of Wichita Federal issued upon
conversion of Wichita Federal from the mutual to the stock form (the
"Conversion"). On June 3, 1994, in connection with the completion of the
Conversion, WFS acquired all shares of Wichita Federal, and issued 1,603,644
shares of WFS Common Stock pursuant to a public offering (128,292 of which
shares were issued to WFS's Employee Stock Ownership Plan (the "ESOP"))
resulting in net proceeds of approximately $14 million (net of Conversion costs
and the proceeds of the loan to the ESOP) of which approximately $3.5 million
was retained by WFS and the remaining balance of approximately $10.5 million was
used to acquire the outstanding shares of Wichita Federal.
The principal executive offices of WFS are located at 340 South Broadway,
Wichita, Kansas 67202, and its telephone number at such address is (316)
383-8404. Additional information with respect to WFS and its subsidiary is
included in documents incorporated by reference in this Proxy Statement.
Specifically, reference is made to the Annual Report on Form 10-KSB for the
fiscal year ended September 30, 1995 and the Quarterly Report on Form 10-QSB for
the quarter ended March 31, 1996 of WFS, copies of which accompany this Proxy
Statement. See "AVAILABLE INFORMATION," "DOCUMENTS INCORPORATED BY REFERENCE,"
and "BUSINESS OF WFS."
EFC. EFC, a Kansas corporation, is a bank holding company registered with
the Board of Governors of the Federal Reserve System ("Federal Reserve") under
the Bank Holding Company Act of 1956, as amended (the "BHC Act"). EFC has five
subsidiary banks serving ten Kansas communities through 21 branch locations.
Through its approximately 94% owned subsidiary, Emprise Bank, EFC offers a broad
range of financial services through ten offices located in Wichita, Kansas. As
of March 31, 1996, EFC had total consolidated assets of approximately $537
million, total consolidated deposits of approximately $459 million, and total
consolidated shareholders' equity of approximately $64 million.
The principal executive offices of EFC are located at 211 North Broadway,
Wichita, Kansas 67202, and its telephone number at such address is (316)
264-8394.
MEETING OF SHAREHOLDERS
This Proxy Statement is being furnished to the holders of WFS Common Stock
in connection with the solicitation by the WFS Board of Directors of proxies for
use at the Special Meeting at which WFS shareholders will be asked to vote upon
(i) a proposal to approve the Agreement and (ii) such other business as may
properly come before the meeting. The Special Meeting will be held at the
William L. Graham Center located at 435 South Broadway, Wichita, Kansas, at 1:00
P.M., local time, on June 25, 1996. See "SPECIAL MEETING OF WFS
SHAREHOLDERS -- Date, Place, Time, and Purpose."
<PAGE> 10
WFS's Board of Directors has fixed the close of business on May 17, 1996,
as the record date (the "WFS Record Date") for determination of the shareholders
entitled to notice of and to vote at the Special Meeting. Only holders of record
of shares of WFS Common Stock on the WFS Record Date will be entitled to notice
of and to vote at the Special Meeting. Each share of WFS Common Stock is
entitled to one vote. Shareholders who execute proxies retain the right to
revoke them at any time prior to being voted at the Special Meeting. On the WFS
Record Date, there were 1,661,178 shares of WFS Common Stock issued and
outstanding. See "SPECIAL MEETING OF WFS SHAREHOLDERS -- Record Dates, Voting
Rights, Required Votes, and Revocability of Proxies."
Approval of the Agreement and the Merger contemplated thereby requires the
affirmative vote of a majority of the votes entitled to be cast at the Special
Meeting by the holders of the issued and outstanding shares of WFS Common Stock.
Directors and executive officers of WFS and their affiliates are entitled to
vote 19.4% of the outstanding shares of WFS Common Stock. See "SPECIAL MEETING
OF WFS SHAREHOLDERS -- Record Dates, Voting Rights, Required Votes, and
Revocability of Proxies."
THE MERGER
General. As originally executed, the Agreement provided for the
acquisition of WFS by Emprise Bank pursuant to the merger of WFS with a newly
formed wholly-owned subsidiary of Emprise Bank, with WFS as the surviving
entity. However, the Agreement also provided that the Merger may be restructured
at the election of Emprise Bank. Specifically, Emprise Bank had the right to
assign the Agreement to EFC. Emprise Bank has exercised this right and has
assigned the Agreement to EFC pursuant to the Assignment.
Under the Agreement and the Assignment, EFC: (i) has the option to (a) form
its own wholly-owned subsidiary and merge the subsidiary with and into WFS or
(b) if Emprise Bank has already organized an acquisition subsidiary, acquire all
of the capital stock of such subsidiary and merge the subsidiary with and into
WFS; and (ii) has acquired all of Emprise Bank's rights and benefits under the
Agreement and is liable for all of the obligations, duties, and covenants of
Emprise Bank.
EFC has elected to form its own wholly-owned subsidiary and merge the
subsidiary with and into WFS. Accordingly, a vote in favor of the Agreement and
the Merger will be deemed to be a vote in favor of the restructuring of the
transaction as described above.
Therefore, at the Effective Time, each share of WFS Common Stock then
issued and outstanding (including those shares held by the ESOP, by the
Management Recognition and Retention Plan of WFS (the "MRRP"), and by WFS, EFC,
or their respective subsidiaries if held in a fiduciary capacity or in
satisfaction of debts previously contracted, but excluding all other shares held
by WFS, EFC, or their respective subsidiaries, and shares held by shareholders
who perfect their statutory rights of appraisal) will be canceled in exchange
for a cash payment in the amount of $23.25 (the "Merger Cash Price").
The Agreement also contemplates that at the Effective Time, all employee
stock options ("WFS Options") under WFS's 1994 Stock Option and Incentive Plan
(the "Stock Option Plan") will be deemed vested and exercisable and will be
canceled and the holders of such options will be entitled to receive a cash
payment for each share subject to such option equal to the difference between
the Merger Cash Price for each such share and the price the holder was required
to pay for such share upon exercise of the option.
Finally, the Agreement contemplates that EFC intends, after the Merger, to
cause WFS to be merged into EFC, and Wichita Federal to be merged ("Related
Mergers") into Emprise Bank. However, the Merger is not conditioned on the
closing of the Related Mergers. Under the Agreement, the Related Mergers will
not become effective until after the Effective Time of the Merger. No
shareholder approval for the Related Mergers is requested, or is to be voted
upon, pursuant to the Agreement or this Proxy Statement.
As of the WFS Record Date, WFS had 1,661,178 shares of WFS Common Stock
issued and outstanding and 137,018 additional shares of WFS Common Stock subject
to WFS Options. Based on the Merger Cash Price of $23.25 per share of WFS Common
Stock, it is anticipated that upon consummation of the Merger, EFC will pay
total consideration of approximately $39.56 million. EFC will fund the aggregate
cash payments from (i) approximately $22.5 million in available funds on hand
and (ii) approximately $16.5 million under a
2
<PAGE> 11
line of credit from Bank IV Kansas, N.A. The line of credit will be repaid
primarily out of approximately $4.5 million in funds of WFS and out of a
one-time capital distribution from Wichita Federal in the approximate amount of
$9.2 million with the balance being paid out of future earnings.
Reasons for the Merger, Recommendations of the Board of Directors of
WFS. The Board of Directors of WFS believes that the Agreement and the Merger
are in the best interests of WFS and its shareholders. THE WFS DIRECTORS
UNANIMOUSLY RECOMMEND THAT WFS SHAREHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT.
See "DESCRIPTION OF TRANSACTION -- Background of and Reasons for the Merger."
In unanimously approving the Agreement, WFS's directors considered, among
other things, WFS's and EFC's financial condition, the financial terms of the
Merger, the likelihood of the Merger being approved by regulatory authorities
without undue conditions or delay, legal advice concerning the proposed Merger,
in general the fairness of the terms of the Merger to WFS shareholders, and the
opinion of Charles Webb & Company ("Webb & Co.") as to the fairness of the
Merger Cash Price, from a financial point of view, to the shareholders of WFS.
See "DESCRIPTION OF TRANSACTION -- Background of and Reasons for the Merger."
Opinion of Financial Advisor. Webb & Co. has rendered an opinion to WFS
that, based on and subject to the procedures, matters, and limitations described
in its opinion and such other matters as it considered relevant, as of the date
of its opinion, the Merger Cash Price is fair, from a financial point of view,
to the shareholders of WFS. The opinion of Webb & Co. dated as of the date of
this Proxy Statement is attached as Appendix C to this Proxy Statement. WFS
shareholders are urged to read the opinion in its entirety for a description of
the procedures followed, matters considered, and limitations on the reviews
undertaken in connection therewith. See "DESCRIPTION OF TRANSACTION -- Opinion
of WFS's Financial Advisor."
Effective Time. Subject to the conditions to the obligations of the
parties to effect the Merger, the Effective Time will occur on the date and at
the time that the Certificate of Merger becomes effective with the Delaware
Secretary of State and the Certificate of Merger becomes effective with the
Kansas Secretary of State. Unless otherwise agreed upon by WFS and EFC, and
subject to the conditions to the obligations of the parties to effect the
Merger, EFC will determine and designate when the Effective Time occurs, which
will be not more than ten days after the last to occur of (i) the effective date
(including expiration of any applicable waiting period) of the last required
consent of any regulatory authority having authority over and approving or
exempting the Merger, and (ii) the date on which the shareholders of WFS approve
the Agreement. The designation of the Effective Time by EFC must be made prior
to the last to occur of the foregoing events and not less than ten days prior to
the Effective Time. See "DESCRIPTION OF TRANSACTION -- Effective Time of the
Merger," "-- Conditions to Consummation of the Merger," and "-- Waiver,
Amendment, and Termination."
NO ASSURANCE CAN BE PROVIDED THAT THE NECESSARY SHAREHOLDER AND REGULATORY
APPROVALS CAN BE OBTAINED OR THAT THE OTHER CONDITIONS PRECEDENT TO THE MERGER
CAN OR WILL BE SATISFIED. WFS AND EFC ANTICIPATE THAT ALL CONDITIONS TO THE
CONSUMMATION OF THE MERGER WILL BE SATISFIED SO THAT THE MERGER CAN BE
CONSUMMATED DURING THE SECOND QUARTER OF 1996. HOWEVER, DELAYS IN THE
CONSUMMATION OF THE MERGER COULD OCCUR.
Exchange of Stock Certificates or Options for Cash Consideration. Within
two business days after the Effective Time, EFC will cause Emprise Bank, acting
in its capacity as exchange agent for EFC (the "Exchange Agent"), to mail to
each holder of record appropriate transmittal materials, which shall specify
that delivery of the cash consideration specified in the Agreement shall be
effected upon proper delivery of a certificate or certificates (collectively,
the "Certificates") or a WFS Option which, immediately prior to the Effective
Time, represented outstanding shares of WFS Common Stock. In no event will the
holder of any surrendered Certificate(s) be entitled to receive interest on the
cash to be issued to such holder, and in no event will WFS, EFC, or the Exchange
Agent be liable to any holder of WFS Common Stock or WFS Option for any cash
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat, or similar law.
Regulatory Approvals and Other Conditions. The Merger is subject to the
prior approval of the Federal Reserve and the OTS. Applications have been filed
with each of these agencies for the requisite approvals.
3
<PAGE> 12
The Federal Reserve has issued its consent to the Merger and the parties are
awaiting the approval of the OTS.
THERE CAN BE NO ASSURANCE THAT THE OTS APPROVAL WILL BE OBTAINED OR AS TO
THE TIMING OF ANY SUCH APPROVAL. THERE ALSO CAN BE NO ASSURANCE THAT ANY SUCH
APPROVAL WILL NOT IMPOSE CONDITIONS THAT ARE DEEMED MATERIALLY BURDENSOME BY EFC
(AS DEFINED IN THE AGREEMENT).
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of WFS shareholders, receipt of a
private letter ruling concerning the use of the proceeds of the Merger by the
ESOP to repay a loan from WFS, receipt of a letter from the independent
accountants of WFS with respect to certain financial information about WFS, and
certain other conditions. WFS has filed a request for a private letter ruling
with the Internal Revenue Service and believes that such ruling will be
forthcoming. No assurance, however, can be given that the Internal Revenue
Service will issue the requested ruling. See "DESCRIPTION OF
TRANSACTION -- Regulatory Approvals" and "-- Conditions to Consummation of the
Merger."
Waiver, Amendment, and Termination. The Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time by mutual action of
the Boards of Directors of WFS and EFC, or by the action of the Board of
Directors of either company under certain circumstances, including if the Merger
is not consummated by September 30, 1996, unless the failure to consummate by
such time is due to a breach of the Agreement by the party seeking to terminate.
However, the Agreement provides that WFS or EFC will have to pay the other party
a $1.7 million fee (hereinafter referred to as a "'bust up' fee") under certain
circumstances. If for any reason the Merger is not consummated, WFS will
continue to operate as a savings and loan holding company under its present
management. To the extent permitted by law, the Agreement may be amended upon
the written agreement of EFC and WFS without the approval of shareholders;
provided, however, that the provisions of the Agreement relating to the manner
or basis in which shares of WFS Common Stock will be canceled and surrendered in
exchange for the Merger Cash Price may not be amended after the Special Meeting
without the requisite approval of the holders of the issued and outstanding
shares of WFS Common Stock entitled to vote thereon. See "DESCRIPTION OF
TRANSACTION -- Waiver, Amendment, and Termination."
Dissenters' Rights. Pursuant to DGCL Section 262, the holders of WFS
Common Stock have dissenters' rights with respect to the Merger. Any WFS
shareholder who does not vote in favor of the proposal to approve the Agreement
and the Merger contemplated thereby and who complies with certain requirements
of the applicable provisions of the DGCL may have the right to an appraisal and
payment for such person's shares of WFS Common Stock.
TO PERFECT DISSENTERS' RIGHTS OF APPRAISAL, A HOLDER OF WFS COMMON STOCK
MUST STRICTLY COMPLY WITH THE APPLICABLE STATUTORY PROVISIONS, A COPY OF WHICH
PROVISIONS IS ATTACHED AS APPENDIX C TO THIS PROXY STATEMENT. ANY HOLDER OF WFS
COMMON STOCK WHO RETURNS A SIGNED PROXY BUT WHO FAILS TO PROVIDE VOTING
INSTRUCTIONS WITH RESPECT TO THE PROPOSAL TO APPROVE THE AGREEMENT AND THE
MERGER CONTEMPLATED THEREBY WILL BE DEEMED TO HAVE VOTED IN FAVOR OF SUCH
PROPOSAL AND WILL NOT BE ENTITLED TO ASSERT DISSENTERS' RIGHTS OF APPRAISAL. See
"DESCRIPTION OF TRANSACTION -- Dissenters' Rights."
Interests of Certain Persons in the Merger. Certain members of WFS's
management and Board of Directors have interests in the Merger in addition to
their interests as shareholders of WFS generally. Those interests relate to,
among other things, employment and change in control agreements, vesting of
shares held by the MRRP, and provisions in the Agreement regarding
indemnification and eligibility for certain EFC employee benefits. The total
aggregate value of the transaction to insiders, defined as the directors and
executive officers of WFS, is approximately $4.8 million, approximately $2.95
million of which is value received for shares which insiders purchased in or
subsequent to the Conversion. See "DESCRIPTION OF TRANSACTION -- Interests of
Certain Persons in the Merger."
Certain Federal Income Tax Consequences of the Merger. The conversion of
WFS Common Stock and WFS Options into the right to receive the Merger Cash Price
or the difference between the Merger Cash Price and the option's exercise price
in cash, as the case may be, will be a taxable transaction for WFS shareholders
and optionholders. In general, each shareholder and optionholder of WFS will
recognize gain or loss for federal income tax purposes equal to the difference
between the amount of cash received and the holder's tax
4
<PAGE> 13
basis in the shares or options surrendered for payment. The gain or loss will be
capital gain or loss if the stock or option is held by the shareholder as a
capital asset at the Effective Time. Gain or loss must be computed separately
for each block of shares of WFS Common Stock or WFS Options acquired at the same
price in a single transaction. TAX CONSEQUENCES OF THE MERGER FOR INDIVIDUAL
TAXPAYERS CAN VARY, HOWEVER, AND ALL WFS SHAREHOLDERS ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS TO DETERMINE THE EFFECT OF THE MERGER ON THEM UNDER FEDERAL,
STATE, LOCAL AND FOREIGN TAX LAWS. For a further discussion of the federal
income tax consequences of the Merger, See "DESCRIPTION OF
TRANSACTION -- Certain Federal Income Tax Consequences."
Accounting Treatment. It is intended that the Merger will be accounted for
as a purchase transaction for accounting and financial reporting purposes. See
"DESCRIPTION OF TRANSACTION -- Accounting Treatment."
Conduct of Business Pending the Merger. WFS has agreed in the Agreement
to, among other things, operate its business only in the ordinary course and to
take no action that would adversely affect its ability to perform its covenants
and agreements under the Agreement. In addition, WFS has agreed not to take
certain actions relating to the operation of WFS pending consummation of the
Merger without the prior written consent of EFC, except as otherwise permitted
by the Agreement, including, among other things: (i) becoming responsible for
any obligation for borrowed money in excess of an aggregate of $200,000, except
in the ordinary course of business in accordance with past practices; (ii)
paying any dividends other than at a quarterly rate not in excess of $.10 per
share in accordance with past practices, acquiring, or exchanging any shares of
its capital stock, or, subject to certain exceptions, issuing any additional
shares of its capital stock or giving any person the right to acquire any such
shares; (iii) acquiring control over any other entity; (iv) subject to certain
exceptions, granting any increase in compensation or benefits, or paying any
bonus, to any of its directors, officers or employees; or (v) modifying or
adopting any employee benefit plans, including any employment contract.
EFC has agreed in the Agreement to, among other things, take no action
which would (i) materially adversely affect the ability of any party to the
Agreement to obtain any regulatory consents required for the transactions
contemplated in the Agreement without imposition of a condition or restriction
that would adversely affect WFS or the Merger, or (ii) materially adversely
affect the ability of any party to the Agreement to perform its covenants and
agreements under the Agreement. See "DESCRIPTION OF TRANSACTION -- Conduct of
Business Pending the Merger."
Under the terms of the Agreement, generally, except with respect to the
Agreement and the transactions contemplated thereby, no WFS company nor any
affiliate thereof nor any representative retained by any WFS company may
directly or indirectly solicit any acquisition proposal ("Acquisition Proposal")
by any person. Further, the Agreement provides that no WFS company or any
affiliate or representative thereof shall furnish any non-public information
that it is not legally obligated to furnish, negotiate with respect to, or enter
into any contract with respect to, any Acquisition Proposal. Despite these
general restrictions on soliciting other offers, under the Agreement, the WFS
companies, affiliates, and representatives may consider other Acquisition
Proposals if the Board of Directors of WFS, after consultation with WFS's legal
counsel, determines in good faith that abiding by the general restrictions on
soliciting and responding to an Acquisition Proposal (including the requirement
of notice to EFC) would be inconsistent with its fiduciary obligations. See
"DESCRIPTION OF TRANSACTION -- "'No-Shop' Covenant."
MARKET PRICES OF COMMON STOCK
Shares of WFS Common Stock are traded on the Nasdaq National Market System
("Nasdaq") under the symbol "WBCI." The following table sets forth the reported
closing price per share for WFS Common Stock on November 29, 1995, the last full
business day preceding the public announcement of the execution of the
Agreement, and on May 13, 1996, the latest practicable date prior to the mailing
of this Proxy Statement.
<TABLE>
<CAPTION>
MARKET PRICE WFS
PER SHARE AT: COMMON STOCK
----------------------------------------------------------------------- ------------
<S> <C>
November 29, 1995...................................................... $22 1/4
May 13, 1996........................................................... 22 3/4
</TABLE>
5
<PAGE> 14
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for WFS and are based on the consolidated financial statements of
WFS, including the notes thereto, which are incorporated by reference in this
Proxy Statement. The data should be read in conjunction with the historical
financial statements, including the notes thereto, and other financial
information concerning WFS incorporated by reference or included herein. Interim
unaudited data for the six months ended March 31, 1996 and 1995, of WFS reflect,
in the opinion of the management of WFS, all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of such data.
Results for the six months ended March 31, 1996, are not necessarily indicative
of results which may be expected for any other interim period or for the year as
a whole. See "AVAILABLE INFORMATION" and "DOCUMENTS INCORPORATED BY REFERENCE."
WFS BANCORP, INC.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE SIX MONTHS AS OF AND FOR THE
ENDED MARCH 31, YEAR ENDED SEPTEMBER 30,
--------------------- --------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets................................ $ 275,758 $ 291,335 $ 294,969 $ 257,592 $244,760 $240,496 $258,664
Loans receivable, net....................... 179,891 152,441 175,722 119,430 106,336 110,284 126,578
Mortgage-backed and related securities...... 69,666 110,785 89,679 113,758 112,193 101,847 102,411
Investment securities....................... 8,706 17,581 15,989 14,780 13,150 13,544 8,627
Deposits.................................... 197,071 208,019 199,656 186,653 192,680 214,417 239,325
Total borrowings............................ 42,654 49,023 57,323 34,900 29,900 6,250 --
Total shareholders' equity.................. 33,854 31,950 33,222 32,552 17,488 15,518 15,221
Shareholders' equity per share.............. 21.69 21.45 21.42 21.98 -- -- --
SELECTED OPERATIONS DATA:
Total interest income....................... 10,959 9,512 20,343 16,043 17,017 18,989 22,720
Total interest expense...................... 6,686 5,563 12,400 9,346 9,948 13,308 17,720
--------- --------- --------- --------- -------- -------- --------
Net interest income..................... 4,273 3,949 7,943 6,697 7,069 5,681 5,000
Provision for loan losses (reduction of
allowance) charged (credited) to
expense................................... 90 63 332 (249) 474 1,005 603
--------- --------- --------- --------- -------- -------- --------
Net interest income after provision for
losses on loans....................... 4,183 3,886 7,611 6,946 6,595 4,676 4,397
--------- --------- --------- --------- -------- -------- --------
Total non-interest income................... (48) 596 525 637 1,504 521 1,278
Total non-interest expense.................. 2,791 3,024 5,914 5,520 4,902 4,999 5,141
--------- --------- --------- --------- -------- -------- --------
Income before income taxes, extraordinary
item, and cumulative effect of accounting
change.................................... 1,344 1,458 2,222 2,063 3,197 198 534
Income tax expense (benefit)................ 518 564 863 825 1,227 260 (138)
--------- --------- --------- --------- -------- -------- --------
Income before extraordinary item and
cumulative effect of accounting change.... 826 894 1,359 1,238 1,970 (62) 672
Extraordinary item -- tax benefits from
utilization of net operating loss carry
forward................................... -- -- -- -- -- 359 394
Cumulative effect of accounting change...... -- -- -- (245) -- -- --
--------- --------- --------- --------- -------- -------- --------
Net income.................................. $ 826 $ 894 $ 1,359 $ 993 $ 1,970 $ 297 $ 1,066
======== ======== ======== ======== ======== ======== ========
Average common stock........................ 1,558,000 1,484,000 1,503,000 1,477,000(1) -- -- --
--------- --------- --------- ---------
Income per common share..................... $ 0.53 $ 0.60 $ 0.90 $ 0.33(1) -- -- --
======== ======== ======== ========
Cash dividends per common share............. $ 0.20 $ 0.70 $ 0.90
======== ======== ========
SELECTED AVERAGE BALANCES:
Assets...................................... $ 286,174 $ 267,900 $ 279,845 $ 246,814 $242,629 $249,580 $259,238
Earning assets.............................. 278,681 258,885 273,176 239,882 230,738 233,369 238,880
Loans receivable, net....................... 179,393 130,049 147,230 109,756 108,310 118,431 133,085
Mortgage-backed and related securities...... 80,831 113,770 105,176 111,236 106,601 101,763 89,666
Investment securities....................... 11,031 12,928 13,402 11,269 11,340 9,143 14,340
Total deposits.............................. 199,817 191,978 199,363 191,050 203,549 226,873 239,406
Shareholders' equity........................ 33,422 31,390 31,956 22,030 16,503 15,369 14,647
</TABLE>
6
<PAGE> 15
<TABLE>
<CAPTION>
FOR THE SIX MONTHS AS OF AND FOR THE
ENDED MARCH 31, YEAR ENDED SEPTEMBER 30,
--------------------- --------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
KEY RATIOS AND OTHER DATA:
Performance Ratios:
Return on assets (ratio of net income to
average total assets)................... 0.29% 0.33% 0.49% 0.40% 0.81% 0.12% 0.41%
Average net interest rate spread.......... 2.51 2.59 2.39 2.48 2.89 2.35 2.07
Net interest margin(2).................... 6.13 2.84 2.91 2.79 3.06 2.43 2.09
Ratio of operating expense to average
total assets............................ 0.98 1.13 2.11 2.24 2.02 2.00 1.98
Return on shareholders' equity (ratio of
net income to average stockholders'
equity)................................. 2.47 2.85 4.25 4.51 11.94 1.93 7.26
Quality Ratios:
Non-performing assets to total assets at
the end of the year..................... 0.37 0.51 0.46 1.07 1.52 2.57 3.81
Non-performing assets to total loans at
end of year............................. 0.57 0.97 0.78 2.31 3.51 5.61 7.80
Allowance for loan losses to
non-performing loans at period end...... 121.76 72.14 168.27(3) 47.92 43.32 35.22 22.55
Allowance for loan losses to total loans
at end of year.......................... 0.70 0.69 0.72 0.82 1.00 1.14 1.08
Capital Ratios:
Shareholders' equity to total assets at
end of year............................. 12.28 10.97 11.26 12.64 7.14 6.45 5.88
Average shareholders' equity to average
assets.................................. 11.68 11.72 11.42 8.93 6.80 6.16 5.65
Ratio of average interest-earnings assets
to average interest bearing
liabilities............................. 111.60 110.82 111.58 108.10 104.11 101.47 100.31
Number of full service offices............ 3 3 3 3 1 1 1
</TABLE>
- ---------------
(1) Based on the period June 3, 1994 to September 30, 1994.
(2) Net interest income divided by average interest earning assets.
(3) Large troubled debt restructure (TDR) expired after December 1994.
In addition, for the year ended September 30, 1995, and the six months
ended March 31, 1996, WFS had capital ratios exceeding those required by all
relevant banking regulators. The required minimum Tier 1 and total risk-based
capital ratios are 4.0% and 8.0%, respectively. The minimum leverage ratio of
Tier 1 capital to total adjusted assets is 3.0% to 5.0%, depending on the risk
profile of the institution and other factors.
7
<PAGE> 16
SPECIAL MEETING OF WFS SHAREHOLDERS
DATE, PLACE, TIME, AND PURPOSE
This Proxy Statement is being furnished to the holders of WFS Common Stock
in connection with the solicitation by the WFS Board of Directors of proxies for
use at the Special Meeting at which WFS shareholders will be asked to vote upon
a proposal to approve the Agreement. The Special Meeting will be held at the
William L. Graham Center located at 435 South Broadway, Wichita, Kansas, at 1:00
P.M., local time, on June 25, 1996. See "DESCRIPTION OF TRANSACTION."
RECORD DATES, VOTING RIGHTS, REQUIRED VOTES, AND REVOCABILITY OF PROXIES
The close of business on May 17, 1996, has been fixed as the WFS Record
Date for determining holders of outstanding shares of WFS Common Stock entitled
to notice of and to vote at the Special Meeting. Only holders of WFS Common
Stock of record on the books of WFS at the close of business on the WFS Record
Date are entitled to notice of and to vote at the Special Meeting. As of the WFS
Record Date, there were 1,661,178 shares of WFS Common Stock issued and
outstanding and held by approximately 340 holders of record.
Holders of WFS Common Stock are entitled to one vote on each matter
considered and voted upon at the Special Meeting for each share of WFS Common
Stock held of record as of the WFS Record Date. To hold a vote on any proposal,
a quorum must be assembled, which is a majority of the shares of WFS Common
Stock issued and outstanding and entitled to vote, present in person or
represented by proxy. In determining whether a quorum exists at the Special
Meeting for purposes of all matters to be voted on, all votes "for" or
"against," as well as all abstentions, with respect to the proposal receiving
the most such votes, will be counted. The vote required for the approval of the
Agreement is a majority of the shares of WFS Common Stock entitled to be cast at
the Special Meeting by holders of the issued and outstanding shares of WFS
Common Stock. Consequently, with respect to the proposal to approve the
Agreement, abstentions and broker non-votes will be counted as part of the base
number of votes to be used in determining if the proposal has received the
requisite number of base votes for approval. Thus, an abstention and a broker
non-vote will have the same effect as a vote "against" such proposal.
Shares of WFS Common Stock represented by properly executed proxies, if
such proxies are received in time and not revoked, will be voted in accordance
with the instructions indicated on the proxies. IF NO INSTRUCTIONS ARE
INDICATED, SUCH PROXIES WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND, IN THE
DISCRETION OF THE PROXY HOLDER, AS TO ANY OTHER MATTER WHICH MAY COME PROPERLY
BEFORE THE SPECIAL MEETING. IF NECESSARY, THE PROXY HOLDER MAY VOTE IN FAVOR OF
A PROPOSAL TO ADJOURN THE SPECIAL MEETING IN ORDER TO PERMIT FURTHER
SOLICITATION OF PROXIES IN THE EVENT THERE ARE NOT SUFFICIENT VOTES TO APPROVE
THE FOREGOING PROPOSAL AT THE TIME OF THE SPECIAL MEETING.
FAILURE BOTH TO RETURN THE PROXY CARD AND TO VOTE IN PERSON AT THE SPECIAL
MEETING WILL HAVE THE EFFECT OF A VOTE CAST AGAINST APPROVAL OF THE AGREEMENT.
A WFS shareholder who has given a proxy may revoke it at any time prior to
its exercise at the Special Meeting by (i) giving written notice of revocation
to the Secretary of WFS, (ii) properly submitting to WFS a duly executed proxy
bearing a later date, or (iii) attending the Special Meeting and voting in
person. All written notices of revocation and other communications with respect
to revocation of proxies should be addressed as follows: WFS Bancorp, Inc., 340
South Broadway, Wichita, Kansas 67202; Attention: Robert V. McGrath, Secretary.
The directors and executive officers of WFS and their affiliates
beneficially owned, as of the WFS Record Date, 321,405 shares (or approximately
19.4% of the issued and outstanding shares) of WFS Common Stock.
SOLICITATION OF PROXIES
Proxies may be solicited by the directors, officers, and employees of WFS
by mail, in person, or by telephone or telegraph. Such persons will receive no
additional compensation for such services. WFS may
8
<PAGE> 17
make arrangements with brokerage firms and other custodians, nominees, and
fiduciaries, if any, for the forwarding of solicitation materials to the
beneficial owners of WFS Common Stock held of record by such persons. Any such
brokers, custodians, nominees, and fiduciaries will be reimbursed for the
reasonable out-of-pocket expenses incurred by them for such services. All
expenses associated with the solicitation of proxies, other expenses associated
with the Special Meeting, and expenses related to the printing and mailing of
this Proxy Statement, will be shared by EFC and WFS as provided in the
Agreement. See "DESCRIPTION OF TRANSACTION -- Expenses and Fees."
RECOMMENDATION
THE BOARD OF DIRECTORS OF WFS HAS UNANIMOUSLY APPROVED THE AGREEMENT AND
THE MERGER CONTEMPLATED THEREBY, BELIEVES THAT THE PROPOSAL TO APPROVE THE
AGREEMENT AND THE MERGER CONTEMPLATED THEREBY IS IN THE BEST INTERESTS OF WFS
AND ITS SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT THE WFS SHAREHOLDERS VOTE
FOR APPROVAL OF THE PROPOSAL TO APPROVE THE AGREEMENT AND THE MERGER
CONTEMPLATED THEREBY.
9
<PAGE> 18
DESCRIPTION OF TRANSACTION
The following information describes the material aspects of the Merger.
This description does not purport to be complete and is qualified in its
entirety by reference to the Appendices hereto, including the Agreement, which
is attached as Appendix A to this Proxy Statement and incorporated herein by
reference. All shareholders are urged to read the Appendices in their entirety.
GENERAL
As originally executed the Agreement provided for the acquisition of WFS by
Emprise Bank pursuant to the merger of WFS with a newly formed wholly-owned
subsidiary of Emprise Bank, with WFS as the surviving entity. However, the
Agreement also provided that on or before the Effective Time, Emprise Bank had
the right to assign the Agreement to EFC, the parent corporation of Emprise
Bank. Pursuant to an Assignment, Emprise Bank has exercised its right to assign
the Agreement to EFC. Under the Assignment, EFC has acquired all of the rights
and benefits of Emprise Bank under the Agreement and is liable to perform all of
the obligations, duties, and covenants of Emprise Bank.
Therefore, at the Effective Time, each share of WFS Common Stock then
issued and outstanding (including those shares held by the ESOP, by the MRRP,
and by WFS, EFC, or their respective subsidiaries if held in a fiduciary
capacity or in satisfaction of debts previously contracted, but excluding all
other shares held by WFS, EFC, or their respective subsidiaries, and shares held
by shareholders who perfect their statutory rights of appraisal) will be
canceled in exchange for a cash payment in the amount of $23.25 (the "Merger
Cash Price").
The Agreement also contemplates that EFC intends, after the Merger, to
cause WFS to be merged into EFC and Wichita Federal to be merged into Emprise
Bank. It is anticipated that each of WFS and Wichita Federal will enter into
Related Merger agreements on such terms as may reasonably be requested and take
such actions in connection therewith as may reasonably be necessary to cooperate
with EFC in its efforts to effect the Related Mergers. However, the Merger is
not conditioned on the closing of the Related Mergers. Under the Agreement, the
Related Mergers will not become effective until after the Effective Time of the
Merger. No shareholder approval for the Related Mergers is requested, or is to
be voted upon, pursuant to the Agreement or this Proxy Statement.
In addition, in the event the necessary consents of regulatory authorities
are denied or EFC is advised that any consent of a regulatory authority is
likely to be materially delayed or denied due to the structure of the proposed
Merger and Related Mergers under which WFS and Wichita Federal are being merged
into Emprise Bank, then (i) the applications for necessary consents of the
regulatory authorities shall be filed accordingly, (ii) EFC shall act diligently
to process the amended or newly-filed applications and obtain the necessary
consents of the regulatory authorities as expeditiously as possible, and (iii)
the date set forth in Section 10.1(e) of the Agreement shall be changed to a
date six months from the date of assignment contemplated in clause (i) above.
Accordingly, a vote in favor of the Agreement and the Merger will be deemed to
be a vote in favor of any restructuring of the transaction as described above.
As of the WFS Record Date, WFS had 1,661,178 shares of WFS Common Stock
issued and outstanding and 137,018 additional shares of WFS Common Stock subject
to WFS Options or held by the MRRP. Taking into account the Merger Cash Price of
$23.25 per share of WFS Common Stock, it is anticipated that upon consummation
of the Merger, EFC will pay total consideration of approximately $39.56 million.
EFC will fund the aggregate cash payments from (i) approximately $22.5 million
in available funds on hand and (ii) approximately $16.5 million under a line of
credit from Bank IV Kansas, N.A. The line of credit will be primarily repaid out
of approximately $4.5 million in funds of WFS and out of a one-time capital
distribution from Wichita Federal in the approximate amount of $9.2 million with
the balance being paid out of future earnings.
10
<PAGE> 19
EFFECT OF THE MERGER ON STOCK OPTIONS
The Agreement contemplates that at or prior to the Effective Time, all
employee stock options under the Stock Option Plan will be deemed vested and
exercisable and will be canceled and the holders of such options will be
entitled to receive a cash payment for each share subject to such option equal
to the difference between the Merger Cash Price for each such share and the
price the holder was required to pay for such share upon exercise of the option.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. After completing the Conversion in June 1994,
WFS concentrated its focus on implementing its business strategy to enhance
earnings and shareholder value. In February 1995, in light of its relatively low
return on equity and earnings performance, WFS engaged Webb & Co. to evaluate
various business strategies in conjunction with the Board of Directors. The
initial focus of the engagement was a review of the WFS business plan which
included significant wholesale growth and continued independence for WFS. The
next step included an analysis of potential candidates for a merger of equals
with WFS and potential candidates for WFS to acquire. Throughout the engagement
Webb & Co. regularly reported to the Board of Directors, comparing the value
created under all scenarios, including the shareholder value in the event of a
sale of WFS, based on recent market comparables.
By letter dated July 12, 1995, WFS received an unsolicited offer from
Emprise Bank to acquire WFS for cash consideration between $20 and $25 per share
of WFS Common Stock. Such offer requested information from WFS so that Emprise
Bank could further refine its offer.
In July 1995, based on the outcome of the above analysis combined with the
rapid pace of consolidation in the financial institutions industry, the
unsolicited offer of Emprise Bank, the uncertainty surrounding the thrift
industry due to the deposit insurance premium differential between institutions
insured by the Savings Association Insurance Fund (the "SAIF") and those insured
by the Bank Insurance Fund ("BIF") and potential federal regulatory agency
consolidation, the attractiveness of thrift acquisition premiums, WFS's
comparatively low return on equity during its first year as a public company and
the composition and goals of its shareholder base, the WFS Board of Directors
authorized Webb & Co. to negotiate, subject to certain price and consideration
requirements, with a single potential acquiror on an exclusive basis for the
potential sale of WFS. After receiving an indication of interest, at a price
which was unacceptable to the Board of Directors, Webb & Co. was authorized by
the Board of Directors to contact various financial institutions, including
Emprise Bank, to ascertain the level of acquisition interest in WFS.
Beginning in September 1995, Webb & Co. contacted eleven potential
acquirors, including Emprise Bank, providing them with a confidentiality
agreement and a package of information about WFS. Of the potential acquirors
contacted, Emprise Bank and one other potential acquiror submitted initial
non-binding indications of interest. Webb & Co. periodically reported to the
Board of WFS during this period on the progress of such discussions and the
potential merger terms indicated, including the amount and form of
consideration, financial assessments of the pro forma impact of the merger on
the prospective acquirors, certain deal contingencies, and potential benefits of
the combination.
Emprise Bank and the other company which submitted initial indications of
interest, performed off-site due diligence of WFS. After completing the due
diligence process, both companies presented non-binding indications of interest
to WFS. In November 1995, Webb & Co. presented to WFS's Board the details of
such proposals received from the two institutions, including among other things,
price per share to be paid and the form of consideration. After considering,
among other things, the amount and value of the proposed consideration and the
perceived financial and regulatory ability to complete the acquisition, as well
as the shareholder returns WFS could potentially generate under alternative
strategies, the Board of Directors of WFS directed Webb & Co. to negotiate with
Emprise Bank and the other potential acquiror in order to finalize the offer.
After further negotiation and evaluation of the final proposals, the Board of
Directors of WFS determined to enter into exclusive negotiations with Emprise
Bank with the goal of executing a definitive merger agreement for the
acquisition of WFS.
11
<PAGE> 20
On November 7, 1995 WFS issued a press release disclosing that WFS had
entered into discussions with one or more third party financial institutions
regarding the sale of WFS.
On November 30, 1995, WFS's Board of Directors, along with Webb & Co. and
WFS's special legal counsel, Alston & Bird, reviewed the contents of the
Agreement together with its exhibits. The Board of Directors also considered the
potential benefits of the transaction, financial and valuation analyses of the
transaction and the terms of the Agreement, and related questions and answers.
Webb & Co. delivered its oral opinion, subsequently followed by its written
opinion, as of such date, that the consideration to be paid in the Merger was
fair to holders of WFS Common Stock from financial point of view. On the basis
of this review, the WFS Board of Directors unanimously approved the Agreement.
Under the terms of the Agreement as executed on November 30, 1995, Emprise
Bank had the right to terminate the Agreement in the event that on or before
December 31, 1995, either (i) TMI Financial, Inc. (or an assignee) shall not
have repurchased the following participation certificates: Series 1993-B-CPS,
dated April 29, 1993; Series 1993-C-CPS, dated July 1, 1993; and Series 1994-A,
dated August 5, 1994 (collectively, the "Participation Certificates") from WFS
at a purchase price equal to the unpaid balance of each Participation
Certificate less up to a maximum of $100,000, plus accrued and unpaid interest,
or (ii) WFS shall not have received appropriate documentation evidence
satisfactory to Emprise Bank that the repurchase of such Participation
Certificates shall be consummated on or before the Effective Time. The condition
included in this provision of the Agreement as executed on November 30, 1995,
was satisfied during January 1996, and, accordingly, the Agreement was amended
and restated as of January 31, 1996, to delete this termination right on the
part of Emprise Bank and to further refine certain agreements made by the
parties with respect to the ESOP. See "-- Interest of Certain Persons in the
Merger -- ESOP." As a result of the sale of such Participation Certificates, WFS
incurred an after-tax loss on such sale of approximately $210,000. Such loss was
reflected in the results of operations of WFS for the second quarter ended March
31, 1996.
The terms of the Agreement are the result of arm's length negotiations
between WFS and Emprise Bank. There is no affiliation between any of the
directors and officers of the respective companies.
WFS's Reasons for the Merger. In reaching its conclusion to approve the
Merger, the WFS Board of Directors consulted with WFS's senior management, as
well as with its financial and legal advisors, and considered various factors,
including the following material factors:
(a) The financial terms of the Merger. The presentation by Webb & Co.
indicating that the transaction multiples for WFS, when considered in total,
based on the Merger Cash Price in the Merger, compared in most cases favorably
with the other transactions reviewed by Webb & Co., and represented 119% of
WFS's per common share fully diluted book value, 25.8 times WFS's last 12 months
earnings, and 19.8% of WFS's total deposits. Webb & Co. advised the Board that
the combination of WFS's higher equity levels and lower level of earnings caused
the Merger Cash Price to be at the high end of the range based on a multiple of
earnings and at the low end of the range based on a percentage of book value.
Webb & Co. further advised the Board that the low earnings of WFS was a reason
that potential acquirors would not consider using their common stock as
currency, as a stock-for-stock merger with WFS would be dilutive to a potential
acquiror on an earnings per share basis. Moreover, Webb & Co. advised the Board
that the premium over the trading price of WFS Common Stock represented by the
Merger Cash Price was, while nominal, meaningless to the evaluation, given that
takeover speculation had been built into the stock price of WFS Common Stock due
to the earlier WFS press releases disclosing WFS's review of its strategic
direction as well as its entering into preliminary merger discussions with a
third-party financial institution.
(b) The effect on shareholder value of WFS remaining independent compared
to the effect of its combining with Emprise Bank. In this respect the Board
considered several matters. First, the Board considered whether it was
reasonable to anticipate that WFS, as an independent enterprise, could meet the
earnings projections necessary to produce a value comparable to the value to be
received in the Merger. Second, the Board took into account that WFS had special
value to Emprise Bank in enhancing its deposit market share position in the
Wichita, Kansas market area and that Emprise Bank had the ability to realize
certain cost savings in the Merger to support the price being paid. The Board
recognized that the Merger
12
<PAGE> 21
would require Emprise to achieve certain cost savings in order to justify from a
future earnings perspective the Merger Cash Price. To achieve such cost savings,
Emprise would be required to eliminate certain positions, thereby causing
certain employees of WFS to lose their jobs.
(c) Certain financial information about WFS. Such information included,
but was not limited to, information with regard to recent and historical stock
performance, valuation analyses, financial and operating performance data, and
comparable merger and acquisition transactions as presented by Webb & Co. The
Board also considered the results of the due diligence reviews of WFS made by
Emprise Bank's management, including, among other things, projected financial
results, securities portfolio and derivatives positions, contingencies, credit
policies and processes and asset quality.
(d) Advice of financial advisor and fairness opinion. The opinion of Webb
& Co. (including the assumptions and financial information and projections
relied upon by Webb & Co. in arriving at such opinion) that, as of November 30,
1995, the Merger Cash Price was fair to the shareholders of WFS from a financial
point of view. See "-- Opinion of WFS's Financial Advisor."
(e) Regulatory approvals. The likelihood of obtaining the regulatory
approvals that would be required with respect to the Merger. See "-- Regulatory
Approvals."
The foregoing discussion of the information and factors considered by the
WFS Board is not intended to be exhaustive but is believed to include all
material factors considered by the WFS Board. In reaching its determination to
approve the Merger, the WFS Board did not assign any relative or specific
weights to different factors. After deliberating with respect to the Merger and
the other transactions contemplated thereby, and considering, among other
things, the matters discussed above and the opinion of Webb & Co. referred to
above, the WFS Board unanimously approved the Agreement and the transactions
contemplated thereby as being in the best interests of WFS and its shareholders.
WFS'S BOARD OF DIRECTORS RECOMMENDS THAT WFS SHAREHOLDERS VOTE FOR APPROVAL
OF THE AGREEMENT.
Emprise Bank's and EFC's Reasons for the Merger.
In reaching their respective conclusions to approve the Merger, the Emprise
Bank and EFC Boards of Directors consulted with the senior management of their
respective institutions, as well as with their financial and legal advisors, and
considered various factors, including the following:
(a) the information presented to the directors by the respective
managements of Emprise Bank and EFC concerning the business, operations,
earnings, asset quality, and financial condition of WFS, including the
composition of the earning assets portfolio of WFS;
(b) the financial terms of the Merger, including the relationship of the
Merger Cash Price to the market value, tangible book value, and earnings per
share of WFS Common Stock;
(c) the likelihood of the Merger being approved by applicable regulatory
authorities without undue conditions or delay;
(d) the opportunity for reducing the noninterest expense of the operations
of Wichita Federal and the ability of the operations of Wichita Federal after
the Effective Time to contribute to the earnings of Emprise Bank and EFC through
its existing products and services and additional services offered by Emprise
Bank; and
(e) the attractiveness of the WFS franchise and the compatibility of the
franchise of WFS with the operations of Emprise Bank in the Wichita, Kansas
area.
The Board of Directors of Emprise Bank determined that the Merger was in
the best interests of Emprise Bank and its shareholders and approved the
Agreement on November 16, 1995. The Board of Directors of Emprise Bank further
approved the amendment and restatement of the Agreement on January 25, 1996. The
Board of Directors of Emprise Bank approved the Assignment of the Agreement on
March 16, 1996. The Board of Directors of EFC approved the Agreement and the
Assignment on March 7, 1996.
13
<PAGE> 22
OPINION OF WFS'S FINANCIAL ADVISOR
General. The Board of Directors of WFS retained Charles Webb & Co. as its
financial advisor to evaluate WFS's strategic alternatives and, in certain
circumstances, to act as its financial advisor in connection with its ongoing
consideration and/or implementation of such alternatives. Webb & Co., as part of
its investment banking business, is regularly engaged in the evaluation of
business and securities in connection with mergers and acquisitions, negotiated
underwritings, and distributions of listed and unlisted securities. Webb & Co.
is familiar with the market for common stocks of publicly traded Midwest-based
banks, thrifts and bank and thrift holding companies. The WFS Board selected
Webb & Co. on the basis of the firm's reputation and its experience and
expertise in transactions similar to the Merger and its prior work for and
relationship with WFS in connection with the Conversion.
Pursuant to its engagement, Webb & Co. was asked to render an opinion as to
the fairness, from a financial point of view, of the Merger Cash Price to
shareholders of WFS. Webb & Co. delivered its opinion to the WFS Board that, as
of November 30, 1995, the Merger Cash Price is fair, from a financial point of
view, to the shareholders of WFS. No limitations were imposed by the WFS Board
upon Webb & Co. with respect to the investigations made or procedures followed
by it in rendering its opinion. Webb & Co. has consented to the inclusion herein
of the summary of its opinion to the WFS Board and to the reference to the
entire opinion attached as Appendix C to this Proxy Statement.
THE FULL TEXT OF WEBB & CO.'S OPINION AS OF THE DATE OF THIS PROXY
STATEMENT, WHICH SETS FORTH CERTAIN ASSUMPTIONS MADE, MATTERS CONSIDERED, AND
LIMITATIONS ON REVIEW UNDERTAKEN IS ATTACHED AS APPENDIX C TO THIS PROXY
STATEMENT, IS INCORPORATED HEREIN BY REFERENCE, AND SHOULD BE READ IN ITS
ENTIRETY IN CONNECTION WITH THIS PROXY STATEMENT. THE SUMMARY OF THE OPINION OF
WEBB & CO. SET FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE OPINION. WEBB & CO.'S OPINION IS DIRECTED ONLY TO THE FAIRNESS,
FROM A FINANCIAL POINT OF VIEW, OF THE MERGER CASH PRICE TO THE SHAREHOLDERS OF
WFS AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER OF WFS AS TO HOW
SUCH SHAREHOLDER SHOULD VOTE ON THE MERGER.
In rendering its opinion dated November 30, 1995, Webb & Co. studied
financial and other business data supplied by WFS including (i) the prospectus
dated April 13, 1994 for the Conversion, (ii) the Annual Report, Proxy
Statement, and Form 10-K for the year ended September 30, 1994, (iii) Form
10-Q's for the quarters ended December 31, 1994, March 31, 1995 and June 30,
1995, (iv) unaudited financial statements for the year ended September 30, 1995,
and (v) certain other information deemed relevant. Webb & Co. discussed with
senior management and the Boards of Directors of WFS and its wholly-owned
subsidiary, Wichita Federal, the current position and prospective outlook for
WFS. Webb & Co. considered historical quotations and prices of recorded
transactions in WFS Common Stock since the Conversion and substructural terms of
several other recent transactions involving savings and loan mergers and
acquisitions or proposed changes of control of comparably situated companies.
For Emprise Bank, Webb & Co. reviewed the audited financial statements for the
year ended December 31, 1994 and subsequent financial statements (unaudited) for
the quarter ended September 30, 1995 and certain other information deemed
necessary to substantiate Emprise Bank's ability to fund the Merger Cash Price.
In connection with rendering its opinion to WFS's Board of Directors, Webb
& Co. performed a variety of financial analyses. However, the preparation of a
fairness opinion involves various determinations as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular circumstances, and, therefore, such an opinion is not readily
susceptible to summary description. Webb & Co., in conducting its analysis and
in arriving at its opinion, has not conducted a physical inspection of any of
the properties or assets of WFS, and has not made or obtained any independent
valuation or appraisals of any properties, assets or liabilities of WFS. Webb &
Co. has assumed and relied upon the accuracy and completeness of the financial
and other information that was provided to it by WFS or that was publicly
available. Its opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to it as of the
date of, its analyses.
Valuation Methodologies. Webb & Co.'s review of comparable transactions
included the following pending or recently completed acquisitions of thrift
institutions. Such companies were selected for one of the
14
<PAGE> 23
following reasons: (i) comparable total transaction value; (ii) similar Central
location; or (iii) similar earnings history of WFS.
<TABLE>
<CAPTION>
ACQUIROR TARGET
- --------------------------- ---------------------------
<S> <C> <C>
PENDING TRANSACTIONS
Mercantile Bancorp
Plains Spirit Financial
Commercial Federal
Railroad Financial
First Midwest Bancorp
CF Bancorp, Inc.
CNB Bancshares
UF Bancorp Inc.
Roosevelt Financial
WFS Bancorp
CitFed Bancorp Inc.
PSB Holdings
Roosevelt Financial
Kirksville Bancshares
COMPLETED TRANSACTIONS
National City Corp.
Central Indiana Bancorp
Crestar Financial
Tidemark Bancorp
Union Planters Corporation
BNF Bancorp
Mercantile Bank
UNSL Financial
Bancorp South
LF Bancorp
First Financial Corp.
FirstRock Bancorp
Huntington Bancshares
FirstFed Northern Kentucky
Washington Mutual SB
Olympus Capital
Centura Banks, Inc.
First Southern Bancorp
</TABLE>
The information in the following table summarizes the material information
analyzed by Webb & Co. with respect to the transactions referred to above. The
summary does not purport to be a complete description of the analysis performed
by Webb & Co. and should not be construed independently of the other information
considered by Webb & Co. in rendering its opinion. Selecting portions of Webb &
Co.'s analysis or isolating certain aspects of the comparable transactions
without considering all analysis and factors, could create an incomplete or
potentially misleading view of the evaluation process.
<TABLE>
<CAPTION>
CONSIDERATION CONSIDERATION
AGGREGATE AS A MULTIPLE AS %
CONSIDERATION OF EARNINGS(1) OF BOOK VALUE
----------- -------------- -------------
<S> <C> <C> <C>
Average for comparable transactions..................... $43 million 17.3x 141%
Highest amount/value for a comparable transaction....... 70 million 31.2 200
Lowest amount/value for a comparable transaction........ 24 million 10.7 112
Emprise Bank offer to acquire WFS....................... 40 million 25.8(2) 119(4)
</TABLE>
- ---------------
(1) Earnings were computed for a 12-month period; however, not necessarily on a
fiscal year basis.
(2) Based on earnings for the fiscal year ended September 30, 1995, the most
recent available quarterly data at the time of Webb & Co.'s analyses and
1,661,178 shares of WFS Common Stock outstanding.
(3) Based on $23.25 per share in cash and the difference between the option
exercise price of the 137,018 WFS Options outstanding, for total
consideration of $39.6 million.
(4) Based on the $39.6 million of total consideration and book value of $33.2
million at September 30, 1995.
In its analysis of comparable transactions, Webb & Co. gave slightly more
weight to the multiple of WFS's earnings, rather than its book value, based on
WFS's capital level in comparison to that of the comparable transaction group.
At September 30, 1995, WFS's capital to assets ratio was 11.3% as compared to
9.4% for the median for all publicly traded thrifts nationally. The combination
of the higher equity ratio and the lower level of earnings caused the Merger
Cash Price to be at the high end of the range based on a multiple of earnings
and at the low end of the range based on a percentage of book value. Webb & Co.
therefore believed that the price to earnings multiple would be more likely to
affect the future value of an investment in WFS Common Stock and should be given
slightly more weight in its fairness analysis. Based on the above information,
Webb & Co. concluded that the multiples implied by the consideration of $23.25
per share were within the ranges of the comparable group.
15
<PAGE> 24
Discounted Cash Flow Analysis. Webb & Co. performed a discounted cash flow
analysis under various projections to estimate the fair market value of the WFS
Common Stock. Among other things, Webb & Co. considered a range of earnings and
dividend growth assumptions over the next five years and a terminal value for
WFS at that time based on applying a book value (150%) and an earnings
acquisition multiple (15-20 times) to the fifth year projected earnings. The
cash flows generated under these assumptions were discounted to present values
using discount rates ranging from 12% to 14%, which represent estimated required
rates of returns that shareholders would require. Webb & Co. concluded from the
discounted cash flow analysis that the merger consideration to be received
exceeded the present value of the future projected cash flows as detailed above.
In connection with its written opinion as of the date of this Proxy
Statement, Webb & Co. confirmed the appropriateness of its reliance on the
analyses used to render its November 30, 1995, opinion by performing procedures
to update certain of such analyses and by reviewing the assumptions on which
such analyses were based and the factors considered in connection therewith.
Compensation of Webb & Co. Webb & Co. will receive a fee of approximately
$411,075 for services rendered in connection with advising WFS regarding the
Merger, including the fairness opinion and financial advisory services provided
to WFS since the completion of the Conversion, plus reimbursement of out of
pocket expenses. As of the date of the Proxy Statement, Webb & Co. has received
$65,075 of such fee. Webb & Co. was paid a fee of $283,400 in connection with
the services it performed in connection with Wichita Federal's Conversion.
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Time will occur on the date and at the time that the
Certificate of Merger relating to the Merger becomes effective with the Delaware
Secretary of State and the Certificate of Merger relating to the Merger becomes
effective with the Kansas Secretary of State. Unless otherwise agreed upon by
EFC and WFS, and subject to the conditions to the obligations of the parties to
effect the Merger, EFC will determine and designate when the Effective Time
occurs, which will be not more than ten days after the last to occur of (i) the
effective date (including expiration of any applicable waiting period) of the
last required consent of any regulatory authority having authority over and
approving or exempting the Merger, and (ii) the date on which the shareholders
of WFS approve the Agreement. The designation of the Effective Time by EFC shall
be made prior to the last to occur of the foregoing events and not less than ten
days prior to the Effective Time.
No assurance can be provided that the necessary shareholder and regulatory
approvals can be obtained or that other conditions precedent to the Merger can
or will be satisfied. WFS and EFC anticipate that all conditions to consummation
of the Merger will be satisfied so that the Merger can be consummated during the
second quarter of 1996. However, delays in the consummation of the Merger could
occur.
The Board of Directors of either WFS or EFC generally may terminate the
Agreement if the Merger is not consummated by September 30, 1996, unless the
failure to consummate by that date is the result of a breach of the Agreement by
the party seeking termination. See "-- Conditions to Consummation of the Merger"
and "-- Waiver, Amendment, and Termination."
DISTRIBUTION OF MERGER CASH PRICE
Promptly after the Effective Time, EFC will cause Emprise Bank, acting in
its capacity as Exchange Agent, to mail to each holder of shares of WFS Common
Stock or WFS Options a letter of transmittal and instructions for use in
effecting the surrender and cancellation of the Certificates in exchange for
cash consideration specified in the Agreement.
WFS SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE
THE LETTER OF TRANSMITTAL AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of Certificates for WFS Common Stock
or agreements for WFS Options, together with a properly completed letter of
transmittal, there will be mailed to each holder of WFS
16
<PAGE> 25
Common Stock or WFS Options surrendering such items a check for the amount of
cash consideration to be paid for such shares or options. At the Effective Time,
EFC will pay each holder of WFS Common Stock $23.25 per share for each share of
WFS Common Stock and WFS will pay with respect to each WFS Option that is
outstanding immediately prior to the Effective Time, whether or not the option
is exercisable, an amount in cash equal to the difference (if positive) between
the Merger Cash Price and the exercise price per share specified in the WFS
Option.
After the Effective Time, there will be no transfers of shares of WFS
Common Stock on WFS's stock transfer books and no issuance of shares pursuant to
WFS Options. If Certificates representing shares of WFS Common Stock are
presented for transfer after the Effective Time, they will be canceled and
exchanged for a check for the amount of cash consideration set forth in the
Agreement. Similarly, WFS Options only represent the right to receive a check
for the amount of cash consideration provided for in the Agreement.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to various conditions, including: (i)
the receipt of the approval of the Agreement by the shareholders of WFS as
required by the DGCL; (ii) the receipt of certain regulatory approvals required
for consummation of the Merger; (iii) the receipt of a private letter ruling or
other documentation or evidence establishing to the reasonable satisfaction of
the parties that the ESOP may repay the loan from WFS from the proceeds received
by the ESOP under the Merger for the WFS Common Stock issued to the ESOP without
causing the loan to fail to qualify as an exempt loan under Internal Revenue
Code Section 4975(e)(7) and regulations thereunder; (iv) the accuracy, as of the
date of the Agreement and as of the Effective Time, of the representations and
warranties of WFS and EFC as set forth in the Agreement; (v) the performance of
all agreements and the compliance with all covenants of WFS and EFC as set forth
in the Agreement; (vi) receipt by EFC of letters from KPMG Peat Marwick LLP
dated not more than five days prior to (a) the date of the Proxy Statement and
(b) the Effective Time, with respect to certain financial information regarding
WFS, in form and substance reasonably satisfactory to EFC, which letters shall
be based upon customary specified procedures undertaken by such firm in
accordance with Statement of Auditing Standards No. 72; (vii) each of WFS and
Wichita Federal shall have entered into a Related Merger agreement in accordance
with the terms of the Agreement upon a reasonable request of EFC; (viii) the
receipt of all consents required for consummation of the Merger or for the
preventing of any default under any contract or permit which, if not obtained or
made, is reasonably likely to have, individually or in the aggregate, a material
adverse effect; (ix) the absence of any law or order or any action taken by any
court, governmental, or regulatory authority prohibiting, restricting, or making
illegal the consummation of the transaction; and (x) the satisfaction of certain
other conditions, including the receipt of certain legal opinions and various
certificates from the officers of WFS and EFC. WFS has filed a request for a
private letter ruling with the Internal Revenue Service and believes that such
ruling will be forthcoming. No assurance, however, can be given that the
Internal Revenue Service will issue the requested ruling. See "-- Regulatory
Approvals," "-- Waiver, Amendment, and Termination," and "-- Interests of
Certain Persons in the Merger -- ESOP."
No assurance can be provided as to when or if all of the conditions
precedent to the Merger can or will be satisfied or waived by the party
permitted to do so. In the event the Merger is not effected on or before
September 30, 1996, the Agreement may be terminated and the Merger abandoned by
a vote of a majority of the Board of Directors of either WFS or EFC. See
"-- Waiver, Amendment, and Termination."
REGULATORY APPROVALS
WFS and EFC are not aware of any material governmental approvals or actions
that are required for consummation of the Merger, except as described below.
Should any other approval or action be required, it presently is contemplated
that such approval or action would be sought.
The Merger is subject to the prior approval of the Federal Reserve pursuant
to Section 4 of the BHC Act and the OTS pursuant to Section 10(e) of the HOLA.
The Federal Reserve has issued its consent to the Merger and the parties are
awaiting the approval of the OTS. The Federal Reserve and the OTS use similar
standards when considering whether or not to approve the Merger. In evaluating
the Merger, the Federal
17
<PAGE> 26
Reserve and the OTS must consider, among other factors, the financial and
managerial resources and future prospects of the institutions and the
convenience and needs of the communities to be served, and in the case of the
OTS, the risk presented to the SAIF. The relevant statutes prohibit the Federal
Reserve or the OTS from approving the Merger if (i) it would result in a
monopoly or be in furtherance of any combination or conspiracy to monopolize or
attempt to monopolize the business of banking in any part of the United States
or (ii) its effect in any section of the country may be to substantially lessen
competition or to tend to create a monopoly, or if it would be a restraint of
trade in any other manner, unless the Federal Reserve or the OTS, as the case
may be, finds that any anticompetitive effects are outweighed clearly by the
public interest and the probable effect of the transaction in meeting the
convenience and needs of the communities to be served. The Merger may not be
consummated until the 30th day (which the Federal Reserve may reduce to 15 days)
following the date of the Federal Reserve approval, during which time the United
States Department of Justice may challenge the transaction on antitrust grounds.
The commencement of any antitrust action would stay the effectiveness of the
approval of the agencies, unless a court of competent jurisdiction specifically
orders otherwise.
WAIVER, AMENDMENT, AND TERMINATION
To the extent permitted by applicable law, WFS and EFC, with the approval
of their respective Boards of Directors, may amend the Agreement by written
agreement at any time before or after approval of the Agreement by the WFS and
EFC shareholders; provided, however, that after the Special Meeting, no
amendment may alter the manner or basis in which shares of WFS Common Stock will
be canceled and surrendered in exchange for the Merger Cash Price without the
requisite approval of the holders of the issued and outstanding shares of WFS
Common Stock entitled to vote thereon. In addition, prior to or at the Effective
Time, either WFS or EFC, or both, acting through their respective Boards of
Directors or chief executive officers or other authorized officers may waive any
default in the performance of any term of the Agreement by the other party, may
waive or extend the time for the compliance or fulfillment by the other party of
any and all of its obligations under the Agreement, and may waive any of the
conditions precedent to the obligations of such party under the Agreement,
except any condition that, if not satisfied, would result in the violation of
any applicable law or governmental regulation. No such waiver will be effective
unless written and unless executed by a duly authorized officer of WFS or EFC,
as the case may be.
The Agreement may be terminated and the Merger abandoned at any time prior
to the Effective Time (i) by the mutual consent of the Boards of Directors of
WFS and EFC; (ii) by the Board of Directors of WFS or EFC (a) in the event of
any inaccuracy of any representation or warranty of the other party contained in
the Agreement which cannot be or has not been cured within 30 days after giving
written notice to the breaching party of such inaccuracy and which inaccuracy
would provide the terminating party the ability to refuse to consummate the
Merger under the applicable standards set forth in the Agreement (provided that
the terminating party is not then in breach of any representation or warranty
contained in the Agreement under the applicable standards set forth in the
Agreement or in material breach of any covenant or other agreement contained in
the Agreement), (b) in the event of a material breach by the other party of any
covenant or agreement contained in the Agreement which cannot be or has not been
cured within 30 days after the giving of written notice to the breaching party
of such breach (provided that the terminating party is not then in breach of any
representation or warranty contained in the Agreement under the applicable
standards set forth in the Agreement or in material breach of any covenant or
other agreement contained in the Agreement), (c) if the Merger is not
consummated by September 30, 1996, provided that the failure to consummate is
not due to the breach by the party electing to terminate, (d) if (1) any
approval of any regulatory authority required for consummation of the Merger and
the other transactions contemplated by the Agreement has been denied by final
nonappealable action, or if any action taken by such authority is not appealed
within the time limit for appeal or (2) the shareholders of WFS fail to vote
their approval of the matters submitted for the approval by such shareholders at
the Special Meeting, or (e) if any of the conditions precedent to the
obligations of such party to consummate the Merger have not been satisfied,
fulfilled, or waived by the appropriate party by September 30, 1996 (provided
that the terminating party is not then in breach of any representation or
warranty contained in the Agreement under the applicable standards set forth in
the
18
<PAGE> 27
Agreement or in material breach of any covenant or other agreement contained in
the Agreement); and (iii) by the Board of Directors of WFS pursuant to the
relevant provisions of the Agreement described in "-- 'No-Shop' Covenant."
If the Merger is terminated as described above, the Agreement will become
void and have no effect, except that certain provisions of the Agreement,
including those relating to the obligations to maintain the confidentiality of
certain information obtained. In addition, termination of the Agreement will not
relieve any breaching party from liability for any uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination. Finally, the Agreement provides that each party will pay its own
expenses in connection with the Merger. However, the Agreement provides that WFS
or EFC will have to pay the other party a "bust up" fee of $1.7 million under
certain circumstances. Specifically, if WFS terminates the Agreement because it
is unable to fulfill the conditions imposed on it or if WFS terminates the
Agreement because it desires to enter into a transaction with another party, WFS
must pay EFC a "bust up" fee. Conversely, EFC will be obligated to pay a "bust
up" fee if EFC fails to fulfill one if its conditions to closing or willfully
breaches any representation or warranty or covenant of the Agreement. See
"-- Expenses and Fees."
"NO-SHOP" COVENANT
Under the terms of the Agreement, generally, except with respect to the
Agreement and the transactions contemplated thereby, no WFS company nor any
affiliate thereof nor any representative retained by any WFS company may
directly or indirectly solicit any acquisition proposal ("Acquisition Proposal")
by any person. The Agreement defines "Acquisition Proposal" as any tender offer
or exchange offer or any proposal for a merger, acquisition of all of the stock
or assets of, or other business combination involving any party or any of its
subsidiaries, the purchase or lease of a substantial portion of the assets of
such party or its subsidiaries, or the acquisition by the foregoing or other
means of a substantial equity interest in, or a substantial portion of the
assets of, another party or any of its subsidiaries. Further, the Agreement
provides that no WFS company or any affiliate or representative thereof shall
furnish any non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any contract with respect to, any
Acquisition Proposal. However, WFS may communicate information about an
Acquisition Proposal received at or before the Shareholders' Meeting to its
shareholders if and to the extent that it is required to do so in order to
comply with its legal obligations. In general, WFS must promptly notify EFC
orally and in writing in the event that it receives any inquiry or proposal
relating to any such transaction, whether received before or after the
Shareholders' Meeting.
Despite these general restrictions on soliciting other offers, under the
Agreement, the WFS companies, affiliates, and representatives may consider other
Acquisition Proposals if the Board of Directors of WFS, after consultation with
WFS's legal counsel, determines in good faith that abiding by the general
restrictions on soliciting and responding to an Acquisition Proposal (including
the requirement of notice to EFC) would be inconsistent with its fiduciary
obligations. If, in the event of an Acquisition Proposal, the Board of Directors
of WFS, after consultation with WFS's legal counsel, determines that it is in
the best interests of WFS and its shareholders to take, or seek to take, one or
more actions in response to such Acquisition Proposal, then no such action taken
by WFS in response, including the termination of the Agreement, will be deemed
to be, or to result in, a breach of any of the representations, warranties,
covenants, agreements, or restrictions of WFS contained in the Agreement;
provided, however, WFS has no right to take such actions, including a
termination of the Agreement, in response to any Acquisition Proposal or
inquiries or discussions pertaining to a possible Acquisition Proposal made or
received after the approval of the Agreement by the shareholders of WFS.
DISSENTERS' RIGHTS
If the Merger is consummated, holders of WFS Common Stock will be entitled
to have the "fair value" of their shares of WFS Common Stock at the Effective
Time (exclusive of any element of value arising from the accomplishment or
expectation of the Merger) judicially determined and paid to them in cash,
together with interest, if any, by complying with the provisions of Section 262
of the DGCL ("Section 262").
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<PAGE> 28
Shareholders of record who desire to exercise their appraisal rights must
satisfy all of the following conditions. A written demand for appraisal of their
WFS Common Stock must be delivered to WFS before the taking of the vote of the
WFS shareholders at the Special Meeting on approval of the Agreement. Such
demand will be sufficient if it reasonably informs WFS of the shareholder's
identity and that the shareholder intends thereby to demand appraisal of such
holder's shares. This written demand for appraisal of shares must be in addition
to and separate from voting against, abstaining from voting, or failing to vote
on adoption of the Agreement. Voting against, abstaining from voting, or failing
to vote on adoption of the Agreement will not constitute a demand for appraisal
within the meaning of Section 262.
Shareholders electing to exercise their appraisal rights under Section 262
must not vote for adoption of the Agreement. Voting for adoption of the
Agreement, or delivering a proxy in connection with the Special Meeting (unless
the proxy specifies a vote against, or abstaining from voting on, adoption of
the Agreement), will constitute a waiver of a shareholder's right of appraisal
and will nullify any written demand for appraisal submitted by the shareholder.
A demand for appraisal must be executed by or for the shareholder of
record, fully and correctly, as such shareholder's name appears on such
shareholder's Certificates. If the WFS Common Stock is owned of record in a
fiduciary capacity, such as by a trustee, guardian, or custodian, such demand
must be executed by the fiduciary. If the WFS Common Stock is owned of record by
more than one person, as in a joint tenancy or tenancy in common, such demand
must be executed by all joint owners. An authorized agent, including an agent
for two or more joint owners, may execute the demand for appraisal for a
shareholder of record; however, the agent must identify the record owner and
expressly disclose the fact that, in exercising the demand, such holder is
acting as agent for the record owner.
A record owner, such as a broker who holds WFS Common Stock as a nominee
for others may exercise appraisal rights with respect to the shares held for all
or less than all beneficial owners of shares as to which the holder is the
record owner. In such case, the written demand must set forth the number of
shares covered by such demand. Where the number of shares is not expressly
stated, the demand will be presumed to cover all shares of WFS Common Stock
outstanding in the name of such record owner.
Shareholders who elect to exercise appraisal rights should mail or deliver
their written demands to: WFS Bancorp, Inc., 340 South Broadway, Wichita, Kansas
67202; Attention: Robert V. McGrath, Secretary. The written demand for appraisal
should specify the shareholder's name and mailing address, the number of shares
of WFS Common Stock owned, and state that the shareholder is thereby demanding
appraisal. Within ten days after the Effective Time, EFC must provide notice of
the Effective Time to all shareholders who have complied with Section 262 and
have not voted for adoption of the Agreement.
Within 120 days after the Effective Time, either EFC or any shareholder who
has complied with the foregoing requirements of Section 262 and who is otherwise
entitled to appraisal rights may file a petition in the Delaware Court of
Chancery demanding a determination of the fair value of shares of the dissenting
shareholders. If a petition for an appraisal is timely filed, after a hearing on
such petition, the Court of Chancery will determine which shareholders are
entitled to appraisal rights and will appraise the shares of WFS Common Stock
owned by such shareholders, determining the fair value of such shares, exclusive
of any element of value arising from the accomplishment or expectation of the
Merger, together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value. In determining fair value, the court is
to take into account all relevant factors. In Weinberger v. UOP, Inc., et al.,
457 A.2d 701, decided February 1, 1983, the Delaware Supreme Court expanded the
considerations that could be considered in determining fair value in an
appraisal proceeding, stating that " . . . proof of value by any techniques or
methods which are generally considered acceptable in the financial community and
otherwise admissible in court. . ." should be considered, and that " . . .
[f]air price obviously requires consideration of all relevant factors involving
the value of a company . . ." The Delaware Supreme Court stated that in making
this determination of fair value the court must consider ". . . market value,
asset value, dividends, earnings prospects, the nature of the enterprise and any
other facts which were known or which could be ascertained as of the date of
merger and which throw any light on future prospects of the merged corporation .
. ." The court further stated that ". . . elements of future value, including
the nature of the enterprise, which are known or
20
<PAGE> 29
susceptible of proof as of the date of the merger and not the product of
speculation, may be considered . . ." However, the court noted that Section 262
provides that fair value is to be determined ". . . exclusive of any element of
value arising from the accomplishment or expectation of the merger . . .".
The fair value of shares determined under Section 262 could be more than,
the same as, or less than the consideration WFS shareholders are entitled to
receive pursuant to the Agreement if they do not seek appraisal of their shares.
Investment banking opinions as to fairness from a financial point of view are
not necessarily opinions as to fair value under Section 262.
At the hearing on such petition filed in the Court of Chancery, the court
will determine the shareholders who have complied with Section 262 and who have
become entitled to rights. The court may require dissenting shareholders who
have demanded an appraisal for their shares and who hold stock represented by
certificates to submit their stock certificates to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings. Failure of a
dissenting shareholder to submit such holder's certificates may result in the
dismissal of such shareholder's appraisal proceedings.
The cost of the appraisal proceeding may be determined by the Court of
Chancery and taxed against the parties as the court deems equitable in the
circumstances. Upon application of a dissenting shareholder, the court may order
that all or a portion of the expenses incurred by any dissenting shareholder in
connection with the appraisal proceeding, including, without limitation,
reasonable attorneys' fees and the fees and expenses of experts, be charged pro
rata against the value of all shares of WFS Common Stock entitled to appraisal.
In the absence of such a determination or assessment, each party bears its own
expenses.
Any shareholder who has duly demanded appraisal in compliance with Section
262 will not, after the Effective Time, be entitled to vote for any purpose the
shares of WFS Common Stock subject to such demand or to receive payment of
dividends or other distributions, if any, on such shares, except for dividends
or distributions payable to shareholders of record as of a date prior to the
Effective Time.
At any time within 60 days after the Effective Time, any former holder of
WFS Common Stock will have the right to withdraw a demand for appraisal and to
accept the consideration offered in the Agreement. After this period, such
holder may withdraw such holder's demand for appraisal only with the consent of
EFC. If no petition for appraisal is filed with the Court of Chancery within 120
days after the Effective Time, shareholders' rights to appraisal shall cease and
all shareholders will be entitled to receive the consideration provided in the
Agreement. Inasmuch as EFC has no obligation to file such a petition, and has no
present intention to do so, any shareholder who desires such a petition to be
filed is advised to file it on a timely basis. However, no petition timely filed
in the Court of Chancery demanding appraisal will be dismissed as to any
shareholder without the approval of the court, and such approval may be
conditioned upon such terms as the court deems just.
Within 120 days after the Effective Time, any shareholder who has complied
with the foregoing requirements of Section 262 is entitled, upon written
request, to receive from EFC a statement setting forth the aggregate number of
shares not voted in favor of the Merger and the aggregate number of holders of
shares who have demanded appraisal. Such written statement shall be mailed to
such shareholder within ten days of such holder's request.
The foregoing is only a summary of the rights of dissenting holders of WFS
Common Stock. Any holder of WFS Common Stock who intends to dissent should
carefully review the text of the Delaware statutory law set forth in Appendix C
to this Proxy Statement and should also consult with such holder's attorney. The
failure of a WFS shareholder to follow precisely the procedures summarized above
and set forth in Appendix B to this Proxy Statement, may result in loss of
appraisal rights. No further notice of the events giving rise to appraisal
rights or any steps associated therewith will be furnished to holders of WFS
Common Stock, except as indicated above or otherwise required by law.
In general, any dissenting shareholder who perfects such holder's right to
be paid the "fair value" of such holder's WFS Common Stock in cash will
recognize taxable gain or loss for federal income tax purposes upon receipt of
such cash. See "-- Certain Federal Income Tax Consequences."
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<PAGE> 30
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Agreement, WFS has agreed that unless the prior written
consent of EFC has been obtained, and except as otherwise expressly contemplated
in the Agreement, WFS will (i) operate its business only in the usual, regular,
and ordinary course and in accordance with past practices, (ii) preserve intact
its business organization and assets and maintain its rights and franchises,
(iii) make reasonable efforts to maintain its current employee relationships,
(iv) make reasonable efforts to preserve the goodwill of customers and others
having business relations with WFS Companies, (v) maintain the properties of WFS
Companies in customary repair, working order, and condition (reasonable wear and
tear excepted), (vi) keep in force at not less than their present limits all
existing policies of insurance under which WFS Companies are the insured, and
(vii) take no action which would (a) adversely affect the ability of any party
to obtain any consents required for the transactions contemplated by the
Agreement without imposition of a condition or restriction of the type referred
to in the Agreement or (b) adversely affect the ability of any party to perform
its covenants and agreements under the Agreement.
In addition, WFS has agreed that, prior to the earlier of the Effective
Time or termination of the Agreement, WFS will not, except with the prior
written consent of the chief executive officer or chief financial officer of EFC
or as expressly contemplated or permitted by the Agreement, agree or commit to
do, any of the following: (i) amend the Certificate of Incorporation, Bylaws, or
other governing instruments of any WFS company; (ii) incur any additional debt
obligation or other obligation for borrowed money (other than indebtedness of a
WFS company to another WFS company) in excess of an aggregate of $200,000 (for
the WFS companies on a consolidated basis) except in the ordinary course of
business of WFS or its subsidiaries consistent with past practices (which shall
include, for WFS subsidiaries that are depository institutions, the creation of
deposit liabilities, purchases of federal funds, advances from the Federal Home
Loan Bank or the Federal Reserve Bank, and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any asset of any WFS company any lien or permit any such lien to
exist (other than in connection with deposits, repurchase agreements, Federal
Home Loan Bank advances, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and liens in effect as of the date
of the Agreement that were previously disclosed to EFC by WFS) or, whether or
not in the ordinary course of business of WFS or its subsidiaries, consistent
with past practices, (a) incur any debt or other obligation for borrowed money
having a maturity of more than two years, (b) enter into any loan commitment in
excess of $200,000 other than residential mortgages intended for secondary
market sale, or (c) enter into a commitment to loan to or purchase a loan of a
borrower who does not reside or do business in the State of Kansas or commit to
enter into or purchase a loan which is secured by property located outside the
State of Kansas.
WFS further has agreed that, prior to the earlier of the Effective Time or
termination of the Agreement, WFS will not, except with the prior written
consent mentioned above, agree or commit to do: (i) repurchase, redeem, or
otherwise acquire or exchange (other than exchanges in the ordinary course under
employee benefit plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of any WFS company, or declare
or pay any dividend or make any other distribution in respect of any WFS capital
stock, provided that WFS may (to the extent legally and contractually permitted
to do so), but shall not be obligated to, declare and pay regular quarterly cash
dividends on the shares of WFS Common Stock at a rate not in excess of $.10 per
share with usual and regular record and payment dates in accordance with past
practice previously disclosed and such dates may not be changed without the
prior written consent of EFC; provided further, that, with respect to the
calendar quarter in which the Effective Time occurs: (a) no dividend may be paid
by WFS if the Effective Time occurs on or before the tenth day of such quarter;
(b) a dividend equal to one-third ( 1/3) of the regular quarterly dividend that
could otherwise be permissibly paid during such quarter pursuant to the
Agreement may be paid by WFS if the Effective Time occurs after the tenth day of
such quarter but on or before the 40th day of such quarter; (c) a dividend equal
to two-thirds ( 2/3) of the regular quarterly dividend that would otherwise be
permissibly paid during such quarter pursuant to the Agreement may be paid by
WFS if the Effective Time occurs after the 40th day of such quarter, but on or
before the 70th day of such quarter; and (d) the dividend that could otherwise
be permissibly paid during such quarter pursuant to the Agreement may be paid by
WFS if the Effective Time occurs after the 70th day of
22
<PAGE> 31
such quarter; (ii) except pursuant to the Agreement, pursuant to the exercise of
stock options outstanding as of the date of the Agreement and pursuant to the
terms thereof in existence on the date of the Agreement or the vesting of shares
of WFS Common Stock under the MRRP or the ESOP and pursuant to the terms thereof
in existence on the date of the Agreement, issue, sell, pledge, encumber,
authorize the issuance of, enter into any contract to issue, sell, pledge,
encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of WFS Common Stock, or any other capital
stock of any WFS company, or any stock appreciation rights, or any option,
warrant, conversion, or other right to acquire any such stock, or any security
convertible into any such stock; (iii) adjust, split, combine, or reclassify any
capital stock of any WFS company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of WFS Common Stock or
sell, lease, mortgage, or otherwise dispose of or otherwise encumber any shares
of capital stock of any WFS subsidiary (unless any such shares of stock are sold
or otherwise transferred to another WFS company) or any assets having a book
value in excess of $100,000 other than in the ordinary course of business for
reasonable and adequate consideration; (iv) except for purchases of U.S.
Treasury securities or U.S. Government agency securities, which in either case
have maturities of three years or less, purchase any securities, including
mortgage-backed securities, or make any material investment, either by purchase
of stock (other than capital stock of the Federal Home Loan Bank of Topeka
relative to the acquisition of any new advances) or securities, contributions to
capital, asset transfers, or purchase of any assets, in any person other than a
wholly-owned WFS subsidiary, or otherwise acquire direct or indirect control
over any person, other than in connection with (a) foreclosures in the ordinary
course of business, or (b) acquisitions of control by a depository institution
subsidiary in its fiduciary capacity; (v) grant any material increase in
compensation or benefits to the employees or officers of any WFS company except
in the ordinary course of business or as previously disclosed to EFC by WFS or
as required by law; pay any severance or termination or any bonus other than
pursuant to written policies or written contracts in effect on the date of the
Agreement, and previously disclosed to EFC by WFS; enter into or amend any
severance agreements with officers of any WFS company; grant any increase in
fees or other increases in compensation or other benefits to directors of any
WFS company except as previously disclosed to EFC by WFS; or voluntarily
accelerate the vesting of any stock options or other stock-based compensation or
employee benefits; (vi) enter into or amend any employment contract between any
WFS company and any person (unless such amendment is required by law); (vii)
except as disclosed to EFC, adopt any new employee benefit plan of any WFS
company or make any material change in or to any existing employee benefit plans
of any WFS company other than any such change that is required by law or that,
in the opinion of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan; (viii) except as disclosed to EFC, make any
significant change in any tax or accounting methods or systems of internal
accounting controls, except as may be appropriate to conform to changes in tax
laws or regulatory accounting requirements or generally accepted accounting
principles; (ix) commence any litigation other than in accordance with past
practice or settle any litigation involving any liability of any WFS company for
money damages of $50,000 or more or restrictions upon the operations of any WFS
company; or (x) modify, amend, or terminate any material contract (including any
loan Contract with an unpaid balance exceeding $100,000) or waive, release,
compromise, or assign any material rights or claims.
The Agreement also provides that from the date of the Agreement until the
earlier of the Effective Time or the termination of the Agreement, EFC covenants
and agrees that it will take no action which would (i) materially adversely
affect the ability of any party to obtain any consents required for the
transactions contemplated by the Agreement without imposition of a condition or
restriction of the type referred to in the Agreement or (ii) materially
adversely affect the ability of any party to perform its covenants and
agreements under the Agreement. EFC further agrees that from the date of the
Agreement until the earlier of the Effective Time or the termination of the
Agreement, without the prior written approval of WFS, EFC will not agree to make
any acquisition of an unaffiliated financial institution which could reasonably
be expected to jeopardize or delay beyond April 1, 1996, any consent of a
regulatory authority required for the transactions contemplated thereby.
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<PAGE> 32
MANAGEMENT AND OPERATIONS AFTER THE MERGER
The directors and officers of EFC's newly-formed subsidiary in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors and officers,
respectively, of WFS from and after the Effective Time in accordance with the
Bylaws of WFS, as amended and restated as of the Effective Time.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General. Certain members of WFS management and of the WFS Board of
Directors have interests in the Merger that are in addition to any interests
they may have as shareholders of WFS generally. These interests include, among
other things, provisions in the Agreement relating to indemnification of WFS
directors and officers, and certain severance and other employee benefits, as
described below. The total aggregate value of the transaction to insiders,
defined as the directors and executive officers of WFS, is approximately $4.8
million, approximately $2.95 million of which is value received for shares which
insiders purchased in or subsequent to the Conversion.
Indemnification and Insurance. The Agreement provides that EFC will
indemnify, defend, and hold harmless the present and former directors, officers,
employees, and agents of the WFS companies against all liabilities arising out
of actions or omissions occurring at or prior to the Effective Time (including
the transactions contemplated by the Agreement) to the full extent permitted by
WFS's Certificate of Incorporation and Bylaws, as currently in effect, including
provisions relating to advances of expenses incurred in the defense of any
litigation. In any case in which approval by EFC is required to effectuate any
indemnification, at the election of the indemnified party, the determination of
any such approval will be made by independent counsel mutually agreed upon
between EFC and the indemnified party. The Agreement also provides that EFC
shall use its reasonable efforts to maintain in effect for a period of three
years after the Effective Time WFS's existing directors' and officers' liability
insurance policy, subject to certain exceptions and modifications. In addition,
under the Agreement, EFC shall not be liable for any settlement effected without
its prior written consent; and the surviving party shall not have any obligation
to any indemnified party when and if a court of competent jurisdiction
determines, and such determination has become final, that the indemnification of
such indemnified party in the manner contemplated in the Agreement is prohibited
by applicable Law.
WFS Executive Arrangements. Wichita Federal has entered into an employment
agreement with Burton G. Dunlap, the President and Chief Executive Officer of
WFS and Wichita Federal. Consummation of the Merger will constitute a change in
control for purposes of the employment agreement. If Mr. Dunlap's employment is
terminated involuntarily in connection with the Merger or within 12 months
thereafter, the employment agreement provides for payment to Mr. Dunlap of the
remaining salary payable under the employment agreement (through June 3, 1998),
plus a termination payment equal to 299% of his "base amount" as defined in
Section 280G of the Internal Revenue Code; provided, however, that the total
severance payments to Mr. Dunlap under the employment agreement will be limited
to an amount so as not to result in an "excess parachute payment" under Section
280G of the Internal Revenue Code. If, pursuant to the provisions described
above, a payment were required to be made to Mr. Dunlap, which is anticipated,
and assuming the Effective Time occurs on June 30, 1996, the estimated amount of
such payment would be approximately $200,000.
Wichita Federal has also entered into employment agreements with three
other of its executive officers, Robert V. McGrath, Edward C. Gilbert, Jr. and
Gregg L. Filiatreault. Consummation of the Merger will constitute a change in
control for purposes of such employment agreements. If the employment of the
employee is terminated involuntarily in connection with the Merger or within 12
months thereafter, the employment agreement provides for payment to the employee
of a lump sum severance payment ($25,000 to Mr. McGrath, $68,150 to Mr. Gilbert,
and $58,100 to Mr. Filiatreault). While, similarly to Mr. Dunlap's agreement,
these employment agreements call for a reduction in the severance payments to
the extent necessary to avoid an "excess parachute payment" under Section 280G
of the Internal Revenue Code, it is not likely that any reduction would be
necessary in the case of these officers.
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<PAGE> 33
Director and Officer Stock Options. In connection with the Conversion, the
Board of Directors of WFS adopted the Stock Option Plan, subject to shareholder
ratification which was received at the 1995 Annual Meeting of Shareholders of
WFS. WFS has granted stock options to Mr. Dunlap and certain other officers
under the Stock Option Plan. Such plan provides for awards in the form of stock
options, stock appreciation rights, limited stock appreciation rights, and
restricted stock. Under the terms of the Stock Option Plan, in addition to
granting options to full-time employees of WFS and Wichita Federal, the Stock
Option Plan permits the granting of non-qualified stock options to purchase
9,164 shares of WFS Common Stock to each non-employee director.
Under the terms of the Agreement, at the Effective Time, all WFS Options
will be deemed vested and exerciseable (regardless of whether such options are
exerciseable by their terms under the Stock Option Plan) and will be canceled
and holders of such options will be entitled to receive a cash payment for each
share subject to such option equal to the difference between the Merger Cash
Price for each such share and the price the holder was required to pay for such
shares upon exercise of the option.
The following table sets forth, with respect to Mr. Dunlap, all executive
officers as a group (collectively, the "Executive Officer Group"), and all
outside directors as a group: (i) the number of shares covered by WFS Options
held by such persons; (ii) the weighted average exercise price of all such
options held by such persons; and (iii) the aggregate value (i.e., Merger Cash
Price less option exercise price) of all such options.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE AGGREGATE
OPTIONS EXERCISE PRICE VALUE
HELD PER OPTION OF OPTIONS
------- ---------------- ----------
<S> <C> <C> <C>
Burton G. Dunlap............................................ 19,725 $ 15.875 $ 145,472
Executive Officer Group (5 persons)......................... 48,469 15.95 353,834
Outside Directors (6 persons)............................... 54,984 16.90 349,378
</TABLE>
MRRP. In connection with the Conversion, the Board of Directors of WFS
adopted the MRRP, subject to shareholder ratification which was received at the
1995 Annual Meeting of Shareholders of WFS. Under the terms of the MRRP, 64,145
shares of WFS Common Stock (or 4.0% of the shares issued in the Conversion) were
made available for awards. As of the date of this Proxy Statement, 57,534 shares
of WFS Common Stock have been awarded to directors, executive officers, and
employees of WFS under the MRRP and the remaining 6,611 shares are available for
future awards. Shares of WFS Common Stock awarded under the MRRP vest in equal
installments over a five-year period from the date of award, with the first
installment having vested at July 18, 1995 and each additional installment
vesting on the four subsequent anniversaries of shareholder approval of the
MRRP. Accordingly, two installments or 40% of the shares of WFS Common Stock
awarded under the MRRP have vested and the remaining three installments or 60%
of the shares of WFS Common Stock awarded under the MRRP have not vested. Under
the terms of the Agreement, all shares held by the MRRP will be canceled
(regardless of whether such shares have vested) at the Effective Time in
exchange for a cash payment in the amount of the Merger Cash Price.
The following table sets forth, with respect to Mr. Dunlap, the Executive
Officer Group, and all outside directors as a group: (i) the number of shares
under the MRRP held by such persons and (ii) the aggregate value of all such
shares based upon the Merger Cash Price.
<TABLE>
<CAPTION>
AGGREGATE
MRRP VALUE OF
SHARES HELD MRRP SHARES
----------- -----------
UNVESTED UNVESTED
----------- -----------
<S> <C> <C>
Burton G. Dunlap..................................................... 5,484 $ 127,503
Executive Officer Group (5 persons).................................. 13,842 321,827
Outside Directors (6 persons)........................................ 12,827 298,228
</TABLE>
ESOP. In connection with the Conversion, WFS implemented the ESOP covering
substantially all employees. At the time of its formation, the ESOP acquired
128,292 shares of WFS Common Stock at a cost of $10.00 per share (the public
offering price of WFS Common Stock in the Conversion) for a total cost of
25
<PAGE> 34
$1,282,920. WFS loaned $1,282,920 to the ESOP to finance this acquisition (the
"ESOP Loan"). The ESOP Loan was collateralized by the unallocated stock and has
been recorded as a reduction of shareholders' equity in the consolidated
financial statements of WFS incorporated herein. Shares are released and
allocated to the accounts of participants as the principal and interest on the
outstanding ESOP Loan is paid down at which time the shares are also released
from collateralizing the note. As of the date of this Proxy Statement, WFS has
released 28,123 shares, leaving total shares collateralizing the note of
100,169, which have a fair market value of $2,328,929 based on the Merger Cash
Price.
In connection with the Merger, EFC has agreed, under the terms of the
Agreement, to pay the Merger Cash Price for all shares of WFS Common Stock held
by the ESOP, including the 100,169 shares of WFS Common Stock that remain
unallocated to the accounts of participants. EFC and WFS agreed that (i) subject
to the receipt of a private letter ruling from the Internal Revenue Service or
other documentation or evidence establishing to the reasonable satisfaction of
EFC and WFS that the ESOP may repay the ESOP Loan from WFS from the proceeds
received by the ESOP under the Merger without causing the ESOP Loan to fail to
qualify as an exempt loan under the Internal Revenue Code, the ESOP Loan shall
be paid off by the ESOP as soon as practicable following the Effective Time
using proceeds from the sale of WFS Common Stock by the ESOP pursuant to the
Merger, (ii) any and all unallocated assets or funds remaining in the ESOP after
the ESOP Loan is paid off, pursuant to the immediately preceding clause, shall
be allocated as soon as possible after the ESOP Loan is paid off, to the maximum
extent permitted under the law (as defined below) to the ESOP accounts of the
persons who are participants in the ESOP as of the date preceding the Effective
Time (the "WFS ESOP Participants"), and that such allocation to such WFS ESOP
Participants shall be made during the plan year of the ESOP in which the
Effective Time occurs, (iii) until the maximum allocation under the preceding
clause (ii) has been made for the plan year in which the Effective Time occurs,
no person shall become a new participant in the ESOP as of or after the
Effective Time, the ESOP shall not be merged into any other qualified plan, nor
shall any other qualified plan be merged into ESOP, and neither EFC nor any
affiliate of EFC (or any successor of either the foregoing) may seek to obtain
the reversion of any portion of the unallocated assets of the ESOP. The phrase
"to the maximum extent permitted under the law" in clause (ii) above shall mean
to the maximum extent permitted under Section 415 of the Internal Revenue Code,
and for this purpose treating as "annual additions" under Section 415 of the
Internal Revenue Code only that portion of the unallocated assets and funds
under the ESOP that is equal to (x) multiplied by [(y) divided by (z)], where
(x) equals the dollar amount of assets to be allocated to each participant's
ESOP account, (y) equals the price at which WFS Common Stock was initially
purchased by the ESOP, and (z) equals the price at which WFS Common Stock held
by the ESOP is sold to EFC.
In addition, the parties agreed that the Agreement did not require EFC to
make additional contributions to the ESOP or, after the maximum allocation
described in clause (ii) above has been made, prohibit EFC from terminating the
ESOP, merging it into another qualified plan of EFC, or otherwise dealing with
the ESOP for the remaining unallocated assets or funds of the ESOP as EFC deems
advisable; provided that, under no circumstances shall EFC or any affiliate of
EFC (or any successor of either of the foregoing) seek to retain a reversion of
any portion of the unallocated assets of the ESOP.
As a result of the application of Section 415 of the Internal Revenue Code,
a certain portion of the Merger Cash Price received for the shares of WFS Common
Stock held by the ESOP at the Effective Time that are not allocated to the
accounts of the WFS ESOP Participants, will not be allocated to such
participants as of the Effective Time. Under estimates available to WFS as of
the date of this Proxy Statement, and assuming that the Effective Time occurs on
June 30, 1996, it is anticipated that an estimated $495,240 in aggregate Merger
Cash Price received for the unallocated shares will not be allocated to the WFS
ESOP Participants as of the Effective Time.
Other Matters Relating to WFS Employee Benefit Plans. The Agreement also
provides that, after the Effective Time, EFC will provide generally to officers
and employees of the WFS companies who, at or after the Effective Time, become
officers or employees of an EFC company, employee benefits under employee
benefit plans (other than stock option or other plans involving the potential
issuance of EFC Common Stock) on terms and conditions which, when taken as a
whole, are substantially similar to those currently provided by the EFC
companies to their similarly situated officers and employees; provided that,
other than the employees
26
<PAGE> 35
of WFS companies who are parties to the employment or severance contracts
previously disclosed by WFS, any employee of WFS who is not offered employment
by EFC at the Effective Time or whose employment is terminated after the
Effective Time as a result of the Merger shall receive the severance benefits in
accordance with the letter dated October 31, 1995, of EFC to the Board of
Directors of WFS. For purposes of participation and vesting under such employee
benefit plans, the service of the employees of the WFS companies prior to the
Effective Time shall be treated as service with an EFC company participating in
such employee benefit plans. The Agreement further provides that EFC will cause
the WFS companies to honor, in accordance with their terms, all employment,
severance, consulting, and other compensation contracts disclosed to EFC between
any WFS company and any current or former director, officer, or employee
thereof, and all provisions for vested benefits or other vested amounts earned
or accrued through the Effective Time under the WFS benefit plans.
Directors Fees. Each director of WFS who is not retained as a director of
the surviving corporation shall be paid a bonus in consideration of past
services in the amount of $12,000, which is the amount of the present directors'
fees for one year of regular monthly meetings.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER TO WFS SHAREHOLDERS. THIS SUMMARY IS BASED ON THE
FEDERAL INCOME TAX LAWS AS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES
NOT TAKE INTO ACCOUNT POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS,
INCLUDING AMENDMENTS TO APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN
JUDICIAL OR ADMINISTRATIVE RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT.
THIS SUMMARY DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY
PERSON. IN PARTICULAR, AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT
ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO WFS SHAREHOLDERS IN
LIGHT OF THEIR PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN
PERSONS, TAX-EXEMPT ENTITIES, DEALERS IN SECURITIES, INSURANCE COMPANIES, AND
CORPORATIONS, AMONG OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF
THE MERGER UNDER ANY STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. WFS
SHAREHOLDERS, THEREFORE, ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING
REQUIREMENTS, THE APPLICATION AND EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND
OTHER TAX LAWS, AND THE IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
The conversion of WFS Common Stock and WFS Options into the right to
receive the Merger Cash Price or the difference between the Merger Cash Price
and the option's exercise price in cash, as the case may be, will be a taxable
transaction for WFS shareholders and optionholders. In general, each shareholder
and optionholder of WFS will recognize gain or loss for federal income tax
purposes equal to the difference between the amount of cash received and the
holder's tax basis in the shares or WFS Options surrendered for payment. The
gain or loss will be capital gain or loss if the stock or option is held by the
shareholder as a capital asset at the Effective Time. Gain or loss must be
computed separately for each block of shares of WFS Common Stock or WFS Options
acquired at the same price in a single transaction.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a "purchase," as
that term is used pursuant to generally accepted accounting principals, for
accounting and financial reporting purposes. Under the purchase method of
accounting, the assets and liabilities of WFS as of the Effective Date will be
recorded at their estimated respective fair values and added to those of EFC.
Financial statements of EFC issued after the Effective Date will reflect such
values and will not be restated retroactively to reflect the historical
financial position or results of operations of WFS.
27
<PAGE> 36
EXPENSES AND FEES
The Agreement provides, in general, that each of the parties will bear and
pay all direct costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder (including the Related Mergers),
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel. However, under certain circumstances, either party may
be required to pay a fee to cover the other party's expenses. In particular, if
WFS terminates or fails to consummate the Agreement in ways specifically
proscribed by the Agreement, then WFS agrees that, for a period of 12 months
following such termination or failure to consummate, it will be a specific,
absolute, and unconditional binding condition of WFS's entering into a letter of
intent, agreement in principle, or definitive agreement (whether or not
considered binding, non-binding, or conditional) with respect to, or
recommending shareholder acceptance of, any business combination with any third
party, that such third party that is a party to the business combination must
pay to EFC, prior to the time the business combination is announced to the
public by press release or otherwise, an amount in cash equal to $1,700,000,
which sum represents the direct costs and expenses (including, without
limitation, fees and expenses of EFC's financial or other consultants, printing
costs, investment bankers, accountants, and counsel) incurred by EFC in
negotiating and carrying out the transactions contemplated by the Agreement
(including the Related Mergers), and the indirect costs and expenses incurred by
EFC in connection with the transactions contemplated by the Agreement (including
the Related Mergers) including EFC's management time devoted to negotiation and
preparation for such transaction. In the event such third party fails or refuses
to pay such amounts, the amounts will be an obligation of WFS and will be paid
by WFS promptly upon notice to WFS by EFC.
Similarly, if EFC terminates or fails to consummate the Agreement in the
ways specifically proscribed in the Agreement, EFC must pay WFS an amount in
cash equal to $1,700,000 which sum represents the direct cost and expenses
(including, without limitation, fees and expenses of WFS's financial or other
consultants, printing costs, investment bankers, accountants, and counsel)
incurred by WFS in negotiating and carrying out the transactions contemplated by
the Agreement and the indirect costs and expenses incurred by WFS in connection
with the transactions contemplated by the Agreement, including WFS's management
time devoted to negotiation and preparation for such transaction.
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<PAGE> 37
MARKET PRICES AND DIVIDENDS
WFS Common Stock is traded on the Nasdaq under the symbol "WBCI." The
following table sets forth, for the indicated periods since the Conversion was
effected on June 3, 1994, (i) the high and low closing prices for WFS Common
Stock as reported on the Nasdaq, and (ii) the cash dividends declared per share
of WFS Common Stock for the periods indicated.
<TABLE>
<CAPTION>
WFS
--------------------------------------------
PRICE RANGE CASH DIVIDENDS
----------------------- DECLARED PER
HIGH LOW SHARE
------- --------- --------------
<S> <C> <C> <C>
Fiscal 1994
Second Quarter..................................... -- -- --
Third Quarter...................................... $12.875 $ 11.00 --
Fourth Quarter..................................... 15.50 12.625 --
Fiscal 1995
First Quarter...................................... 15.50 13.25 .60
Second Quarter..................................... 18.75 14.75 .10
Third Quarter...................................... 20.50 18.00 .10
Fourth Quarter..................................... 20.75 18.75 .10
Fiscal 1996
First Quarter...................................... 22.75 20.50 .10
Second Quarter..................................... 22.88 22.00 .10
Third Quarter
(through May 14, 1996).......................... 22.75 22.50 .10
</TABLE>
On November 29, 1995, the last business day prior to public announcement of
the proposed Merger, the closing price of WFS Common Stock as reported on the
Nasdaq was $22.25.
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<PAGE> 38
BUSINESS OF WFS
GENERAL
WFS, a Delaware corporation, is a savings and loan holding company
registered with the OTS under the HOLA. Through its wholly-owned subsidiary,
Wichita Federal, WFS operates three savings and loan offices in Wichita, Kansas
and one savings and loan office in Valley Center, Kansas and offers a variety of
financial services. As of March 31, 1996, WFS had total consolidated assets of
approximately $276 million, total consolidated deposits of approximately $197
million, and total consolidated shareholders' equity of approximately $33
million.
WFS was organized at the direction of Wichita Federal in 1994 for the
purpose of owning all of the outstanding stock of Wichita Federal issued upon
the Conversion. On June 3, 1994, in connection with the completion of the
Conversion, WFS acquired all shares of Wichita Federal, and issued 1,603,644
shares of WFS Common Stock pursuant to a public offering (128,292 of which
shares were issued to the ESOP) resulting in net proceeds of approximately $14
million (net of Conversion costs and the proceeds of the loan to the ESOP) of
which approximately $3.5 million was retained by WFS and the remaining balance
of approximately $10.5 million was used to acquire the outstanding shares of
Wichita Federal.
The principal executive offices of WFS are located at 340 South Broadway,
Wichita, Kansas 67202, and its telephone number at such address is (316)
383-8404. Additional information with respect to WFS and its subsidiary is
included in documents incorporated by reference in this Proxy Statement.
Specifically, reference is made to the Annual Report on Form 10-KSB for the
fiscal year ended September 30, 1995 and the Quarterly Report on Form 10-QSB for
the quarter ended March 31, 1996 of WFS, copies of which accompany this Proxy
Statement. See "AVAILABLE INFORMATION" and "DOCUMENTS INCORPORATED BY
REFERENCE."
CERTAIN REGULATORY CONSIDERATIONS
Following the enactment of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, the former Federal Deposit Insurance Corporation
("FDIC") insurance fund insuring the deposits of commercial banks and
state-chartered savings banks was renamed the "Bank Insurance Fund" or "BIF" and
the former Federal Savings and Loan Insurance Corporation ("FSLIC") insurance
fund insuring all other thrift deposits was renamed the "Savings Association
Insurance Fund" or "SAIF." The Federal Deposit Insurance Act requires that the
SAIF and BIF funds each be recapitalized, utilizing insurance assessments from
depository institutions, until reserves are at least 1.25% of the deposits
insured by that fund. While both SAIF and BIF reserves were initially very low,
BIF reserves have grown much more quickly due to a number of factors, including
the fact that a significant portion of SAIF premiums have been and are currently
being used to make payments on the so-called "FICO" bonds issued in the late
1980s by the Financing Corporation to recapitalize the now-defunct FSLIC. In
1995, the BIF attained its designated reserve ratio of 1.25% and insurance
premiums for BIF members were reduced to a nominal $2,000 per year payment. SAIF
members, on the other hand, continue to be assessed on their deposits at rates
ranging from 23 to 31 basis points (i.e., $0.23 to $0.31 per $100 of deposits).
On July 28, 1995, the FDIC, the Treasury Department, and the OTS proposed a
SAIF recapitalization plan (the "Proposed Plan") with the general backing of the
thrift industry. Under the Proposed Plan, all SAIF-member institutions (as well
as banks holding SAIF-assessed deposits) would pay a special assessment to
recapitalize the SAIF, and the assessment base for the payments on the FICO
bonds would be expanded to include the deposits of both BIF- and SAIF-insured
institutions. The amount of the special assessment required to recapitalize the
SAIF is currently estimated to be approximately 78 basis points (0.78% of
deposits). In order to pay for their approximately two-thirds share of the
interest due on the FICO bonds, BIF members would be required to pay annual
insurance assessments of 2.5 basis points (0.025% of deposits). Under the
version of the Proposed Plan currently before Congress, the special assessment
would be based on the amount of SAIF-insured deposits held on March 31, 1995. If
a 78 basis point assessment were to be assessed against Wichita Federal's
deposits as of March 31, 1995, Wichita Federal would be required to pay a
30
<PAGE> 39
special assessment on its SAIF-insured deposits of $1.6 million, and its core
and risk-based capital ratios as of March 31, 1996 would be reduced to 10.2% and
22.7%, respectively. However, the special assessment paid by Wichita Federal
presumably would be at least partially offset by a reduction in insurance
premiums paid by the thrift if, as expected, the SAIF became recapitalized and
the FDIC were to reduce SAIF premiums to BIF levels following payment of the
special assessment.
The terms of the Proposed Plan were included in the balance budget
legislation that was vetoed by President Clinton in December 1995 for unrelated
reasons. On May 9, 1996, Senator Dole announced that the Proposed Plan would be
included in legislation repealing a four-cents-per-gallon gas tax imposed in
1993 in order to offset the revenue loss resulting from the gas tax repeal.
While the Clinton Administration generally supports the Proposed Plan, it is
being vigorously opposed by the banking industry. In addition, prospects for
passage of any SAIF recapitalization legislation are also made uncertain by the
possible refusal of the Democratic members of the U.S. Senate to permit a Senate
vote on the gas tax repeal unless the Senate majority also allows a vote on a
proposed increase in the minimum wage. In view of the legislative uncertainty
that currently exists, WFS cannot predict whether the Proposed Plan or any other
recapitalization proposal will be enacted as described above or, if enacted, the
timing or amount of any special SAIF assessment, whether ongoing SAIF premiums
will thereafter be reduced to a level equal to that of BIF premiums, or whether
such legislation, if enacted, may contain other unrelated provisions, for
example, requiring all federally-chartered thrifts to convert to bank charters.
In addition, under several other legislative proposals that have been
pending before Congress, the BIF and the SAIF would be merged into a single
insurance fund some time after the SAIF achieved its designated reserve ratio of
1.25%. As a condition to the merger of the two insurance funds, certain of the
charter consolidation proposals would eliminate the federal thrift charter and
require all federal savings and loan associations and federal savings banks to
become either state-chartered thrifts or commercial banks.
Currently, thrift institutions meeting a prescribed 60% asset test in the
Internal Revenue Code are permitted to make tax-deductible additions to their
bad debt reserves under the "percentage of taxable income" or "PTI" method in an
amount equal to 8% of their taxable income or under the "experience" method,
regardless of their actual loss experience. Thrifts with assets of $500 million
or less converting to bank charters are no longer able to make additions to
their tax bad debt reserves utilizing the PTI method but instead are required to
deduct bad debts only as they occur (the "specific charge-off" method) or to
switch to the experience method. In addition, a recently converted bank must
recapture (i.e., report as income) over a multi-year period all or a portion of
its bad debt reserve and record a current or deferred tax liability for
financial accounting purposes.
Companion tax measures have been introduced in Congress that would
eliminate the ability of thrifts to utilize the PTI method of calculating their
bad debt reserves and require them to switch to either the specific charge-off
method or, in the case of smaller institutions, the experience method. At the
same time, the legislative proposals would reduce the tax burdens of those
thrifts converting to commercial bank charters or continuing as state-chartered
thrifts by only requiring recapture of thrifts' post-1987 bad debt reserves into
income over a six-year period, subject to suspension for up to two years if the
thrift meets a residential loan requirement. There would be no tax liability
associated with recapture of a thrift's pre-1988 bad debt reserves. Wichita
Federal has provided deferred taxes of $216,442 on post-1987 bad debt reserves
of $636,595 as of December 31, 1995.
While it currently appears that Congress is unlikely to enact charter
conversion legislation this year, it is possible that Congress will enact bad
debt reserve changes substantially as described above during the current
session, apart from any charter consolidation legislation, as a means to raise
revenue to offset the impact of certain tax cut and other proposals that are
also pending. WFS's management is unable to predict whether, when, or in what
sequence the above legislation or any other similar legislative proposals will
be enacted or, if enacted, the impact that such proposals would have on Wichita
Federal and its financial condition.
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<PAGE> 40
BUSINESS OF EFC
EFC is a Kansas corporation that is a bank holding company registered with
the Federal Reserve under the BHC Act. EFC has five subsidiary banks serving ten
Kansas communities through 21 branch locations. Through its approximately 94%
owned subsidiary, Emprise Bank, EFC offers a broad range of financial services
through ten offices located in Wichita, Kansas. As of March 31, 1996, EFC had
total consolidated assets of approximately $537 million, total consolidated
deposits of approximately $459 million, and total consolidated shareholders'
equity of approximately $64 million.
The principal executive offices of EFC are located at 211 North Broadway,
Wichita, Kansas 67202 and its telephone number at such address is (316)
264-8394.
DESCRIPTION OF WFS CAPITAL STOCK
WFS is authorized to issue 5,000,000 shares of WFS Common Stock, of which
1,661,178 shares were issued and outstanding as of March 31, 1996. WFS is also
authorized to issue 1,000,000 shares of WFS $0.01 par value serial preferred
stock, none of which is issued and outstanding.
Holders of WFS Common Stock are entitled to receive such dividends as may
be declared by the Board of Directors out of funds legally available therefore.
The ability of WFS to pay dividends is affected by the ability of its subsidiary
depository institution to pay dividends, which is limited by applicable
regulatory requirements and capital guidelines. At December 31, 1995, under such
requirements and guidelines, WFS's subsidiary depository institution had $10.2
million of undivided profits legally available for the payment of dividends.
OTHER MATTERS
MISCELLANEOUS
As of the date of this Proxy Statement, the Board of Directors of WFS knows
of no matters that will be presented for consideration at the Special Meeting
other than as described in this Proxy Statement. However, if any other matters
shall properly come before the Special Meeting or any adjournment thereof and be
voted upon, the enclosed proxy shall be deemed to confer discretionary authority
to the individuals named as proxies therein to vote the shares represented by
such proxy as to any such matters.
SOLICITATION
In addition to solicitation by mail, proxies may be solicited by the
officers, directors, and employees of WFS by telephone, telegram, or in person.
Such officers, directors, and employees will not be additionally compensated for
such solicitation but may be reimbursed for out-of-pocket expenses incurred in
connection therewith. Brokerage houses, nominees, fiduciaries, and other
custodians will be requested to forward solicitation materials to beneficial
owners and will be reimbursed for their reasonable out-of-pocket expenses
incurred in connection therewith. In addition to the foregoing, WFS may retain a
proxy solicitation firm to assist in soliciting proxies at an additional cost.
SHAREHOLDERS PROPOSALS
In the event the Merger is not consummated, WFS expects to hold the next
annual meeting of shareholders during January 1997. Under SEC rules, proposals
of WFS shareholders intended to be presented at that meeting must be received by
WFS at its principal executive offices no later than the date specified in WFS's
1996 annual meeting proxy statement.
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<PAGE> 41
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of WFS Bancorp, Inc. and subsidiaries
as of September 30, 1995 and 1994 and for the two years then ended, incorporated
by reference in this Proxy Statement have been audited by KPMG Peat Marwick LLP,
independent certified public accountants, to the extent and for the periods
indicated in their report thereon. Such consolidated financial statements have
been included in reliance upon the report of KPMG Peat Marwick LLP.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Special Meeting and will have the opportunity to make a statement if they desire
to do so and to respond to appropriate questions.
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<PAGE> 42
APPENDIX A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
WFS BANCORP, INC.
AND
EMPRISE BANK, WICHITA
ENTERED INTO AS OF NOVEMBER 30, 1995
AND AMENDED AND RESTATED AS OF JANUARY 31, 1996
A-1
<PAGE> 43
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
Parties.................................................................................. A-5
Preamble................................................................................. A-5
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER............................................ A-5
1.1 Merger........................................................................ A-5
1.2 Time and Place of Closing..................................................... A-5
1.3 Effective Time................................................................ A-5
1.4 Related Mergers............................................................... A-6
1.5 Restructuring of Merger....................................................... A-6
ARTICLE 2 -- TERMS OF MERGER............................................................. A-6
2.1 Charter....................................................................... A-6
2.2 Bylaws........................................................................ A-7
2.3 Directors and Officers........................................................ A-7
ARTICLE 3 -- MANNER OF CANCELING SHARES OF WFS........................................... A-7
3.1 Cancellation of Shares of WFS................................................. A-7
3.2 Termination of WFS Stock Plans................................................ A-7
3.3 Dissenting Shareholders....................................................... A-7
3.4 Conversion of Stock of Acquisition Company.................................... A-7
ARTICLE 4 -- SURRENDER OF SHARES......................................................... A-7
4.1 Surrender Procedures.......................................................... A-7
4.2 Rights of Former WFS Shareholders............................................. A-8
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF WFS....................................... A-8
5.1 Organization, Standing, and Power............................................. A-8
5.2 Authority; No Breach By Agreement............................................. A-8
5.3 Capital Stock................................................................. A-9
5.4 WFS Subsidiaries.............................................................. A-9
5.5 Financial Statements.......................................................... A-10
5.6 Absence of Certain Changes or Events.......................................... A-10
5.7 Tax Matters................................................................... A-10
5.8 Assets........................................................................ A-10
5.9 Environmental Matters......................................................... A-11
5.10 Compliance with Laws.......................................................... A-11
5.11 Labor Relations............................................................... A-12
5.12 Employee Benefit Plans........................................................ A-12
5.13 Material Contracts............................................................ A-13
5.14 Legal Proceedings............................................................. A-14
5.15 Reports....................................................................... A-14
5.16 Statements True and Correct................................................... A-14
5.17 Regulatory Matters............................................................ A-14
5.18 State Takeover Laws........................................................... A-14
5.19 Charter Provisions............................................................ A-14
5.20 Insurance..................................................................... A-15
5.21 Notes and Leases.............................................................. A-15
5.22 Personal Property............................................................. A-15
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF ACQUIROR.................................. A-15
6.1 Organization and Standing..................................................... A-15
6.2 Authority; No Breach by Agreement............................................. A-15
6.3 Financial Statements.......................................................... A-16
6.4 Absence of Certain Changes or Events.......................................... A-16
</TABLE>
A-2
<PAGE> 44
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
6.5 Compliance with Laws.......................................................... A-16
6.6 Legal Proceedings............................................................. A-16
6.7 Availability of Funds......................................................... A-17
6.8 Statements True and Correct................................................... A-17
6.9 Regulatory Matters............................................................ A-17
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION.................................... A-17
7.1 Affirmative Covenants of WFS.................................................. A-17
7.2 Negative Covenants of WFS..................................................... A-17
7.3 Covenants of Acquiror......................................................... A-19
7.4 Adverse Changes in Condition.................................................. A-19
7.5 Reports....................................................................... A-19
7.6 Treatment of Stock Options.................................................... A-20
ARTICLE 8 -- ADDITIONAL AGREEMENTS....................................................... A-20
8.1 Proxy Statement; Shareholder Approval......................................... A-20
8.2 Applications.................................................................. A-20
8.3 Filings with State Offices.................................................... A-20
8.4 Agreement as to Efforts to Consummate......................................... A-20
8.5 Investigation and Confidentiality............................................. A-20
8.6 Press Releases................................................................ A-21
8.7 Certain Actions............................................................... A-21
8.8 State Takeover Laws........................................................... A-21
8.9 Charter Provisions............................................................ A-22
8.10 Employee Benefits and Contracts............................................... A-22
8.11 Indemnification............................................................... A-22
8.12 Availability of Funds......................................................... A-23
8.13 Dealings with the ESOP........................................................ A-23
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE........................... A-23
9.1 Conditions to Obligations of Each Party....................................... A-23
(a) Shareholder Approval.................................................... A-23
(b) Regulatory Approvals.................................................... A-23
(c) Legal Proceedings....................................................... A-24
(d) ESOP Proceedings........................................................ A-24
9.2 Conditions to Obligations of Acquiror......................................... A-24
(a) Representations and Warranties.......................................... A-24
(b) Performance of Agreements and Covenants................................. A-24
(c) Certificates............................................................ A-24
(d) Accountant's Letters.................................................... A-24
(e) Related Mergers......................................................... A-25
(f) Stockholder Approval.................................................... A-25
9.3 Conditions to Obligations of WFS.............................................. A-25
(a) Representations and Warranties.......................................... A-25
(b) Performance of Agreements and Covenants................................. A-25
(c) Certificates............................................................ A-25
(d) Fairness Opinion........................................................ A-25
ARTICLE 10 -- TERMINATION................................................................ A-25
10.1 Termination................................................................... A-25
10.2 Effect of Termination......................................................... A-26
10.3 Non-Survival of Representations and Covenants................................. A-27
</TABLE>
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<PAGE> 45
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
ARTICLE 11 -- MISCELLANEOUS.............................................................. A-27
11.1 Definitions................................................................... A-27
11.2 Expenses...................................................................... A-31
11.3 Brokers and Finders........................................................... A-33
11.4 Entire Agreement.............................................................. A-33
11.5 Amendments.................................................................... A-33
11.6 Waivers....................................................................... A-33
11.7 Assignment.................................................................... A-34
11.8 Notices....................................................................... A-34
11.9 Governing Law................................................................. A-34
11.10 Counterparts.................................................................. A-34
11.11 Captions...................................................................... A-35
11.12 Interpretations............................................................... A-35
11.13 Enforcement of Agreement...................................................... A-35
11.14 Severability.................................................................. A-35
11.15 Restatement of Prior Agreement................................................ A-35
</TABLE>
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<PAGE> 46
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement")
is made and entered into as of the 30th day of November, 1995, and amended and
restated as of the 31st day of January, 1996, by and between WFS BANCORP, INC.
("WFS"), a Delaware corporation having its principal office located in Wichita,
Kansas; and EMPRISE BANK, WICHITA ("Acquiror"), a Kansas corporation having its
principal office located in Wichita, Kansas.
PREAMBLE
The Boards of Directors of WFS and Acquiror are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective shareholders. This Agreement provides for the acquisition of WFS by
Acquiror pursuant to the merger of WFS with a wholly-owned Subsidiary of
Acquiror to be hereafter formed and the Related Mergers contemplated, but not
agreed upon, hereunder. At the effective time of the Merger, the outstanding
shares of the capital stock of WFS shall be surrendered and canceled for the
cash price per share as provided herein. As a result, shareholders of WFS shall
be entitled to receive the cash price per share as provided herein in lieu of
any shares or other securities of Acquiror or any other entity and the Surviving
Corporation of the Merger and transactions contemplated hereunder shall continue
to conduct the business and operations of WFS. The Merger described in this
Agreement is subject to the approvals of the shareholders of WFS, the Board of
Governors of the Federal Reserve System, the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation ("FDIC"), and the State Banking Board of
the State of Kansas, and the satisfaction of certain other conditions described
in this Agreement.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time, Acquiror shall have caused the formation of a wholly owned
subsidiary of Acquiror (the "Acquisition Company") for the purpose of merging
such Acquisition Company with and into WFS in accordance with the provisions of
Section 252 of the DGCL and Section 6702 of Chapter 17 of the Kansas Statutes
(the "Merger"). WFS shall be the Surviving Corporation resulting from the Merger
and shall continue to be governed by the Laws of the State of Delaware. The
Merger shall be consummated pursuant to the terms of this Agreement, which has
been approved and adopted by the respective Boards of Directors of WFS and
Acquiror, and which Acquiror will cause to be approved by the Board of Directors
and shareholders of the Acquisition Company prior to the Effective Time.
1.2 TIME AND PLACE OF CLOSING. The Closing will take place at 1:00 p.m. on
the date that the Effective Time occurs or at such other time as the Parties,
acting through their chief executive officers or chief financial officers, may
mutually agree. The place of Closing shall be at the offices of Emprise Bank,
Wichita, Kansas, or such other place as may be mutually agreed upon by the
Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by this
Agreement, other than the Related Mergers, shall become effective on the date
and at the time the Certificate of Merger reflecting the Merger shall become
effective with the Secretary of State of the State of Delaware and the
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Kansas (the "Effective Time"). Subject to the
terms and conditions hereof, unless otherwise mutually agreed upon in writing by
the chief executive officers or chief financial officers of each Party, the
Acquiror shall determine and designate when the Effective Time occurs, which
shall be not more than 10 days after the last to occur of (i) the effective date
(including expiration of any applicable waiting period) of the last required
Consent of
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<PAGE> 47
any Regulatory Authority having authority over and approving or exempting the
Merger, and (ii) the date on which the shareholders of WFS approve this
Agreement; provided, however, that Acquiror shall not be required to designate a
date for the Effective Time earlier than April 1, 1996. The designation of the
Effective Time by Acquiror shall be made prior to the last to occur of the
foregoing events and not less than 10 days prior to the Effective Time.
1.4 RELATED MERGERS. Acquiror intends to cause WFS and Wichita Federal
Savings and Loan Association ("Wichita Federal") to be merged ("Related
Mergers") into Acquiror as the Surviving Corporation of the Related Mergers.
Concurrently with or at approximately the same time Acquiror files applications
with the Regulatory Authorities for the necessary Consents for the Merger,
Acquiror will file applications for the necessary Consents for the Related
Mergers so that they may become effective at approximately the same time or
shortly after the Effective Time. It is anticipated that each of WFS and Wichita
Federal shall enter into Related Merger agreements with Acquiror on such terms
as Acquiror may reasonably request and to take such actions in connection
therewith as may reasonably be necessary to authorize and comply with such
agreement and otherwise to cooperate with Acquiror in its efforts to effect the
Related Mergers; provided, however (i) no WFS Company shall be requested to do
any act in violation of any Law, existing Contract, or fiduciary duty, (ii) such
Related Mergers shall not become effective until after the Effective Time, (iii)
there shall be no stockholder approval by WFS or Wichita Federal of the Related
Mergers until after the Effective Time, and (iv) such agreements for the Related
Mergers will automatically terminate in the event of the termination of this
Agreement prior to the Closing.
1.5 RESTRUCTURING OF MERGER. On or before the Effective Time, Acquiror
shall have the right to assign this Agreement to Emprise Financial Corporation
("EFC"), a Kansas corporation having its principal office in Wichita, Kansas,
and the parent corporation of Acquiror. Such assignment to EFC shall include the
right of EFC to form Acquisition Company as its wholly-owned subsidiary, if not
then formed, or acquire all of the capital stock of Acquisition Company, if it
has then been formed. In the event of such assignment, EFC shall cause the
Merger between WFS and Acquisition Company, as the Subsidiary of EFC, to be
consummated as provided in Section 5 of this Agreement. Under such assignment,
EFC shall acquire all of the rights and benefits of Acquiror hereunder and shall
be liable to perform all of the obligations, duties, and covenants of the
Acquiror, and the warranties and representations of Acquiror contained herein
shall be those of EFC and shall be true and correct as to EFC. Notwithstanding
such restructured Merger, the provisions of Section 6 of this Agreement shall
continue in effect insofar as they pertain to the Related Merger of Wichita
Federal into Emprise Bank. Any such assignment shall be in writing with an
executed copy furnished to WFS under which EFC expressly agrees to be bound by
all of the covenants, agreements, representations, and warranties of the
Acquiror hereunder. In addition, in the event the necessary consents of
Regulatory Authorities are denied or Acquiror is advised that any Consent of a
Regulatory Authority is likely to be materially delayed or denied due to the
structure of the proposed Merger and Related Mergers under which WFS and Wichita
Federal are being merged into Emprise Bank, then (i) Acquiror shall assign this
Agreement to EFC as provided above, (ii) the applications for necessary Consents
of the Regulatory Authorities shall be filed accordingly, (iii) Acquiror shall
act diligently to process the amended or newly-filed applications and obtain the
necessary Consents of the Regulatory Authorities as expeditiously as possible,
and (iv) the date set forth in Section 28 of this Agreement shall be changed to
a date six months from the date of assignment contemplated in clause (i) above.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Articles of Incorporation of the Surviving Corporation of
the Merger shall be amended and restated at and as of the Effective Time to read
as did the Articles of Incorporation of Acquisition Company immediately prior to
the Effective Time (except that the name of the Surviving Corporation will
remain unchanged or as otherwise provided by the DGCL) until otherwise amended
or repealed.
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<PAGE> 48
2.2 BYLAWS. The Bylaws of the Surviving Corporation of the Merger shall be
amended and restated at and as of the Effective Time to read as did the Bylaws
of the Acquisition Company immediately prior to the Effective Time (except as
otherwise provided by the DGCL).
2.3 DIRECTORS AND OFFICERS. The directors and officers of the Acquisition
Company in office immediately prior to the Effective Time, together with such
additional persons as may thereafter be elected, shall serve as the directors
and officers, respectively, of the Surviving Corporation of the Merger from and
after the Effective Time in accordance with the Bylaws of the Surviving
Corporation, as amended and restated as of the Effective Time.
ARTICLE 3
MANNER OF CANCELING SHARES OF WFS
3.1 CANCELLATION OF SHARES OF WFS. At the Effective Time, by virtue of the
Merger and without any action on the part of the Acquiror, WFS, or the
shareholders of either of the foregoing, all shares of WFS Common Stock issued
and outstanding immediately prior to the Effective Time, including the shares
issued and held by the ESOP, irrespective of whether such shares have been
allocated to the accounts of participants, and the MRRP, shall be canceled on
the books of WFS and in consideration therefor Acquiror shall make a cash
payment equal to $23.25 ("Merger Cash Price") to the holders thereof for each
such share canceled as herein provided.
3.2 TERMINATION OF WFS STOCK PLANS. At or prior to the Effective Time, all
employee stock options under the WFS Stock Plan shall be deemed vested and
exercisable, whether or not then exercisable, and shall be canceled and
terminated and in consideration therefor the holders of such options shall be
paid by WFS (or Acquiror as necessary) from funds of WFS a cash payment for each
share subject to the option in an amount equal to the difference between the
Merger Cash Price for each such share and the price the holder was required to
pay for such share upon the exercise of the option.
3.3 DISSENTING SHAREHOLDERS. Any holder of shares of WFS Common Stock who
perfects such holder's dissenters' rights in accordance with and as contemplated
by Section 262 of the DGCL shall be entitled to receive the value of such shares
in cash as determined pursuant to such provision of Law; provided, that no such
payment shall be made to any dissenting shareholder unless and until such
dissenting shareholder has complied with the applicable provisions of the DGCL
and surrendered to WFS the certificate or certificates representing the shares
for which payment is being made. In the event that after the Effective Time a
dissenting shareholder of WFS fails to perfect, or effectively withdraws or
loses, such holder's right to appraisal and of payment for such holder's shares,
Acquiror shall issue and deliver the consideration to which such holder of
shares of WFS Common Stock is entitled under this Article 3 (without interest)
upon surrender by such holder of the certificate or certificates representing
shares of WFS Common Stock held by such holder.
3.4 CONVERSION OF STOCK OF ACQUISITION COMPANY. At and as of the Effective
Time of the Merger, each share of Common Stock of the Acquisition Company shall
be converted into one share of Common Stock, $.01 par value per share, of the
Surviving Corporation.
ARTICLE 4
SURRENDER OF SHARES
4.1 SURRENDER PROCEDURES. Within two business days after the Effective
Time, Acquiror shall cause the exchange agent selected by Acquiror (the
"Exchange Agent") to mail to the former shareholders of WFS appropriate
transmittal materials, which shall specify that delivery shall be effected only
upon proper delivery of the certificates representing shares of WFS Common Stock
or options to purchase WFS Common Stock, that the shares of WFS Common Stock or
options to purchase WFS Common Stock have been canceled, and that the
consideration to be paid for such shares or options shall be paid only upon
delivery and surrender of such certificates or option agreements. If Acquiror
elects not to select another Person as Exchange Agent,
A-7
<PAGE> 49
then Acquiror shall be deemed to be the Exchange Agent for all purposes under
this Agreement. After the Effective Time, each holder of shares of WFS Common
Stock or options to purchase WFS Common Stock issued and outstanding at the
Effective Time (other than shareholders who elect to perfect their dissenters'
rights of appraisal in accordance with Section 3.3 of this Agreement) shall
surrender the certificate or certificates representing such shares or options to
the Exchange Agent and shall promptly upon surrender thereof receive in exchange
therefor the consideration provided in Section 3.1 or 3.2 of this Agreement,
together with all undelivered dividends or distributions in respect of such
shares (without interest thereon) pursuant to Section 4.2 of this Agreement.
Acquiror shall not be obligated to deliver the consideration to which any former
holder of WFS Common Stock or options to purchase WFS Common Stock is entitled
as a result of the Merger until such holder surrenders such holder's certificate
or certificates representing the shares of WFS Common Stock or option or options
to purchase WFS Common Stock for which the consideration is to be paid as
provided in Section 3.1 or 3.2 of this Agreement. The certificate or
certificates of WFS Common Stock (other than certificates of shareholders who
elect to perfect their dissenters' rights of appraisal in accordance with
Section 3.3 of this Agreement) so surrendered shall be duly endorsed as the
Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither Acquiror, WFS, nor the Exchange Agent shall be liable
to a holder of WFS Common Stock or options to purchase WFS Common Stock for any
amounts paid or property delivered in good faith to a public official pursuant
to any applicable abandoned property Law.
4.2 RIGHTS OF FORMER WFS SHAREHOLDERS. At the Effective Time, the stock
transfer books of WFS shall be closed as to holders of WFS Common Stock
immediately prior to the Effective Time and no transfer of WFS Common Stock by
any such holder shall thereafter be made or recognized. At the Effective Time
all shares of WFS Common Stock shall be canceled on the stock register and
transfer books of WFS. Until surrendered in accordance with the provisions of
Section 4.1 of this Agreement, each certificate theretofore representing shares
of WFS Common Stock or option or options to purchase WFS Common Stock shall from
and after the Effective Time represent for all purposes only the right to
receive the consideration provided in Section 3.1 or 3.2 of this Agreement upon
surrender of the certificate, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time which have been declared or made by WFS in
respect of such shares of WFS Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF WFS
WFS hereby represents and warrants to Acquiror as follows:
5.1 ORGANIZATION, STANDING, AND POWER. WFS is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on the business of
WFS as now conducted and to own, lease, and operate WFS' Assets. WFS is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of WFS' Assets or the nature or conduct of WFS' business requires WFS
to be so qualified or licensed.
5.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) WFS has the corporate power and
authority necessary to execute, deliver, and perform WFS' obligations under this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of WFS, subject to the approval of this Agreement by the holders of the
outstanding WFS Common Stock, which is the only shareholder vote required for
approval of this Agreement and consummation of the Merger by WFS. Subject to
such requisite shareholder approval, this Agreement represents a legal, valid,
and binding obligation of WFS, enforceable against WFS in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights
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<PAGE> 50
generally and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by WFS, nor the
consummation by WFS of the transactions contemplated hereby, nor compliance by
WFS with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of WFS' Certificate of Incorporation or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any WFS Company under, any
Contract or Permit of any WFS Company, where such Default or Lien, or any
failure to obtain such Consent, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on WFS, or (iii) subject to receipt of
the requisite approvals referred to in Section 9.1(b) of this Agreement, violate
any Law or Order applicable to any WFS Company or any of their respective
material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on WFS, no notice to, filing with, or
Consent of, any public body of authority is necessary for the consummation by
WFS of the Merger and the other transactions contemplated in this Agreement.
5.3 CAPITAL STOCK. (a) The authorized capital stock of WFS consists of (i)
5,000,000 shares of WFS Common Stock, par value $.01 per share, of which
1,657,871 shares are issued and outstanding as of the date of this Agreement,
and (ii) 1,000,000 shares of serial preferred stock, par value $.01 per share,
none of which is issued and outstanding and none of which shall be issued and
outstanding at the Effective Time. All of the issued and outstanding shares of
capital stock of WFS are duly and validly issued and outstanding and are fully
paid and nonassessable under the DGCL. None of the outstanding shares of capital
stock of WFS has been issued in violation of any Laws or any preemptive rights
of the current or past shareholders of WFS. WFS has reserved (i) 160,360 shares
of WFS Common Stock for issuance under the WFS Stock Plan pursuant to which
options to purchase not more than 137,018 shares of WFS Common Stock are
outstanding, (ii) 64,146 shares for issuance under the MRRP, pursuant to which
grants of not more than 57,534 shares of WFS Common Stock are outstanding, and
(iii) 128,292 shares for issuance under the ESOP and which have been issued to
the ESOP, pursuant to which 21,235 shares have been allocated to the accounts of
participants. Prior to the Effective Time, no additional options to purchase
shall be granted under the WFS Stock Plan, no additional grants of shares shall
be made to the MRRP, and no additional shares shall be issued to the ESOP.
(b) Except as set forth in Section 5.3(a) of this Agreement, there are no
shares of capital stock or other equity securities of WFS outstanding and no
outstanding Rights relating to the capital stock of WFS.
5.4 WFS SUBSIDIARIES. WFS has disclosed in Section 5.4 of the WFS
Disclosure Memorandum all of the WFS Subsidiaries as of the date of this
Agreement. Except as disclosed in Section 5.4 of the WFS Disclosure Memorandum,
WFS or one of WFS' Subsidiaries owns all of the issued and outstanding shares of
capital stock of each WFS Subsidiary. No equity securities of any WFS Subsidiary
are or may become required to be issued by reason of any Rights, and there are
no Contracts by which any WFS Subsidiary is bound to issue additional shares of
its capital stock or Rights or by which any WFS Company is or may be bound to
transfer any shares of the capital stock of any WFS Subsidiary. There are no
Contracts relating to the rights of any WFS Company to vote or to dispose of any
shares of the capital stock of any WFS Subsidiary. All of the shares of capital
stock of each WFS Subsidiary held by a WFS Company are fully paid and
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the WFS Company
free and clear of any Lien. Each WFS Subsidiary is either a savings association
or corporation and is duly organized, validly existing, and (as to corporations)
in good standing under the Laws of the jurisdiction in which it is incorporated
or organized, and has the corporate power and authority necessary for it to own,
lease, and operate its Assets and to carry on its business as now conducted.
Each WFS Subsidiary is duly qualified or licensed to transact business as a
foreign
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<PAGE> 51
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed. Each WFS Subsidiary that is
a depository institution is an "insured institution" as defined in the Federal
Deposit Insurance Act and applicable regulations thereunder, and the deposits in
which are insured by the Savings Association Insurance Fund.
5.5 FINANCIAL STATEMENTS. WFS has included in Section 5.8 of the WFS
Disclosure Memorandum copies of all WFS Financial Statements which have been
prepared for periods ended prior to the date hereof and will deliver to Acquiror
copies of all WFS Financial Statements prepared subsequent to the date hereof.
The WFS Financial Statements (as of the dates thereof and for the periods
covered thereby) (i) are or, if dated after the date of this Agreement, will be
in accordance with the books and records of the WFS Companies, which are or will
be, as the case may be, complete and correct and which have been or will have
been, as the case may be, maintained in accordance with good business practices,
and (ii) present or will present, as the case may be, fairly the consolidated
financial position of the WFS Companies as of the dates indicated and the
consolidated results of operations, changes in shareholders' equity, and cash
flows of the WFS Companies for the periods indicated, in accordance with GAAP
(subject to any exceptions as to consistency specified therein or as may be
indicated in the notes thereto or, in the case of interim financial statements,
to normal recurring year-end adjustments that are not material in amount or
effect). To the Knowledge of WFS, the WFS Companies have no material contingent
liabilities not reflected on the WFS Financial Statements other than those
disclosed in Section 5.5 of the WFS Disclosure Memorandum.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1995, except as
disclosed in the WFS Financial Statements delivered prior to the date of this
Agreement or as disclosed in Section 5.6 of the WFS Disclosure Memorandum, there
have been no events, changes, or occurrences which have had, or are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
WFS. To the Knowledge of WFS, there are no impending termination, expiration, or
loss of Contracts, franchises, licenses, Permits, or other Assets that,
individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect on WFS.
5.7 TAX MATTERS. (a) All Tax returns required to be filed by or on behalf
of any of the WFS Companies have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1994, and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, and all returns filed are
complete and accurate to the Knowledge of WFS. All Taxes shown on filed returns
have been paid. As of the date of this Agreement, there is no audit or
examination being made by any taxing authority and no notice has been received
by any WFS Company of an upcoming audit or examination by any taxing authority.
As of the date of this Agreement, there is no deficiency or refund Litigation
with respect to any Taxes, except as reserved against in the WFS Financial
Statements delivered prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) None of the WFS Companies has executed an extension or waiver of any
statute of limitations on the assessment or collection of any Tax due (excluding
such statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
(c) Adequate provision for any Taxes due or to become due for any of the
WFS Companies for the period or periods through and including the date of the
respective WFS Financial Statements has been made and is reflected on such WFS
Financial Statements.
(d) Deferred Taxes of the WFS Companies have been provided for in
accordance with GAAP. To the Knowledge of WFS, there is no item of deferred
taxable income which will become taxable due to the consummation of the Merger
or the Related Mergers that is reasonably likely to have a Material Adverse
Effect on WFS, other than as disclosed in Section 5.7(d) of the WFS Disclosure
Memorandum.
5.8 ASSETS. Except as disclosed in Section 5.5 of the WFS Disclosure
Memorandum or as disclosed or reserved against in the WFS Financial Statements
delivered prior to the date of this Agreement, the WFS Companies have good and
marketable title, free and clear of all Liens, to all of their respective
Assets. All
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tangible properties used in the businesses of the WFS Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with WFS' past practices. All Assets which are
material to WFS' business on a consolidated basis, held under leases or
subleases by any of the WFS Companies, are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceedings may be brought), and each such Contract is in full force and effect.
None of the WFS Companies has received notice from any insurance carrier that
(i) any insurance will be canceled or that coverage thereunder will be reduced
or eliminated, or (ii) premium costs with respect to any policies of insurance
will be substantially increased. The Assets of the WFS Companies include all
Assets required to operate the business of the WFS Companies as presently
conducted. Section 5.8 of the WFS Disclosure Memorandum lists all of the real
estate owned by the WFS Companies, and except as disclosed therein, title to all
of such real properties are insured under an owner's title insurance policy
issued by a title insurance company authorized to do business in the state where
the property is located.
5.9 ENVIRONMENTAL MATTERS. (a) Except as disclosed in Section 5.9(a) of
the WFS Disclosure Memorandum, to the Knowledge of WFS, each WFS Company, its
Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on WFS.
(b) There is no Litigation pending or, to the Knowledge of WFS, threatened
before any court, governmental agency or authority, or other forum in which any
WFS Company or any of its Participation Facilities has been or, with respect to
threatened Litigation, may be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment or presence of any Hazardous Material, whether
or not occurring at, on, under, or involving a site owned, leased, or operated
by any WFS Company or any of its Participation Facilities, except for such
Litigation pending or threatened which is disclosed in Section 5.14 of the WFS
Disclosure Memorandum.
(c) There is no Litigation pending or, to the Knowledge of WFS, threatened
before any court, governmental agency or authority, or other forum in which any
WFS Company with respect to its Loan Properties has been or, with respect to
threatened Litigation, may be named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment or
presence of any Hazardous Material, whether or not occurring at, on, under, or
involving a Loan Property, except for such Litigation pending or threatened that
is disclosed in Section 5.14 of the WFS Disclosure Memorandum.
(d) To the Knowledge of WFS, there is no reasonable basis for any
Litigation of a type described in subsections (b) or (c), except such as is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on WFS.
(e) To the Knowledge of WFS, there have been no releases and there is no
presence of Hazardous Material in, on, under, or affecting any property referred
to above, including any Participation Facility or Loan Property, except such as
are disclosed in Section 5.9 of the WFS Disclosure Memorandum.
5.10 COMPLIANCE WITH LAWS. WFS is duly registered as a savings and loan
holding company under the HOLA. Each WFS Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on a WFS Company, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on a WFS Company.
None of the WFS Companies:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on WFS; and
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(b) since January 1, 1994, has received any notification or communication
from any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any WFS Company is
not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, where such noncompliance is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on WFS, (ii) threatening to revoke any Permits, the revocation of which
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on WFS or (iii) requiring any WFS Company to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or to adopt any Board
resolution or similar undertaking, which restricts materially the conduct of its
business, or in any manner related to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
5.11 LABOR RELATIONS. No WFS Company is the subject of any litigation
asserting that it or any other WFS Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other WFS Company to bargain with any
labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving any WFS Company, pending or threatened,
nor is there any activity involving any WFS Company's employees seeking to
certify a collective bargaining unit or engaging in any other organization
activity.
5.12 EMPLOYEE BENEFIT PLANS. (a) WFS has disclosed in Section 5.12 of the
WFS Disclosure Memorandum, and has delivered or made available to Acquiror prior
to the execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including "employee benefit plans" as
that term is defined in Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any WFS Company or
Affiliate thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the "WFS Benefit
Plans"). Any of the WFS Benefit Plans which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA, is referred to herein
as a "WFS ERISA Plan."
(b) Except as disclosed in Section 5.12(b) of the WFS Disclosure
Memorandum, all WFS Benefit Plans are in compliance with the applicable terms of
ERISA, the Internal Revenue Code, and any other applicable Laws the breach or
violation of which are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on WFS. Each WFS ERISA Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue Code has
received a favorable determination letter from the Internal Revenue Service, and
WFS is not aware of any circumstances likely to result in revocation of any such
favorable determination letter. To the Knowledge of WFS, no WFS Company has
engaged in a transaction with respect to any WFS Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would subject
any WFS Company to a Tax imposed by either Section 4975 of the Internal Revenue
Code or Section 502(i) of ERISA in amounts which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on WFS.
(c) Within the six-year period preceding the Effective Time, no Liability
under Subtitle C or D of Title IV of ERISA has been or is expected to be
incurred by any WFS Company with respect to any ongoing, frozen, or terminated
single-employer plan or the single-employer plan of any entity which is
considered one employer with WFS under Section 4001 of ERISA or Section 414 of
the Internal Revenue Code or Section 302 of ERISA (whether or not waived) (an
"ERISA Affiliate"), which Liability is reasonably likely to have a Material
Adverse Effect on WFS. No WFS Company has incurred any withdrawal Liability with
respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate), which
Liability is reasonably likely to have a Material Adverse Effect on WFS. No
Notice of a "reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been required to
be filed for any WFS Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof.
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(d) No WFS Company has any Liability for retiree health and life benefits
under any of the WFS Benefit Plans and there are no restrictions on the rights
of such WFS Company to amend or terminate any such Plan without incurring any
Liability thereunder, which Liability is reasonably likely to have a Material
Adverse Effect on WFS.
(e) Except as disclosed in Section 5.12 of the WFS Disclosure Memorandum,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby (including the Related Mergers) will (i) result
in any payment (including severance, unemployment compensation, golden
parachute, or otherwise) becoming due to any director or any employee of any WFS
Company from any WFS Company under any WFS Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any WFS Benefit Plan, or (iii)
result in any acceleration of the time of payment or vesting of any such
benefit, where such payment, increase, or acceleration is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on WFS.
(f) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any WFS Company and their respective beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the WFS Financial Statements to the extent required
by and in accordance with GAAP.
(g) No WFS Company has any Contract or obligation of any nature to pay or
provide, and is not now paying or providing, to any former director, officer, or
employee, any periodic or other payment or other consideration or benefit,
including life or health insurance, except as disclosed in Section 5.12 of the
WFS Disclosure Memorandum.
5.13 MATERIAL CONTRACTS. Except as disclosed in Section 5.13 of the WFS
Disclosure Memorandum, none of the WFS Companies, nor any of their respective
Assets, businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract, (ii) any Contract relating to the borrowing of money by
any WFS Company or the guarantee by any WFS Company of any such obligation
(other than Contracts evidencing deposit liabilities, purchases of federal
funds, fully-secured repurchase agreements, and Federal Home Loan Bank advances
of depository institution Subsidiaries, trade payables, and Contracts relating
to borrowings or guarantees made in the ordinary course of business), or any
Contract relating to any loans or indebtedness of any WFS Company (including any
loan from the Federal Home Loan Bank) which will be accelerated or could at the
option of the lender or creditor of such indebtedness be accelerated, either
before or after the consummation of the transactions contemplated by this
Agreement (including the Related Mergers), by virtue of this Agreement or such
consummation, (iii) any Contract, accepted order, or other commitment for the
purchase or sale of materials, services, or supplies having a total remaining
contract price in excess of $10,000, (iv) any contract containing any
restrictions on any party thereto competing with any of the WFS Companies or any
of the WFS Companies competing with any Person or otherwise restricting any of
the WFS Companies in the conduct of their business, (v) any other Contract
which, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on any WFS Company or which was entered into other than in the
ordinary and usual course of business, and (vi) any other Contract or amendment
thereto that would be required to be filed as an exhibit to a Form 10-K filed by
WFS with the SEC as of the date of this Agreement that has not been filed as an
exhibit to WFS' Form 10-K filed for the fiscal year ended September 30, 1994, or
in another SEC Document and identified to Acquiror (together with all Contracts
referred to in Sections 5.8 and 5.12(a) of this Agreement, the "WFS Contracts").
With respect to each WFS Contract and except as disclosed in Section 5.13 of the
WFS Disclosure Memorandum: (i) the Contract is in full force and effect; (ii) no
WFS Company is in Default thereunder, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on WFS; (iii) no WFS Company has repudiated or waived any material
provision of any such Contract; and (iv) no other party to any such Contract is,
to the Knowledge of WFS, in Default in any respect, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on WFS, or has repudiated or waived any material provision
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thereunder. All of the indebtedness of any WFS Company for money borrowed (other
than Federal Home Loan Bank advances) is prepayable at any time by such WFS
Company without penalty or premium.
5.14 LEGAL PROCEEDINGS. Except as disclosed in Section 5.14 of the WFS
Disclosure Memorandum, there is no Litigation instituted, pending, or, to the
Knowledge of WFS, threatened (or unasserted but considered probable of
assertion) against any WFS Company, or against any Asset, interest, or right of
any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on WFS, nor are there any Orders of any
Regulatory Authorities, other than governmental authorities, or arbitrators
outstanding against any WFS Company that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on WFS.
5.15 REPORTS. Since January 1, 1992, or the date of organization if later,
each WFS Company has timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with (i) the SEC, including, but not limited to, Forms 10-K, Forms 10-Q,
Forms 8-K, and proxy statements, (ii) other Regulatory Authorities, and (iii)
any applicable state securities or banking authorities (except, in the case of
state securities authorities, failures to file which are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on WFS). As
of their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, 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 made therein, in light of the circumstances
under which they were made, not misleading.
5.16 STATEMENTS TRUE AND CORRECT. None of the information supplied or to
be supplied by any WFS Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to WFS' shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by a WFS Company or
any Affiliate thereof with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of WFS, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
any WFS Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law. The Proxy Statement and any amendment thereof or supplement
thereto to be mailed to shareholders, and any document to be filed with any
Regulatory Authority shall prior to such mailing or filing be submitted to and
approved by Acquiror.
5.17 REGULATORY MATTERS. No WFS Company has taken any action or has any
Knowledge of any fact or circumstance that is reasonably likely to materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
5.18 STATE TAKEOVER LAWS. Each WFS Company has taken all necessary action
to exempt the transactions contemplated by this Agreement from any applicable
state takeover Law, including Section 203 of the DGCL.
5.19 CHARTER PROVISIONS. Each WFS Company has taken all action so that the
entering into of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement (including the Related Mergers) do
not and will not result in the grant of any Rights to any Person under the
Certificate of Incorporation, Bylaws, or other governing instruments of any WFS
Company or restrict or impair the ability of Acquiror or any of its Subsidiaries
or Affiliates to vote, or otherwise to exercise the rights of a shareholder with
respect to, shares of any WFS Company that may be directly or indirectly
acquired or controlled by it.
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5.20 INSURANCE. Section 5.20 of the WFS Disclosure Memorandum contains a
complete list of all insurance policies presently in effect. All the insurance
policies and bonds currently owned by any WFS Company are in full force and
effect.
5.21 NOTES AND LEASES. To the Knowledge of WFS, all promissory notes and
leases owned by Wichita Federal at the Effective Time will represent bona fide
indebtedness or obligations to Wichita Federal and are and will be enforceable
in accordance with their terms without valid set-offs or counterclaims, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws and equitable principles affecting creditors' rights generally;
provided, however, no representation or warranty is made in this Agreement as to
the collectibility of such notes and leases.
5.22 PERSONAL PROPERTY. Each of the WFS Companies has good and marketable
title to all of the machinery, equipment, materials, supplies, and other
property of every kind, tangible or intangible, contained in its offices and
other Participation Facilities or shown as assets in its records and books of
account, free and clear of all Liens. All leases of personal property to which
any of the WFS Companies is a party as lessee and which are material to its
operations are valid and enforceable in accordance with their terms, and there
has been no Default by any party thereto that is reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect on WFS. All
of such personal property owned or leased by a WFS Company is in good operating
condition, normal wear and tear excepted.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to WFS as follows:
6.1 ORGANIZATION AND STANDING. Acquiror is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of Kansas and
has the corporate power and authority to carry on its business as now conducted
and to own, lease, and operate its material Assets. The Acquisition Company will
be a duly organized and validly existing Kansas corporation and a wholly-owned
Subsidiary of Acquiror in good standing under the Laws of the State of Kansas at
the Effective Time.
6.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) Acquiror has the corporate
power and authority necessary to execute, deliver, and perform Acquiror's
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Acquiror. This Agreement represents a legal, valid, and
binding obligation of Acquiror, enforceable against Acquiror in accordance with
its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement by Acquiror, nor
the consummation by Acquiror of the transactions contemplated hereby, nor
compliance by Acquiror with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of Acquiror's Articles of Incorporation
or Bylaws, or (ii) constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any Asset of any
Acquiror Company under, any Contract or Permit of any Acquiror Company, where
such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Acquiror, or (iii) subject to receipt of the requisite approvals referred to in
Section 9.1(b) of this Agreement, violate any Law or Order applicable to any
Acquiror Company or any of their respective material Assets.
(c) Other than Consents required from Regulatory Authorities, and other
than notices to or filings with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation with respect to any employee benefit plans, or
under the HSR Act, and other than Consents, filings, or notifications which, if
not obtained or
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made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Acquiror, no notice to, filing with, or Consent of,
any public body or authority is necessary for the consummation by any Acquiror
Company of the Merger and the other transactions contemplated in this Agreement.
6.3 FINANCIAL STATEMENTS. Acquiror has disclosed in Section 6.3 of the
Acquiror Disclosure Memorandum all Acquiror Financial Statements which have been
prepared for periods ended prior to the date hereof and will deliver to WFS
copies of all Acquiror Financial Statements prepared subsequent to the date
hereof. The Acquiror Financial Statements (as of the dates thereof and for the
periods covered thereby) (i) are or, if dated after the date of this Agreement,
will be in accordance with the books and records of the Acquiror Companies,
which are or will be, as the case may be, complete and correct and which have
been or will have been, as the case may be, maintained in accordance with good
business practices, and (ii) present or will present, as the case may be, fairly
the consolidated financial position of the Acquiror Companies as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows of the Acquiror Companies for the periods indicated, in
accordance with GAAP (subject to exceptions as to consistency specified therein
or as may be indicated in the notes thereto or, in the case of interim financial
statements, to normal recurring year-end adjustments that are not material in
amount or effect).
6.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1994, except
as disclosed in the Acquiror Financial Statements delivered prior to the date of
this Agreement or as disclosed in Section 6.4 of the Acquiror Disclosure
Memorandum, there have been no events, changes, or occurrences which have had,
or are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Acquiror. To the Knowledge of Acquiror, there are no impending
termination, expiration, or loss of Contracts, franchises, licenses, Permits, or
other Assets that, individually or in the aggregate, are reasonably likely to
have a Material Adverse Effect on Acquiror.
6.5 COMPLIANCE WITH LAWS. EFC is duly registered as a bank holding company
under the BHC Act. Each Acquiror Company has in effect all permits necessary for
it to own, lease, or operate its material Assets and to carry on its business as
now conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Acquiror, and there has occurred no Default under any such Permit, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Acquiror. Except as disclosed in Section
6.5 of the Acquiror Disclosure Memorandum, no Acquiror Company:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Acquiror; and
(b) since January 1, 1994, has received any notification or communication
from any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any Acquiror
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Acquiror, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Acquiror, or (iii) requiring any
Acquiror Company to enter into or consent to the issuance of a cease and desist
order, formal agreement, directive, commitment, or memorandum of understanding,
or to adopt any Board resolution or similar undertaking, which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management, or the payment of
dividends.
6.6 LEGAL PROCEEDINGS. There is no Litigation instituted or pending, or,
to the Knowledge of Acquiror, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any Acquiror Company, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Acquiror, nor are
there any Orders of any Regulatory Authorities, other governmental
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authorities, or arbitrators outstanding against any Acquiror Company, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Acquiror.
6.7 AVAILABILITY OF FUNDS. As of the date of this Agreement and at the
Effective Time, Acquiror has, and will have, available sufficient liquid funds
to enable it to satisfy its payment obligations pursuant to this Agreement.
6.8 STATEMENTS TRUE AND CORRECT. None of the information supplied or to be
supplied by any Acquiror Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to WFS' shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by any Acquiror
Company or any Affiliate thereof with any Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Proxy Statement, when first mailed
to the shareholders of WFS, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
any Acquiror Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
6.9 REGULATORY MATTERS. No Acquiror Company or any Affiliate thereof has
taken any action or has any Knowledge of any fact or circumstance that is
reasonably likely to materially impede or delay receipt of any Consents of
Regulatory Authorities referred to in Section 9.1(b) of this Agreement or result
in the imposition of a condition or restriction of the type referred to in the
last sentence of such Section. Upon consummation of the Merger, Acquiror will
continue to satisfy all regulatory requirements with respect to capital adequacy
and will continue to maintain regulatory capital ratios at a level sufficient
for Acquiror (or Acquiror's depository institution in the case Acquiror is EFC)
to qualify as a "well-capitalized" institution under regulations promulgated
pursuant to the Federal Deposit Insurance Corporation Act.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF WFS. Unless the prior written consent of
Acquiror shall have been obtained, and except as otherwise expressly
contemplated herein, WFS shall and shall cause each of its Subsidiaries to (i)
operate its business only in the usual, regular, and ordinary course and in
accordance with past practices; (ii) preserve intact its business organization
and Assets and maintain its rights and franchises; (iii) make reasonable efforts
to keep available to Acquiror Companies the services of the present officers and
employees of WFS Companies; (iv) make reasonable efforts to preserve the good
will of customers and others having business relations with WFS Companies; (v)
maintain the properties of WFS Companies in customary repair, working order, and
condition (reasonable wear and tear excepted); (vi) keep in force at not less
than their present limits all existing policies of insurance under which WFS
Companies are the insured; and (vii) take no action which would (a) adversely
affect the ability of any Party to obtain any Consents required for the
transactions contemplated hereby (including the Related Mergers) without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 9.1(b) of this Agreement, or (b) adversely affect the
ability of any Party to perform its covenants and agreements under this
Agreement.
7.2 NEGATIVE COVENANTS OF WFS. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, WFS
covenants and agrees that it will not do or agree or commit to do, or permit any
of its Subsidiaries to do or agree to commit to do, any of the following without
the prior written consent of the chief executive officer, president, or chief
financial officer of Acquiror, or Emprise Bank, Wichita, if it is not the
Acquiror at that time, which consent shall not be unreasonably withheld:
(a) amend the Certificate of Incorporation, Bylaws, or other governing
instruments of any WFS Company; or
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(b) incur any additional debt obligation or other obligation for borrowed
money (other than indebtedness of a WFS Company to another WFS Company) in
excess of an aggregate of $200,000 (for the WFS Companies on a consolidated
basis) except in the ordinary course of the business of WFS or its Subsidiaries
consistent with past practices (which exception shall include, for WFS
Subsidiaries that are depository institutions, creation of deposit liabilities,
purchases of federal funds, advances from the Federal Reserve Bank or Federal
Home Loan Bank, and entry into repurchase agreements fully secured by U. S.
government or agency securities), or impose, or suffer the imposition of, on any
Asset of any WFS Company any Lien or permit any such Lien to exist (other than
in connection with deposits, repurchase agreements, Federal Home Loan Bank
advances, bankers acceptances, "treasury tax and loan" accounts established in
the ordinary course of business, the satisfaction of legal requirements in the
exercise of trust powers, and Liens in effect as of the date hereof that are
disclosed in Section 7.2(b) of the WFS Disclosure Memorandum), or, whether or
not in the ordinary course of business of WFS or its Subsidiaries consistent
with past practices, (i) incur any debt or other obligation for borrowed money
having a maturity of more than two years, (ii) enter into any loan commitment in
excess of $200,000 other than residential mortgages intended for secondary
market sale, or (iii) enter into a commitment to loan to or purchase a loan of a
borrower who does not reside or do business in the State of Kansas or commit to
enter into or purchase a loan which is secured by property located outside the
State of Kansas; or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under WFS Benefit Plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any WFS Company, or declare or pay any dividend or make any
other distribution in respect of WFS' capital stock, provided that WFS may (to
the extent legally and contractually permitted to do so), but shall not be
obligated to, declare and pay regular quarterly cash dividends on the shares of
WFS Common Stock at a rate not in excess of $.10 per share with usual and
regular record and payment dates in accordance with past practice disclosed in
Section 7.2(c) of the WFS Disclosure Memorandum and such dates may not be
changed without the prior written consent of Acquiror; provided, further, that,
with respect to the calendar quarter in which the Effective Time occurs: (i) no
dividend may be paid by WFS if the Effective Time occurs on or before the tenth
day of such quarter; (ii) a dividend equal to one-third ( 1/3) of the regular
quarterly dividend that could otherwise be permissibly paid during such quarter
pursuant to this Section 7.2(c) may be paid by WFS if the Effective Time occurs
after the tenth day of such quarter but on or before the 40th day of such
quarter; (iii) a dividend equal to two-thirds ( 2/3) of the regular quarterly
dividend that would otherwise be permissibly paid during such quarter pursuant
to this Section 7.2(c) may be paid by WFS if the Effective Time occurs after the
40th day of such quarter, but on or before the 70th day of such quarter; and
(iv) the dividend that could otherwise be permissibly paid during such quarter
pursuant to this Section 7.2(c) may be paid by WFS if the Effective Time occurs
after the 70th day of such quarter; or
(d) except pursuant to the exercise of stock options outstanding as of the
date hereof under the WFS Stock Plan and pursuant to the terms thereof in
existence on the date hereof or the vesting of shares of WFS Common Stock under
the MRRP or the ESOP and pursuant to the terms thereof in existence on the date
hereof, issue, sell, pledge, encumber, authorize the issuance of, enter into any
Contract to issue, sell, pledge, encumber, or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of WFS Common
Stock or any other capital stock of any WFS Company, or any stock appreciation
rights, or any option, warrant, conversion, or other right to acquire any such
stock, or any security convertible into any such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any WFS
Company or issue or authorize the issuance of any other securities in respect of
or in substitution for shares of WFS Common Stock, or sell, lease, mortgage, or
otherwise dispose of or otherwise encumber any shares of capital stock of any
WFS Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another WFS Company) or any Asset having a book value in excess
of $100,000 other than in the ordinary course of business for reasonable and
adequate consideration; or
(f) except for purchases of U. S. Treasury securities or U. S. Government
agency securities, which in either case have maturities of three years or less,
purchase any securities, including mortgage-backed securities, or make any
material investment, either by purchase of stock (other than capital stock of
the
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Federal Home Loan Bank of Topeka relative to the acquisition of any new
advances) or securities, contributions to capital, Asset transfers, or purchase
of any Assets, in any Person other than a wholly-owned WFS Subsidiary, or
otherwise acquire direct or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of business, or (ii)
acquisitions of control by a depository institution Subsidiary in its fiduciary
capacity; or
(g) grant any increase in compensation or benefits to the employees or
officers of any WFS Company, except in accordance with past practices disclosed
in Section 7.2(g) of the WFS Disclosure Memorandum or as required by Law; pay
any severance or termination pay or any bonus other than pursuant to written
policies or written Contracts in effect on the date of this Agreement and
disclosed in Section 7.2(g) of the WFS Disclosure Memorandum; enter into or
amend any severance agreements with officers of any WFS Company; grant any
material increase in fees or other increases in compensation or other benefits
to directors of any WFS Company except in accordance with past practice
disclosed in Section 7.2(g) of the WFS Disclosure Memorandum; or voluntarily
accelerate the vesting of any stock options or other stock-based compensation or
employee benefits; or
(h) enter into or amend any employment Contract between any WFS Company and
any Person (unless such amendment is required by Law); or
(i) except as disclosed in Section 7.2(i) of the WFS Disclosure Memorandum,
adopt any new employee benefit plan of any WFS Company or make any material
change in or to any existing employee benefit plans of any WFS Company other
than any such change that is required by Law or that, in the opinion of counsel,
is necessary or advisable to maintain the tax qualified status of any such plan;
or
(j) except as disclosed in Section 7.2(j) of the WFS Disclosure Memorandum,
make any significant change in any Tax or accounting methods or systems of
internal accounting controls, except as may be appropriate to conform to changes
in Tax Laws or regulatory accounting requirements or GAAP; or
(k) commence any Litigation other than in accordance with past practice,
settle any Litigation involving any Liability of any WFS Company for money
damages of $50,000 or more or any restrictions upon the operations of any WFS
Company; or
(l) modify, amend, or terminate any material Contract (including any loan
Contract with an unpaid balance exceeding $100,000) or waive, release,
compromise, or assign any material rights or claims.
7.3 COVENANTS OF ACQUIROR. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Acquiror
covenants and agrees that it shall take no action which would (i) materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 9.1(b) of
this Agreement, or (ii) materially adversely affect the ability of any Party to
perform its covenants and agreements under this Agreement. Acquiror further
agrees that from the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement, without the prior written approval of
WFS, Acquiror shall not agree to make any acquisition of an unaffiliated
financial institution which could reasonably be expected to jeopardize or delay
beyond April 1, 1996, any Consent of a Regulatory Authority required for the
transactions contemplated hereby.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries or Affiliates which (i) is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on it or (ii) would cause or
constitute a material breach of any of its representations, warranties, or
covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports, such financial statements will fairly present the
consolidated financial position of the entity
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filing such statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows for the periods then
ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not material). As
of their respective dates, such reports will comply in all material respects
with the Securities Laws and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Any financial statements contained in any
other reports to another Regulatory Authority shall be prepared in accordance
with Laws applicable to such reports.
7.6 TREATMENT OF STOCK OPTIONS. WFS shall use its best efforts to obtain
an agreement from each holder of an employee stock option under the WFS Stock
Plan to the effect that while such holder is an employee of WFS such holder will
not exercise the option prior to the Effective Time or termination of this
Agreement.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 PROXY STATEMENT; SHAREHOLDER APPROVAL. After execution of this
Agreement, WFS shall promptly call a Shareholders' Meeting, to be held as soon
as reasonably practicable for the purpose of voting upon approval of this
Agreement and such other related matters as it deems appropriate. In connection
with the Shareholders' Meeting, (i) WFS shall prepare and file with the SEC a
Proxy Statement and mail such Proxy Statement to WFS' shareholders, (ii) the
Parties shall furnish to each other all information concerning them that they
may reasonably request in connection with such Proxy Statement, (iii) the Board
of Directors of WFS shall recommend (subject to compliance with their fiduciary
duties as advised by counsel) to its shareholders the approval of this
Agreement, and (iv) the Board of Directors and officers of WFS shall (subject to
compliance with their fiduciary duties as advised by counsel) use their
reasonable efforts to obtain such shareholders' approval.
8.2 APPLICATIONS. Acquiror shall with due diligence prepare and file, and
WFS shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement, including the Related Mergers,
seeking the requisite Consents necessary to consummate the transactions
contemplated by this Agreement, including the Related Mergers. Acquiror shall
provide WFS the opportunity to review such applications prior to the filing of
such applications with the Regulatory Authorities and shall regularly advise WFS
as to the progress in obtaining the requisite Consents.
8.3 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Acquiror shall execute and file the Certificate of
Merger with the Secretary of State of the State of Delaware and the Certificate
of Merger with the Secretary of State of the State of Kansas in connection with
the Closing.
8.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement (including the Related Mergers), including using its reasonable
efforts to lift or rescind any Order adversely affecting its ability to
consummate the transactions contemplated herein (including the Related Mergers)
and to cause to be satisfied the conditions referred to in Article 9 of this
Agreement; provided, that nothing herein shall preclude either Party from
exercising its rights under this Agreement. Each Party shall use, and shall
cause each of its Subsidiaries to use, its reasonable efforts to obtain all
Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement, including the Related Mergers.
8.5 INVESTIGATION AND CONFIDENTIALITY. (a) Prior to the Effective Time,
WFS shall keep Acquiror advised of all material developments relevant to its
business and the business of its Subsidiaries and to
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consummation of the Merger and shall permit Acquiror to make or cause to be made
such investigation of the business and properties of it and its Subsidiaries,
including, at the expense of Acquiror, environmental audits, and of their
respective financial and legal conditions as Acquiror reasonably requests,
provided that such investigation shall be reasonably related to the transactions
contemplated hereby and shall not interfere unnecessarily with normal
operations. No investigation by Acquiror shall affect the representations and
warranties of WFS.
(b) In addition to Acquiror's obligations under the Confidentiality
Agreement, Acquiror shall, and shall cause its advisers and agents to, maintain
the confidentiality of all confidential information furnished to it by WFS
Companies concerning WFS Companies' businesses, operations, and financial
positions and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement. If this
Agreement is terminated prior to the Effective Time, Acquiror shall promptly
return or certify the destruction of all documents and copies thereof, and all
work papers containing confidential information received from WFS Companies.
(c) Each Party agrees to give the other Party notice as soon as practicable
after any determination by it of any fact or occurrence relating to the other
Party which it has discovered through the course of its investigation and which
represents, or is reasonably likely to represent, either a material breach of
any representation, warranty, covenant, or agreement of the other Party or which
has had or reasonably may have a Material Adverse Effect on the other Party.
8.6 PRESS RELEASES. Prior to the Effective Time, WFS and Acquiror shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.6
shall be deemed to prohibit any party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.7 CERTAIN ACTIONS. (a) Except with respect to this Agreement and the
transactions contemplated hereby, no WFS Company nor any Affiliate thereof nor
any Representative retained by any WFS Company shall directly or indirectly
solicit any Acquisition Proposal by any Person. No WFS Company or any Affiliate
or Representative thereof shall furnish any non-public information that it is
not legally obligated to furnish, negotiate with respect to, or enter into any
Contract with respect to, any Acquisition Proposal, but WFS may communicate
information about such an Acquisition Proposal received at or before the
Shareholders' Meeting to its shareholders if and to the extent that it is
required to do so in order to comply with its legal obligations. WFS shall
promptly notify Acquiror orally and in writing in the event that it receives any
inquiry or proposal relating to any such transaction, whether received before or
after the Shareholders' Meeting.
(b) Notwithstanding the foregoing, the WFS Companies, Affiliates, and
Representatives are not obligated to take any of the actions set forth in
subsection (a), or refrain from taking any of the actions set forth in
subsection (a), if the Board of Directors of WFS, after consultation with WFS'
legal counsel, determines in good faith that such actions or inactions
(including the notice required by the last sentence of subsection (a)) would be
inconsistent with its fiduciary obligations. If, in the event of an Acquisition
Proposal, the Board of Directors of WFS, after consultation with WFS' legal
counsel, determines that it is in the best interests of WFS and its shareholders
to take, or seek to take, one or more actions in response to such Acquisition
Proposal, then no such action taken by WFS in response thereto, including the
termination of this Agreement, shall be deemed to be, or to result in, a breach
of any of the representations, warranties, covenants, agreements, or
restrictions of WFS contained in this Agreement; provided, however, WFS shall
have no right to take any such actions, including a termination of this
Agreement, in response to any Acquisition Proposal or inquiries or discussions
pertaining to a possible Acquisition Proposal made or received after the
approval of this Agreement by the shareholders of WFS; and provided further,
that any such action taken by WFS shall be subject to the provisions of Section
11.2.
8.8 STATE TAKEOVER LAWS. Each WFS Company shall take all necessary steps
to exempt the transactions contemplated by this Agreement (including the Related
Mergers) from, or if necessary challenge the validity or applicability of, any
applicable state takeover Law, including Section 203 of the DGCL.
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8.9 CHARTER PROVISIONS. Each WFS Company shall take all necessary action
to ensure that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated hereby, including the Related
Mergers, do not and will not result in the grant of any Rights to any Person
under the Certificate of Incorporation, Bylaws, or other governing instruments
of any WFS Company or restrict or impair the ability of Acquiror or any of its
Subsidiaries or Affiliates to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any WFS Company that may be directly or
indirectly acquired or controlled by it.
8.10 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time,
Acquiror shall provide generally to officers and employees of the WFS Companies
who become employees of Acquiror employee benefits under employee benefit plans
(other than stock option or other plans involving the potential issuance of
Acquiror Common Stock), on terms and conditions which when taken as a whole are
substantially similar to those currently provided by the Acquiror Companies to
their similarly situated officers and employees; provided that, other than the
employees of the WFS Companies who are parties to the employment or severance
Contracts disclosed in Section 8.10 of the WFS Disclosure Memorandum, any
employee of WFS who is not offered employment by Acquiror at the Effective Time
or whose employment is terminated after the Effective Time as a result of the
Merger shall receive the severance benefits in accordance with the letter dated
October 31, 1995, of Emprise Bank, Wichita, to the Board of Directors of WFS
("Severance Procedure Letter"). For purposes of participation and vesting (but
not for benefit accrual) under such employee benefit plans, the service of the
employees of the WFS Companies prior to the Effective Time shall be treated as
service with an Acquiror Company participating in such employee benefit plans to
the extent reasonably and legally practicable. Acquiror also shall cause the
Surviving Corporation and its Subsidiaries to honor in accordance with their
terms all employment, severance, consulting, and other compensation Contracts
disclosed in Section 8.10 of the WFS Disclosure Memorandum to Acquiror between
any WFS Company and any current or former director, officer, or employee
thereof, and all provisions for vested benefits or other vested amounts earned
or accrued through the Effective Time under the WFS Benefit Plans. Each director
of WFS who is not retained as a director of the Surviving Corporation shall be
paid a bonus in consideration of past services in the amount of $12,000, which
is the amount of the present directors' fees for one year of regular monthly
meetings.
8.11 INDEMNIFICATION. (a) Acquiror shall, and shall cause the Surviving
Corporation to, indemnify, defend, and hold harmless the present and former
directors, officers, employees, and agents of the WFS Companies (each, an
"Indemnified Party") against all Liabilities arising out of actions or omissions
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement, including the Related Mergers) to the full
extent permitted by WFS' Certificate of Incorporation and Bylaws as in effect on
the date hereof, including provisions relating to advances of expenses incurred
in the defense of any Litigation. Without limiting the foregoing, in any case in
which approval by the Surviving Corporation is required to effectuate any
indemnification, Acquiror shall cause the Surviving Corporation to direct, at
the election of the Indemnified Party, that the determination of any such
approval shall be made by independent counsel mutually agreed upon between
Acquiror and the Indemnified Party.
(b) Acquiror shall and shall cause the Surviving Corporation to use its
reasonable efforts (and WFS shall cooperate prior to the Effective Time in these
efforts) to maintain in effect for a period of three years after the Effective
Time WFS' existing directors' and officers' liability insurance policy (provided
that Acquiror may substitute therefor (i) policies of at least the same coverage
and amounts containing terms and conditions which are substantially no less
advantageous or (ii) with the consent of WFS given prior to the Effective Time,
any other policy) with respect to claims arising from facts or events which
occurred prior to the Effective Time and covering persons who are currently
covered by such insurance.
(c) Acquiror shall not be liable for any settlement effected without its
prior written consent; and the Surviving Corporation shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have become final,
that the indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law.
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(d) If the Surviving Corporation or any of its successors or assigns shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving Person of such consolidation or merger or shall transfer all or
substantially all of its assets to any Person, then and in each case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation shall assume the obligations set forth in this Section 8.11.
8.12 AVAILABILITY OF FUNDS. Prior to the Effective Time, Acquiror shall
have deposited with the Exchange Agent sufficient funds to enable it to satisfy
its payment obligations pursuant to this Agreement.
8.13 DEALINGS WITH THE ESOP. (a) The Parties agree (i) that, subject to
satisfying the provisions of Section 9.1(d) of this Agreement, the loan by WFS
to the ESOP under documents dated June 3, 1994 (the "Loan") shall be paid off by
the ESOP as soon as practicable following the Merger using proceeds from the
sale of WFS Common Stock by the ESOP pursuant to the Merger, (ii) that any and
all unallocated assets or funds remaining in the ESOP after the Loan is paid off
pursuant to the immediately preceding clause shall be allocated as soon as
possible after the Loan is paid off, to the maximum extent permitted under the
law (as defined hereafter) to the ESOP accounts of the persons who are
participants in the ESOP as of the day preceding the Merger, and that such
allocation to such participants shall be made during the Plan Year of the ESOP
in which the Merger is consummated; and (iii) that, until the maximum allocation
under clause (ii) of this sentence has been made for the Plan Year in which the
Merger is consummated, no person shall become a new participant in the ESOP as
of or after the Effective Time, the ESOP shall not be merged into any other
qualified plan, nor shall any other qualified plan be merged into the ESOP, and
neither the Acquiror nor any affiliate of the Acquiror (or any successor of
either of the foregoing) may seek to obtain a reversion of any portion of the
unallocated assets of the ESOP.
(b) The phrase "to the maximum extent permitted under the law" in clause
(ii) of Section 8.13(a) shall mean to the maximum extent permitted under Section
415 of the Internal Revenue Code, and for this purpose treating as "annual
additions" under Section 415 of the Internal Revenue Code only that portion of
the unallocated assets and funds under the ESOP that is equal to X multiplied by
[Y divided by Z], where X equals the dollar amount of assets to be allocated to
each participant's ESOP account, Y equals the price at which WFS common stock
was initially purchased by the ESOP, and Z equals the price at which the WFS
common stock held by the ESOP is sold to Acquisition Company.
(c) Nothing in this Section 8.13 shall require the Acquiror to make
additional contributions to the ESOP or, after the maximum allocation described
in clause (ii) of Section 8.13(a) has been made, prohibit it from terminating
the ESOP, merging it into another qualified plan of the Acquiror or the
Surviving Corporation, or otherwise deal with the ESOP for the remaining
unallocated assets or funds of the ESOP as Acquiror deems advisable; provided,
however, and notwithstanding the foregoing, under no circumstances shall the
Acquiror or any affiliate of the Acquiror (or any successor of either of the
foregoing) seek to obtain a reversion of any portion of the unallocated assets
of the ESOP.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby, except those obligations which will continue
after any termination of this Agreement as otherwise provided herein, are
subject to the satisfaction of the following conditions, unless waived by both
Parties pursuant to Section 11.6 of this Agreement:
(a) SHAREHOLDER APPROVAL. The shareholders of WFS shall have approved
this Agreement, and the consummation of the transactions contemplated
hereby, other than the Related Mergers, as and to the extent required by
Law, by the provisions of any governing instruments, or by the rules of the
NASD.
(b) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and
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shall be in full force and effect and all waiting periods required by Law
shall have expired. No Consent obtained from any Regulatory Authority which
is necessary to consummate the Merger and the transactions contemplated
hereby shall be conditioned or restricted in a manner (including
requirements relating to the raising of additional capital in excess of the
amount of capital set forth in Section 9.1(b) of the Acquiror Disclosure
Memorandum, but not including any requirements that Assets or deposits be
divested in order to cure any asserted anti-trust concern, the parties
agreeing that the risk of such divestiture requirements is assumed by
Acquiror) which in the reasonable judgment of the Board of Directors of
Acquiror would so materially adversely impact the economic or business
benefits of the transactions contemplated by this Agreement that, had such
condition or requirement been known, Acquiror would not, in its reasonable
judgment, have entered into this Agreement.
(c) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement.
(d) ESOP RULING. If no private letter ruling or other documentation
or evidence has been received establishing to the reasonable satisfaction
of the parties that the ESOP may repay the loan from WFS from the proceeds
received by the ESOP under the Merger for the WFS Common Stock issued to
the ESOP without causing the loan to fail to qualify as an exempt loan
under Internal Revenue Code Section 4975(e)(7) and regulations thereunder.
9.2 CONDITIONS TO OBLIGATIONS OF ACQUIROR. The obligations of Acquiror to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Acquiror pursuant to Section 11.6(a) of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of WFS set forth
in this Agreement shall be assessed as of the date of this Agreement and as
of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of WFS set forth in Section 5.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimis in amount. The
representations and warranties of WFS set forth in Sections 5.17, 5.18, and
5.19 of this Agreement shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and warranties of
WFS set forth in this Agreement (excluding the representations and
warranties set forth in Sections 5.3, 5.17, 5.18, and 5.19) such that the
aggregate effect of such inaccuracies would have, or reasonably may have, a
Material Adverse Effect on WFS; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed not
to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of WFS to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all
material respects.
(c) CERTIFICATES. WFS shall have delivered to Acquiror (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Section 9.2(a) and Section
9.2(b) of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by WFS' Board of Directors and shareholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, other than the
Related Mergers, all in such reasonable detail as Acquiror and its counsel
shall request.
(d) ACCOUNTANT'S LETTERS. Acquiror shall have received from KPMG Peat
Marwick LLP letters dated not more than five days prior to (i) the date of
the Proxy Statement and (ii) the Effective Time,
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with respect to certain financial information regarding WFS, in form and
substance reasonably satisfactory to Acquiror, which letters shall be based
upon customary specified procedures undertaken by such firm in accordance
with Statement of Auditing Standard No. 72.
(e) RELATED MERGERS. Each of WFS and Wichita Federal shall have
entered into a Related Merger agreement in accordance with the terms of
Section 1.4 and the other provisions of this Agreement upon a reasonable
request of Acquiror.
(f) STOCKHOLDER APPROVAL. Neither the stockholders of WFS nor of
Wichita Federal shall have approved either of the Related Mergers prior to
the Effective Time.
9.3 CONDITIONS TO OBLIGATIONS OF WFS. The obligations of WFS to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by WFS pursuant to Section 11.6(b) of this Agreement.
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of Acquiror set
forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of Acquiror set forth in Sections 6.7 and 6.9 of this Agreement
shall be true and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of Acquiror set forth in
this Agreement (excluding the representations and warranties set forth in
Sections 6.7 and 6.9) such that the aggregate effect of such inaccuracies
would have, or is reasonably likely to have, a Material Adverse Effect on
Acquiror; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" shall be deemed not to include such
qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Acquiror to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) CERTIFICATES. Acquiror shall have delivered to WFS (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Sections 9.3(a) and 9.3(b)
of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Acquiror's Board of Directors evidencing the
taking of all corporate action necessary to authorize the execution,
delivery, and performance of this Agreement, and the consummation of the
transactions contemplated hereby, other than the Related Mergers, all in
such reasonable detail as WFS and its counsel shall request.
(d) FAIRNESS OPINION. WFS shall have received from Charles Webb &
Company a letter, dated not more than five business days prior to the date
of the Proxy Statement, to the effect that, in the opinion of such firm,
the Merger Cash Price is fair, from a financial point of view, to the
holders of WFS Common Stock.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of the Agreement by the shareholders of WFS,
this Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time:
(a) By mutual consent of the Board of Directors of Acquiror and the
Board of Directors of WFS; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set
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forth in Section 9.2(a) of this Agreement in the case of WFS and Section
9.3(a) in the case of Acquiror or in material breach of any covenant or
other agreement contained in this Agreement) in the event of an inaccuracy
of any representation or warranty of the other Party contained in this
Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such inaccuracy and
which inaccuracy would provide the terminating Party the ability to refuse
to consummate the Merger under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of WFS and Section 9.3(a) in the case
of Acquiror; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of WFS and Section 9.3(a) in
the case of Acquiror or in material breach of any covenant or other
agreement contained in this Agreement) in the event of a material breach by
the other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach; or
(d) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of WFS and Section 9.3(a) in
the case of Acquiror or in material breach of any covenant or other
agreement contained in this Agreement) in the event (i) any Consent of any
Regulatory Authority required for consummation of the Merger and the other
transactions contemplated hereby (other than the Related Mergers) shall
have been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit for
appeal, or (ii) the shareholders of WFS fail to vote their approval of this
Agreement and the transactions contemplated hereby, other than the Related
Mergers, as required by the DGCL and the rules of the NASD at the
Shareholders' Meeting where the transactions were presented to such
shareholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by September 30, 1996, if the
failure to consummate the transactions contemplated hereby on or before
such date is not caused by any breach of this Agreement by the Party
electing to terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of WFS and Section 9.3(a) in
the case of Acquiror or in material breach of any covenant or other
agreement contained in this Agreement) in the event any of the conditions
precedent to the obligations of such Party to consummate the Merger (other
than as contemplated by Section 10.1(d) of this Agreement) cannot be
satisfied or fulfilled by the date specified in Section 10.1(e) of this
Agreement as the date after which such Party may terminate this Agreement;
or
(g) By the Board of Directors of WFS pursuant to Section 8.7(b),
provided it has complied with all of the provisions thereof, including the
notice provisions thereof, and provided further, that after approval of
this Agreement by the shareholders of WFS, Section 8.7(b) of this Agreement
shall no longer be operative or permit WFS to take any of the actions
referred to therein, including any right to terminate this Agreement.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Article 11 and Section 8.5(b) of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant to
Sections 10.1(b), 10.1(c), and 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability pursuant to Section 11.2 for an uncured willful
breach of a representation, warranty, covenant, or agreement giving rise to such
termination.
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10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 and Sections 8.10, 8.11, and 8.12 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS. (a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"ACQUIROR COMPANIES" shall mean, collectively, Acquiror and all
Acquiror Subsidiaries of Acquiror or any parent corporation of which
Acquiror is a Subsidiary.
"ACQUIROR DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Acquiror Disclosure Memorandum" delivered prior to the date of
this Agreement to WFS describing in reasonable detail the matters contained
therein and, with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such disclosure is
being made. Information disclosed with respect to one Section shall not be
deemed to be disclosed for purposes of any other Section not specifically
referenced with respect thereto.
"ACQUIROR FINANCIAL STATEMENTS" shall mean (i) the Consolidated
Statements of Condition of EFC as of September 30, 1995, December 31, 1994,
and December 31, 1993, Income Statements for periods ending the same date,
and the Interim Report on Form FR-Y9C dated June 30, 1995, filed with the
Board of Governors of the Federal Reserve System, (ii) the Call Reports of
Emprise Bank ended December 31, 1993, December 31, 1994, and September 30,
1995, and (iii) the same Consolidated Statements of EFC and Call Reports of
Emprise Bank with respect to periods ended subsequent to the above
Statements and Call Reports. The Acquiror Financial Statements shall
include related notes and schedules, if any, on any of the foregoing
Statements and Call Reports.
"ACQUISITION PROPOSAL" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or assets of, or other business combination involving such Party
or any of its Subsidiaries, the purchase or lease of a substantial portion
of the Assets of such Party or its Subsidiaries, or the acquisition by the
foregoing or other means of a substantial equity interest in, or a
substantial portion of the assets of, such Party or any of its
Subsidiaries.
"AFFILIATE" of a Person shall mean (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by,
or under common control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Amended and Restated Agreement and Plan of
Merger.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal, or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"BUSINESS COMBINATION" shall mean an acquisition of, merger or
combination with, share exchange involving any class of voting stock of,
sale of more than 25% of the consolidated assets by, or other business
combination involving, or tender offer for or sale or issuance of any
equity securities involving an acquisition by a third party of more than
25% of the voting stock of, WFS.
"CERTIFICATE OF MERGER" shall mean the Certificate of Merger to be
executed by Acquisition Company and filed with the Secretary of State of
Delaware and with the Secretary of State of the State of Kansas relating to
the Merger as contemplated by Section 1.1 of this Agreement.
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"CONFIDENTIALITY AGREEMENT" shall mean that certain letter
Confidentiality Agreement, dated August 30, 1995, between WFS and Emprise
Bank, Wichita.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding or undertaking of
any kind or character, or other document to which any Person is a party or
that is binding on any Person or its capital stock, Assets, or business.
"DEFAULT" shall mean (i) any breach or violation of or default under
any Contract, Order, or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time
or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order, or Permit.
"DGCL" shall mean the Delaware General Corporation Law.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and which
are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601, et
seq. ("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42
U.S.C. 6901, et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall have the meaning provided in Section 5.12 of
this Agreement.
"ESOP" shall mean the WFS Bancorp, Inc., Employee Stock Ownership Plan
executed April 24, 1994, and made effective January 1, 1994.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as
those terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil,
and shall specifically include asbestos.
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean the personal
knowledge after due inquiry of the chairman, president, chief
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financial officer, chief accounting officer, chief credit officer, general
counsel, any assistant or deputy general counsel, or any senior or
executive vice president of such Person.
"LAW" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a person or its
Assets, Liabilities, or business, including those promulgated, interpreted,
or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including
costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute, or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, (ii) for depository institutions, pledges to
secure deposits, and other Liens incurred in the ordinary course of the
banking business, and (iii) Liens which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on a Party.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceedings, or notice (written or oral) by any Person alleging
potential Liability or requesting information relating to or affecting a
party, its business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement (including the Related
Mergers), but shall not include regular, periodic examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned or controlled by the
Party in question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security or other interest, and, where required by the
context, includes any such property where such Party or any of its
Subsidiaries constitutes the owner or operator of such property, but only
with respect to such property.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change, or
occurrence which, individually or together with any other event, change, or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of such party and its Subsidiaries,
taken as a whole, or (ii) the ability of such Party to perform its
obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement (including the Related
Mergers), provided that "material adverse effect" shall not be deemed to
include the impact of (a) changes in banking and similar Laws (including
deposit insurance assessments for depository Subsidiaries) of general
applicability or interpretations thereof by courts or governmental
authorities, (b) changes in GAAP or regulatory accounting principles
generally applicable to banks, savings associations, or their holding
companies, and (c) the Merger and compliance with the provisions of this
Agreement on the operating performance of the Parties.
"MRRP" shall mean the WFS Bancorp, Inc. "Management Recognition and
Retention Plan" ratified by the WFS shareholders on January 18, 1995.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
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"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local, or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, includes the owner or
operator of such facility or property, but only with respect to such
facility or property.
"PARTY" shall mean either WFS or Acquiror, and "PARTIES" shall mean
both of WFS and Acquiror.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by WFS to
solicit the approval of WFS' shareholders of the transactions contemplated
by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of Governors
of the Federal Reserve System, the Office of Thrift Supervision (including
its predecessor, the Federal Home Loan Bank Board), the FDIC, the State
Banking Board of the State of Kansas, and any other federal or state
regulatory agency having jurisdiction over the Parties and their respective
Subsidiaries or parent company of which they are a Subsidiary, the NASD,
and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative of a Person.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock
of a Person or by which a Person is or may be bound to issue additional
shares of its capital stock or other Rights.
"SEC DOCUMENTS" shall mean all forms, proxy statements, reports,
schedules, and other documents filed, or required to be filed, by a Party
or any of its Subsidiaries or parent company of which it is a Subsidiary
with any Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the shareholders of
WFS to be held pursuant to Section 8.1 of this Agreement, including any
adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns or controls 50% or
more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its
parent; provided, there shall not be included any such entity acquired
through foreclosure or any such entity the equity securities of which are
owned or controlled in a fiduciary capacity.
"SURVIVING CORPORATION" shall mean the surviving corporation resulting
from the Merger or if used in the context of a Related Merger, the
surviving corporation of the Related Merger.
"TAX" or "TAXES" shall mean any federal, state, county, local, or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use property, withholding, excise, occupancy, and other taxes,
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assessments, charges, fares, or impositions, including interest, penalties,
and additions imposed thereon or with respect thereto.
"WFS COMMON STOCK" shall mean the $.01 par value common stock of WFS.
"WFS COMPANIES" shall mean, collectively, WFS and all WFS
Subsidiaries.
"WFS DISCLOSURE MEMORANDUM" shall mean the written information
entitled "WFS Bancorp, Inc. Disclosure Memorandum" delivered prior to the
date of this Agreement to Acquiror describing in reasonable detail the
matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any other
Section not specifically referenced with respect thereto. Reference in this
Agreement to a Section of this Agreement shall also include a reference to
the corresponding Section of the WFS Disclosure Memorandum.
"WFS FINANCIAL STATEMENTS" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of WFS as of June
30, 1995, and as of September 30, 1994 and 1993, and the related statements
of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for the nine months ended June 30,
1995, and for each of the three fiscal years ended September 30, 1994,
1993, and 1992, as filed by WFS in SEC Documents, and (ii) the consolidated
balance sheets of WFS (including related notes and schedules, if any) and
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to June 30, 1995.
"WFS STOCK PLAN" shall mean the existing stock option plan of WFS
designated as follows: WFS Bancorp, Inc. "1994 Stock Option and Incentive
Plan" ratified by the WFS shareholders on January 18, 1995.
"WFS SUBSIDIARIES" shall mean the Subsidiaries of WFS, which shall
include the WFS Subsidiaries described in Section 5.4 this Agreement.
(b) The terms set forth below shall have the meanings ascribed thereto in
the referenced sections:
<TABLE>
<S> <C>
Acquisition Company..................................... Section 1.1
Closing................................................. Section 1.2
Effective Time.......................................... Section 1.3
ERISA Affiliate......................................... Section 5.12(c)
Exchange Agent.......................................... Section 4.1
Merger.................................................. Section 1.1
Merger Cash Price....................................... Section 3.1
Related Mergers......................................... Section 1.4
Severance Procedure Letter.............................. Section 8.10
Termination Event....................................... Section 11.2(b)
WFS Benefit Plans....................................... Section 5.12(a)
WFS ERISA Plan.......................................... Section 5.12(a)
</TABLE>
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 EXPENSES. (a) Except as otherwise provided in this Section 11.2, each
of the Parties shall bear and pay all direct costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder
(including the Related Mergers), including filing, registration and application
fees, printing fees, and fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel.
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(b) Notwithstanding the foregoing, if any of the following occurs:
(i) any termination of this Agreement
(a) by Acquiror pursuant to Section 10.1(b) (but only in the case
of a willful breach by WFS of a representation or warranty), 10.1(c)
(but only in the case of a willful breach by WFS of a covenant), or
10.1(f) (but only on the basis of the failure to satisfy any of the
conditions enumerated in Section 9.1(a) (but only upon or after the
occurrence of a Termination Event), 9.2(b) (but only in the case of a
willful breach by WFS of a representation or warranty), or 9.2(b) (but
only in the case of a willful breach by WFS of a covenant)) of this
Agreement, or
(b) by WFS pursuant to Section 10.1(f) (but only on the basis of
the failure to satisfy any of the conditions enumerated in Section
9.1(a) (but only upon or after the occurrence of a Termination Event) or
9.3(d) or 10.1(g) of this Agreement, or
(c) by either Party pursuant to Section 10.1(d)(ii) (but only upon
or after the occurrence of a Termination Event) of this Agreement, or
(ii) failure to consummate the Merger by reason of any failure to
satisfy the conditions enumerated in Section 9.1(a) (but only upon or after
the occurrence of a Termination Event), 9.2(a) (but only in the case of a
willful breach by WFS of a representation or warranty), 9.2(b) (but only in
the case of a willful breach by WFS of a covenant), 9.2(e), 9.2(f), or
9.3(d) of this Agreement,
then WFS covenants, acknowledges, and agrees that for a period of 12 months
following the occurrence of any of the above, it shall be a specific, absolute,
and unconditional binding condition to WFS' entering into a letter of intent,
agreement in principle, or definitive agreement (whether or not considered
binding, non-binding, or conditional) with respect to, or recommending
shareholder acceptance of, any Business Combination with any third party, that
such third party that is a party to the Business Combination shall pay to
Acquiror, prior to the time the Business Combination is announced to the public
by press release or otherwise, an amount in cash equal to $1,700,000, which sum
represents one of the inducements of Acquiror to enter into this Agreement, and
the direct costs and expenses (including, without limitation, fees and expenses
of Acquiror's financial or other consultants, printing costs, investment
bankers, accountants, and counsel) incurred by Acquiror in negotiating and
carrying out the transactions contemplated by this Agreement (including the
Related Mergers), and the indirect costs and expenses incurred by Acquiror in
connection with the transactions contemplated by this Agreement (including the
Related Mergers), including Acquiror's management time devoted to negotiation
and preparation for such transaction. In the event such third party shall fail
or refuse to pay such amounts, the amounts shall be an obligation of WFS and
shall be paid by WFS promptly upon notice to WFS by Acquiror.
(c) Notwithstanding the foregoing, if:
(i) this Agreement is terminated by WFS pursuant to Section 10.1(b)
(but only in the case of a willful breach by Acquiror of a representation
or warranty), 10.1(c) (but only in the case of a willful breach by Acquiror
of a covenant), or 10.1(f) (but only on the basis of the failure to satisfy
any of the conditions enumerated in Section 9.3(a) (but only in the case of
a willful breach by Acquiror of a representation or warranty), or 9.3(b)
(but only in the case of a willful breach by Acquiror of a covenant)) of
this Agreement, or
(ii) the Merger is not consummated by reason of any failure to satisfy
the conditions enumerated in Section 9.3(a) (but only in the case of a
willful breach by Acquiror of a representation or warranty) or 9.3(b) (but
only in the case of a willful breach by Acquiror of a covenant) of this
Agreement,
Acquiror shall promptly pay WFS an amount in cash equal to $1,700,000 which sum
represents the direct cost and expenses (including, without limitation, fees and
expenses of WFS' financial or other consultants, printing costs, investment
bankers, accountants, and counsel) incurred by WFS in negotiating and carrying
out the transactions contemplated by this Agreement and the indirect costs and
expenses incurred by WFS in connection with the transactions contemplated by
this Agreement, including WFS' management time devoted to negotiation and
preparation for such transaction.
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For purposes of this Section 11.2, "Termination Event" shall mean the
occurrence of any of the following: (i) the Shareholders' Meeting shall have
been canceled prior to the termination of this Agreement; (ii) WFS' Board of
Directors shall have withdrawn or modified in a manner adverse to Acquiror the
recommendation of WFS' Board of Directors with respect to the Merger or this
Agreement; or (iii) this Agreement and the consummation of the transactions
contemplated hereby, including the Merger, shall not have been approved at the
Shareholders' Meeting after any Person made, or disclosed an intention to make,
or had negotiations pertaining to, an Acquisition Proposal and this fact is
communicated to a material number of the WFS shareholders, whether by direct or
indirect communication by any Person, public announcement, or other public
disclosure.
11.3 BROKERS AND FINDERS. Except for Charles Webb & Company as to WFS and
except for Keefe, Bruyette & Woods, Inc. as to Acquiror, each of the Parties
represents and warrants that neither it nor any of its officers, directors,
employees, or Affiliates has employed any broker or finder or incurred any
Liability for any financial advisory fees, investment bankers' fees, brokerage
fees, commissions, or finders' fees in connection with this Agreement or the
transactions contemplated hereby, including the Related Mergers. In the event of
a claim by any broker or finder based upon his or its representing or being
retained by or allegedly representing or being retained by WFS or Acquiror, each
of WFS and Acquiror, as the case may be, agrees to indemnify and hold the other
harmless of and from any Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement of the Parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereto, written or oral (except, as to Section 8.5(b) of this
Agreement, for the Confidentiality Agreement and, except as to Section 8.10 of
this Agreement, for the Severance Procedure Letter). Nothing in this Agreement,
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Sections 8.10 and 8.11 of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
shareholder approval of this Agreement has been obtained; provided, that after
any such approval by the holders of WFS Common Stock, the provisions of this
Agreement relating to the manner or basis in which shares of WFS Common Stock
will be canceled and surrendered in exchange for the Merger Cash Price shall not
be amended after the Shareholders' Meeting in a manner adverse to the holders of
WFS Common Stock without any requisite approval of the holders of the issued and
outstanding shares of WFS Common Stock entitled to vote thereon.
11.6 WAIVERS. (a) Prior to or at the Effective Time, Acquiror, acting
through its Board of Directors, chief executive officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by WFS, to waive or extend the time for the compliance or
fulfillment by WFS of any and all of its obligations under this Agreement, and
to waive any or all of the conditions precedent to the obligations of Acquiror
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Acquiror.
(b) Prior to or at the Effective Time, WFS, acting through its Board of
Directors, chief executive officer, or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
Acquiror, to waive or extend the time for the compliance or fulfillment by
Acquiror of any and all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of WFS under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of WFS.
(c) The failure of any Party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such Party at a
later time to enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained in this Agreement
in one or
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more instances shall be deemed to be or construed as a further or continuing
waiver of such condition or breach or a waiver of any other condition or of the
breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party (whether by operation of Law or otherwise) without the
prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage prepaid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
<TABLE>
<S> <C> <C>
WFS: WFS Bancorp, Inc.
340 South Broadway
Wichita, KS 67202
Telecopy Number: (316) 383-8484
Attention: Burton G. Dunlap
President and Chief Executive Officer
Copy to Counsel: Alston & Bird
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004
Telecopy Number: (202) 508-3333
Attention: Frank M. Conner III
Acquiror: Emprise Bank, Wichita
130 North Market
P. O. Box 2970
Wichita, KS 67201
Telecopy Number: (316) 383-4399
Attention: M. D. Michaelis
Chairman of the Board
or Thomas A. Page
President and CEO
Copy to Counsel: Morris, Laing, Evans Brock &
Kennedy, Chartered
Fourth Floor -- 200 West Douglas
Wichita, KS 67202-3084
Telecopy Number: (316) 262-5991
Attention: Ralph R. Brock
</TABLE>
11.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Kansas, without regard to any
applicable conflicts of Laws.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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11.11 CAPTIONS. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any Party, whether under
any rule of construction or otherwise. No Party shall be considered the
draftsman. The Parties acknowledge and agree that this Agreement has been
reviewed, negotiated, and accepted by all Parties and their attorneys and shall
be construed and interpreted according to the ordinary meaning of the words used
so as fairly to accomplish the purposes and intentions of all Parties.
11.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties 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, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provisions of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
11.15 RESTATEMENT OF PRIOR AGREEMENT. This Agreement amends, restates, and
supersedes in its entirety the Agreement and Plan of Merger entered into as of
the 30th day of November, 1995, between the Parties hereto.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<S> <C>
WFS BANCORP, INC.
ATTEST:
/s/ ROBERT McGRATH By /s/ BURTON G. DUNLAP
- --------------------------------------------- ---------------------------------------------
Secretary Burton G. Dunlap
President and Chief Executive Officer
[CORPORATE SEAL]
EMPRISE BANK, WICHITA
ATTEST:
/s/ JOYE B. HANEBERG By /s/ M.D. MICHAELIS
- --------------------------------------------- ---------------------------------------------
Secretary M.D. Michaelis
Chairman of the Board
[CORPORATE SEAL]
</TABLE>
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<PAGE> 77
ASSIGNMENT OF RIGHTS AND ASSUMPTION OF OBLIGATIONS
UNDER AMENDED AND RESTATED MERGER AGREEMENT
KNOW ALL MEN BY THESE PRESENTS: THAT
WHEREAS, Emprise Bank, Wichita, Kansas ("Emprise"), and WFS Bancorp, Inc.
("WFS Bancorp, Inc."), previously entered into that certain Amended and Restated
Agreement and Plan of Merger ("Amended and Restated Merger Agreement") made and
entered into as of the 30th day of November, 1995, and amended and restated as
of the 31st day of January, 1996, pursuant to which a wholly-owned subsidiary of
Emprise Bank, Wichita, Kansas, or of Emprise Financial Corporation ("EFC"), will
merge with and into WFS Bancorp, Inc., with WFS Bancorp, Inc., as the surviving
corporation; and
WHEREAS, in accordance with the terms of Section 1.5 of the Amended and
Restated Merger Agreement, Emprise has the right to assign all its rights under
the Amended and Restated Merger Agreement to EFC in accordance with the terms of
that Section;
NOW, THEREFORE, for and in consideration of the premises and pursuant to
Section 1.5 of the Amended and Restated Merger Agreement between WFS and
Emprise, EMPRISE BANK, Wichita, hereby sells, assigns, transfers, and sets over
unto EMPRISE FINANCIAL CORPORATION all its right, title, interest, and benefits
in and to the Amended and Restated Merger Agreement, and EMPRISE FINANCIAL
CORPORATION by its execution hereof hereby assumes all liabilities, obligations,
duties, and covenants of Emprise pursuant to Section 1.5 of the Amended and
Restated Merger Agreement, and the warranties and representations of Emprise
contained therein shall hereafter be those of EFC.
Dated this 21st day of March, 1996.
EMPRISE BANK, WICHITA
By: /s/ M.D. MICHAELIS
--------------------------------------
M.D. Michaelis
Chairman of the Board
"Emprise"
EMPRISE FINANCIAL CORPORATION
By: /s/ M.D. MICHAELIS
--------------------------------------
M.D. Michaelis
President
"EFC"
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<PAGE> 78
APPENDIX B
AGREEMENT AND PLAN OF MERGER
BETWEEN
EMPRISE ACQUISITION SUB, INC.
WICHITA, KANSAS
AND
WFS BANCORP, INC.
WICHITA, KANSAS
This Agreement and Plan of Merger ("Agreement") is made and entered into as
of the 1st day of April, 1996, by and between EMPRISE ACQUISITION SUB, INC.
("EAS"), a Kansas corporation having its principal office located in Wichita,
Kansas, and WFS BANCORP, INC. ("WFS"), a Delaware corporation having its
principal office located in Wichita, Kansas.
R E C I T A L S
A. Emprise Bank, Wichita, Kansas, and WFS previously entered into that
certain Amended and Restated Agreement and Plan of Merger ("Amended and Restated
Merger Agreement") made and entered into as of the 30th day of November, 1995,
and amended and restated as of the 31st day of January, 1996, pursuant to which
as wholly-owned subsidiary of Emprise Bank, Wichita Kansas or of Emprise
Financial Corporation ("EFC") is to merge with and into WFS with WFS as the
surviving corporation.
B. Emprise Bank has assigned all its right, title, and interest in and to
the Amended and Restated Merger Agreement to EFC, and EFC has assumed all
obligations of Emprise Bank pursuant to Section 1.5 of the Amended and Restated
Merger Agreement.
C. EAS, a wholly-owned subsidiary of EFC, has been established for the sole
purpose of merging with and into WFS, in accordance with the terms and
provisions of the Amended and Restated Merger Agreement.
D. In order to effectuate the merger of EAS into WFS contemplated in the
Amended and Restated Merger Agreement, the parties have executed this Agreement.
NOW THEREFORE, for and in consideration of the premises, the parties hereby
agree:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 DEFINITIONS. Capitalized terms not otherwise defined in this Agreement
shall have the same meaning as set forth in the Amended and Restated Merger
Agreement.
1.2 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined below), EAS shall be merged into WFS, under the
charter of WFS, in accordance with the provisions of Section 252 of the Delaware
General Corporation Law ("DGCL") and Section 6702 of Chapter 17 of the Kansas
Statutes (the "Merger"). WFS shall be the Surviving Corporation resulting from
the Merger and shall continue to be governed by the Laws of the State of
Delaware. The Merger shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the respective Boards of
Directors of the parties.
1.2 TIME AND PLACE OF CLOSING. The Closing will take place at 1:00 p.m. on
the date that the Effective Time occurs or at such other time as the Parties,
acting through their chief executive officers or chief financial
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officers, may mutually agree. The place of Closing shall be at the offices of
Emprise Bank, Wichita, Kansas, or such other place as may be mutually agreed
upon by the Parties.
1.3 EFFECTIVE TIME. The Merger shall become effective on the date and at
the time the Certificate of Merger reflecting the Merger shall become effective
with the Secretary of State of the State of Delaware and the Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Kansas (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the chief
executive officer or chief financial officer of each Party, EAS shall determine
and designate when the Effective Time occurs, which shall be not more than 10
days after the last to occur of (i) the effective date (including expiration of
any applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, and (ii)
the date on which the shareholders of WFS approve this Agreement. The
designation of the Effective Time by EAS shall be made prior to the last to
occur of the foregoing events and not less than 10 days prior to the Effective
Time.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Articles of Incorporation of the Surviving Corporation of
the Merger shall be amended and restated at and as of the Effective Time to read
as did the Articles of Incorporation of EAS immediately prior to the Effective
Time (except that the name of the Surviving Corporation will remain unchanged or
as otherwise provided by the DGCL) until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of the Surviving Corporation of the Merger shall be
amended and restated at and as of the Effective Time to read as did the Bylaws
of EAS immediately prior to the Effective Time (except as otherwise provided by
the DGCL).
2.3 DIRECTORS AND OFFICERS. The directors and officers of EAS in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors and officers,
respectively, of the Surviving Corporation of the Merger from and after the
Effective Time in accordance with the Bylaws of the Surviving Corporation, as
amended and restated as of the Effective Time.
ARTICLE 3
MANNER OF CANCELING SHARES OF WFS
3.1 CANCELLATION OF SHARES OF WFS. At the Effective Time, by virtue of the
Merger and without any action on the part of EAS, WFS, the shareholders of
either of the foregoing, or any other person, all shares of WFS Common Stock
issued and outstanding immediately prior to the Effective Time, including the
shares issued and held by the ESOP, irrespective of whether such shares have
been allocated to the accounts of participants, and the MRRP, shall be canceled
on the books of WFS and in consideration therefor EAS shall make, or cause EFC
to make, a cash payment equal to $23.25 ("Merger Cash Price") to the holders
thereof for each such share canceled as provided in the Amended and Restated
Agreement.
3.2 TERMINATION OF WFS STOCK PLANS. At or prior to the Effective Time, all
employee stock options under the WFS Stock Plan shall be deemed vested and
exercisable, whether or not then exercisable, and shall be canceled and
terminated and in consideration therefor the holders of such options shall be
paid by WFS (or EAS as necessary) from funds of WFS a cash payment for each
share subject to the option in an amount equal to the difference between the
Merger Cash Price for each such share and the price the holder was required to
pay for such share upon the exercise of the option.
3.3 DISSENTING SHAREHOLDERS. Any holder of shares of WFS Common Stock who
perfects such holder's dissenters' rights in accordance with and as contemplated
by Section 262 of the DGCL shall be entitled to receive the value of such shares
in cash as determined pursuant to such provision of Law; provided, that no such
payment shall be made to any dissenting shareholder unless and until such
dissenting shareholder has
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complied with the applicable provisions of the DGCL and surrendered to WFS the
certificate or certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting shareholder of WFS
fails to perfect, or effectively withdraws or loses, such holder's right to
appraisal and of payment for such holder's shares, EFC shall issue and deliver
the consideration to which such holder of shares of WFS Common Stock is entitled
under this Article 3 (without interest) upon surrender by such holder of the
certificate or certificates representing shares of WFS Common Stock held by such
holder.
3.4 CONVERSION OF STOCK OF EAS. At and as of the Effective Time of the
Merger, each share of Common Stock of EAS shall be converted into one share of
Common Stock, $.01 par value per share, of the Surviving Corporation.
ARTICLE 4
SURRENDER OF SHARES
4.1 SURRENDER PROCEDURES. Within two business days after the Effective
Time, EAS shall cause Emprise Bank, as exchange agent (the "Exchange Agent") to
mail to the former shareholders of WFS appropriate transmittal materials, which
shall specify that delivery shall be effected only upon proper delivery of the
certificates representing shares of WFS Common Stock or options to purchase WFS
Common Stock, that the shares of WFS Common Stock or options to purchase WFS
Common Stock have been canceled, and that the consideration to be paid for such
shares or options shall be paid only upon delivery and surrender of such
certificates or option agreements. After the Effective Time, each holder of
shares of WFS Common Stock or options to purchase WFS Common Stock issued and
outstanding at the Effective Time (other than shareholders who elect to perfect
their dissenters' rights of appraisal in accordance with Section 3.3 of this
Agreement) shall surrender the certificate or certificates representing such
shares or options to the Exchange Agent and shall promptly upon surrender
thereof receive in exchange therefor the consideration provided in Section 3.1
or 3.2 of this Agreement, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 4.2 of this Agreement. There shall be no obligation to deliver the
consideration to which any former holder of WFS Common Stock or options to
purchase WFS Common Stock is entitled as a result of the Merger until such
holder surrenders such holder's certificate or certificates representing the
shares of WFS Common Stock or option or options to purchase WFS Common Stock for
which the consideration is to be paid as provided in Section 3.1 or 3.2 of this
Agreement. The certificate or certificates of WFS Common Stock (other than
certificates of shareholders who elect to perfect their dissenters' rights of
appraisal in accordance with Section 3.3 of this Agreement) so surrendered shall
be duly endorsed as the Exchange Agent may require. Any other provision of this
Agreement notwithstanding, neither EAS, WFS, the Exchange Agent, nor any other
person shall be liable to a holder of WFS Common Stock or options to purchase
WFS Common Stock for any amounts paid or property delivered in good faith to a
public official pursuant to any applicable abandoned property Law.
4.2 RIGHTS OF FORMER WFS SHAREHOLDERS. At the Effective Time, the stock
transfer books of WFS shall be closed as to holders of WFS Common Stock
immediately prior to the Effective Time and no transfer of WFS Common Stock by
any such holder shall thereafter be made or recognized. At the Effective Time
all shares of WFS Common Stock shall be canceled on the stock register and
transfer books of WFS. Until surrendered in accordance with the provisions of
Section 4.1 of this Agreement, each certificate theretofore representing shares
of WFS Common Stock or option or options to purchase WFS Common Stock shall from
and after the Effective Time represent for all purposes only the right to
receive the consideration provided in Section 3.1 or 3.2 of this Agreement upon
surrender of the certificate, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time which have been declared or made by WFS in
respect of such shares of WFS Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time.
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ARTICLE 5
MISCELLANEOUS PROVISIONS
5.1 TERMINATION. This Agreement may be terminated by the mutual consent of
the board of directors of EAS and WFS, either before or after any shareholder
group has approved this Agreement. Since time is of the essence to this
Agreement, if for any reason the Merger shall not have been consummated by
December 31, 1996, the board of directors of either EAS or WFS may thereafter
terminate this Agreement upon notice in writing to the other party of such
termination, in which event all obligations hereunder by both parties shall be
terminated.
5.2 RELATIONSHIP TO AMENDED AND RESTATED MERGER AGREEMENT. This Agreement
is executed and delivered in connection with and in partial fulfillment of the
Amended and Restated Merger Agreement and is not intended to and does not modify
any of the obligations of the parties to that agreement. The respective
obligations of each party hereto to perform this Agreement and consummate the
Merger contemplated hereby are subject to all the terms, covenants, conditions,
representations, and other provisions of the Amended and Restated Merger
Agreement. Without limiting the generality of the foregoing, in the event of the
termination of the Amended and Restated Merger Agreement in accordance with its
provisions for any reason prior to the consummation of the Merger, this
Agreement will automatically terminate and each party shall be relieved of all
obligations hereunder.
5.3 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Kansas, without regard to any
applicable conflicts of Laws.
5.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
5.5 CAPTIONS. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
5.6 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any Party, whether under
any rule of construction or otherwise. No Party shall be considered the
draftsman. The Parties acknowledge and agree that this Agreement has been
reviewed, negotiated, and accepted by all Parties and their attorneys and shall
be construed and interpreted according to the ordinary meaning of the words used
so as fairly to accomplish the purposes and intentions of all Parties.
5.7 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties 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, this being in addition to any other remedy to which they
are entitled at law or in equity.
5.8 SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provisions of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<S> <C>
ATTEST: EMPRISE ACQUISITION SUB, INC.
By
- -------------------------------- -----------------------------------
M. D. MICHAELIS M.D. MICHAELIS
Secretary Chairman of the Board
[CORPORATE SEAL]
"EAS"
ATTEST: WFS BANCORP, INC.
By
- -------------------------------- ------------------------------------
Secretary BURTON G. DUNLAP
President and Chief Executive Officer
[CORPORATE SEAL]
"WFS"
</TABLE>
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APPENDIX C
SECTION 262 OF THE
DELAWARE GENERAL CORPORATION LAW
DELAWARE STATUTORY LAW RELATING TO APPRAISAL RIGHTS
262 APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec. 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of his shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holder of the surviving corporation as
provided in subsections (f) or (g) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who has such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec.228 or
253 of this title, the surviving or resulting corporation, either before
the effective date of the merger or consolidation or within 10 days
thereafter, shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
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(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining the fair rate of
interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either
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within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of his section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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APPENDIX D
[CHARLES WEBB & COMPANY LETTERHEAD]
May , 1996
Board of Directors
WFS Bancorp, Inc.
340 South Broadway
Wichita, Kansas 67202
Dear Board of Directors:
You have requested our opinion as an independent investment banking firm
regarding the fairness, from a financial point of view, to the shareholders of
WFS Bancorp, Inc. ("WFS"), of the financial terms of a merger proposal whereby
WFS shall merge (the "Merger") with Emprise Acquisition Sub, Inc., a
newly-formed, wholly-owned subsidiary of Emprise Financial Corporation, Wichita,
Kansas ("EFC"). We have not been requested to opine as to, and our opinion does
not in any matter address, WFS's underlying business decision to proceed with or
effect the Merger.
Pursuant to the Agreement and Plan of Merger, dated as of November 30,
1995, as amended and restated on January 31, 1996, by and between Emprise Bank,
Wichita ("Emprise") and WFS (the "Agreement"), which has been assigned under an
Assignment of Rights and Obligations under Amended and Restated Merger Agreement
(the "Assignment") by Emprise Bank to its parent, EFC, at the effective time of
the Merger, EFC will acquire all of WFS's issued and outstanding shares of
common stock (1,661,178 shares as of the date of the Agreement) and the holders
of such shares of common stock will receive $23.25 in cash in exchange for each
share of WFS common stock. In addition, the holders of unexercised and
outstanding options awarded pursuant to the WFS 1994 Stock Option and Incentive
Plan will receive, for each share subject to such option, the difference between
$23.25 and the price the holder was required to pay for such share upon the
exercise of the option (137,018 unexercised options outstanding as of the date
of the Agreement). The complete terms of the proposed transaction are described
in the Agreement, and this summary is qualified in its entirety by reference
thereto.
Charles Webb & Company, as part of its investment banking business, is
regularly engaged in the evaluation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, and distributions of
listed and unlisted securities. We are familiar with the market for common
stocks of publicly traded Midwest-based banks, thrifts and bank and thrift
holding companies.
In connection with this opinion we reviewed certain financial and other
business data supplied to us by WFS including (i) the prospectus dated April 13,
1994, for WFS's mutual to stock conversion, (ii) Annual Report and Proxy
Statement for the year ended September 30, 1995, (iii) Forms 10-Q for the
quarters ended December 31, 1995 and March 31, 1996, and (iv) certain other
information we deemed relevant. We discussed with senior management and the
boards of directors of WFS and its wholly-owned subsidiary, Wichita Federal
Savings and Loan ("Wichita"), the current position and prospective outlook for
WFS. We considered historical quotations and the prices of recorded transaction
in WFS's common stock since its conversion from mutual to stock form an initial
public offering in June 1994. We reviewed financial and stock market data of
other thrifts, particularly in the Central region, and the financial and
structural terms of several other recent transactions involving savings and loan
mergers and acquisitions or proposed changes of control of comparably situated
companies.
For EFC, we reviewed the audited financial statements for the year ended
December 31, 1994 and subsequent financial statements (unaudited) for the
quarter ended September 30, 1995 and certain other information deemed necessary
to substantiate EFC's ability to fund the consideration price in the merger.
For purposes of this opinion we have relied, without independent
verification, on the accuracy and completeness of the material furnished to us
by WFS and Emprise and the material otherwise made available
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to us, including information from published sources, and we have not made any
independent effort to verify such data. With respect to the financial
information, including forecasts and asset valuations we received from WFS, we
assumed (with your consent) that they had been reasonably prepared reflecting
the best currently available estimates and judgment of WFS's management. In
addition, we have not made or obtained any independent appraisals or evaluations
of the assets or liabilities, and potential and/or contingent liabilities of WFS
or EFC. We have further relied on the assurances of management of WFS and EFC
that they are not aware of any facts that would make such information inaccurate
or misleading. We express no opinion on matters of a legal, regulatory, tax or
accounting nature or the ability of the Merger, as set forth in the Agreement,
to be consummated.
In rendering our opinion, we have assumed that in the course of obtaining
the necessary approvals for the Merger, no restrictions or conditions will be
imposed that would have a material adverse effect on the contemplated benefits
of the Merger to WFS or the ability to consummate the Merger. Our opinion is
based on the market, economic and other relevant considerations as they exist
and can be evaluated on the date hereof.
Consistent with the engagement letter with you, we have acted as financial
advisor to WFS in connection with the Merger and will receive a fee for such
services, a majority of which is contingent upon the consummation of the Merger.
In addition, WFS has agreed to indemnify us for certain liabilities arising out
of our engagement by WFS in connection with the Merger. We have also performed
various investment banking services for WFS in the past and have received
customary fees for such services.
Based upon and subject to the foregoing, as outlined in the foregoing
paragraphs and based on such other matters as we considered relevant, it is our
opinion that as of the date hereof, the financial terms of the proposed merger
set forth in the Agreement are fair, from a financial point of view, to the
shareholders of WFS.
This opinion may not, however, be summarized, excerpted from or otherwise
publicly referred to without our prior written consent, although this opinion
may be included in its entirety in the proxy statements of WFS used to solicit
shareholder approval of the Merger. It is understood that this letter is
directed to the Board of Directors of WFS in its consideration of the Agreement,
and is not intended to be and does not constitute a recommendation to any
shareholder as to how such shareholder should vote with respect to the Merger.
Very truly yours,
CHARLES WEBB & COMPANY
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<PAGE> 89
APPENDIX E
"PRELIMINARY COPIES"
WFS BANCORP, INC.
The undersigned hereby constitutes and appoints Burton G. Dunlap and Robert
V. McGrath, or either of them, as proxies, each with full power of substitution,
to vote the number of shares of common stock of WFS Bancorp, Inc. ("WFS") which
the undersigned would be entitled to vote if personally present at the Special
Meeting of WFS Shareholders to be held at the William L. Graham Center located
at 435 South Broadway, Wichita, Kansas, at 1:00 P.M., local time, on June 25,
1996, and at any adjournment or postponement thereof (the "Special Meeting")
upon the proposals described in the Proxy Statement and the Notice of Special
Meeting of Shareholders, both dated May , 1996, the receipt of which is
acknowledged in the manner specified below.
1. MERGER. To consider and vote upon a proposal to approve an Amended and
Restated Agreement and Plan of Merger, dated as of November 30, 1995, and
amended and restated as of January 31, 1996 (the "Agreement"), by and between
WFS and Emprise Bank, Wichita, a Kansas State Bank ("Emprise Bank"), as assigned
by Emprise Bank to Emprise Financial Corporation ("EFC"), the holder of
approximately 94% of the outstanding shares of Emprise Bank, pursuant to an
Assignment of Rights and Assumption of Obligations under Amended and Restated
Merger Agreement, dated March 21, 1996 (the "Assignment"), and the related
Agreement and Plan of Merger (the "Plan") to be entered into by Emprise
Acquisition Sub, Inc., a newly-formed, wholly-owned subsidiary of EFC, and WFS,
which provide that (i) WFS will merge (the "Merger") with a newly formed
wholly-owned subsidiary of EFC, with WFS as the surviving entity, (ii) each
share of the $0.01 par value common stock of WFS ("WFS Common Stock") issued and
outstanding at the effective time of the Merger (with certain exceptions) will
be canceled in exchange for a cash payment of $23.25 (the "Merger Cash Price"),
and (iii) all stock options under WFS's 1994 Stock Option and Incentive Plan
will be deemed vested and exercisable and will be canceled and the holders of
such options will be entitled to receive a cash payment for each share subject
to such option equal to the difference between the Merger Cash Price for each
such share and the price the holder was required to pay for such share upon
exercise of the options, all as more fully described in the accompanying proxy
statement.
FOR / / AGAINST / / ABSTAIN / /
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Special Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.
Please sign exactly as name appears below. When shares are held jointly, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
DATED:
-----------------, 1996
-------------------------------
Signature
-------------------------------
Signature if held jointly
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
WFS BANCORP, INC.
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
