UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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:
[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 SS. '240.14a-12
FIRST KANSAS FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
COMMON STOCK, PAR VALUE $.10 PER SHARE
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(2) Aggregate number of securities to which transaction applies:
1,040,324 SHARES, INCLUDING OUTSTANDING STOCK OPTIONS
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(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):
$19.00, THE PER SHARE MERGER CONSIDERATION
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(4) Proposed maximum aggregate value of transaction: 19,766,156
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(5) Total fee paid: 1,599.08
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[ ] Fee paid previously with preliminary materials.
[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[FIRST KANSAS FINANCIAL CORPORATION LETTERHEAD]
___________________, 2004
Dear fellow shareholder:
We invite you to attend a Special Meeting of Shareholders of First Kansas
Financial Corporation to be held at 600 Main Street, Osawatomie, Kansas on
______________, _________________, 2004 at _:__ _.m., local time. At the special
meeting, you will be asked to consider and vote upon a proposal to approve and
adopt the Agreement and Plan of Merger among Landmark Bancorp, Inc., Landmark
Acquisition Corporation and First Kansas Financial Corporation which provides
for the merger of First Kansas Financial Corporation with and into Landmark
Acquisition Corporation, a wholly owned subsidiary of Landmark Bancorp, Inc.
If the merger agreement is approved and the merger is subsequently
completed, each outstanding share of First Kansas Financial Corporation ("First
Kansas") common stock (other than certain shares held by Landmark or First
Kansas) will be converted into the right to receive $19.00 in cash, without
interest, subject to possible reduction in certain circumstances as described in
the proxy statement.
The merger cannot be completed unless the shareholders of First Kansas
approve and adopt the merger agreement and the parties receive all required
regulatory approvals, among other customary conditions. Approval of the merger
agreement requires the affirmative vote of a majority of the First Kansas shares
outstanding and entitled to vote at the special meeting at which a quorum is
present. Directors and executive officers holding approximately 14.9% of First
Kansas common stock have agreed with Landmark to vote in favor of the adoption
and approval of the merger agreement.
Based on our reasons described herein, including the fairness opinion
issued by our financial advisor, Trident Securities, a division of McDonald
Investments Inc., which is attached to the proxy statement as Appendix B, your
board of directors believes that the merger agreement is fair to you and in your
best interests. ACCORDINGLY, YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
YOU VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
The accompanying document gives you detailed information about the
special meeting, the merger, the merger agreement and related matters. We urge
you to read this entire document carefully, including the attached merger
agreement.
IT IS VERY IMPORTANT THAT YOUR SHARES BE VOTED AT THE SPECIAL MEETING,
REGARDLESS WHETHER YOU PLAN TO ATTEND IN PERSON. TO ENSURE THAT YOUR SHARES ARE
REPRESENTED ON THIS VERY IMPORTANT MATTER, PLEASE TAKE THE TIME TO VOTE BY
COMPLETING AND MAILING THE ENCLOSED PROXY CARD.
Thank you for your cooperation and your continued support of First Kansas
and First Kansas Federal Savings Bank.
Sincerely,
Larry V. Bailey
President
FIRST KANSAS FINANCIAL CORPORATION
600 MAIN STREET
OSAWATOMIE, KANSAS 66064
(913) 755-3033
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON _________________, 2004
Notice is hereby given that a Special Meeting of Shareholders of First
Kansas Financial Corporation ("First Kansas") will be held at 600 Main Street,
Osawatomie, Kansas on ______________, _________________, 2004 at _:__ _.m.,
local time, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated November 13, 2003, among
Landmark Bancorp, Inc., Landmark Acquisition Corporation and First
Kansas Financial Corporation, pursuant to which, among other
things, (i) Landmark Acquisition Corporation, a newly-formed
subsidiary of Landmark Bancorp will merge with and into First
Kansas, and (ii) upon consummation of the merger, each outstanding
share of First Kansas common stock (other than certain shares held
by First Kansas or Landmark and shares the holders of which have
perfected dissenters' rights of appraisal) will be converted into
the right to receive $19.00 in cash (subject to possible reduction
in certain circumstances), without interest; and
2. To transact such other business as may properly come before the
special meeting or any adjournment or postponement of the special
meeting.
We have fixed the close of business on _______________, 2004 as the
record date for the determination of shareholders entitled to notice of and to
vote at the special meeting or any adjournment or postponement. Only holders of
First Kansas common stock of record at the close of business on that date will
be entitled to notice of and to vote at the special meeting or any adjournment
or postponement of the special meeting. A copy of the merger agreement is
enclosed as Appendix A to the accompanying proxy statement. The affirmative vote
of the holders of a majority of shares of First Kansas common stock issued and
outstanding and entitled to vote at the special meeting is necessary to approve
and adopt the merger agreement. Directors and executive officers holding
approximately 14.9% of the First Kansas common stock have agreed with Landmark
to vote in favor of the adoption and approval of the merger agreement.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER AGREEMENT IS FAIR
TO AND IN THE BEST INTERESTS OF FIRST KANSAS'S SHAREHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT.
By Order of the Board of Directors
Galen E. Graham, Secretary
Osawatomie, Kansas
___________________, 2004
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IMPORTANT: YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN, DATE AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD USING THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
IF YOU ARE A RECORD SHAREHOLDER AND FOR ANY REASON YOU SHOULD DESIRE TO REVOKE
YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS VOTED AT THE SPECIAL MEETING.
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TABLE OF CONTENTS
Page
QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES
FOR THE SPECIAL MEETING...................................................
SUMMARY TERM SHEET............................................................
THE SPECIAL MEETING...........................................................
Time, Date and Place.......................................................
Matter to be Considered....................................................
Shares Outstanding and Entitled to Vote; Record Date.......................
How to Vote Your Shares....................................................
Quorum; Vote Required......................................................
Solicitation of Proxies....................................................
THE MERGER....................................................................
The Parties................................................................
Acquisition Structure......................................................
Merger Consideration.......................................................
Effective Time of the Merger...............................................
Background of the Merger...................................................
Recommendation of the First Kansas Board of Directors
and Reasons for the Merger.............................................
Opinion of First Kansas's Financial Advisor................................
Treatment of Stock Options and Restricted Stock............................
Surrender of Stock Certificates; Payment for Shares........................
Financing the Transaction..................................................
Board of Directors' Covenant to Recommend the Merger Agreement.............
No Solicitation............................................................
Conditions to the Merger...................................................
Representations and Warranties of First Kansas and Landmark................
Conduct Pending the Merger.................................................
Extension, Waiver and Amendment of the Merger Agreement....................
Termination of the Merger Agreement........................................
Termination Fee............................................................
Expenses...................................................................
Interests of Certain Persons in the Merger.................................
Employee Benefits Matters..................................................
Merger Regulatory Approvals and Notices....................................
Certain Federal Income Tax Consequences....................................
Accounting Treatment.......................................................
Voting Agreements..........................................................
Dissenters' Rights of Appraisal............................................
MARKET FOR COMMON STOCK AND DIVIDENDS.........................................
CERTAIN BENEFICIAL OWNERS OF FIRST KANSAS COMMON STOCK........................
SHAREHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING.............................
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS....................
WHERE YOU CAN FIND MORE INFORMATION...........................................
Appendix A Agreement and Plan of Merger, dated November 13, 2003, by and
among Landmark Bancorp, Inc., Landmark Acquisition Corporation
and First Kansas Financial Corporation........................... A-1
Appendix B Fairness Opinion of Trident Securities, a division of
McDonald Investments Inc..........................................B-1
Appendix C Section 17-6712 of the Kansas General Corporation Code............C-1
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QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES
FOR THE SPECIAL MEETING
Q. WHAT AM I BEING ASKED TO VOTE ON?
A. First Kansas stockholders are being asked to vote on an Agreement and Plan of
Merger, which, if approved, will result in First Kansas being acquired by
Landmark in the following manner:
o Landmark Acquisition Corporation, a wholly-owned subsidiary of Landmark
Bancorp, Inc., will be merged with and, into First Kansas, with First
Kansas being the surviving corporation wholly owned by Landmark.
Immediately following that merger, First Kansas Federal Savings Bank will
be merged into Landmark National Bank, with Landmark National Bank
surviving. As a result of this transaction, each outstanding share of First
Kansas common stock (other than shares held by Landmark or First Kansas or
shareholders who perfect dissenters' rights of appraisal) will be converted
into the right to receive $19.00 in cash, subject to possible reduction as
described herein.
o These transactions are collectively referred to in this proxy statement as
"the merger." You may be asked to consider other matters as may properly
come before the special meeting. First Kansas does not know of any other
matters that will be presented for consideration at its special meeting.
Q. WHAT DO I NEED TO DO NOW?
A. First, carefully read this proxy statement in its entirety. Then, vote your
shares of First Kansas common stock by one of the following methods:
o marking, signing, dating and returning your proxy card in the enclosed
prepaid envelope; or
o attending the special meeting and submitting a properly executed proxy or
ballot. If a broker holds your shares in "street name," you will need to
get a proxy from your broker to vote your shares in person.
Q. WHY IS MY VOTE IMPORTANT?
A. A majority of the outstanding shares of First Kansas common stock must be
represented in person or by proxy at the special meeting for there to be a
quorum. If you do not vote using one of the methods described above, it will be
more difficult for First Kansas to obtain the necessary quorum to hold its
special meeting. In addition, the affirmative vote of a majority of the shares
of First Kansas common stock outstanding and entitled to vote at the special
meeting is necessary to approve and adopt the merger agreement. Therefore,
abstentions or failures to vote have the same effect as a vote "against" the
merger agreement.
Q. IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
AUTOMATICALLY VOTE MY SHARES FOR ME?
A. No. If you do not provide your broker with instructions on how to vote your
shares that are held in street name your broker will not be permitted to vote
them. Therefore, you should be sure to provide your broker with instructions on
how to vote these shares. Please check the voting form used by your broker to
see if your broker offers telephone or internet voting.
Q. CAN I CHANGE MY VOTE?
A. Yes. If you have not voted through your broker, there are several ways you
can change your vote after you have submitted a proxy.
o First, you may send a written notice stating that you would like to revoke
your proxy to First Kansas's
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Corporate Secretary, Galen E. Graham, Secretary, First Kansas Financial
Corporation, 600 Main Street, Osawatomie, Kansas 66064;
o Second, you may complete and submit a new proxy card. Any earlier proxy
will be revoked automatically; or
o Third, you may attend the meeting and vote in person. Any earlier proxy
will be revoked. However, simply attending the meeting without voting will
not revoke your earlier proxy.
If you have instructed a broker to vote your shares, you must follow
directions you receive from your broker to change your vote.
Q. SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A. No. Within three business days after the closing date of the merger,
Registrar and Transfer Company, acting as paying agent, will send you a letter
of transmittal containing written instructions for exchanging your First Kansas
stock certificates.
Please do not send in any First Kansas stock certificates until you
have received these written instructions. However, if you are not sure where
your stock certificates are located, now would be a good time to find them so
you don't encounter any delays in processing your exchange at closing. Likewise,
if your stock certificates are lost, please contact Vicki Blevins-Belt at (913)
755-3033 or our transfer agent, ComputerShare, at (303) 262-0600 to find out how
to get a replacement certificate.
Q. WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A. We currently expect to complete the merger by June 30, 2004, assuming all the
conditions to completion of the merger, including obtaining the approval of
First Kansas shareholders at the special meeting and receiving regulatory
approvals, have been fulfilled. Fulfilling some of these conditions, such as
receiving certain governmental clearances or approvals, is not entirely within
our control. If all the conditions to completion of the merger have not been
fulfilled at that time, we expect to complete the merger as quickly as
practicable once the conditions are fulfilled.
Q. WHOM DO I CALL IF I HAVE QUESTIONS ABOUT THE SPECIAL MEETING OR THE MERGER?
A. You should direct any questions regarding the special meeting of shareholders
or the merger to Larry Bailey at (913) 755-3033.
4
SUMMARY TERM SHEET
This summary term sheet highlights selected information from this proxy
statement and may not contain all of the information that may be important to
you. To understand the merger fully and for a more complete description of the
legal terms of the merger, you should read carefully this entire document,
including the merger agreement, a copy of which is included as Appendix A to
this proxy statement, and the other documents to which we have referred you. You
may obtain copies of all publicly filed reports and other information from the
sources listed under the section "Where You Can Find More Information,"
beginning on page ___. Page references are included in this summary to direct
you to a more complete description of the topics.
Throughout this document, "First Kansas," "we" and "our" refers to First
Kansas Financial Corporation; "First Kansas Bank" refers to our wholly-owned
banking subsidiary, First Kansas Federal Savings Bank, and "Landmark" refers to
Landmark Bancorp, Inc. Also, we refer to the merger between Landmark and First
Kansas as the "merger;" the Agreement and Plan of Merger, dated as of November
13, 2003, among Landmark, Landmark Acquisition Corporation and First Kansas as
the "merger agreement;" and the merger between Landmark National Bank and First
Kansas Federal Savings Bank as the "bank merger."
This proxy statement is first being mailed to shareholders of First Kansas
on or about ___________, 2004.
THE PARTIES (PAGE ___)
o First Kansas was formed in 1998 in connection with the conversion of
First Kansas Bank from mutual to stock form. First Kansas is
registered with the Office of Thrift Supervision as a savings and loan
holding company and conducts no significant business apart from its
ownership of the capital stock of First Kansas Bank. First Kansas Bank
is a federally chartered stock savings bank with six offices located
in the Kansas counties of Miami, Bourbon, Mitchell and Phillips. First
Kansas Bank operates a traditional savings bank business and at
September 30, 2003, First Kansas had total assets of $152.4 million
and stockholders' equity of $16.2 million. The executive offices of
First Kansas are located at 600 Main Street, Osawatomie, Kansas 66064
and its telephone number at that location is (913) 755-3033.
o Landmark is a one-bank holding company incorporated under the laws of
the state of Delaware and is engaged in the banking business through
its wholly owned subsidiary, Landmark National Bank. At September 30,
2003, Landmark had total assets of $333.6 million and total
stockholders' equity of $42.9 million. The executive offices of
Landmark are located at 230 Poyntz Avenue, Manhattan, Kansas 66502 and
its telephone number at that location is (785) 565-2000.
FIRST KANSAS SHAREHOLDERS WILL RECEIVE $19.00 IN CASH FOR EACH SHARE OF FIRST
KANSAS COMMON STOCK SUBJECT TO POSSIBLE REDUCTION IN CERTAIN CIRCUMSTANCES (PAGE
___)
Landmark and First Kansas propose a transaction in which First Kansas will
become a wholly-owned subsidiary of Landmark by virtue of the merger of Landmark
Acquisition Corporation, a newly-formed subsidiary of Landmark, with and into
First Kansas. If the acquisition of First Kansas by Landmark is completed, you
will have the right to receive $19.00 in cash (subject to possible reduction as
described below), without interest, for each share of First Kansas common stock
that you own as of the effective time of the merger. The merger agreement
provides that the per share merger consideration may be reduced, however, if
First Kansas's stockholders' equity immediately prior to the closing, after
taking into account various
5
adjustments detailed in the merger agreement (the "Adjusted Stockholders'
Equity"), is less than $13.6 million. In the event First Kansas's Adjusted
Stockholders' Equity is less than $13.6 million, the per share merger
consideration will be reduced by an amount equal to the total amount that the
Adjusted Stockholders' Equity is less than $13.6 million divided by 1,040,324.
You will need to surrender your First Kansas stock certificates to
receive the cash merger consideration, but you should not send us any
certificates now. If the merger is completed, Registrar and Transfer Company
acting as the paying agent will send you detailed instructions on how to
exchange your shares.
THE MERGER WILL BE TAXABLE FOR FIRST KANSAS SHAREHOLDERS (PAGE ___)
For federal income tax purposes, the merger will be treated as the sale
to Landmark of all of the shares of First Kansas common stock. You will
recognize taxable gain or loss equal to the difference between the cash payment
that you receive for your shares of First Kansas common stock and your adjusted
tax basis in your shares that you exchange for that payment. In general, the
gain or loss will be either long-term capital gain or short-term capital gain
depending on the length of time you have held your shares of First Kansas common
stock.
Tax matters are complicated, and the tax consequences of the merger may
vary among shareholders. In addition, you may be subject to state, local or
foreign tax laws that are not discussed in this proxy statement. You should
therefore consult your own tax advisor for a full understanding of the tax
consequences to you of the merger.
OUTSTANDING FIRST KANSAS STOCK OPTIONS WILL BE CANCELLED FOR THEIR CASH VALUE TO
THE EXTENT THEY ARE NOT EXERCISED PRIOR TO THE MERGER AND ALL UNVESTED
RESTRICTED STOCK AWARDS WILL VEST (PAGE ___)
Immediately prior to the effective time of the merger (which is the
date on which the merger is consummated), each outstanding and unexercised
option to purchase shares of First Kansas common stock issued under the First
Kansas stock option plan, whether or not then vested and exercisable, will be
terminated and each holder will be entitled to receive in consideration for such
option a cash payment from First Kansas in an amount equal to the difference
between the per share merger consideration and the per share exercise price of
the option, multiplied by the number of shares covered by the option, less any
required tax withholdings. All unvested shares of restricted stock awarded under
the First Kansas Bank Restricted Stock Plan will become fully vested and
immediately prior to the effective time will be cancelled in exchange for a cash
payment by First Kansas equal to the per share merger consideration, less any
required withholding taxes.
WE HAVE RECEIVED AN OPINION FROM OUR FINANCIAL ADVISOR THAT THE PER SHARE MERGER
CONSIDERATION IS FAIR TO FIRST KANSAS'S SHAREHOLDERS FROM A FINANCIAL POINT OF
VIEW (PAGE ___)
Among other factors considered in deciding to approve the merger
agreement, the First Kansas board of directors received the written opinion of
its financial advisor, Trident Securities, a division of McDonald Investments
Inc. ("Trident Securities") that, as of November 13, 2003 (the date on which the
First Kansas board of directors approved the merger agreement), the per share
merger consideration is fair to the holders of First Kansas common stock from a
financial point of view. This opinion was subsequently updated as of the date of
this proxy statement. The opinion dated as of the date of this proxy statement
is included as Appendix B to this proxy statement. You should read this opinion
completely to understand the assumptions made, matters considered and
limitations of the review undertaken by Trident Securities in providing its
opinion. Trident Securities' opinion is directed to the First Kansas board of
directors and does not constitute a recommendation to any shareholder as to any
matters relating to the merger, including how to vote.
6
THE SPECIAL MEETING (PAGE __)
The special meeting will be held at _:__ _.m., local time, on
______________, _________________, 2004, at 600 Main Street, Osawatomie, Kansas.
At the special meeting, you will be asked to approve and adopt the merger
agreement and to act on any other matters that may properly come before the
special meeting.
RECORD DATE; VOTE REQUIRED (PAGE ____)
You can vote at the special meeting if you owned shares of First Kansas
common stock as of the close of business on _______________, 2004. On that date,
there were _______ shares of First Kansas common stock outstanding. You will
have one vote at the special meeting for each share of First Kansas common stock
that you owned of record on that date.
The affirmative vote of a majority of the shares of First Kansas common
stock outstanding and entitled to vote at the special meeting, or 454,123
shares, at which a quorum is present is necessary to approve and adopt the
merger agreement.
Directors and executive officers of First Kansas have individually agreed
with Landmark to vote their shares of First Kansas common stock in favor of the
merger and the merger agreement. These individuals own in the aggregate
approximately 14.9% of the outstanding shares of First Kansas common stock
(exclusive of unexercised stock options and shares held in a fiduciary capacity
under various employee benefit plans).
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT BY FIRST KANSAS SHAREHOLDERS (PAGE __)
Based on the reasons described elsewhere in this proxy statement, First
Kansas's board of directors believes that the merger agreement is fair to and in
your best interests. Accordingly, your board of directors unanimously recommends
that you vote "FOR" approval and adoption of the merger agreement.
FIRST KANSAS AND LANDMARK MUST MEET SEVERAL CONDITIONS TO COMPLETE THE MERGER
(PAGE __)
Completion of the merger depends on the satisfaction or waiver of a number
of conditions, including the following:
o The representations and warranties of each of Landmark and First
Kansas in the merger agreement that are qualified as to materiality or
knowledge must be true and correct and any such representations and
warranties that are not so qualified must be true and correct in all
material respects, in each case as of the date of the merger agreement
and as of the closing date of the merger;
o Shareholders of First Kansas must approve the merger agreement in
accordance with applicable law and all other corporate proceedings
required to have been taken shall have been done;
o Landmark and First Kansas must receive all required regulatory
approvals to complete the transactions contemplated by the merger
agreement and such approvals must be reasonably satisfactory to
Landmark and First Kansas;
o Neither party shall have been made a party to any proceeding or be
threatened to be made party to any proceeding which, in the reasonable
opinion of the other party, has had or is reasonably likely to have
material adverse effect on such party and there must be no
7
injunction, order, decree or law preventing or materially restricting
the completion of the transactions contemplated by the merger
agreement;
o Landmark and First Kansas must have performed in all material respects
their respective obligations required to be performed under the merger
agreement at or prior to the closing of the merger;
o No change in the business, assets, financial condition or results of
operations of Landmark or First Kansas shall have occurred which has
had, or is reasonably likely to have individually or in the aggregate,
a material adverse effect on Landmark or First Kansas;
o The consent, approval or waiver of each person (other than required
regulatory agencies) whose consent or approval shall be required in
order to permit the lawful completion of the transactions contemplated
by the merger agreement shall have been obtained;
o Landmark shall have been permitted to perform environmental
assessments on the real property of First Kansas;
o The total number of shares the holders of which have perfected
dissenters' rights of appraisal shall not exceed 5% of the outstanding
shares of First Kansas common stock;
o First Kansas's Adjusted Stockholders' Equity, as defined in the merger
agreement, shall not be less than $13.1 million immediately prior to
closing;
o Landmark shall have received evidence that all of First Kansas's
merger-related expenses have been paid; and
o First Kansas shall have received a fairness opinion from Trident
Securities as of the date of the signing of the merger agreement and
prior to mailing of this proxy statement.
Unless prohibited by law, either Landmark or First Kansas could elect to
waive any of the conditions for its benefit that have not been satisfied and
complete the merger anyway. The parties cannot be certain whether or when any of
the conditions to the merger will be satisfied or waived where permissible, or
that the merger will be completed.
THE PARTIES NEED TO OBTAIN VARIOUS REGULATORY APPROVALS IN ORDER TO COMPLETE THE
MERGER AND THE BANK MERGER. (PAGE ___)
To complete the merger and the bank merger, the parties and their
affiliates need to obtain the consent or prior approval of, or give notice to
various regulatory authorities, including the Board of Governors of the Federal
Reserve System or Federal Reserve Board, the Office of the Comptroller of the
Currency, the Office of Thrift Supervision and the Federal Deposit Insurance
Corporation. The U.S. Department of Justice may provide input into the approval
process of federal banking agencies and will have between 15 and 30 days
following any approval by a federal banking agency of an application to
challenge the approval on antitrust grounds. Landmark and First Kansas have
filed all necessary applications and notices with applicable regulatory
authorities in connection with the merger and the bank merger. Landmark and
First Kansas cannot predict, however, whether or when all required regulatory
approvals or consents will be obtained, what conditions they might include, or
whether they will be received on a timely basis.
8
THE MERGER AGREEMENT MAY BE TERMINATED BY THE PARTIES (PAGE ___)
The merger agreement may be terminated at any time (even after approval of
the merger by the First Kansas shareholders) as follows:
o By mutual consent of the parties;
o By either party if the merger is not completed by August 1, 2004
unless the delay is due to the party seeking to terminate;
o By either Landmark or First Kansas if any of the conditions to their
respective obligations to complete the merger have not been satisfied
as of the closing date (unless it is due to their fault) and the
failure of that condition to be met would have certain specified
negative results;
o By First Kansas if it receives an unsolicited competing merger
proposal that is determined in good faith to be more favorable to
shareholders than the merger agreement; or
o By Landmark if First Kansas's Adjusted Stockholders' Equity as
calculated immediately prior to closing is less than $13.1 million.
FIRST KANSAS IS OBLIGATED TO PAY LANDMARK A TERMINATION FEE UNDER CERTAIN
CIRCUMSTANCES (PAGE ___)
If the merger agreement is terminated by Landmark or First Kansas in
certain specified circumstances, First Kansas may be obligated to pay Landmark a
fee upon termination of $750,000 ($500,000 if the merger agreement is not
approved by shareholders but no competing merger proposal has been received) and
reimburse Landmark for its expenses incurred in connection with the merger
agreement up to $75,000. In addition, if within 24 months of the termination of
the merger agreement, First Kansas enters into an agreement with another party
providing for a change in control of First Kansas or First Kansas Bank, First
Kansas would be obligated to pay Landmark an additional fee of $250,000
($500,000 if only $500,000 had been due at termination) and make further expense
reimbursement.
CERTAIN DIRECTORS AND OFFICERS OF FIRST KANSAS HAVE INTERESTS IN THE MERGER
WHICH DIFFER FROM YOUR INTERESTS AS A FIRST KANSAS SHAREHOLDER (PAGE ___)
Some of the directors and executive officers of First Kansas have
agreements, stock options, restricted stock awards and other benefit plans or
arrangements that provide them with interests in the merger that are different
from, or in addition to, your interests. These interests arise from the merger
agreement and because of rights under benefits and compensation plans or
arrangements maintained by First Kansas or First Kansas Bank and, in the case of
the executive officers, under employment agreements, and include the following:
o The vesting of all unvested stock options and shares of restricted
stock granted under First Kansas's equity compensation plans upon
consummation of the merger;
o The allocation under the First Kansas Bank ESOP of any unallocated
assets attributable to the exchange of shares of First Kansas common
stock will be made to all plan participants, pro rata based upon
allocated account balances, including the accounts of executive
officers, following termination of the ESOP and the complete repayment
of the outstanding ESOP loan balance upon consummation of the merger;
o Severance payments to Larry V. Bailey, Daniel G. Droste and Galen E.
Graham in the approximate amounts of $575,000, $265,000 and $35,000,
respectively;
9
o Landmark's agreement to provide indemnification arrangements for,
among others, directors and executive officers of First Kansas and to
maintain directors' and officers' indemnification insurance for such
persons for a period of six years following the merger;
o Landmark's agreement to engage Larry V. Bailey as a consultant for a
three-year period following the merger for total aggregate
compensation of $160,000; and
o Non-competition and non-solicitation agreements with each of the
directors of First Kansas other than Mr. Bailey for a one-year period
in consideration for a $12,000 payment per director.
The board of directors of First Kansas was aware of these factors and
considered them in approving the merger and the merger agreement.
FIRST KANSAS SHAREHOLDERS MAY DISSENT FROM THE MERGER AND SEEK APPRAISAL OF
THEIR SHARES (PAGE ___ AND APPENDIX C)
In accordance with Kansas law, holders of First Kansas common stock may
dissent from the merger and seek appraisal of their shares of First Kansas
common stock in connection with the merger provided they comply with the
detailed statutory requirements described herein and set forth in their entirety
in Appendix C.
Shareholders considering seeking appraisal should be aware that the fair
value of their shares could be more than, the same as or less than the merger
consideration they would receive pursuant to the merger agreement if they did
not seek appraisal of their shares.
It is a condition to Landmark's obligation to close the merger that the
total number of dissenting shares not exceed 5% of the outstanding shares.
THE SPECIAL MEETING
TIME, DATE AND PLACE
A special meeting of shareholders of First Kansas will be held at _:__
_.m., local time, on ______________, _________________, 2004 at 600 Main Street,
Osawatomie, Kansas and at any adjournment thereof.
MATTER TO BE CONSIDERED
The purpose of the special meeting is to consider and approve and adopt the
merger agreement and to transact such other business as may properly come before
the special meeting or any adjournment or postponement of the special meeting.
At this time, the First Kansas board of directors is unaware of any matters,
other than set forth in the preceding sentence, that may be presented for action
at the special meeting.
In addition, stockholders may be asked to consider such other matters as
are properly brought before the special meeting, including a proposal to adjourn
the special meeting to permit further solicitation of proxies by the First
Kansas board of directors in the event that there are an insufficient number of
votes to approve and adopt the merger agreement at the time of the special
meeting.
10
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
The close of business on _______________, 2004 has been fixed by First
Kansas as the record date for the determination of holders of First Kansas
common stock entitled to notice of and to vote at the special meeting and any
adjournment or postponement of the special meeting. At the close of business on
the record date, there were 908,245 shares of First Kansas common stock
outstanding and entitled to vote. Each share of First Kansas common stock
entitles the holder to one vote at the special meeting on all matters properly
presented at the special meeting.
HOW TO VOTE YOUR SHARES
Shareholders of record may vote by mail or by attending the special meeting
and voting in person. If you choose to vote by mail, simply mark the enclosed
proxy card, date and sign it, and return it in the postage paid envelope
provided.
If your shares are held in the name of a bank, broker or other holder of
record, you will receive instructions from the holder of record that you must
follow in order for your shares to be voted. Your failure to instruct your
broker to vote on the proposal to approve and adopt the merger agreement will be
the equivalent of voting against the proposal. Also, please note that if the
holder of record of your shares is a broker, bank or other nominee and you wish
to vote in person at the special meeting, you must bring a letter from the
broker, bank or other nominee confirming that you are the beneficial owner of
the shares.
Any shareholder executing a proxy may revoke it at any time before it is
voted by:
o Delivering to the Secretary of First Kansas prior to the special
meeting a written notice of revocation addressed to Galen E. Graham,
Secretary, First Kansas Financial Corporation, 600 Main Street,
Osawatomie, Kansas 66064;
o Delivering to First Kansas prior to the special meeting a properly
executed proxy with a later date; or
o Attending the special meeting and voting in person.
Attendance at the special meeting will not, in and of itself, constitute
revocation of a proxy.
Each proxy returned to First Kansas (and not revoked) by a holder of First
Kansas common stock will be voted in accordance with the instructions indicated
thereon. If no instructions are indicated, the proxy will be voted "FOR"
approval and adoption of the merger agreement.
At this time, the First Kansas board of directors is unaware of any
matters, other than set forth above, that may be presented for action at the
special meeting or any adjournment or postponement of the special meeting. If
other matters are properly presented, however, the persons named as proxies will
vote in accordance with their judgment with respect to such matters. The persons
named as proxies by a shareholder may propose and vote for one or more
adjournments or postponements of the special meeting to permit additional
solicitation of proxies in favor of approval and adoption of the merger
agreement, but no proxy voted against the merger agreement will be voted in
favor of any such adjournment or postponement.
11
QUORUM; VOTE REQUIRED
A quorum, consisting of the holders of a majority of the issued and
outstanding shares of First Kansas common stock, must be present in person or by
proxy before any action may be taken at the special meeting. Abstentions will be
treated as shares that are present for purposes of determining the presence of a
quorum.
The affirmative vote of a majority of the issued and outstanding shares of
First Kansas common stock entitled to vote at the special meeting, in person or
by proxy, is necessary to approve and adopt the merger agreement on behalf of
First Kansas.
First Kansas intends to count shares of First Kansas common stock present
in person at the special meeting but not voting, and shares of First Kansas
common stock for which it has received proxies but with respect to which holders
of such shares have abstained on any matter, as present at the special meeting
for purposes of determining whether a quorum exists. However, because approval
and adoption of the merger agreement requires the affirmative vote of a majority
of the issued and outstanding shares of First Kansas common stock entitled to
vote at the special meeting, such nonvoting shares and abstentions have the same
effect as a vote against the merger agreement. In addition, under applicable
rules, brokers who hold shares of First Kansas common stock in street name for
customers who are the beneficial owners of such shares are prohibited from
giving a proxy to vote shares held for such customers in favor of the approval
of the merger agreement without specific instructions to that effect from such
customers. Accordingly, the failure of such customers to provide instructions
with respect to their shares of First Kansas common stock to their broker will
have the effect of the shares not being voted and have the same effect as a vote
against the merger agreement. Such "broker non-votes," if any, will be counted
as present for determining the presence or absence of a quorum for the
transaction of business at the special meeting or any adjournment or
postponement thereof.
The directors and executive officers of First Kansas and their respective
affiliates collectively owned approximately 27.7% of the outstanding shares of
First Kansas common stock as of the record date for the special meeting
(inclusive of stock options exercisable within 60 days). The directors and
executive officers of First Kansas have entered into voting agreements with
Landmark pursuant to which they have agreed to vote all of their shares
(excluding shares held in a fiduciary capacity where the beneficiary is not
related by blood or marriage) in favor of the merger agreement. These
individuals own in the aggregate approximately 14.9% of the outstanding shares
of First Kansas common stock (exclusive of unexercised stock options). See
"Certain Beneficial Owners of First Kansas Common Stock," on page ___ and "The
Merger -- Shareholder Agreements" on page ___.
Landmark has represented to First Kansas that it and its affiliate owns 100
shares of the outstanding shares of common stock of First Kansas.
SOLICITATION OF PROXIES
First Kansas will pay for the costs of mailing this proxy statement to its
shareholders, as well as all other costs incurred by it in connection with the
solicitation of proxies from its shareholders on behalf of its board of
directors. In addition to solicitation by mail, the directors, officers and
employees of First Kansas and its subsidiaries may solicit proxies from
shareholders of First Kansas in person or by telephone, telegram, facsimile or
other electronic methods without compensation other than reimbursement by First
Kansas for their actual expenses.
Arrangements also will be made with brokerage firms and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of First Kansas common stock held of record by such persons,
and First Kansas will reimburse such firms, custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses in connection therewith.
12
THE MERGER
The following information describes the material aspects of the merger
agreement and the merger. This description does not purport to be complete and
is qualified in its entirety by reference to the appendices to this proxy
statement, including the merger agreement attached as Appendix A. You are urged
to carefully read the merger agreement and the other appendices in their
entirety.
THE PARTIES
Set forth below is a brief description of the parties to the merger
agreement.
o First Kansas was formed in 1998 in connection with the conversion of
First Kansas Bank from mutual to stock form. First Kansas is
registered with the Office of Thrift Supervision as a savings and loan
holding company and conducts no significant business apart from its
ownership of the capital stock of First Kansas Bank. First Kansas Bank
is a federally chartered stock savings bank with six offices located
in the Kansas counties of Miami, Bourbon, Mitchell and Phillips. First
Kansas Bank operates a traditional savings bank business and at
September 30, 2003, First Kansas has total assets of $152.4 million
and stockholders' equity of $16.2 million. The executive offices of
First Kansas are located at 600 Main Street, Osawatomie, Kansas 66064
and its telephone number at that location is (913) 755-3033.
o Landmark is a one-bank holding company incorporated under the laws of
the state of Delaware and is engaged in the banking business through
its wholly owned subsidiary, Landmark National Bank. At September 30,
2003, Landmark had total assets of $333.6 million and total
stockholders' equity of $42.9 million. The executive offices of
Landmark are located at 230 Poyntz Avenue, Manhattan, Kansas 66502 and
its telephone number at that location is (785) 565-2000.
ACQUISITION STRUCTURE
Subject to the terms and conditions set forth in the merger agreement,
Landmark Acquisition Corporation, a newly-formed subsidiary of Landmark will be
merged with and into First Kansas. Concurrent with the merger and immediately
after the effective time, First Kansas Bank will be merged with and into
Landmark National Bank with Landmark National Bank as the surviving entity of
the merger.
MERGER CONSIDERATION
At the effective time of the merger, each share of First Kansas common
stock issued and outstanding immediately prior to the effective time (other than
shares held by persons who have perfected dissenters' rights of appraisal and
certain shares held by First Kansas or Landmark) will be cancelled and converted
automatically into the right to receive from Landmark an amount equal $19.00 in
cash, without interest, subject to possible reduction in certain circumstances
described below.
The merger agreement provides that the per share merger consideration will
be reduced if First Kansas's Adjusted Stockholders' Equity, as defined in the
merger agreement, immediately prior to closing is less than $13.6 million. In
the event, the Adjusted Stockholders' Equity is less than $13.6 million, the
$19.00 price will be reduced by an amount equal to the amount by which the
Adjusted Stockholders' Equity is less than $13.6 million divided by 1,040,324.
13
For example, if, immediately prior to closing, First Kansas's Adjusted
Stockholders' Equity (as calculated in accordance with the merger agreement) was
$13.4 million, the per share merger consideration would be reduced to $18.81.
After the completion of the merger, holders of certificates that prior to
the merger represented issued and outstanding shares of First Kansas common
stock will have no rights with respect to those shares except for the right to
surrender the certificates for the merger consideration. After the completion of
the merger, holders of shares of First Kansas common stock will have no
continuing equity interest in First Kansas or Landmark and, therefore, will not
share in future earnings, dividends or growth of First Kansas or Landmark.
EFFECTIVE TIME OF THE MERGER
The merger will become effective at the time and date agreed to by the
parties or, if no agreement is made, at 12:01 a.m. on the day following the date
on which a certificate of merger, executed in accordance with the relevant
provisions of the General Corporation Code of Kansas, is accepted for filing
with the Secretary of State of the State of Kansas. The merger agreement
provides that the closing date, which is the date on which the parties exchange
various closing documents, will be 21 business days after the end of the month
in which all required regulatory approvals have been obtained and all statutory
waiting periods have expired, or as otherwise determined by the parties.
Although no assurance can be given in this regard, it is anticipated that the
merger will become effective by June 30, 2004.
BACKGROUND OF THE MERGER
During the past several years, Patrick Alexander, Landmark's President and
Larry Bailey, President of First Kansas held informal meetings at which time
they discussed a possible strategic alliance between First Kansas and Landmark.
On January 14, 2003, Mr. Alexander and Mr. Bailey met again at which time Mr.
Alexander expressed an interest in actively commencing negotiations for a
possible merger.
On February 18, 2003, representatives of Trident Securities met with Mr.
Bailey to discuss the current status of the mergers and acquisitions market and
possible strategic alternatives for First Kansas. On February 19, 2003, Mr.
Alexander informally met with First Kansas's board of directors to discuss a
possible merger. Mr. Bailey discussed strategic alternatives generally and
Landmark specifically with the entire board of directors at a meeting held on
March 25, 2003. At that meeting, the board determined to investigate a possible
strategic alliance with Landmark and approved the engagement of Trident
Securities as its financial advisor to assist in evaluating and negotiating a
possible merger transaction.
During April and May of 2003, representatives of Trident Securities and
representatives of Landmark conducted negotiations which culminated in Landmark
submitting a written indication of interest. Landmark proposed a transaction in
which it would acquire First Kansas in exchange for merger consideration
consisting of cash and shares of Landmark common stock in equal components. This
proposal had an approximate value of $19.00 per share based on the trading price
of the Landmark common stock at that point in time. This non-binding proposal
was subject to, among other items, the completion of due diligence.
The First Kansas board met on June 3, 2003 to discuss the Landmark
proposal. The board authorized Trident Securities to contact other potential
acquirors unless Landmark increased the value it was offering. Landmark
subsequently indicated it would not make any changes in its indication of
interest.
Between June and July 2003, Trident Securities contacted 13 other potential
acquirors and provided a confidential information memorandum to six parties.
Landmark was also invited to increase its proposal. None of the six parties
ultimately opted to submit a written indication of interest although two parties
indicated verbally that they might be interested in doing so but at values
substantially less than the original Landmark proposal.
14
On July 25, 2003, Landmark verbally re-submitted its original proposal such
that the consideration was then valued at approximately $19.50 per share due to
an increase in the trading price for the Landmark common stock. The First Kansas
board met on August 1, 2003 to discuss the results of the process conducted by
Trident Securities and authorized Trident Securities to pursue discussions with
Landmark and permit Landmark to conduct due diligence. Due diligence was
conducted by both parties during the month of August, 2003.
On September 19, 2003, after completion of due diligence, Landmark informed
First Kansas that it was necessary to revise its proposal at a lower value than
previously discussed. Landmark stated that the decreased value was due to
concerns about declining earnings for First Kansas and the estimated $550,000
charge to earnings to be incurred by First Kansas due to the under-funded status
of its defined benefit plan upon termination of such plan. The stock component
of the proposal had also declined due to decreases in the trading price of the
Landmark common stock.
The parties continued to negotiate terms in September 2003. On September
29, 2003 in response to First Kansas's concerns regarding the stock component of
Landmark's proposal, the parties agreed to restructure the proposal to an
all-cash proposal of $19.00 per share. On November 13, 2003, the board met to
further discuss the terms of the merger agreement and related matters. The board
received a presentation from Trident Securities in which Trident Securities
delivered its opinion that the per share merger consideration being offered by
Landmark was fair to shareholders of First Kansas from a financial point of
view. The First Kansas board unanimously approved the merger agreement
RECOMMENDATION OF THE FIRST KANSAS BOARD OF DIRECTORS AND REASONS FOR THE MERGER
The First Kansas board has unanimously approved the merger agreement and
unanimously recommends that First Kansas shareholders vote "FOR" approval and
adoption of the merger agreement.
The First Kansas board has determined that the merger is fair to, and in
the best interests of, First Kansas and its shareholders. In approving the
merger agreement, the First Kansas board consulted with Trident Securities with
respect to the financial aspects and fairness of the merger from a financial
point of view and with its legal counsel as to its legal duties and the terms of
the merger agreement. In arriving at its determination, the First Kansas board
also considered a number of factors, including the following:
o The board's familiarity with and review of information concerning the
business, results of operations, financial condition, competitive
position and future prospects of First Kansas;
o The current and prospective environment in which First Kansas
operates, including national, regional and local economic conditions,
the competitive environment for banks and other financial institutions
generally and the increased regulatory burdens on financial
institutions generally and the trend toward consolidation in the
banking industry and in the financial services industry;
o The financial presentation of Trident Securities and the opinion of
Trident Securities that, as of the date of such opinion, the merger
consideration of $19.00 in cash per share was fair, from a financial
point of view, to the holders of First Kansas common stock (see " --
Opinion of First Kansas's Financial Advisor," on page ___);
o The historical market prices of the First Kansas common stock and the
fact that the per share merger consideration represented a 4% premium
over the average per share closing prices of the First Kansas common
stock during the eight-week period immediately preceding the merger
announcement (see "Market for Common Stock and Dividends" on page
___);
15
o Results that could be expected to be obtained by First Kansas if it
continued to operate independently, and the likely benefits to
shareholders of such course, as compared with the value of the merger
consideration being offered by Landmark;
o The ability of Landmark to pay the aggregate merger consideration and
to receive the requisite regulatory approvals in a timely manner;
o The fact that the consideration to be received in the merger is cash,
thus eliminating any uncertainty in valuing the merger consideration
to be received by First Kansas shareholders, and that this
consideration would result in a fully-taxable transaction to First
Kansas shareholders;
o Trident Securities' assessment that it currently was unlikely that
another acquiror had both the willingness and the financial capability
to offer to acquire First Kansas at a price which was higher than that
being offered by Landmark;
o The terms and conditions of the merger agreement, including the
parties' respective representations, warranties, covenants and other
agreements, the conditions to closing, a provision which permits First
Kansas's board of directors, in the exercise of its fiduciary duties,
under certain conditions, to furnish information to, or engage in
negotiations with, a third party which has submitted an unsolicited
proposal to acquire First Kansas and a provision providing for First
Kansas's payment of a termination fee to Landmark if the merger
agreement is terminated under certain conditions;
o The effects of the merger on First Kansas's depositors and customers
and the communities served by First Kansas which was deemed to be
favorable given that they would be served by a geographically
diversified organization which had greater resources than First
Kansas; and
o The effects of the merger on First Kansas's employees, including the
prospects for employment with a large, growing organization such as
Landmark and the severance and other benefits agreed to be provided by
Landmark to employees whose employment was terminated in connection
with the merger.
The discussion and factors considered by the First Kansas board is not
intended to be exhaustive, but includes all material factors considered. In
approving the merger agreement, the First Kansas board did not assign any
specific or relative weights to any of the foregoing factors and individual
directors may have weighted factors differently.
OPINION OF FIRST KANSAS'S FINANCIAL ADVISOR
ACQUISITION - GENERAL. Pursuant to an engagement letter dated March 19,
2003 between First Kansas and Trident Securities, a division of McDonald
Investments Inc., First Kansas retained Trident Securities to render an opinion
with respect to the fairness, from a financial point of view, of the merger
consideration to be received by First Kansas stockholders in connection with a
sale of First Kansas. Trident Securities is a nationally recognized specialist
in the financial services industry and is regularly engaged in evaluations of
similar businesses and in advising institutions with regard to mergers and
acquisitions, as well as raising debt and equity capital for such institutions.
First Kansas selected Trident Securities to render a fairness opinion based upon
Trident Securities' qualifications, expertise and reputation in such capacity.
Trident Securities delivered a written opinion, dated November 13, 2003
that the merger consideration was fair to First Kansas stockholders, from a
financial point of view, as of the date of such opinion. Trident Securities also
delivered to the First Kansas board a written opinion updated as of this proxy
statement
16
confirming its written opinion of November 13, 2003. Neither First Kansas nor
its board of directors imposed any limitations on Trident Securities with
respect to the investigations made or the procedures followed in rendering its
opinion.
THE FULL TEXT OF TRIDENT SECURITIES WRITTEN OPINION TO THE FIRST KANSAS
BOARD, DATED AS OF THE DATE OF THIS PROXY STATEMENT, WHICH SETS FORTH THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND EXTENT OF REVIEW BY TRIDENT SECURITIES,
IS ATTACHED AS APPENDIX B AND IS INCORPORATED HEREIN BY REFERENCE. IT SHOULD BE
READ CAREFULLY AND IN ITS ENTIRETY IN CONJUNCTION WITH THIS DOCUMENT. THE
FOLLOWING SUMMARY OF TRIDENT SECURITIES' OPINION IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF THE OPINION. TRIDENT SECURITIES OPINION IS
ADDRESSED TO THE FIRST KANSAS BOARD AND DOES NOT CONSTITUTE A RECOMMENDATION TO
ANY SHAREHOLDER OF FIRST KANSAS AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE
FIRST KANSAS SPECIAL MEETING DESCRIBED IN THIS DOCUMENT.
Trident Securities, in connection with rendering its opinion:
(i) Reviewed certain publicly available information concerning First
Kansas, including the Annual Reports on Form 10-KSB of First Kansas
for each of the years for the three-year period ended December 31,
2002 and the Quarterly Reports on Forms 10-QSB of First Kansas for the
quarters ended March 31, 2003, June 30, 2003 and September 30, 2003.
(ii) Reviewed certain publicly available information concerning Landmark,
including the consolidated statement of financial condition as of June
30, 2003, related statements of income, changes in stockholders'
equity and cash flows for the year ended December 31, 2002 accompanied
by the audit report of Landmark's independent public accountants;
(iii)Reviewed certain other internal information, primarily financial in
nature, relating to the respective businesses, earnings, assets and
prospects of First Kansas and Landmark provided to us or publicly
available for purposes of our analysis;
(iv) Participated in meetings and telephone conferences with members of
senior management of First Kansas concerning the financial condition,
business, assets, financial forecasts and prospects of the company, as
well as other matters we believed relevant to our inquiry;
(v) Participated in meetings and telephone conferences with members of
senior management of Landmark concerning the financial condition,
business, assets, financial forecasts of Landmark, as well as other
matters we believed relevant to our inquiry;
(vi) Reviewed certain stock market information for First Kansas common
stock and compared it with similar information for certain companies,
the securities of which are publicly traded;
(vii)Compared the results of operations and financial condition of First
Kansas with that of certain companies, which we deemed to be relevant
for purposes of this opinion;
(viii) Reviewed the financial terms, to the extent publicly available, of
certain acquisition transactions, which we deemed to be relevant for
purposes of this opinion;
(ix) Reviewed financial projections prepared by management of First Kansas;
(x) Reviewed the merger agreement and certain related documents; and
(xi) Performed such other reviews and analyses as we have deemed
appropriate.
17
The oral and written opinions provided by Trident Securities to First
Kansas were necessarily based upon economic, monetary, financial market and
other relevant conditions as of the dates thereof.
In connection with its review and arriving at its opinion, Trident
Securities relied upon the accuracy and completeness of the financial
information and other pertinent information provided by First Kansas and
Landmark to Trident Securities for purposes of rendering its opinion. Trident
Securities did not assume any obligation to independently verify any of the
provided information as being complete and accurate in all material respects.
With regard to the financial forecasts established and developed for First
Kansas with the input of its management, Trident Securities assumed that these
materials had been reasonably prepared on bases reflecting the best available
estimates and judgments of First Kansas as to the future performance of First
Kansas and that the projections provided a reasonable basis upon which Trident
Securities could formulate its opinion. First Kansas does not publicly disclose
such internal management projections of the type utilized by Trident Securities
in connection with Trident Securities role as financial advisor to First Kansas.
Therefore, such projections cannot be assumed to have been prepared with a view
towards public disclosure. The projections were based upon numerous variables
and assumptions that are inherently uncertain, including, among others, factors
relative to the general economic and competitive conditions facing First Kansas.
Accordingly, actual results could vary significantly from those set forth in the
respective projections.
Trident Securities does not claim to be an expert in the evaluation of loan
portfolios or the allowance for loan losses with respect thereto and therefore
assumes that such allowances for First Kansas are adequate to cover such losses.
In addition, Trident Securities does not assume responsibility for the review of
individual credit files and did not make an independent evaluation, appraisal or
physical inspection of the assets or individual properties of First Kansas, nor
was Trident Securities provided with such appraisals. Furthermore, Trident
Securities assumes that the merger will be consummated in accordance with the
terms set forth in the merger agreement, without any waiver of any material
terms or conditions by First Kansas, and that obtaining the necessary regulatory
approvals for the merger will not have an adverse effect on either separate
institution or the combined entity. Moreover, in each analysis that involves per
share data for First Kansas, Trident Securities adjusted the data to reflect
full dilution, i.e., the effect of the exercise of outstanding options utilizing
the treasury stock method. In particular, Trident Securities assumes that the
merger will be recorded as a "purchase" in accordance with generally accepted
accounting principles.
In connection with rendering its opinion to First Kansas's board of
directors, Trident Securities performed a variety of financial and comparative
analyses, of which the analyses necessitating the primary weight of our opinion
are briefly summarized below. Such summary of analyses does not purport to be a
complete description of the analyses performed by Trident Securities. Moreover,
Trident Securities believes that these analyses must be considered as a whole
and that selecting portions of such analyses and the factors considered by it,
without considering all such analyses and factors, could create an incomplete
understanding of the scope of the process underlying the analyses and, more
importantly, the opinion derived from them. The preparation of a financial
advisor's opinion is a complex process involving subjective judgments and is not
necessarily susceptible to partial analyses or a summary description of such
analyses. In its full analysis, Trident Securities also included assumptions
with respect to general economic, financial market and other financial
conditions. Furthermore, Trident Securities drew from its past experience in
similar transactions, as well as its experience in the valuation of securities
and its general knowledge of the banking industry as a whole. Any estimates in
Trident Securities's analyses were not necessarily indicative of actual future
results or values, which may significantly diverge more or less favorably from
such estimates. Estimates of First Kansas valuations do not purport to be
appraisals nor to necessarily reflect the prices at which companies or their
respective securities actually may be sold. None of the analyses summarized
below were assigned a greater significance by Trident Securities than any other
in deriving its opinion.
18
COMPARABLE TRANSACTION ANALYSIS. Trident Securities reviewed and compared
actual information for groups of comparable pending and completed thrift merger
transactions (through November 7, 2003) it deemed pertinent to an analysis of
the merger. The pricing ratios for the merger were compared to the average and
median ratios of (i) price to last twelve months earnings, (ii) price to
tangible book value, (iii) capital adjusted price to tangible book value, (iv)
tangible book value premium to core deposit ratio ("TBV Prem./Core Deposits"),
and (v) transaction premium to current trading price for each of the following
twelve comparable transaction groups:
o all thrift acquisitions in the United States announced within the
preceding 12 months ("All Recent Median");
o all thrift acquisitions in the United States announced within the
preceding 90 days ("Last 90 Days Median");
o all pending thrift acquisitions in the United States that have been
announced but have yet to close ("All Pending Median");
o all Midwest United States thrift acquisitions announced within the
preceding 12 months ("Midwest Recent Median");
o all thrift acquisitions in the United States announced within the
preceding 12 months involving acquired thrifts with assets of
$100-$200 Million ("Assets $100mm-$200mm Median");
o all thrift acquisitions in the United States announced within the
preceding 12 months with a total deal size of $10-$30 Million ("Deal
Size $10mm-$30mm Median");
o all thrift acquisitions in the United States announced within the
preceding 12 months involving acquired thrifts with returns on average
assets of 0bp-40bp ("ROAA 0bp-40bp Median");
o all thrift acquisitions in the United States announced within the
preceding 12 months involving acquired thrifts with returns on average
equity of 0%-4% ("ROAE 0%-4% Median");
o all thrift acquisitions in the United States announced within the
preceding 12 months involving acquired thrifts with tangible capital
of 9%-13% ("Tangible Capital 9%-13% Median");
o all thrift acquisitions in the United States announced within the
preceding 12 months involving acquired thrifts with non performing
assets of .40%-.60% ("NPAs .40%-.60% Median");
o Guideline thrift acquisitions announced since July 18, 2000 involving
acquired thrifts with asset sizes, capital levels, profitability and
market areas similar to First Kansas ("Guideline Median")
19
The following table represents a summary analysis of the comparable
transactions analyzed by Trident Securities based on the announced transaction
values:
Median Price to Capital TBV Prem/
Number ------------------------ Adj.Price/ Prem/
of LTM Tang. Tang. Core Trading
Trans. EPS (1) Book Book Deposits Price (2)
----------- ---------- ---------- ------------ ------------ ------------
ALL RECENT MEDIAN 44 19.4x 167.9% 198.8% 12.5% 22.0%
LAST 90 DAYS MEDIAN 10 21.1x 266.1% 245.8% 19.0% 25.6%
ALL PENDING MEDIAN 2 19.9x 189.9% 223.4% 17.8% 25.0%
MIDWEST RECENT MEDIAN 9 21.1x 150.6% 175.3% 7.8% 13.8%
ASSETS $100MM-$200MM MEDIAN 5 19.9x 169.7% 172.6% 12.9% 20.8%
DEAL SIZE $10MM-$30MM MEDIAN 7 21.1x 157.5% 166.9% 12.9% 28.1%
ROAA 0BP-40BP MEDIAN 6 45.9x 122.3% 142.1% 5.0% 25.0%
ROAE 0%-4% MEDIAN 6 45.9x 122.3% 142.1% 5.0% 25.0%
TANGIBLE CAPITAL 9%-13% MEDIAN 12 21.1x 164.0% 198.9% 13.0% 31.5%
NPAS .40%-.60% MEDIAN 5 17.9x 164.5% 198.8% 12.5% 32.5%
GUIDELINE MEDIAN 12 26.6x 116.6% 135.7% 5.9% 22.4%
FIRST KANSAS....................... NM 113.2% 121.5% 2.7% -6.9%
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Last 12 months earnings per share
(2) Based on First Kansas's closing stock price of $20.40 on November 12, 2003
</FN>
Trident Securities selected twelve thrift acquisition transactions (the
"Guideline Transactions") that were believed to be most relevant based on the
similarity of the sellers to First Kansas in asset size, capital level,
profitability and market area characteristics. The Guideline transactions are
listed in the following table:
BUYER/SELLER
------------
o First NB Holding Company/Access Anytime Bancorp Inc.
o Washington Federal Inc./United S&L Bank
o Standard Bancshares Inc./Security Financial Bancorp Inc.
o Classic Bancshares Inc./First Federal Financial Bancorp Inc.
o Midwest Banc Holdings Inc./Big Foot Financial Corp.
o First Federal Bancshares Inc./PFSB Bancorp Inc.
o Colony Bankcorp Inc./Quitman Bancorp Inc.
o National Bancshares Corp./Peoples Financial Corp.
o Union Community Bancorp/Montgomery Financial Corp.
o Platte Valley Financial Service Co./Tri-County Bancorp Inc.
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o PSB Bancorp Inc./Jade Financial Corp.
o Citco Community Bankshares, Inc./Twin City Bancorp
A summary of the pricing multiples for the Guideline transactions is listed
below:
LOW HIGH MEDIAN FIRST KANSAS
--- ---- ------ ------------
Price/EPS (LTM) 16.7x 48.0x 26.6x NM
Price/Tangible Book 91.7% 157.5% 116.6% 113.2%
Capital Adj. P/TBV 83.7% 214.2% 135.7% 121.5%
Premium/Core Deposits 0.3% 11.0% 5.9% 2.7%
Premium/Trading Price 3.9% 58.5% 22.4% -6.9%
The value of the transaction indicates that the merger consideration paid
to First Kansas stockholders falls within the range of similar transactions,
represented by the guideline transactions, based on all methods of merger
valuation used by Trident Securities in its comparable merger transaction
analyses.
DISCOUNTED EARNINGS ANALYSIS. Trident Securities calculated a present value
of First Kansas's forward earnings using internal projections for the five-year
period through the calendar year ended December 31, 2007. This analysis utilized
a range of discount rates of 13%-16%, assumed annual asset growth of 2% and
annual earnings growth of 5.0%, utilized a range of terminal earnings multiples
of 16.0x-20.0x calendar year 2007 net income, and a target tangible capital
ratio of 9.00%. The analyses resulted in a range of present values for First
Kansas shareholders of between $10.04 and $12.22 per share. This analysis was
based on estimates by Trident Securities in determining the terminal earnings
multiples used in projecting First Kansas's acquisition value and is not
necessarily indicative of actual values or actual future results and does not
purport to reflect the prices at which any securities may trade at the present
or at any time in the future. Trident Securities noted that the discounted
earnings analysis was included because it is a widely used valuation
methodology, but noted that the results of such methodology are highly dependent
upon the numerous assumptions that must be made, including earnings growth
rates, terminal multiples, discount rates and target tangible capital ratios.
BASED ON THE AFOREMENTIONED ANALYSES AND TRIDENT SECURITIES EXPERIENCE WITH
NUMEROUS MERGERS INVOLVING THRIFT INSTITUTIONS, IT IS TRIDENT SECURITIES OPINION
THAT THE MERGER CONSIDERATION TO BE RECEIVED BY FIRST KANSAS STOCKHOLDERS IN THE
MERGER IS FAIR FROM A FINANCIAL POINT OF VIEW.
No institution used as a comparison in the above analyses is identical to
First Kansas, or the combined entity and no other transaction is identical to
the merger. Accordingly, an analysis of the results of the foregoing is not
purely mathematical; rather, such analyses involve complex considerations and
judgments concerning differences in financial, market and operating
characteristics of the companies and other factors that could affect the trading
characteristics of the companies to which First Kansas, and the combined entity
are being compared.
IN CONNECTION WITH DELIVERY OF ITS OPINION DATED AS OF THE DATE OF THIS
DOCUMENT, TRIDENT SECURITIES PERFORMED PROCEDURES TO UPDATE, AS NECESSARY,
CERTAIN OF THE ANALYSES DESCRIBED ABOVE AND REVIEWED THE ASSUMPTIONS ON WHICH
THE ANALYSES DESCRIBED ABOVE WERE BASED AND THE FACTORS CONSIDERED IN CONNECTION
THEREWITH. TRIDENT SECURITIES DID NOT PERFORM ANY ANALYSES IN ADDITION TO THOSE
DESCRIBED ABOVE IN UPDATING THE OPINION.
For its financial advisory services provided to First Kansas, Trident
Securities will be paid a total fee of 1.50% of the aggregate merger
consideration, of which $60,000 has been received to date with the balance
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of the total fee to be paid to Trident Securities at the time of closing of the
merger. In addition, First Kansas has agreed to reimburse Trident Securities for
all reasonable out-of-pocket expenses, incurred by it on First Kansas's behalf,
provided such expenses shall not exceed $10,000 without First Kansas's prior
consent. First Kansas also agreed to indemnify Trident Securities against
certain liabilities, including any which may arise under the federal securities
laws.
Trident Securities is a member of all principal securities exchanges in the
United States and in the conduct of its broker-dealer activities may have from
time to time purchased securities from, and sold securities to, First Kansas and
Landmark. As a market maker, Trident Securities may also have purchased and sold
the securities of First Kansas for Trident Securities own account and for the
accounts of its customers.
TREATMENT OF STOCK OPTIONS AND RESTRICTED STOCK
Immediately prior to the effective time of the merger, each outstanding and
unexercised option to purchase shares of First Kansas common stock issued under
the First Kansas stock option plan, whether or not then vested and exercisable,
will be terminated. Each holder will be entitled to receive in consideration for
the termination of such option a cash payment from First Kansas at the closing
in an amount equal to the difference between the per share merger consideration
and the per share exercise price of the option, multiplied by the number of
shares covered by the option, less any required tax withholdings.
Immediately prior to the effective time of the merger, each unvested
restricted share of First Kansas common stock granted under the First Kansas
restricted stock plan which is outstanding immediately prior to the effective
time of the merger shall be cancelled in exchange for a cash payment equal to
the per share merger consideration from First Kansas, less any required tax
withholdings.
SURRENDER OF STOCK CERTIFICATES; PAYMENT FOR SHARES
Landmark and First Kansas have agreed to appoint Registrar and Transfer
Company as paying agent for the benefit of the holders of shares of First Kansas
common stock in connection with the merger. At or prior to the effective time of
the merger, Landmark will deliver to the paying agent an amount of cash equal to
the aggregate merger consideration.
No later than three business days following the completion of the merger,
Landmark shall cause the exchange agent to mail to each holder of record of
shares of First Kansas common stock a letter of transmittal disclosing the
procedure for exchanging certificates representing shares of First Kansas common
stock for the merger consideration. After the effective time, each holder of a
certificate representing shares of issued and outstanding First Kansas common
stock (except for shares held by holders who have perfected dissenters' rights
of appraisal and certain shares held by First Kansas or Landmark) will, upon
surrender to Registrar and Transfer Company of a certificate for exchange
together with a properly completed letter of transmittal, be entitled to receive
the per share merger consideration in cash, without interest, multiplied by the
number of shares of First Kansas common stock represented by the certificate and
the certificate so surrendered will be cancelled. No interest will be paid or
accrued on the merger consideration upon the surrender of any certificate for
the benefit of the holder of the certificate.
Any portion of cash delivered to Registrar and Transfer Company by Landmark
that remains unclaimed by the former shareholders of First Kansas for six months
after the effective time will be delivered to Landmark. Any shareholders of
First Kansas who have not exchanged their certificates as of that date may look
only to Landmark for payment of the merger consideration. However, neither
Landmark nor any other entity or person shall be liable to any holder of shares
of First Kansas common stock for any consideration paid to a public official in
accordance with applicable abandoned property, escheat or similar laws.
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YOU SHOULD NOT SUBMIT SHARE CERTIFICATES FOR FIRST KANSAS COMMON STOCK
UNTIL YOU HAVE RECEIVED WRITTEN INSTRUCTIONS TO DO SO.
FINANCING THE TRANSACTION
Based on 908,245 shares of First Kansas common stock currently outstanding,
the aggregate amount of consideration to be paid to First Kansas's shareholders
will be approximately $17.3 million (assuming a per share merger consideration
of $19.00). This amount would increase by an additional $2.5 million if all
options to purchase 132,079 shares of First Kansas common stock which are
currently outstanding were exercised prior to the effective time of the merger.
Landmark has represented and warranted in the merger agreement that it will have
the sources of capital and financing sufficient to pay the merger consideration
to the shareholders of First Kansas following completion of the merger and any
other amounts payable by Landmark pursuant to the merger agreement.
BOARD OF DIRECTORS' COVENANT TO RECOMMEND THE MERGER AGREEMENT
The merger agreement requires the First Kansas board of directors to
recommend the approval and adoption of the merger agreement by the First Kansas
shareholders in the proxy statement subject to compliance with its fiduciary
duties.
NO SOLICITATION
The merger agreement provides that, subject to compliance with its
fiduciary duties, First Kansas shall not, and shall not authorize or permit any
of its subsidiaries or any of their respective directors, officers, employees,
professional or financial advisors, representatives, agents and affiliates to,
directly or indirectly make, exchange, facilitate, solicit, initiate or assist
any inquiries, proposals or offers or expressions of interest from, or provide
any nonpublic information or access to its premises to, or participate in
discussions with any party other than Landmark concerning or relating to a
competing First Kansas proposal. The term "competing First Kansas proposal" is
defined in the merger agreement to be:
o Any merger, sale of assets not in the ordinary course of business,
acquisition, business combination, change of control or other similar
transaction involving First Kansas or any of its subsidiaries;
o Any purchase or other acquisition by any party of 5% or more of the
capital stock of First Kansas or any of its subsidiaries; or
o Any issuance by any First Kansas subsidiary or any shares of its
capital stock.
The merger agreement allows First Kansas to furnish information to, and
negotiate and engage in discussions with, any person or entity (or its
representatives) that makes a competing First Kansas proposal that was not
initiated, solicited, knowingly encouraged or facilitated by First Kansas, any
First Kansas subsidiary or any of their respective directors, officers,
employees, agents or representatives after the date of the merger agreement if:
o The board of directors of First Kansas receives a written opinion from
its financial advisor that such proposal may be superior from a
financial point of view to the transactions contemplated by the merger
agreement;
o First Kansas's outside legal counsel advises First Kansas that the
maker of the unsolicated proposal may legally acquire First Kansas and
First Kansas Bank;
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o The board of directors determines in good faith that such action is
necessary for First Kansas's board of directors to comply with its
fiduciary duties under the law; and
o Prior to furnishing any information or entering into discussions,
First Kansas provides reasonable notice to Landmark it is doing so.
First Kansas is required to notify Landmark if First Kansas receives any
competing proposals and provide the identity of the party making the proposal
and the terms thereof.
CONDITIONS TO THE MERGER
Completion of the merger depends on the satisfaction or waiver of a number
of conditions, including the following:
o The representations and warranties of each of Landmark and First
Kansas in the merger agreement that are qualified as to materiality or
knowledge must be true and correct and any such representations and
warranties that are not so qualified must be true and correct in all
material respects, in each case as of the date of the merger agreement
and as of the closing date of the merger;
o Shareholders of First Kansas must approve the merger agreement in
accordance with applicable law and all other corporate proceedings
required to have been taken shall have been done;
o Landmark and First Kansas must receive all required regulatory
approvals to complete the transactions contemplated by the merger
agreement and such approvals must be reasonably satisfactory to
Landmark and First Kansas;
o Neither party shall have been made a party to any proceeding or be
threatened to be made party to any proceeding which, in the reasonable
opinion of the other party, has had or is reasonably likely to have
material adverse effect on such party and there must be no injunction,
order, decree or law preventing or materially restricting the
completion of the transactions contemplated by the merger agreement;
o Landmark and First Kansas must have performed in all material respects
their respective obligations required to be performed under the merger
agreement at or prior to the closing of the merger;
o No change in the business, assets, financial condition or results of
operations of Landmark or First Kansas shall have occurred which has
had, or is reasonably likely to have individually or in the aggregate,
a material adverse effect on Landmark or First Kansas;
o The consent, approval or waiver of each person (other than required
regulatory approvals) whose consent or approval shall be required in
order to permit the lawful completion of the transactions contemplated
by the merger agreement shall have been obtained;
o Landmark shall have been permitted to perform environmental
assessments on the real property of First Kansas;
o The total number of shares the holders of which have perfected
dissenters' rights of appraisal shall not exceed 5% of the outstanding
shares of First Kansas common stock;
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o First Kansas's Adjusted Stockholders' Equity shall not be less than
$13.1 million immediately prior to closing;
o Landmark shall have received evidence that all of First Kansas's
merger-related expenses have been paid; and
o First Kansas shall have received a fairness opinion from Trident
Securities as of the date of the signing of the merger agreement and
prior to mailing of this proxy statement and such opinions shall not
have been withdrawn prior to the closing of the merger.
Unless prohibited by law, either Landmark or First Kansas could elect to
waive any of the conditions for its benefit that have not been satisfied and
complete the merger anyway. The parties cannot be certain whether or when any of
the conditions to the merger will be satisfied or waived where permissible, or
that the merger will be completed.
REPRESENTATIONS AND WARRANTIES OF FIRST KANSAS AND LANDMARK
First Kansas, Landmark and Landmark Acquisition Corporation each has made
representations and warranties to the other with respect to (among other
things):
o corporate organization and existence;
o corporate authority and power to enter into the merger agreement and
to complete the transactions contemplated by the merger agreement;
o undisclosed liabilities and material changes;
o regulatory approvals;
o absence of any conflicts between the terms of the merger agreement and
their respective governing documents, applicable law and their
respective material contracts;
o pending or threatened legal proceedings; and
o the truth and accuracy of documents filed with the SEC.
First Kansas has also made additional representations and warranties to
Landmark with respect to:
o the organization of First Kansas Bank;
o its stock capitalization and the capitalization of First Kansas Bank;
o financial statements and reports;
o books and records;
o title to properties;
o condition of assets;
o loan loss reserves;
o taxes;
o compliance with ERISA;
o compliance with laws, including environmental laws;
o absence of certain changes and events;
o properties, contracts, employee benefit plans and other agreements;
o absence of defaults under material contracts;
o insurance;
o regulatory filings;
o agency and custodial accounts; and
o brokerage commissions.
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In addition, Landmark has made a representation and warranty to First
Kansas regarding the availability of capital and financing sufficient for it to
pay the merger consideration and any other amounts payable under the merger
agreement.
CONDUCT PENDING THE MERGER
The merger agreement contains covenants of First Kansas and Landmark
pending the completion of the merger, including covenants regarding the conduct
of First Kansas's business. These covenants are briefly described below.
First Kansas has agreed that it will, and will cause its subsidiaries to,
conduct its business in the ordinary course consistent with past practice and
use reasonable best efforts to preserve its business organization, employees and
advantageous business relationships and to retain the services of its officers
and key employees. First Kansas has agreed to give Landmark and its
representatives access to its facilities during normal business hours and permit
a representative to attend board meetings as an observer. With respect to its
operations, First Kansas has also agreed that it will:
o Consult with Landmark regarding operational matters of a material
nature including any sales of investment securities, loans originated
for its portfolio and any changes in the asset-liability management of
First Kansas Bank;
o Enter into loan transactions in accordance with sound credit practices
and consult with Landmark regarding any new or existing lending
relationship in excess of $500,000;
o Maintain an adequate reserve for loan losses;
o Maintain all material assets in good operating condition and maintain
the insurance coverage of such assets;
o Timely file all required regulatory filings;
o Maintain its books and records in the ordinary manner; and
o Maintain compensation of employees and directors at current levels
except as otherwise agreed to by Landmark.
First Kansas has further agreed that, except as expressly contemplated or
permitted by the merger agreement, prior to the effective time of the merger, it
will not, and will not permit any of its subsidiaries to, do any of the
following without the prior written consent of Landmark:
o Issue or otherwise make any changes in its authorized capital stock or
any securities or rights to acquire shares of capital stock;
o Repurchase shares of its common stock;
o Declare or pay any additional dividend or distribution on any shares
of First Kansas capital stock;
o Amend its governing documents;
26
o Pay or increase any bonuses, salaries or other compensation to any
directors, officers or employees except in the ordinary course of
business or in accordance with existing compensation plans;
o Enter into any employment, consulting, non-competition or similar
contract;
o Except as required by law, adopt, amend, terminate or increase
benefits under any First Kansas employee benefit plan;
o Enter into, terminate or extend any joint venture agreement;
o Enter into any contract not in the ordinary course of business;
o Make any material amendment to any existing lease;
o Sell other than in the ordinary course, lease or dispose of any assets
or permit any liens on material assets except for certain permitted
liens;
o Incur any liability other than in the ordinary course;
o Make any capital investment exceeding $30,000 or aggregate capital
investments in excess of $60,000;
o Except for the transactions contemplated by the merger agreement,
merge or consolidate with any other party or make any equity
investment in any other party;
o Agree to borrow or lend money other than in the ordinary course;
o Purchase any investment security that is callable prior to its stated
maturity or that has a stated maturity of 30 months or more or has a
purchase price greater than $250,000;
o Obtain any advances from the Federal Home Loan Bank with maturities
greater than one year; or
o Make any material change in its accounting methods.
The merger agreement also contains covenants relating to, among other
things:
o The preparation and distribution of the proxy statement to be sent to
shareholders of First Kansas in connection with the solicitation of
their approval and adoption of the merger agreement and all requisite
regulatory filings;
o The preparation and filing of all required regulatory applications and
notices;
o The provision by Landmark of certain employee benefits;
o The delivery to Landmark of financial statements and reports filed by
First Kansas with regulatory authorities;
o Landmark's access to information concerning First Kansas and the
confidentiality of the information;
27
o The performance of certain environmental investigations at the
discretion of Landmark;
o Obtaining title reports and surveys on the real property owned by
First Kansas;
o Contributions to the First Kansas ESOP;
o Consultation regarding First Kansas's data and item processing
agreements;
o The accrual of merger-related expenses prior to the closing date;
o Possible adjustment to First Kansas's financial or accounting records
immediately prior to the effective time of the merger to conform to
those of Landmark including adjustments to its loan loss reserves;
o Consultation regarding certain tax matters;
o First Kansas's withdrawal from its defined benefit plan;
o Publicity regarding the transaction;
o Continued director and officer liability coverage and indemnification;
and
o The formation of an advisory board.
EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
At any time prior to the effective time of the merger (and whether before
or after approval of the merger by First Kansas's shareholders), Landmark and
First Kansas may, to the extent permitted by law:
o Extend the time for performance of any of the obligations of the other
party under the merger agreement;
o Waive any inaccuracies in the representations and warranties contained
in the merger agreement or in any document delivered pursuant to the
merger agreement;
o Waive compliance with, or modify or supplement any agreements or
conditions contained in the merger agreement; or
o Amend any provision of the merger agreement.
However, after the approval of the merger by the shareholders of First
Kansas, Landmark and First Kansas may not, without further approval of the
shareholders of First Kansas, extend, waive or amend any provision of the merger
agreement which affects the rights of shareholders in a materially adverse way.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated before completion of the merger
(even if shareholders of First Kansas have already voted to approve it):
28
o By mutual consent of the boards of directors of Landmark and First
Kansas;
o By Landmark, if any of the conditions to its obligation to complete
the merger have not been satisfied as of the date set for closing or
satisfaction of such conditions becomes impossible (other than through
failure on Landmark's part to satisfy its obligations under the merger
agreement) if:
o The failure to satisfy such condition is or would reasonably be
likely to constitute a material adverse effect on First Kansas or
Landmark and
o Landmark has not waived such condition on or before the date set
for closing;
o By First Kansas, if any of the conditions to its obligation to
complete the merger have not been satisfied as of the date set for
closing or satisfaction of such conditions becomes impossible (other
than through failure on the part of First Kansas to satisfy its
obligations under the merger agreement) if:
o the failure to satisfy such condition would prevent or would be
reasonably likely to prevent Landmark from paying the aggregate
merger consideration to Registrar and Transfer Company as paying
agent on the closing date or fulfilling its obligations to pay
all amounts due to employees under its employee benefit plans,
provide ongoing indemnification and director and officer
liability coverage or provide ongoing employee benefit coverage
for continuing employees and
o First Kansas has not waived such condition on or before the date
set for closing.
o By Landmark or First Kansas, if the merger is not completed by August
1, 2004, unless the failure to complete the merger by that date is due
to the failure by the party seeking the termination of the merger
agreement to perform its obligations under the merger agreement;
o By First Kansas if it receives an unsolicited competing proposal that
is determined in good faith by the board after consultation with its
independent financial advisors, to be more favorable to First Kansas's
shareholders than the merger agreement; or
o By Landmark if First Kansas's Adjusted Stockholders' Equity, defined
in the merger agreement and as calculated immediately prior to the
closing date is less than $13.1 million.
TERMINATION FEE AND EXPENSES
The merger agreement provides that, as a general matter, each party shall
bear its own costs and expenses incurred in connection with the merger agreement
and the transactions contemplated by the merger agreement.
In some circumstances, however, First Kansas or Landmark may be required to
pay a termination fee to the other party and reimburse such party's transaction
expenses. First Kansas would be obligated to pay Landmark an amount equal to
Landmark's expenses up to a maximum of $75,000 plus a termination fee of
$750,000 if the merger agreement is terminated in the following circumstances:
o By Landmark due to a breach by First Kansas of its obligations under
the merger agreement (unless such breach was due to the failure by
Landmark to fulfill its obligations under the merger agreement);
29
o By First Kansas due to its receipt of an unsolicited proposal that its
board has determined in good faith after consultation with its
financial advisor to be more favorable to its shareholders than the
merger agreement;
o By Landmark if First Kansas's Adjusted Stockholders' Equity as
calculated immediately prior to closing was less than $13.1 million;
or
o By Landmark or First Kansas if the First Kansas shareholders do not
approve the merger agreement and prior to the termination First Kansas
has received a competing First Kansas proposal;
In addition, if the merger agreement is terminated due to the circumstances
described in the first four bullet points above and within 24 months after such
termination, First Kansas enters into an agreement with another party providing
for the acquisition of control of First Kansas or First Kansas Bank, First
Kansas would be obligated to pay Landmark an additional fee of $250,000 plus
reimburse its expenses that exceeded the $75,000 cap up to an additional
$75,000.
If the merger agreement is terminated by Landmark or First Kansas due to
the failure of the shareholders to approve the merger agreement but no competing
First Kansas proposal has been received, First Kansas would be obligated to pay
a termination fee of $500,000. If within 24 months of the termination, First
Kansas enters into an agreement with another party providing for the acquisition
of control of it or First Kansas Bank, it would be obligated to pay Landmark an
additional termination fee of $500,000 and provide additional expense
reimbursement up to $150,000.
Landmark would be obligated to pay First Kansas a fee of $750,000 plus
reimburse its expenses up to a maximum of $75,000 if First Kansas terminates the
merger agreement due to a breach by Landmark of its obligations under the merger
agreement unless the breach is due to the failure by First Kansas to fulfill its
obligations.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
When you are considering the recommendation of First Kansas's board of
directors with respect to approving the merger agreement and the merger, you
should be aware that First Kansas directors and executive officers have
interests in the merger as individuals which are in addition to, or different
from, their interests as shareholders of First Kansas. The First Kansas board of
directors was aware of these factors and considered them, among other matters,
in approving the merger agreement and the merger. These interests are described
below.
EMPLOYMENT AGREEMENTS. Under the merger agreement, Landmark agreed to honor
various contractual obligations which have been entered into by First Kansas and
or its subsidiaries and some of their executive officers, including three
employment agreements between First Kansas Bank and Larry V. Bailey, President,
Daniel G. Droste, Senior Vice President and Treasurer and Galen E. Graham,
Senior Vice President and Secretary. Pursuant to the terms of their respective
employment agreements, each of these officers will be entitled to receive a
change in control severance payment resulting from their termination of
employment with First Kansas Bank following the merger. Such payments are
estimated to be $575,000, $265,000 and $35,000, respectively. In connection with
the receipt of their payments, each officer will enter into a termination and
release agreement with Landmark.
CONSULTING AGREEMENT. Upon consummation of the merger, Larry V. Bailey will
enter into a three-year consulting agreement with Landmark. Pursuant to the
terms of such agreement, Mr. Bailey will be entitled to receive aggregate
payments of $160,000. Additionally, Landmark will maintain and will pay one-half
(1/2) the cost of providing medical and dental insurance to Mr. Bailey and his
spouse from the merger
30
effective date until Mr. Bailey attains the age of sixty-five (65). Mr. Bailey
will have a three-year non-competition provision.
PAY-TO-STAY BONUS. Concurrent with the execution of the merger agreement,
Landmark entered into an agreement with James J. Casaert pursuant to which
arrangement, in lieu of any other severance payments, he will receive a bonus of
$50,000 provided he stays with Landmark through a transition period (not to
exceed 90 days) after the data conversion is complete. The bonus will be payable
in two installments with half due upon closing of the merger and the remainder
due upon completion of the transition period.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. First Kansas Bank has adopted an
unfunded supplemental executive retirement plan for the benefit of Larry V.
Bailey. The merger agreement provides that the supplemental executive retirement
plan will be terminated as of the effective date of the merger. Upon the
effective date of the merger, Mr. Bailey will receive a lump sum payment of
approximately $1,000,000, which will result in an additional expense of
approximately $725,000. Upon receipt of payment of benefits, Mr. Bailey will
recognize taxable ordinary income in the amount of such payment received and
First Kansas will be entitled to recognize a tax-deductible compensation expense
at that time for tax return purposes.
NON-COMPETITION AND NON-SOLICITATION AGREEMENTS. Concurrent with the
execution of the merger agreement, each director of First Kansas (other than
Larry V. Bailey) was required by Landmark to enter into a one-year
non-competition and non-solicitation agreement to be effective upon completion
of the merger. As consideration for agreeing not to compete with Landmark, each
director will receive a $12,000 payment upon completion of the merger.
STOCK OPTION PLAN AND RESTRICTED STOCK PLAN. The merger agreement provides
that immediately prior to the effective time of the merger, each outstanding and
unexercised option to acquire shares of First Kansas common stock will be
terminated and the holder thereof will be entitled to receive a cash payment
therefor from First Kansas at closing in an amount equal to the difference
between the per share merger consideration and the per share exercise price of
the option multiplied by the number of shares covered by the option, less any
applicable tax withholdings. Immediately prior to the effective time of the
merger, each unvested share of restricted stock will vest and be settled in cash
by First Kansas for the per share merger consideration less tax withholdings.
See " -- Treatment of Stock Options and Restricted Stock" on page ___.
The following table sets forth the number of options, including unvested
options, and the number of unvested shares of restricted stock which were held
by the directors and executive officers of First Kansas as of the date of this
proxy statement as well as the payments that will be received in cancellation of
such options (assuming such options are not exercised prior to the effective
date of the merger) and such unvested restricted stock at completion of the
merger before deducting any applicable withholding taxes.
31
PAYMENT AT
COMPLETION OF
PAYMENT AT MERGER ON
COMPLETION OF NUMBER OF CANCELLATION
MERGER ON UNVESTED OF UNVESTED
NUMBER OF CANCELLATION SHARES OF SHARES OF
NAME STOCK OPTIONS OF OPTIONS * RESTRICTED STOCK RESTRICTED STOCK*
---- ------------- ------------ ---------------- ----------------
Larry V. Bailey 38,848 $320,496 3,108 $59,052
Galen E. Graham 19,424 $160,248 1,554 $29,526
Daniel G. Droste 19,424 $160,248 1,554 $29,526
Roger L. Coltrin 7,769 $64,094 622 $11,818
Donald V. Meyer 7,769 $64,094 622 $11,818
James E. Breckenridge 7,769 $64,094 622 $11,818
J. Darcy Domoney 7,769 $64,094 622 $11,818
Sherman W. Cole 7,769 $64,094 622 $11,818
-------- --------
TOTAL $961,462 $177,194
======== ========
<FN>
- ---------
* Assuming a $19.00 per share purchase price which may be adjusted. Before
deduction of applicable withholding taxes.
</FN>
EMPLOYEE STOCK OWNERSHIP PLAN. Pursuant to the terms of the First Kansas
Bank employee stock ownership plan, or ESOP, in the event of a "change in
control," which is defined in the ESOP in a manner which would include the
merger, the ESOP will be terminated and any unvested benefits thereunder shall
vest immediately. As soon as practicable after the effective time of the merger,
the account balances in the ESOP shall be distributed to participants and
beneficiaries in accordance with applicable law and the ESOP. In connection with
the termination of the ESOP, and prior to any final distribution to
participants, the trustee of the ESOP will utilize funds in the ESOP suspense
account to repay the outstanding loan from First Kansas to the ESOP, and any
unallocated amounts in the ESOP will be allocated to the accounts of
participating First Kansas employees in accordance with applicable law and the
ESOP. As of September 30, 2003, the ESOP held 62,158 unallocated shares of First
Kansas common stock in the suspense account (which does not reflect payments on
the ESOP loan during the three months ended September 30, 2003) and the
outstanding principal balance of the loan from First Kansas to the ESOP was
$590,520.
INDEMNIFICATION AND INSURANCE. The merger agreement provides that, for a
period of six years after the effective time, Landmark shall indemnify and hold
harmless each present and former director, officer and employee of First Kansas
for all actions taken by them prior to the effective time of the merger to the
same extent as the greatest indemnification provided by First Kansas as of the
date of execution of the merger agreement.
In addition, the merger agreement provides that Landmark will purchase
directors' and officers' liability insurance coverage to provide First Kansas's
directors and officers with coverage for three years following the effective
time of the merger, substantially the same as the existing coverage under the
directors' and officers' liability insurance coverage currently maintained by
First Kansas.
ADVISORY BOARD. Landmark has agreed to establish an advisory board to
assist in and advise with respect to the integration of the operations of First
Kansas and First Kansas Bank with and into Landmark and Landmark National Bank.
The advisory board shall consist of those members of the First Kansas board
32
serving at the effective time other than Larry Bailey. Advisory board members
will not receive any compensation for their service.
Other than as set forth above, no director or executive officer of First
Kansas has any direct or indirect material interest in the merger, except
insofar as ownership of First Kansas common stock might be deemed such an
interest. See "Certain Beneficial Owners of First Kansas Common Stock,"
beginning on page ___.
EMPLOYEE BENEFITS MATTERS
The merger agreement contains agreements of the parties with respect to
various employee matters, which are briefly described below.
PARTICIPATION IN LANDMARK'S EMPLOYEE BENEFIT PLANS. As soon as practicable
after the merger, Landmark will determine whether to terminate or maintain
separately the existing employee benefit plans of First Kansas (other than the
ESOP which will be terminated). First Kansas Bank employees who continue as
employees of Landmark National Bank will be entitled to participate in all
Landmark employee benefit plans as of the first entry date on or after the
effective time.
Landmark will cause the applicable benefits plans of Landmark or its
affiliates:
o Not to treat any employee of First Kansas or its subsidiaries as a
"new" employee for purposes of exclusion from any benefit plan for a
pre-existing medical condition;
o To treat service rendered to First Kansas or any of its subsidiaries
as service rendered to Landmark for purposes of eligibility to
participate, vesting and for other appropriate benefits, including
applicability of minimum waiting periods for participation, but not
for benefit accrual; and
o Give credit for accrued but unused sick time as of the effective time
up to a maximum of 90 days.
RETENTION BONUSES. Each employee other than those covered by a written
employment or severance agreement who satisfactorily fulfills his or her duties
up to the effective time will be entitled to receive a retention bonus equal to
two weeks pay. Such bonus will be paid by First Kansas Bank immediately prior to
the effective time.
SEVERANCE COMPENSATION AND BENEFITS. First Kansas Bank or Landmark will pay
any employee of First Kansas who is not otherwise covered by a specific
employment or severance agreement and who is terminated by either First Kansas
Bank or Landmark or its affiliates for reasons other than cause in the one year
period immediately following the merger in an amount equal to his or her then
current weekly base salary times two weeks for every full year of service at
First Kansas or Landmark, with a minimum of four weeks salary and a maximum of
26 weeks salary paid.
OUTSTANDING FIRST KANSAS AGREEMENTS. Following the merger, Landmark and its
affiliates will honor, in accordance with their terms, all written employment,
benefits, options and other compensation agreements disclosed by First Kansas to
Landmark.
MERGER REGULATORY APPROVALS AND NOTICES
Completion of the merger is subject to the prior receipt of all consents or
approvals of, or the provision of notices to, various regulatory authorities
required to complete the merger and the bank merger, except to the extent that a
regulatory authority may waive any such requirement.
33
FEDERAL RESERVE. The merger requires the submission to the Federal Reserve
Board of a notice pursuant to the Bank Holding Company Act of 1956, as amended,
and the Federal Reserve Board's Regulation Y. Pursuant to the Bank Holding
Company Act of 1956, as amended, and the Federal Reserve Board's Regulation Y,
the Federal Reserve Board may not approve the merger notice if:
o The merger would result in a monopoly or would further any combination
or conspiracy to monopolize, or attempt to monopolize, the business of
banking in any part of the United States; or
o The effect of the merger may be substantially to lessen competition in
any section of the country, or tend to create a monopoly, or in any
other manner be in restraint of trade, unless the Federal Reserve
Board finds that the anticompetitive effects of the merger are clearly
outweighed by its probable effect in meeting the convenience and needs
of the community.
Among other things, before approving any such merger notice, the Federal
Reserve Board must consider (i) the financial and managerial resources and
future prospects of the bank holding company or companies and the banks
concerned, (ii) the convenience and needs of the communities to be served,
including the record of performance under the Community Reinvestment Act of
1977, (iii) the effectiveness of the bank holding company or companies in
combating money laundering activities, and (iv) in connection with acquisition
by a bank holding company seeking to acquire control of all or substantially all
of the assets of a bank located in a state other than the home state of the bank
holding company, the record of compliance of the applicant bank holding company
with applicable state community reinvestment laws. Applicable Federal Reserve
Board regulations require publication of notice of the merger and an opportunity
for the public to comment on the merger in writing and to request a hearing.
Any transaction approved by the Federal Reserve Board may not be completed
until 30 days after such approval, during which time the U.S. Department of
Justice may challenge such transaction on antitrust grounds and seek divesture
of certain assets and liabilities. With the approval of the Federal Reserve
Board and the U.S. Department of Justice, the waiting period may be reduced to
15 days.
Regulation Y provides that the approval of the Federal Reserve is not
required for certain acquisitions by bank holding companies if the acquisition
has a component that will be approved by a federal supervisory agency under the
Bank Merger Act and certain other requirements are met. Under this regulation,
the acquiring bank holding company must submit a notice to the Federal Reserve
Board at least 10 days prior to the transaction and no application for approval
of the proposed acquisition under the Bank Holding Company Act will be required
unless the Federal Reserve Board informs the proposed acquiror to the contrary
prior to expiration of this period.
OFFICE OF THE COMPTROLLER OF THE CURRENCY. The bank merger requires the
approval of the Office of the Comptroller of the Currency under the Bank Merger
Act. The OCC will review the bank merger under statutory criteria which are
substantially the same as those required to be considered by the Federal Reserve
in evaluating the merger, except that the OCC will not conduct an independent
antitrust analysis of the bank merger if the Federal Reserve Board does so.
Applicable regulations require publication of notice of the application for
approval of the bank merger and an opportunity for the public to comment on the
application in writing and to request a hearing.
Any transaction approved by the OCC may not be completed until 30 days
after such approval, during which time the U.S. Department of Justice may
challenge such transaction on antitrust grounds and seek divestiture of certain
assets and liabilities. With the approval of the OCC and the U.S. Department of
Justice, the waiting period may be reduced to no less than 15 days.
34
OFFICE OF THRIFT SUPERVISION. Since First Kansas Bank will not be the
surviving entity of the bank merger, prior approval of the Office of Thrift
Supervision is not required although a notice of the proposed transaction must
be filed with the OTS.
FEDERAL DEPOSIT INSURANCE CORPORATION. Subsequent to the merger, the
surviving company to the merger will be merged into Landmark National Bank. This
will require approval by the FDIC. The FDIC will review this merger under
statutory criteria which are substantially the same as those required to be
considered by the Federal Reserve in evaluating the merger.
STATUS OF APPROVALS AND NOTICES. Landmark and First Kansas have filed all
required applications and notices with applicable regulatory authorities in
connection with the merger. Landmark and First Kansas cannot predict, however,
whether or when all required regulatory approvals, consents or waivers will be
obtained, what conditions they might include, or whether they will be received
on a timely basis.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a general summary of the material United States
federal income tax consequences of the merger. This discussion is based upon the
Internal Revenue Code of 1986, as amended, final and temporary regulations
promulgated by the United States Treasury Department, judicial authorities and
current rulings and administrative practice of the Internal Revenue Service, as
currently in effect, all of which are subject to change at any time, possibly
with retroactive effect. This discussion assumes that First Kansas common stock
is held as a capital asset by each holder and does not address all aspects of
federal income taxation that might be relevant to particular holders of First
Kansas common stock in light of their status or personal investment
circumstances, such as foreign persons, dealers in securities, regulated
investment companies, life insurance companies, other financial institutions,
tax-exempt organizations, pass-through entities, taxpayers who hold First Kansas
common stock as part of a "straddle," "hedge" or "conversion transaction" or who
have a "functional currency" other than United States dollars or individual
persons who have received First Kansas common stock as compensation or otherwise
in connection with the performance of services. Further, this discussion does
not address state, local or foreign tax consequences of the merger.
For United States federal income tax purposes, the merger will be treated
as an acquisition by Landmark of all the outstanding stock of First Kansas. Each
holder of shares of First Kansas common stock will be treated as exchanging such
shares for cash.
The receipt of cash in exchange for shares of First Kansas common stock
will be a taxable transaction for federal income tax purposes. Each holder's
gain or loss per share will be equal to the difference between the per share
cash consideration and the holder's adjusted tax basis per share in First Kansas
common stock. A holder's gain or loss from the exchange will be a capital gain
or loss. This gain or loss will be long-term if the holder has held First Kansas
common stock for more than 12 months prior to the merger. Under current law, net
long-term capital gains of individuals are subject to a maximum federal income
tax rate of 15%, whereas the maximum federal income tax rate on ordinary income
and net short-term capital gains (i.e., gain on capital assets held for not more
than twelve months) of an individual is currently 35% (not taking into account
any phase-out of tax benefits such as personal exemptions and certain itemized
deductions). For corporations, capital gains and ordinary income are taxed at
the same maximum rate of 35%. Capital losses are currently deductible only to
the extent of capital gains plus, in the case of taxpayers other than
corporations, $3,000 of ordinary income ($1,500 in the case of married
individuals filing separate returns). In the case of individuals and other
non-corporation taxpayers, capital losses that are not currently deductible may
be carried forward to other years, subject to certain limitations. In the case
of corporations, capital losses that are not currently deductible may generally
be carried back to each of the three years preceding the loss year and forward
to each of the five years succeeding the loss year, subject to certain
limitations.
35
A holder of First Kansas common stock may be subject to backup withholding
at the rate of 28% with respect to payments of cash consideration received
pursuant to the merger, unless the holder (a) provides a correct taxpayer
identification number, or TIN, in the manner required or (b) is a corporation or
other exempt recipient and, when required, demonstrates this fact. To prevent
the possibility of backup federal income tax withholding, each holder must
provide the disbursing agent with his, her or its correct TIN by completing a
Form W-9 or Substitute Form W-9. A holder of First Kansas common stock who does
not provide the disbursing agent with his, her or its correct TIN may be subject
to penalties imposed by the Internal Revenue Service, as well as backup
withholding. Any amount withheld will be creditable against the holder's federal
income tax liability. First Kansas (or its agent) will report to the holders of
First Kansas common stock and the Internal Revenue Service the amount of any
"reportable payments," as defined in Section 3406 of the Internal Revenue Code,
and the amount of tax, if any, withheld with respect thereto.
The foregoing discussion is for general information only and is not a
complete description of all of the potential tax consequences that may occur as
a result of the merger. Regardless of your particular situation, you should
consult your own tax advisor regarding the federal tax consequences of the
merger to you, as well as the tax consequences of the merger to you arising
under the laws of any state, local or other jurisdiction, domestic or foreign.
ACCOUNTING TREATMENT
The merger will be accounted for under the purchase method of accounting
under accounting principles generally accepted in the United States of America.
Under this method, First Kansas's assets and liabilities as of the date of the
merger will be recorded at their respective fair values and added to those of
Landmark. Any difference between the purchase price for First Kansas and the
fair value of the identifiable net assets acquired (including core deposit
intangibles) will be recorded as goodwill. In accordance with Financial
Accounting Standards Board Statement No. 142, "Goodwill and Other Intangible
Assets," issued in July 2001, the goodwill resulting from the merger will not be
amortized to expense, but will be subject to at least an annual assessment of
impairment by applying a fair value test. In addition, any core deposit
intangibles recorded by Landmark in connection with the merger will be amortized
to expense in accordance with the new rules. The financial statements of
Landmark issued after the merger will reflect the results attributable to the
acquired operations of First Kansas beginning on the date of completion of the
merger.
VOTING AGREEMENTS
In connection with the execution of the merger agreement, each director and
executive officer of First Kansas entered into a voting agreement with Landmark
in the form attached as Exhibit D to the merger agreement. Under these
agreements, these individuals agreed to vote all of their shares of First Kansas
common stock (excluding shares held in a fiduciary capacity except on behalf of
relatives by blood or marriage) in favor of the merger of First Kansas and
against the approval of any other agreement providing for the acquisition of
First Kansas or all or substantially all of its assets. Those individuals who
serve as directors of First Kansas are not and could not be contractually bound
to abrogate their fiduciary duties as directors of First Kansas. Accordingly,
while each First Kansas director is contractually bound to vote as a First
Kansas stockholder in favor of the merger, his fiduciary duties as a director
nevertheless require him to act in his capacity as a director in the best
interest of First Kansas when considering the merger. Pursuant to these
agreements, these individuals also agreed not to transfer their shares of First
Kansas common stock prior to the special meeting of shareholders of First Kansas
called to approve and adopt the merger agreement, except for transfers in
limited circumstances. These agreements will remain in effect until the earlier
of the effective time of the merger or the termination of the merger agreement
in accordance with its terms.
36
DISSENTERS' RIGHTS OF APPRAISAL
Under Section 17-6712 of the Kansas General Corporation Code, any holder of
First Kansas common stock who does not wish to accept the per share merger
consideration may dissent from the merger and elect to have the fair value of
such shareholder's shares of First Kansas common stock (exclusive of any element
of value arising from the accomplishment or expectation of the merger)
judicially determined and paid to such shareholder in cash, together with a fair
rate of interest, if any, provided that such shareholder complies with the
provisions of Section 17-6712.
The following discussion is not a complete statement of the law pertaining
to appraisal rights under the Kansas General Corporation Code, and is qualified
in its entirety by the full text of Section 17-6712, which is provided in its
entirety as Appendix C to this proxy statement. All references in Section
17-6712 and in this summary to a "stockholder" or "shareholder" are to a record
holder of the shares of First Kansas common stock as to which appraisal rights
are asserted. A person having a beneficial interest in shares of First Kansas
common stock held of record in the name of another person, such as a broker or
nominee, must act promptly to cause the record holder to follow properly the
steps summarized below and in timely manner to perfect appraisal rights.
Any shareholder who wishes to exercise such appraisal rights or who wishes
to preserve the right to do so should review carefully the following discussion
and Appendix C to this proxy statement. Failure to comply with the procedures
specified in Section 17-6712 timely and properly will result in the loss of
appraisal rights. Moreover, because of the complexity of the procedures for
exercising the right to seek appraisal of the First Kansas common stock, First
Kansas recommends that shareholders who consider exercising such rights should
seek the advice of counsel.
Any holder of common stock wishing to exercise the right to dissent from
the merger and demand appraisal under Section 17-6712 must satisfy each of the
following conditions:
o Deliver to First Kansas a written objection to the merger prior to the
taking of the vote on the merger at the special meeting;
o Not vote the holder's shares of First Kansas common stock in favor of
the merger agreement at the special meeting; a proxy which does not
contain voting instructions will, unless revoked, be voted in favor of
the merger agreement; therefore, a shareholder who votes by proxy and
who wishes to exercise appraisal rights must vote against the merger
agreement or abstain from voting on the merger agreement;
o Within 20 days after the date of mailing of the notice from the
surviving corporation notifying the holder that the merger has become
effective, the shareholder must demand payment in writing from the
surviving corporation of the value of such holder's stock, which
demand will be sufficient if it reasonably informs the surviving
corporation of the identity of the shareholder and that the
shareholder intends thereby to demand the payment of the value of such
shareholder's shares; and
o Continuously hold such shares from the date of making the demand
through the effective time of the merger; a shareholder who is the
record holder of shares of common stock on the date the written demand
for appraisal is made but who thereafter transfers such shares prior
to the effective time of the merger will lose any right to appraisal
in respect of such shares.
Neither voting (in person or by proxy) against, abstaining from voting on
or failing to vote on the proposal to approve the merger agreement will
constitute a written demand for payment within the meaning of
37
Section 17-6712. The written demand for payment of the value of the
shareholder's shares must be in addition to and separate from any such proxy or
vote.
Only a holder of record of shares of common stock issued and outstanding
immediately prior to the effective time of the merger is entitled to assert
appraisal rights for the shares of common stock registered in that holder's
name. A demand for appraisal should be executed by or on behalf of the
shareholder of record, fully and correctly, as such shareholder's name appears
on such stock certificates, should specify the shareholder's name and mailing
address, the number of shares of common stock owned and that such shareholder
intends thereby to demand appraisal of such shareholder's common stock. If the
shares are owned of record in a fiduciary capacity, such as by a trustee,
guardian or custodian, execution of the demand should be made in that capacity.
If the shares are owned of record by more than one person as in a joint tenancy
or tenancy in common, the demand should be executed by or on behalf of all
owners. An authorized agent, including one or more joint owners, may execute a
demand for appraisal on behalf of a shareholder; however, the agent must
identify the record owner or owners and expressly disclose the fact that, in
executing the demand, the agent is acting as agent for such owner or owners. A
record holder such as a broker who holds shares as nominee for several
beneficial owners may exercise appraisal rights with respect to the shares held
for one or more beneficial owners while not exercising such rights with respect
to the shares held for one or more other beneficial owners; in such case, the
written demand should set forth the number of shares as to which appraisal is
sought, and where no number of shares is expressly mentioned the demand will be
presumed to cover all shares held in the name of the record owner. Shareholders
who hold their shares in brokerage accounts or other nominee forms and who wish
to exercise appraisal rights are urged to consult with their brokers to
determine the appropriate procedures for the making of a demand for appraisal by
such nominee.
A shareholder who elects to exercise appraisal rights pursuant to Section
17-6712 should mail or deliver a written demand to: Galen E. Graham, Secretary,
First Kansas Financial Corporation, 600 Main Street, Osawatomie, Kansas 66064.
Within ten days after the effective time of the merger, the surviving
corporation must send a notice as to the effectiveness of the merger to each
former shareholder of First Kansas who has made a written objection to the
merger in accordance with Section 17-6712 and who has not voted in favor of the
merger agreement. If any former shareholder, within 20 days after the date of
the mailing of the notice, shall demand in writing, from the surviving
corporation, payment of the value of the shareholder's stock, the surviving
corporation shall pay, within 30 days after the expiration of the period of 20
days, the value of the shareholder's stock on the effective date of the merger,
exclusive of any element of value arising from the expectation or accomplishment
of the merger.
If the surviving corporation and any such shareholder fail to agree upon
the value of such stock during the 30 day period, then within four months after
the expiration of the 30 day period, but not thereafter, either the surviving
corporation or any dissenting shareholder who has complied with the requirements
of Section 17-6712 may file a petition in the Kansas District Court demanding a
determination of the value of the shares of common stock held by all dissenting
shareholders, a copy of which shall be sent to the surviving corporation. Within
10 days of receipt of the shareholder's petition filed with the Court, the
surviving corporation must file with the clerk of such court a duly verified
list containing the names and addresses of all shareholders who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached.
After the hearing on the petition, the Court shall determine the
shareholders who have complied with the requirements of Section 17-6712 and
therefore are entitled to the valuation of and payment for their shares, and
shall appoint an appraiser or appraisers to determine such value. Upon receipt
and review of the report of the appraiser or appraisers, the Court shall
determine the value of the stock of the shareholders entitled to payment
therefor and shall direct the payment of such value, together with interest, if
any, to the shareholders by the surviving corporation.
38
Neither Landmark nor First Kansas is under any obligation to and has no
present intent to file a petition for appraisal, and shareholders seeking to
exercise appraisal rights should NOT assume that the surviving corporation will
file such a petition or that the surviving corporation will initiate any
negotiations with respect to the fair value of such shares. Accordingly,
shareholders who desire to have their shares appraised should initiate any
petitions necessary for the perfection of their appraisal rights within the time
periods and in the manner prescribed in Section 17-6712. Since First Kansas has
no obligation to file such a petition, the failure of a shareholder to do so
within the period specified could nullify such shareholder's previous written
demand for appraisal. In any event, at any time prior to the conclusion of the
20 days after the date of the mailing of the shareholder's written demand for
payment of the value of the shareholder's stock (or at any time thereafter with
the written consent of First Kansas), any shareholder who has demanded appraisal
has the right to withdraw the demand and to accept payment of the merger
consideration set forth in the merger agreement.
Under the merger agreement, First Kansas has agreed to give Landmark prompt
notice of any demands for appraisal received by First Kansas. Landmark has the
right to participate in and approve all negotiations and proceedings with
respect to demands for appraisal under Kansas law. First Kansas will not, except
with the prior written consent of Landmark, make any payment with respect to any
demands for appraisal, or offer to settle, or settle, any such demands.
Shareholders considering seeking appraisal should be aware that the fair
value of their shares as determined under Section 17-6712 could be more than,
the same as or less than the merger consideration they would receive pursuant to
the merger agreement if they did not seek appraisal of their shares.
Shareholders should also be aware that investment banking opinions are not
opinions as to fair value under Section 17-6712.
In determining fair value, any appraiser may examine any of the books and
records of First Kansas. The appraiser or appraiser shall also allow a
reasonable opportunity to the interested parties to submit pertinent evidence on
the value of the stock. The Court, upon application of any party in interest,
shall determine the amount of interest, if any, to be paid upon the value of the
stock of the shareholders.
Any shareholder who has duly demanded an appraisal in compliance with
Section 17-6712 shall not, after the effective time, be entitled to vote the
shares subject to such demand for any purpose or be entitled to the payment of
dividends or other distributions on those shares, except dividends or other
distributions payable to holders of record of shares as of a record date prior
to the effective time of the merger.
Any shareholder may withdraw its demand for appraisal and accept the per
share merger consideration set forth in the merger agreement by delivering to
the surviving corporation a written withdrawal of such shareholder's demands for
appraisal, except that (1) any such attempt to withdraw made more than 60 days
after the effective time will require written approval of the surviving
corporation and (2) no appraisal proceeding in the Kansas District Court shall
be dismissed as to any shareholder without the approval of the Kansas District
Court, and such approval may be conditioned upon such terms as the Kansas
District Court deems just. If the surviving corporation does not approve a
shareholder's request to withdraw a demand for appraisal when such approval is
required or if the Kansas District Court does not approve the dismissal of an
appraisal proceeding, the shareholder would be entitled to receive only the
appraised value determined in any such appraisal proceeding, which value could
be lower than the value of the merger consideration set forth in the merger
agreement.
Failure to comply strictly with all of the procedures set forth in Section
17-6712 of the Kansas General Corporation Code will result in the loss of a
shareholder's statutory appraisal rights. Consequently, any shareholder wishing
to exercise appraisal rights is urged to consult legal counsel before attempting
to exercise such rights.
39
MARKET FOR COMMON STOCK AND DIVIDENDS
The First Kansas common stock currently is traded on the Nasdaq SmallCap
Market under the symbol "FKAN."
As of the record date, there were __________ shares of First Kansas common
stock outstanding, which were held by approximately 279 holders of record. Such
numbers of shareholders do not reflect the number of individuals or
institutional investors holding stock in nominee name through banks, brokerage
firms and others.
The following table sets forth during the periods indicated the high and
low sales prices of the First Kansas common stock as reported on the Nasdaq
SmallCap Market and the dividends declared per share of First Kansas common
stock.
MARKET PRICE
-------------------
DIVIDENDS
DECLARED
2004 HIGH LOW PER SHARE
------------------------------ ---- --- ---------
First Quarter (through
January __, 2004 $0.00
2003
------------------------------
First Quarter 16.06 14.10 $0.05
Second Quarter 17.45 15.95 0.05
Third Quarter 17.95 16.52 0.05
Fourth Quarter 20.40 17.39 0.05
2002
------------------------------
First Quarter $14.30 $13.50 $0.05
Second Quarter 14.36 12.81 0.05
Third Quarter 14.00 12.90 0.05
Fourth Quarter 14.70 13.21 0.05
On November 12, 2003, the most recent trading day prior to the announcement
of the execution of the merger agreement, the closing per share sale price of
the First Kansas common stock was $20.40 and on January __, 2004, the last
trading day before the printing of this proxy statement, the closing per share
sale price of the First Kansas common stock was $____.
Pursuant to the merger agreement, First Kansas paid a quarterly dividend of
$0.05 per share in November, 2003 but it may not pay any subsequent quarterly
dividends. See "The Merger -- Conduct Pending the Merger," on page ___.
CERTAIN BENEFICIAL OWNERS OF FIRST KANSAS COMMON STOCK
The following table sets forth the beneficial ownership of the First Kansas
common stock as of the record date, and certain other information with respect
to (i) the only persons or entities, including any "group" as that term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934, who or which was
known to First Kansas
40
to be the beneficial owner of more than 5% of the issued and outstanding First
Kansas common stock on the record date, (ii) each director of First Kansas,
(iii) certain executive officers of First Kansas, and (iv) all directors and
executive officers of First Kansas as a group. Unless otherwise indicated, the
address of each such beneficial owner is 600 Main Street, Osawatomie, Kansas
66064.
AMOUNT AND NATURE OF PERCENT OF SHARES OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK OUTSTANDING
------------------------------------ -------------------- ------------------------
First Kansas Federal Savings Bank
Employee Stock Ownership Plan
(the "ESOP") (1) 122,466 13.5%
Sandler O'Neill Asset Management, LLC 90,000 9.9%
712 Fifth Avenue
New York, New York 10019 (2)
First Manhattan Co. 68,900 7.6%
437 Madison Avenue
New York, NY 10022 (3)
James E. Breckenridge 10,876(4) 1.2%
Roger L. Coltrin 40,156(4) 4.4%
J. Darcy Domoney 14,896(4) 1.6%
Sherman W. Cole 12,876(4) 1.4%
Donald V. Meyer 18,876(4) 2.1%
Larry V. Bailey 86,029(5) 9.5%
All directors and officers of the Company
as a group (8 persons) (6) 251,577 27.7%
<FN>
_____________
* Less than 1.0% of outstanding shares.
(1) The ESOP purchased such shares for the exclusive benefit of plan
participants with funds borrowed from First Kansas. These shares are held
in a suspense account and are allocated among ESOP participants annually on
the basis of compensation as the ESOP debt is repaid. The ESOP Committee
consisting of certain non-employee directors of the board instructs the
ESOP Trustee regarding investment of ESOP plan assets. The ESOP Trustee
must vote all shares allocated to participant accounts under the ESOP as
directed by participants. Unallocated shares, and shares for which no
timely voting direction is received, are voted by the ESOP Trustee as
directed by the ESOP Committee.
(2) Number of shares is based upon the named entity's confirmation of such
amount, and such information supercedes the ownership information reported
in an amended Schedule 13D filed with the SEC, on July 7, 2000, on behalf
of itself, Malta Partners, L.P., Malta Hedge Fund, L.P., Malta Partners II,
L.P., Malta Hedge Fund II, L.P., Malta Offshore, Ltd, SOAM Holdings, LLC,
and Mr. Terry Maltese.
(3) Number of shares is based upon an amended Schedule 13G filed with the SEC,
on February 13, 2003, on behalf of the named entity by Neal K. Stearns,
General Partner.
(4) Includes 7,769 shares of common stock which may be acquired pursuant to the
exercise of options within 60 days of the Record Date.
(5) Includes 38,848 shares of common stock which may be acquired pursuant to
the exercise of options within 60 days of the Record Date.
41
(6) Includes shares of common stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which shares
the individuals effectively exercise sole voting and investment power,
unless otherwise indicated. Includes 116,541 shares of common stock that
may be acquired pursuant to the exercise of options within 60 days of the
Record Date. Excludes 103,107 shares held by the ESOP 122,466 shares less
18,789 shares allocated to executive officers) over which certain
non-employee directors, as trustees to the ESOP, exercise shared voting
power. Excludes 9,332 unvested or unawarded shares of common stock held by
the Restricted Stock Plan ("RSP") over which certain directors, as members
of the RSP Committee and as RSP Trustees, exercise voting power. Such
individuals disclaim beneficial ownership with respect to such shares held
by the ESOP and the RSP.
</FN>
SHAREHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING
Any proposal which a shareholder wishes to have included in the proxy
materials of First Kansas relating to the next annual meeting of shareholders of
First Kansas, which will only be held if the merger is not consummated prior
thereto, must be received at the principal executive offices of First Kansas,
600 Main Street, Osawatomie, Kansas 66064, Attention: Galen E. Graham,
Secretary, no later than November 20, 2003. If the stockholders do not approve
the proposed merger or if the parties do not otherwise consummate the merger
transaction, First Kansas would hold an annual meeting because it would need to
elect directors. If such proposal is in compliance with all of the requirements
of Rule 14a-8 of the Securities Exchange Act of 1934, it will be included in the
proxy statement and set forth on the form of proxy issued for such annual
meeting of shareholders. It is urged that any such proposals be sent certified
mail, return receipt requested.
Shareholder proposals which are not submitted for inclusion in First
Kansas's proxy materials pursuant to Rule 14a-8 of the Securities Exchange Act
of 1934 may be brought before an annual meeting pursuant to First Kansas's
Bylaws, which provides that business must be (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the board of
directors, or (b) otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the corporate secretary of First Kansas. To be timely a shareholder's notice
must be delivered to or mailed and received at the principal executive offices
of First Kansas not later than 90 days prior to the anniversary date of the
mailing of proxy materials by First Kansas in connection with the immediately
preceding annual meeting of shareholders. A shareholder's notice to the
corporate secretary shall set forth as to each matter the shareholder proposes
to bring before the annual meeting (a) a brief description of the business
desired to be brought before the annual meeting, (b) the name and address, as
they appear on First Kansas's books, of the shareholder proposing such business,
(c) the class and number of shares of First Kansas which are beneficially owned
by the shareholder and (d) any material interest of the shareholder in such
business. To be timely with respect to the next annual meeting of shareholders
of First Kansas, a shareholder's notice must be received by First Kansas no
later than February 15, 2004.
42
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
This proxy statement and the documents incorporated by reference into this
proxy statement contain forward-looking statements and information with respect
to the financial condition, results of operations, plans, objectives, future
performance, business and other matters relating to First Kansas or the merger
that are based on the beliefs of, as well as assumptions made by and information
currently available to, First Kansas's management. When used in this proxy
statement, the words "anticipate," "believe," "estimate," "expect" and "intend"
and words or phrases of similar import are intended to identify forward-looking
statements. These statements reflect the current view of First Kansas with
respect to future events and are subject to risks, uncertainties and assumptions
that include, without limitation, the risk factors set forth in First Kansas's
Annual Report on Form 10-KSB and other filings with the Securities and Exchange
Commission, the risk that the merger will not be completed and risks associated
with competitive factors, general economic conditions, geographic credit
concentration, customer relations, interest rate volatility, governmental
regulation and supervision, technological changes, changes in consumer spending
and savings habits, defaults in the repayment of loans, changes in volume of
loan originations, and changes in industry practices. Should any one or more of
these risks or uncertainties materialize, or should any underlying assumptions
prove incorrect, actual results may vary materially from those described in this
proxy statement as anticipated, believed, estimated, expected or intended.
WHERE YOU CAN FIND MORE INFORMATION
First Kansas files annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange Commission. You may read
and copy any reports, proxy statements or other information filed by First
Kansas at the Commission's public reference room in Washington, D.C., which is
located at the following address: Public Reference Room, Judiciary Plaza, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549.
You can request copies of these documents, upon payment of a duplicating
fee, by writing to the Commission. Please call the Commission at 1-800-SEC-0330
for further information on the operation of the Commission's public reference
rooms. First Kansas's Commission filings are also available to the public from
document retrieval services and at the Commission's Internet website
(http://www.sec.gov).
43
Appendix A
AGREEMENT AND PLAN OF MERGER
AMONG
LANDMARK BANCORP, INC.
LANDMARK ACQUISITION CORPORATION
AND
FIRST KANSAS FINANCIAL CORPORATION
NOVEMBER 13, 2003
A-1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of November 13, 2003, among LANDMARK BANCORP, INC., a Delaware corporation
("Acquiror"), FIRST KANSAS FINANCIAL CORPORATION, a Kansas corporation ("First
Kansas"), and LANDMARK ACQUISITION CORPORATION, a Kansas corporation and a
wholly-owned subsidiary of Acquiror ("Acquisition Corp").
RECITALS
A. The parties to this Agreement desire to effect a reorganization
whereby Acquiror acquires control of First Kansas through the merger (the
"Merger") of Acquisition Corp with and into First Kansas with First Kansas being
the surviving corporation (the "Surviving Corporation").
B. Pursuant to the terms of this Agreement, each outstanding share of
the capital stock of First Kansas, which is comprised of one class of common
stock, $0.10 par value per share ("First Kansas Common Stock"), shall be
converted at the effective time of the Merger into the right to receive in cash
in the amount set forth in this Agreement, and all of the outstanding shares of
common stock, $0.01 par value per share, of Acquisition Corp ("Acquisition Corp
Common Stock") shall be converted into and shall thereafter represent all of the
issued and outstanding stock of the Surviving Corporation.
C. The parties desire to make certain representations, warranties and
agreements in connection with the Merger and also agree to certain prescribed
conditions to the Merger.
AGREEMENTS
In consideration of the foregoing premises and the following mutual
promises, covenants and agreements, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. In addition to those terms defined throughout this
Agreement, the following terms, when used herein, shall have the following
meanings.
(a) "Acquiror Subsidiary" means a Subsidiary of Acquiror, including
Acquisition Corp and Landmark Bank.
(b) "Acquiror Transactional Expenses" means all transaction costs of
Acquiror necessary to consummate the Contemplated Transactions, including the
organizational expenses of Acquisition Corp, the aggregate fees and expenses of
attorneys, accountants, consultants, financial advisors and other professional
advisors incurred by Acquiror in connection with this Agreement and the
Contemplated Transactions, and all other non-payroll
A-2
related costs and expenses in each case incurred or to be incurred by Acquiror
through the Effective Time in connection with this Agreement and the
Contemplated Transactions.
(c) "Adjusted Stockholders' Equity" means the consolidated
stockholders' equity of First Kansas, calculated in accordance with GAAP and
reflecting the recognition of or accrual for all expenses paid or incurred or
projected to be paid or incurred by First Kansas or Bank in connection with this
Agreement and the Contemplated Transactions, including any Remediation Costs (as
defined in Section 6.10), and including all fees and expenses incurred in
connection with obtaining stockholder approval and any attorneys, accountants,
brokers, finders or investment bankers and any amounts paid or payable to any
director, officer or employee of First Kansas or any First Kansas Subsidiary
under any Contract or benefit plan as a result of the Contemplated Transactions
(excluding any amounts payable under the Consulting Agreement between Acquiror
and Larry V. Bailey pursuant to Section 6.19), but adjusted to exclude: (i)
additions in stockholders' equity resulting from the exercise of any First
Kansas Stock Options from September 30, 2003 to the Closing Date, (ii) any
adjustments made in accordance with Statement of Financial Accounting Standard
No. 115 and (iii) any accounting or other adjustments made pursuant to Section
6.18. First Kansas's Adjusted Stockholders' Equity shall be calculated by First
Kansas's independent auditors, in consultation with Acquiror's independent
auditors, as of the close of business on the last Business Day immediately
preceding the Closing Date (as defined below), using reasonable estimates of
revenues and expenses where actual amounts are not available. For purposes of
the calculation of the Adjusted Stockholders' Equity, First Kansas shall assume
a tax rate of 34% for all applicable accruals. Such calculation shall be subject
to verification and approval prior to the Closing (as defined below) by
Acquiror's independent auditors, which approval shall not be unreasonably
withheld.
(d) "Affiliate" means with respect to:
(i) a particular individual: (A) each other member of such
individual's Family; (B) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family; (C) any
Person in which such individual or members of such individual's Family hold
(individually or in the aggregate) a Material Interest; and (D) any Person with
respect to which such individual or one or more members of such individual's
Family serves as a director, officer, partner, executor or trustee (or in a
similar capacity); and
(ii) a specified Person other than an individual: (A) any Person
that directly or indirectly controls, is directly or indirectly controlled by,
or is directly or indirectly under common control with such specified Person;
(B) any Person that holds a Material Interest in such specified Person; (C) each
Person that serves as a director, officer, partner, executor or trustee of such
specified Person (or in a similar capacity); (D) any Person in which such
specified Person holds a Material Interest; (E) any Person with respect to which
such specified Person serves as a general partner or a trustee (or in a similar
capacity); and (F) any Affiliate of any individual described in clause (B) or
(C) of this subsection (ii).
(e) "Applicable Contract" means any Contract: (i) under which First
Kansas or Bank has or may acquire any rights; (ii) under which First Kansas or
Bank has or may become
A-3
subject to any obligation or liability; or (iii) by which First Kansas or Bank
or any of the assets owned or used by either of them is or may become bound.
(f) "Bank" means First Kansas Federal Savings Bank, a federally
chartered savings bank with its main office located in Osawatomie, Kansas, and a
wholly owned subsidiary of First Kansas.
(g) "Bank Merger" means the merger of Bank with and into Landmark
Bank, with Landmark Bank being the resulting bank.
(h) "Best Efforts" means the efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible, provided, however, that an
obligation to use Best Efforts under this Agreement does not require the Person
subject to that obligation to take actions that would result in a materially
adverse change in the benefits to such Person of this Agreement and the
Contemplated Transactions.
(i) "Breach" means with respect to a representation, warranty,
covenant, obligation or other provision of this Agreement or any instrument
delivered pursuant to this Agreement, any material inaccuracy in or material
breach of, or any failure to perform or comply in a material respect with, such
representation, warranty, covenant, obligation or other provision.
(j) "Business Day" means any day except Saturday, Sunday and any day
on which Landmark Bank is authorized or required by law or other government
action to close.
(k) "Code" means the Internal Revenue Code of 1986, as amended.
(l) "Contemplated Transactions" means all of the transactions
contemplated by this Agreement, including: (i) the Merger; (ii) the Bank Merger;
(iii) the performance by Acquiror, Acquisition Corp and First Kansas of their
respective covenants and obligations under this Agreement; and (iv) Acquiror's
acquisition of control of First Kansas and, indirectly, Bank.
(m) "Contract" means any agreement, contract, obligation, promise or
understanding (whether written or oral and whether express or implied) that is
legally binding.
(n) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as
amended
(p) "FDIC" means the Federal Deposit Insurance Corporation.
(q) "Family" means with respect to an individual: (i) the individual;
(ii) the individual's spouse and former spouses; (iii) any other natural person
who is related to the individual or the individual's spouse within the second
degree; and (iv) any other natural person who resides with such individual.
A-4
(r) First Kansas ESOP" means the First Kansas Financial Corporation
Employee Stock Ownership Plan, as amended.
(s) "First Kansas ESOP Loan" means the principal amount of and
accrued interest on the loan made by Bank to the ESOP as evidenced by a
promissory note dated June 25, 1998.
(t) "First Kansas Restricted Stock Plan" means the First Kansas
Financial Corporation 1999 Restricted Stock Plan, as amended.
(u) "First Kansas Stock Option" means each of the 132,079 outstanding
stock options granted to a Person prior to the date of this Agreement by First
Kansas, under the First Kansas Stock Option Plan or otherwise, and which will
be, by virtue of the Contemplated Transactions or otherwise, vested and fully
exercisable immediately prior to the Effective Time.
(v) "First Kansas Stock Option Plan" means the First Kansas Financial
Corporation 1999 Stock Option Plan.
(w) "First Kansas Subsidiary" means a Subsidiary of First Kansas,
including Bank.
(x) "First Kansas Transactional Expenses" means all transaction costs
of First Kansas necessary to consummate the Contemplated Transactions, the
aggregate fees and expenses of attorneys, accountants, consultants, financial
advisors and other professional advisors incurred by First Kansas in connection
with this Agreement and the Contemplated Transactions, the cost of preparing,
printing and mailing the Proxy Statement to First Kansas's stockholders and all
other non-payroll related costs and expenses in each case incurred or to be
incurred by First Kansas through the Effective Time in connection with this
Agreement and the Contemplated Transactions, excluding, however, all payments
and expenses associated with acceleration of payment of compensation (including
severance benefits, allocation and vesting under any employee stock ownership
plan, stock option plans, retention plans, deferred compensation agreements or
any other First Kansas Employee Benefit Plan, as defined below).
(y) "Knowledge" with respect to:
(i) an individual means that such person will be deemed to have
"Knowledge" of a particular fact or other matter if: (A) such individual is
actually aware of such fact or other matter; or (B) a prudent person serving in
a similar capacity as the individual could reasonably be expected to be aware of
the existence of such fact or other matter; and
(ii) a Person (other than an individual) means that such Person
will be deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving as a director, executive officer, general or managing
partner, executor or trustee of such Person (or in any similar capacity) has
Knowledge of such fact or other matter.
(z) "Landmark Bank" means Landmark National Bank, a national banking
association with its main office located in Manhattan, Kansas.
A-5
(aa) "Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational or other administrative order,
constitution, law, ordinance, regulation, rule, policy statement, directive,
statute or treaty.
(bb) "Material Adverse Effect" with respect to a Person (other
than an individual) means, a material adverse effect (whether or not required to
be accrued or disclosed under Statement of Financial Accounting Standards No.
5), (i) on the condition (financial or otherwise), properties, assets,
liabilities, businesses or results of operations of such Person (but does not
include any such effect resulting from or attributable to any action or omission
by First Kansas or Acquiror or any Subsidiary of either of them taken with the
prior written consent of the other parties hereto, in contemplation of the
Contemplated Transactions); or (ii) on the ability of such Person to perform its
obligations under this Agreement on a timely basis, provided, however, that it
does not include the effect of any change of law, rule or regulation or general
economic event or change in interest rates affecting financial institutions
generally; and provided further that it does not include the effect of
recognition of or accrual for all expenses paid or incurred or projected to be
paid or incurred by First Kansas or Bank in connection with this Agreement and
the Contemplated Transactions, including all fees and expenses incurred in
connection with obtaining stockholder approval and any attorneys, accountants,
brokers, finders or investment bankers and any amounts paid or payable to any
director, officer or employee of First Kansas or any First Kansas Subsidiary
under any contract or benefit plan as a result of the Contemplated Transactions.
(cc) "Material Interest" means the direct or indirect beneficial
ownership (as currently defined in Rule 13d-3 under the Exchange Act) of voting
securities or other voting interests representing at least ten percent (10%) of
the outstanding voting power of a Person or equity securities or other equity
interests representing at least ten percent (10%) of the outstanding equity
securities or equity interests in a Person.
(dd) "OCC" means the Office of the Comptroller of the Currency.
(ee) "Order" means any award, decision, injunction, judgment,
order, ruling, extraordinary supervisory letter, policy statement, memorandum of
understanding, resolution, agreement, directive, subpoena or verdict entered,
issued, made, rendered or required by any court, administrative or other
governmental agency, including any Regulatory Authority, or by any arbitrator.
(ff) "Ordinary Course of Business" means any action taken by a
Person only if such action:
(i) is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(ii) is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority), other than loan approvals for customers of a financial
institution; and
A-6
(iii)is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), other than loan
approvals for customers of a financial institution, in the ordinary course of
the normal day-to-day operations of other Persons that are in the same line of
business as such Person.
(gg) "OTS" means the Office of Thrift Supervision.
(hh) "Person" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union or
other entity or Regulatory Authority.
(ii) "Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any judicial or governmental authority, including a
Regulatory Authority, or arbitrator.
(jj) "Profit Sharing Plan" means the First Kansas Federal Savings
Association Employees' Savings and Profit Sharing Plan and Trust, as amended.
(kk) "Proxy Statement" means the proxy statement to be used by
First Kansas in connection with the solicitation by its board of directors of
proxies for use at the meeting of its stockholders to be convened for the
purpose of voting on the Merger, pursuant to Section 6.8 hereof.
(ll) "Regulatory Authority" means any federal, state or local
governmental body, agency, court or authority which, under applicable Legal
Requirements: (i) has supervisory, judicial, administrative, police,
enforcement, taxing or other power or authority over First Kansas, Bank,
Acquiror, Acquisition Corp or Landmark Bank; (ii) is required to approve, or
give its consent to the Contemplated Transactions; or (iii) with which a filing
must be made in connection therewith, including in any case, the Board of
Governors of the Federal Reserve System, the OCC and the OTS.
(mm) "Representative" means with respect to a particular Person,
any director, officer, manager, employee, agent, consultant, advisor or other
representative of such Person, including legal counsel, accountants and
financial advisors.
(nn) "SEC" means the Securities and Exchange Commission.
(oo) "Securities Act" means the Securities Act of 1933, as
amended.
(pp) "Subsidiary" means with respect to any Person (the "Owner"),
any corporation or other Person of which securities or other interests having
the power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries.
A-7
(qq) "Tax" means any tax (including any income tax, capital gains
tax, value-added tax, sales tax, property tax, gift tax or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency or other fee,
and any related charge or amount (including any fine, penalty, interest or
addition to tax), imposed, assessed or collected by or under the authority of
any Regulatory Authority or payable pursuant to any tax-sharing agreement or any
other Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency or fee.
(rr) "Tax Return" means any return (including any information
return), report, statement, schedule, notice, form or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Regulatory Authority in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
(ss) "TFR" means the quarterly Thrift Financial Report of
Condition required to be filed with the OTS by any federally chartered savings
bank.
(tt) "Threatened" means a claim, Proceeding, dispute, action or
other matter for which any demand or statement has been made (orally or in
writing) or any notice has been given (orally or in writing), or if any other
event has occurred or any other circumstances exist, that would lead a prudent
Person to conclude that such a claim, Proceeding, dispute, action or other
matter is likely to be asserted, commenced, taken or otherwise pursued in the
future.
(uu) "Termination Date" means August 1, 2004, or such later date
as shall have been agreed to in writing by the parties to this Agreement.
(vv) "Total Purchase Price" means the product of the Purchase
Price Per Share times the total number of shares of First Kansas Common Stock
outstanding at the Effective Time (excluding Dissenting Shares, shares of First
Kansas Common Stock held in treasury by First Kansas and shares of First Kansas
Common Stock held by Acquiror).
Section 1.2 Principles of Construction.
(a) In this Agreement, unless otherwise stated or the context
otherwise requires, the following uses apply: (i) actions permitted under this
Agreement may be taken at any time and from time to time in the actor's sole
discretion; (ii) references to a statute shall refer to the statute as in effect
on the date of this Agreement and to any successor statute, and to all
regulations promulgated under or implementing the statute or its successor, as
in effect at the relevant time; (iii) in computing periods from a specified date
to a later specified date, the words "from" and "commencing on" (and the like)
mean "from and including," and the words "to," "until" and "ending on" (and the
like) mean "to, but excluding"; (iv) references to a governmental or
quasi-governmental agency, authority or instrumentality shall also refer to a
regulatory body that succeeds to the functions of the agency, authority or
instrumentality; (v) indications of time of day mean Manhattan, Kansas, time;
(vi) "including" means "including, but not limited to"; (vii) all references to
sections, schedules and exhibits are to
A-8
sections, schedules and exhibits in or to this Agreement unless otherwise
specified; (viii) all words used in this Agreement will be construed to be of
such gender or number as the circumstances require; and (ix) the captions and
headings of articles, sections, schedules and exhibits appearing in or attached
to this Agreement have been inserted solely for convenience of reference and
shall not be considered a part of this Agreement nor shall any of them affect
the meaning or interpretation of this Agreement or any of its provisions.
(b) The Book of Schedules of First Kansas referred to in this
Agreement consist of the agreements and other documentation described and
referred to in this Agreement, which Schedules were delivered by First Kansas to
Acquiror before the date of this Agreement. The disclosures in the Schedules,
and those in any supplement thereto, shall relate only to the representations
and warranties in the section of this Agreement to which they expressly relate
and not to any other representation or warranty in this Agreement. In the event
of any inconsistency between the statements in the body of this Agreement and
those in the Schedules (other than an exception expressly set forth as such in
the Schedules with respect to a specifically identified representation or
warranty), the statements in the body of this Agreement will control.
(c) All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles in the
United States consistent with those used in the preparation of the most recent
audited consolidated financial statements of Acquiror or First Kansas, as the
case may be ("GAAP").
(d) With regard to each and every term and condition of this
Agreement and any and all agreements and instruments subject to the terms
hereof, the parties hereto understand and agree that the same have or has been
mutually negotiated, prepared and drafted, and that if at any time the parties
hereto desire or are required to interpret or construe any such term or
condition or any agreement or instrument subject hereto, no consideration shall
be given to the issue of which party hereto actually prepared, drafted or
requested any term or condition of this Agreement or any agreement or instrument
subject hereto.
ARTICLE 2
THE MERGER
Section 2.1 The Merger. Provided that this Agreement shall not have
----------
been terminated in accordance with its express terms, upon the terms and subject
to the conditions of this Agreement and in accordance with the applicable
provisions of the General Corporation Code of Kansas, as amended (the "Kansas
Code") at the Effective Time (as defined below), Acquisition Corp shall be
merged with and into First Kansas. As a result of the Merger, the separate
corporate existence of Acquisition Corp shall cease and First Kansas will be the
Surviving Corporation.
Section 2.2 Effective Time; Closing.
-----------------------
(a) Provided that this Agreement shall not have been terminated
in accordance with its express terms, the closing of the Merger (the "Closing")
shall occur through the mail or
A-9
at a place which is mutually acceptable to Acquiror and First Kansas, or if they
fail to agree, at the offices of Barack Ferrazzano Kirschbaum Perlman &
Nagelberg LLC, located at 333 West Wacker Drive, Suite 2700, Chicago, Illinois
60606, at 10:00 a.m. on the date which is twenty-one (21) Business Days after
the end of the month in which all required approvals or consents of the
Regulatory Authorities for the Contemplated Transactions have been received and
all statutory waiting periods relating to such approvals have expired (the
"Closing Date"). Subject to the provisions of Article 11, failure to consummate
the Merger on the date and time and at the place determined pursuant to this
Section will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
(b) The parties to this Agreement agree to file on the Closing
Date the appropriate certificate of merger, as contemplated by Sections 17-6003
and 17-6701 of the Kansas Code with the Secretary of State of the State of
Kansas. The Merger shall be effective at the time and on the date agreed to by
the parties to this Agreement, and in the event the parties fail to so agree, at
12:01 a.m. of the day following the date on which the certificate of merger is
accepted for filing by the Secretary of State of the State of Kansas (the
"Effective Time").
Section 2.3 Effects of Merger. At the Effective Time, the effect of the
-----------------
Merger shall be as provided in the Kansas Code. Without limiting the generality
of the foregoing, at the Effective Time, all the property, rights, privileges,
powers and franchises of Acquisition Corp and First Kansas shall be vested in
the Surviving Corporation, and all debts, liabilities and duties of Acquisition
Corp and First Kansas shall become the debts, liabilities and duties of the
Surviving Corporation.
Section 2.4 Articles of Incorporation. At the Effective Time, the
--------------------------
articles of incorporation of Surviving Corporation shall be amended and restated
to be identical to the articles of incorporation of Acquisition Corp in place
immediately prior to the Effective Time and shall become the articles of
incorporation of the Surviving Corporation until thereafter amended in
accordance with applicable law.
Section 2.5 Bylaws. At the Effective Time, the bylaws of Surviving
------
Corporation shall be the bylaws of the Acquisiton Corp in place immediately
prior to the Effective Time and shall become the bylaws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
Section 2.6 Board of Directors. From and after the Effective Time,
-------------------
until duly changed in compliance with applicable law and the articles of
incorporation and bylaws of the Surviving Corporation, the board of directors of
the Surviving Corporation shall consist of the directors of Acquisition Corp
immediately prior to the Effective Time.
Section 2.7 Management. At the Effective Time, the officers of
----------
Acquisition Corp immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation and shall hold office until their
respective successors are duly elected or appointed and qualified in the manner
provided in the articles of incorporation and bylaws of the Surviving
Corporation.
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Section 2.8 Acquiror's Deliveries at Closing. At the Closing, Acquiror
--------------------------------
shall deliver or cause to be delivered the following items to or on behalf of
First Kansas:
(a) evidence of the delivery by Acquiror or its agents to the
Paying Agent (as defined below) of cash representing the Total Purchase Price to
be paid in accordance with the terms of this Agreement in exchange for the
shares of First Kansas Common Stock;
(b) copies of resolutions of the board of directors of Acquiror
approving this Agreement and the consummation of the Contemplated Transactions,
certified as of the Closing Date by the Secretary or any Assistant Secretary of
Acquiror;
(c) copies of resolutions of the board of directors and the
stockholder of Acquisition Corp approving this Agreement and the consummation of
the Contemplated Transactions, certified as of the Closing Date by the Secretary
or any Assistant Secretary of Acquisition Corp;
(d) a good standing certificate for Acquisition Corp issued by
the Secretary of State of the State of Kansas, and dated not more than fifteen
(15) Business Days prior to the Closing Date;
(e) a copy of the articles of incorporation of Acquisition Corp
certified not more than fifteen (15) Business Days prior to the Closing Date by
the Secretary of State of the State of Kansas;
(f) a certificate of the Secretary or any Assistant Secretary of
Acquisition Corp dated the Closing Date certifying a copy of the bylaws of
Acquisition Corp;
(g) certificates executed by the President or Vice President and
Secretary or any Assistant Secretary of Acquiror and Acquisition Corp, dated the
Closing Date, stating that: (i) all of the representations and warranties of
Acquiror or Acquisition Corp as the case may be set forth in this Agreement, as
the same may have been updated pursuant to Section 7.1, are true and correct in
all material respects with the same force and effect as if all of such
representations and warranties were made at the Closing Date, provided, however,
that to the extent such representations and warranties expressly relate to an
earlier date, such representations shall be true and correct in all material
respects on and as of such earlier date, and provided further, that to the
extent that representations and warranties are made in this Agreement subject to
a standard of materiality or Knowledge, such representations and warranties
shall be true and correct in all respects; and (ii) Acquiror or Acquisition
Corp, as the case may be, has performed or complied in all material respects
with all of the covenants and obligations to be performed or complied with by it
under the terms of this Agreement on or prior to the Closing Date, provided,
however, that to the extent performance and compliance with such covenants and
obligations are subject in this Agreement to a standard of materiality, Acquiror
or Acquisition Corp shall have performed and complied in all respects with such
covenants and obligations; and
(h) such other documents as First Kansas may reasonably request.
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All of such items shall be reasonably satisfactory in form and substance to
First Kansas and its counsel.
Section 2.9 First Kansas's Deliveries at Closing. At the Closing, First
------------------------------------
Kansas shall deliver the following items to Acquiror:
(a) evidence of the satisfaction by First Kansas or its agents
of its obligation to pay each option holder and each holder of any First Kansas
Restricted Stock that was unvested immediately prior to the Closing Date the
amounts required under Section 3.2(g) and Section 3.2(h);
(b) a good standing certificate for First Kansas issued by the
Secretary of State of the State of Kansas and dated not more than fifteen (15)
Business Days prior to the Closing Date;
(c) a copy of the articles of incorporation of First Kansas
certified not more than fifteen (15) Business Days prior to the Closing Date by
the Secretary of State of the State of Kansas;
(d) a certificate of the Secretary or any Assistant Secretary of
First Kansas dated the Closing Date certifying a copy of the bylaws of First
Kansas;
(e) copies of resolutions of the stockholders and the board of
directors of First Kansas authorizing and approving this Agreement and the
consummation of the Contemplated Transactions, certified as of the Closing Date
by the Secretary or any Assistant Secretary of First Kansas;
(f) a good standing certificate for Bank issued by the OTS and
dated not more than fifteen (15) Business Days prior to the Closing Date;
(g) a copy of the charter of Bank certified by the OTS and dated
not more than fifteen (15) Business Days prior to the Closing Date;
(h) a certificate of the Secretary of Bank dated the Closing
Date certifying a copy of the bylaws of Bank and stating that there have been no
further amendments to the charter of Bank delivered pursuant to the immediately
preceding paragraph of this Section;
(i) a certificate executed by the President or Vice President
and Secretary or any Assistant Secretary of First Kansas, dated the Closing
Date, stating that: (i) there have been no further amendments to the articles of
incorporation and charter delivered pursuant to this Section; (ii) all of the
representations and warranties of First Kansas set forth in this Agreement, as
the same may have been updated pursuant to Section 6.6, are true and correct in
all material respects with the same force and effect as if all of such
representations and warranties were made at the Closing Date, provided, however,
that to the extent such representations and warranties expressly relate to an
earlier date, such representations shall be true and correct in all material
respects on and as of such earlier date, and provided further, that to the
extent that representations and warranties are made in this Agreement subject to
a standard of materiality or Knowledge, such
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representations and warranties shall be true and correct in all respects; and
(iii) First Kansas has performed or complied in all material respects with all
of the covenants and obligations to be performed or complied with by it under
the terms of this Agreement on or prior to the Closing Date, provided, however,
that to the extent performance and compliance with such covenants and
obligations are subject in this Agreement to a standard of materiality, First
Kansas shall have performed and complied in all respects with such covenants and
obligations;
(j) a list of all holders of First Kansas Common Stock and Bank
Shares (as defined below) as of the Closing Date and a list of all Persons who
have the right at any time to acquire shares of First Kansas Common Stock and
Bank Shares certified in each case by the Secretary or any Assistant Secretary
of First Kansas (the "Final First Kansas Stockholder List");
(k) a legal opinion of First Kansas's counsel dated the Closing
Date in the form attached as Exhibit A;
(l) a certificate of each of First Kansas's legal counsel,
accountants and financial advisor or investment banker, if any, representing
that all fees and expenses incurred by First Kansas prior to and including the
Effective Time have been paid in full, or certificates from these professionals
that all fees and expenses incurred by First Kansas prior to and including the
Effective Time have been invoiced to First Kansas and a certificate from First
Kansas that all invoiced amounts have been paid or accrued in full;
(m) at and pursuant to the request of Acquiror, a resignation
from each of the directors and officers of First Kansas from such individual's
position as a director and an officer of First Kansas, as the case may be; and
(n) such other documents as Acquiror may reasonably request.
All of such items shall be reasonably satisfactory in form and substance to
Acquiror and its counsel.
Section 2.10 Bank Merger.
-----------
(a) Concurrently with the Merger and immediately after the
Effective Time, Acquiror and First Kansas agree to cause the merger of Bank with
and into, and under the charter of, Landmark Bank, with Landmark Bank being the
resulting bank (the "Bank Merger"). The Bank Merger will be effected pursuant to
a merger agreement in the form required by the National Bank Act, as amended
(the "National Bank Act"), and by other applicable Legal Requirements,
containing terms and conditions not inconsistent with the Agreement (the "Bank
Merger Agreement"). The Bank Merger shall occur only if the Merger is
consummated, and it shall become effective immediately after the Effective Time
or such later time as may be determined by Acquiror. To obtain the necessary
regulatory approvals for the Bank Merger to occur immediately after the
Effective Time, Acquiror and First Kansas agree to cause each of Landmark Bank
and Bank, respectively, to approve, adopt, execute and deliver the Bank Merger
Agreement and to take such other steps as are reasonably necessary prior to the
Effective Time to effect the Bank Merger.
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(b) Notwithstanding anything contained herein to the contrary:
(i) the Bank Merger will be effective no earlier than the Effective Time; (ii)
none of Acquiror's actions in connection with the Bank Merger will unreasonably
interfere with any of the operations of First Kansas or Bank prior to the
Effective Time; and (iii) no cost or expense incurred by First Kansas or Bank
pursuant solely to this Section that is not otherwise reimbursed by Acquiror
shall be taken into account for purposes of determining the satisfaction by
First Kansas of the condition in Section 9.11.
Section 2.11 Alternative Structure. Notwithstanding anything contained
---------------------
herein to the contrary, upon receipt of First Kansas's prior written consent
(which consent shall not be unreasonably withheld), Acquiror may specify, for
any reasonable business, tax or regulatory purpose, that, before the Effective
Time, Acquiror and First Kansas shall enter into transactions structured other
than those described in this Agreement to effect the purposes of this Agreement,
including the merger of First Kansas with any Affiliate of Acquiror, and the
parties to this Agreement shall take all action necessary and appropriate to
effect, or cause to be effected, such transactions, provided, however, that no
such proposed change on the structure of the transactions contemplated in this
Agreement shall delay the Closing Date (if such a date has already been firmly
established) or adversely affect the economic benefits, the form of
consideration or the tax effect of the Merger at the Effective Time to the
holders of First Kansas Common Stock.
Section 2.12 Absence of Control. Subject to any specific provisions of
------------------
this Agreement, it is the intent of the parties to this Agreement that neither
Acquiror nor First Kansas by reason of this Agreement shall be deemed (until
consummation of the Contemplated Transactions) to control, directly or
indirectly, the other party and shall not exercise, or be deemed to exercise,
directly or indirectly, a controlling influence over the management or policies
of such other party.
ARTICLE 3
CONVERSION OF SECURITIES IN THE MERGER
Section 3.1 Manner of Merger.
----------------
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of Acquiror or First Kansas or the holder of any First
Kansas Common Stock:
(i) each share of common stock, $0.01 par value per share,
of Acquisition Corp issued and outstanding immediately prior to the Effective
Time shall be converted into one validly issued, fully paid and non-assessable
share of common stock of the Surviving Corporation;
(ii) each share of First Kansas Common Stock issued and
outstanding immediately prior to the Effective Time, including shares granted
pursuant to the First Kansas Restricted Stock Plan which have fully vested prior
to the Closing Date, shall be converted into the right to receive cash in an
amount equal to (i) Nineteen Dollars ($19.00) minus (ii) the Per
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Share Equity Adjustment, if any, as defined below, minus (iii) the Per Share
Remediation Cost, if any, as defined below (the "Purchase Price Per Share");
(iii)each share of First Kansas Common Stock held by First
Kansas as treasury stock shall not be converted into the right to receive cash,
but instead shall be canceled as a result of the Merger;
(iv) each First Kansas Stock Option shall, ipso facto and
without any action on the part of holders thereof, become and be converted into
the right to receive the difference between the Purchase Price Per Share and the
applicable option exercise price (the "Option Spread"), payable as provided
herein and less any Tax withholding required under the Code or any provision of
state or local law, and prior to the Effective Time, the board of directors of
First Kansas and the committee or committees established under the First Kansas
Stock Option Plan shall take such actions or make such determinations as may be
required under the First Kansas Stock Option Plan, subject to the approval of
Acquiror, to effect the provisions of this Agreement; and
(v) each share of First Kansas Common Stock owned by
Acquiror shall be cancelled.
(b) For the purposes of this Section 3.1, the "Per Share Equity
Adjustment", if any, shall be equal to (i) the total amount that the Adjusted
Stockholders' Equity (as calculated immediately prior to the Closing Date) is
less than Thirteen Million Six Hundred Thousand Dollars ($13,600,000) divided by
(ii) 1,040,324.
(c) For the purposes of this Section 3.1, the "Per Share Remediation
Cost", if any, shall be equal to (i) the total of the difference of the
Remediation Cost, as defined in Section 6.10(b), minus One Hundred Thousand
Dollars ($100,000) (which such difference can not be less than zero) divided by
two (2), divided by (ii) 1,040,324. For example, if the Remediation Cost is
determined by the parties to be Three Hundred Thousand Dollars ($300,000), the
Per Share Remediation Cost will be equal to the following:
($300,000-$100,000)/2 = $0.10
---------------------
1,040,324
(d) After the Effective Time, no holder of First Kansas Common Stock
that is issued and outstanding immediately prior to the Effective Time will have
any rights in respect of such First Kansas Common Stock except to receive
payment for such shares of First Kansas Common Stock in the manner provided
herein or as provided in Section 17-6712 of the Kansas Code.
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Section 3.2 Steps of Transaction.
--------------------
(a) Within three (3) Business Days after the Effective Time, Acquiror
shall mail or cause to be mailed to each then current holder of record of a
certificate or certificates representing outstanding shares of First Kansas
Common Stock (the "Certificates"): (i) a letter of transmittal in customary form
which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Paying Agent; and (ii) instructions for use in surrendering such Certificates in
exchange for payment therefor (collectively, the "Transmittal Materials").
Pursuant to the terms of a mutually agreeable paying agent agreement, the
parties hereto agree to appoint Registrar and Transfer Company, as paying agent
(the "Paying Agent") for the parties to effect the surrender of the Certificates
in exchange for cash in an amount determined as provided in this Agreement.
Acquiror shall use all reasonable efforts to mail or cause to be mailed
Transmittal Materials to all persons who become holders of First Kansas Common
Stock subsequent to the Mailing Date and no later than the close of business of
the third (3rd) Business Day prior to the Closing Date.
(b) Acquiror shall have the discretion, which it may delegate in
whole or in part to the Paying Agent, to determine whether Transmittal Materials
have been properly completed, signed and submitted and to disregard any defects
it determines are immaterial. The decision of Acquiror or the Paying Agent on
such matters shall be conclusive and binding. Neither Acquiror nor the Paying
Agent shall be under any obligation to notify any person of any defect in the
materials submitted to the Paying Agent.
(c) Acquiror shall cause the Paying Agent to deliver to each holder
of First Kansas Common Stock who has theretofore submitted effective Transmittal
Materials accompanied by the Certificates covered by such materials a check in
an amount equal to the Purchase Price Per Share times the number of shares of
First Kansas Common Stock theretofore represented by the Certificates so
surrendered, after giving effect to any required Tax withholdings. The amount
paid by Acquiror pursuant to this Section 3.2(c) shall constitute and represent
full satisfaction of all rights pertaining to such shares of First Kansas Common
Stock.
(d) Until so surrendered, each outstanding Certificate (other than
the Certificates representing Dissenting Shares, representing First Kansas
Common Stock held in treasury by First Kansas and representing First Kansas
Common Stock held by Acquiror) shall, for all purposes, solely represent the
cash amount into and for which such shares have been so converted; provided,
however, that upon surrender of a Certificate, there shall be paid to the record
holder or holders of the Certificate, the cash amount, without interest or any
dividends thereon, represented by such Certificate.
(e) After the Effective Time, there shall be no further registration
or transfers on the stock transfer books of First Kansas of the shares of First
Kansas Common Stock that were outstanding immediately prior to the Effective
Time. Any Person whose name does not appear upon the Final First Kansas
Stockholder List who submits Certificates to the Paying Agent shall be entitled
to receive no cash payment, and any such Certificates shall be canceled.
(f) If any cash amount representing the Purchase Price Per Share is
to be paid
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to any Person other than the Person in whose name the Certificate surrendered in
exchange therefor is registered, it shall be a condition to such right to
receive such payment that the Certificate so surrendered shall be properly
endorsed, accompanied by all documents required to evidence and effect such
transfer and otherwise in proper form for transfer and that the person
requesting such payment shall pay to Acquiror any transfer or other Taxes
required by reason of the payment of the Purchase Price Per Share to or in the
name of a Person other than the Person in whose name the Certificate surrendered
in exchange therefor is registered, or otherwise required, or shall establish to
the satisfaction of Acquiror that such Tax has been paid or is not payable.
(g) Immediately prior to the Effective Time, all outstanding First
Kansas Stock Options shall become immediately exercisable and fully vested.
Immediately prior to the Effective Time, all outstanding First Kansas Stock
Options shall be cancelled and First Kansas shall pay each holder, for each
First Kansas Stock Option held, an amount in cash equal to the Option Spread
reduced by any required Tax withholdings. The payment of the Option Spreads
pursuant to this Article shall be delivered and paid by First Kansas in full
satisfaction of all rights pertaining to the First Kansas Stock Option Plans and
the First Kansas Stock Options.
(h) Immediately prior to the Effective Time, all unvested shares of
stock awarded under the First Kansas Restricted Stock Plan ("First Kansas
Restricted Stock") shall become fully vested. Immediately prior to the Effective
Time, all outstanding First Kansas Restricted Stock shall be canceled and First
Kansas shall pay each holder, for each share of First Kansas Restricted Stock
held, an amount in cash equal to the Purchase Price Per Share reduced by any
required Tax withholdings. The payment of the Purchase Price Per Share pursuant
to this Section 3.2(h) shall be delivered and paid by First Kansas in full
satisfaction of all rights pertaining to the First Kansas Restricted Stock Plan
and the First Kansas Restricted Stock.
(i) The Surviving Corporation shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of First Kansas Common Stock such amounts as it is required
to deduct and withhold with respect to the making of such payment under the Code
or any other Legal Requirement. To the extent that amounts are so withheld by
the Surviving Corporation, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
First Kansas Common Stock in respect of which such deduction and withholding was
made by the Surviving Corporation, except that such treatment shall not apply to
any withholding Tax imposed by any foreign jurisdiction.
(j) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Surviving
Corporation, the posting by such person of a bond, in such reasonable amount as
the Surviving Corporation may direct, as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate a check for the cash to
which the holders thereof are entitled pursuant to this Agreement.
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Section 3.3 Return of Funds by Paying Agent; Escheat. At any time
-------------------------------------------
following the six (6) month anniversary of the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to deliver to the
Surviving Corporation any funds which had been made available to the Paying
Agent and not disbursed to holders of shares of First Kansas Common Stock
(including all interest and other income received by the Paying Agent in respect
of all funds made available to it), the Certificates and other documents in its
possession relating to the Merger, and the Paying Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing shares
of First Kansas Common Stock may surrender such Certificate to the Surviving
Corporation or its successor and receive in consideration therefor the cash
amount representing the Purchase Price Per Share therefor, without any interest
or dividends thereon. Notwithstanding anything in this Article or elsewhere in
this Agreement to the contrary, neither the Paying Agent nor any party hereto
shall be liable to a former holder of First Kansas Common Stock or any First
Kansas Stock Option for any funds delivered to a public official pursuant to any
applicable escheat or abandoned property laws.
Section 3.4 Dissenting Shares.
-----------------
(a) Notwithstanding anything to the contrary contained in this
Agreement, to the extent appraisal rights are available to First Kansas
stockholders pursuant to Section 17-6712 of the Kansas Code, any shares held by
a Person who delivers to First Kansas, prior to the time the vote is taken by
First Kansas's stockholders on this Agreement and the Merger, a written demand
for payment for his or her shares, whose shares were not voted in favor of the
Merger and who complies with all of the provisions of the Kansas Code concerning
the rights of such Person to dissent from the Merger and to require appraisal of
such Person's shares and who has not withdrawn such objection or waived such
rights prior to the Closing Date ("Dissenting Shares") shall not be converted
pursuant to Section 3.2 but shall become the right to receive such consideration
as may be determined to be due to the holder of such Dissenting Shares pursuant
to the Kansas Code, provided, however, that each Dissenting Share held by a
Person at the Effective Time who shall, after the Effective Time, withdraw the
demand for appraisal or lose the right of appraisal, in either case pursuant to
the Kansas Code shall be deemed to be converted, as of the Effective Time, into
cash in an amount determined as provided in this Agreement Consideration upon
surrender in the manner provided in Section 3.4 of the Certificates, that,
immediately prior to the Effective Time, evidenced such shares.
(b) First Kansas shall give Acquiror: (i) prompt written notice of
any demands for appraisal received by First Kansas, withdrawals of such demands
and any other instruments served pursuant to the Kansas Code and received by
First Kansas; and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the Kansas Code. First
Kansas shall not, except with the prior written consent of Acquiror, make any
payment with respect to any demands for appraisal or offer to settle any such
demands.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FIRST KANSAS
First Kansas hereby represents and warrants to Acquiror that the
following are true and correct as of the date hereof, and will be true and
correct as of the Effective Time:
Section 4.1 First Kansas Organization. First Kansas (a) is a
----------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Kansas and is also in good standing in each other jurisdiction
in which the nature of the business conducted or the properties or assets owned
or leased by it makes such qualification necessary; (b) is registered with the
OTS as a unitary savings and loan holding company pursuant to the Home Owner's
Loan Act, as amended ("HOLA"); and (c) has full power and authority, corporate
and otherwise, to operate as a thrift holding company and to own, operate and
lease its properties as presently owned, operated and leased, and to carry on
its business as it is now being conducted. Copies of the articles of
incorporation and bylaws of First Kansas and all amendments thereto set forth in
Schedule 4.1 of the First Kansas Book of Schedules are complete and correct.
First Kansas owns no voting stock or equity securities of any corporation,
association, partnership or other entity, other than all of the voting stock of
Bank and as set forth on Schedule 4.1 of the First Kansas Book of Schedules.
Section 4.2 Bank Organization. Bank is a federal savings bank duly
------------------
organized, validly existing and in good standing under the laws of the United
States of America. Bank has full power and authority, corporate and otherwise,
to own, operate and lease its properties as presently owned, operated and
leased, and to carry on its business as it is now being conducted, and is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted or the properties or assets owned or leased
by it makes such qualification necessary. Copies of the charter and bylaws of
Bank and all amendments thereto set forth in Schedule 4.2 of the First Kansas
Book of Schedules are complete and correct. Bank owns no voting stock or equity
securities of any corporation, association, partnership or other entity, other
than as shown on Schedule 4.2 of the First Kansas Book of Schedules.
Section 4.3 Authorization. First Kansas has the requisite corporate
-------------
power and authority to enter into and perform its obligations under this
Agreement and the execution, delivery and performance of this Agreement by First
Kansas and the consummation by it of the transactions contemplated thereby, have
been duly authorized by all necessary corporate action, subject to stockholder
approval. This Agreement constitutes a legal, valid and binding obligation of
First Kansas enforceable in accordance with its terms except as such enforcement
may be limited by bankruptcy, insolvency, reorganization or other similar laws
and subject to general principles of equity.
Section 4.4 No Conflict. Neither the execution nor delivery of this
------------
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time): (a) contravene, conflict with or result in a violation of any provision
of the articles of incorporation, the charter, the bylaws or any resolution
adopted by the board of directors or stockholders of, First Kansas or any First
Kansas Subsidiary; (b) contravene, conflict with or result in a violation of any
Legal Requirement or any Order to which First Kansas or any First Kansas
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Subsidiary, or any of the assets that are owned or used by them, may be subject,
other than any of the foregoing that would be satisfied by compliance with the
provisions of the HOLA, the Securities Act, the Exchange Act and the Kansas
Code; and (c) contravene, conflict with or result in a violation or breach of
any provision of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify any material Applicable Contract to which First Kansas or
any First Kansas Subsidiary is a party or by which any of their respective
assets is bound; or (d) result in the creation of any lien, charge or
encumbrance upon, or with respect to, any of the assets owned or used by First
Kansas or any First Kansas Subsidiary. Except for the requisite approval of its
stockholders, neither First Kansas nor any First Kansas Subsidiary is or will be
required to give any notice to, or obtain any consent from, any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
Section 4.5 First Kansas Capitalization. The authorized capital stock
----------------------------
of First Kansas consists, and at September 30, 2003, consisted of: (a) 8,000,000
shares of common stock, $0.10 par value per share, of which 1,553,938 shares
were issued, and 645,693 shares were held in the treasury of First Kansas as of
that date; and (b) 2,000,000 shares of preferred stock, $0.10 par value per
share, none of which shares were issued and outstanding. The maximum number of
shares of First Kansas Common Stock (assuming for this purpose that share
equivalents constitute First Kansas Common Stock) that would be outstanding
immediately prior to the Effective Time (including treasury shares) if all
options, warrants, conversion rights and other rights with respect thereto were
exercised and the restrictions on any restricted stock were no longer applicable
is 1,686,017 shares. All of the outstanding shares of capital stock of First
Kansas have been duly and validly authorized and issued and are fully paid and
nonassessable. To the Knowledge of First Kansas and except as disclosed in this
Agreement or on the Schedules, none of the shares of authorized capital stock of
First Kansas are, nor on the Closing Date will they be, subject to any claim of
right except pursuant to this Agreement. Except as contemplated in this
Agreement or as set forth in Schedule 4.5 of the First Kansas Book of Schedules,
there are, as of the date of this Agreement, no outstanding subscriptions,
contracts, conversion privileges, options, warrants, calls or other rights
obligating First Kansas or any First Kansas Subsidiary to issue, sell or
otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of
capital stock of First Kansas or any First Kansas Subsidiary. There are no
outstanding securities of First Kansas that are convertible into, or
exchangeable for, any shares of First Kansas's capital stock, and except as
provided in this Section or otherwise disclosed in this Agreement, First Kansas
is not a party to any Contract relating to the issuance, sale or transfer of any
equity securities or other securities of First Kansas. None of the shares of
First Kansas Common Stock were issued in violation of any federal or state
securities laws or any other Legal Requirement. First Kansas does not own or
have any Contract to acquire any equity securities or other securities of any
Person or any direct or indirect equity or ownership interest in any other
business except for the capital stock of Bank and as set forth in Schedule 4.5
of the First Kansas Book of Schedules. Except as disclosed in or permitted by
this Agreement or as provided on Schedule 4.5 of the First Kansas Book of
Schedules, no shares of First Kansas capital stock have been purchased, redeemed
or otherwise acquired, directly or indirectly, by First Kansas or
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any First Kansas Subsidiary and no dividends or other distributions payable in
any equity securities of First Kansas or any First Kansas Subsidiary have been
declared, set aside, made or paid to the stockholders of First Kansas.
Section 4.6 Bank Capitalization. The authorized capital stock of Bank
--------------------
consists, and at the Effective Time will consist, (a) 8,000,000 shares of common
stock, $0.10 par value per share, and (b) 2,000,000 shares of preferred stock,
$0.10 par value per share. 100,000 shares of common stock are, and immediately
prior to the Closing Date will be, duly authorized, validly issued and
outstanding, fully paid and nonassessable; and none of the shares of preferred
stock are, and immediately prior to the Closing Date will be, issued (the shares
of common stock and preferred stock together, the "Bank Shares"). First Kansas
is, and will be on the Closing Date, the record and beneficial owner of one
hundred percent (100%) of the Bank Shares, free and clear of any lien or
encumbrance whatsoever, except as set forth in Schedule 4.6 of the First Kansas
Book of Schedules. The Bank Shares are, and will be on the Closing Date, freely
transferable and are, and will be on the Closing Date, subject to no claim of
right except pursuant to this Agreement and as set forth in Schedule 4.6 of the
First Kansas Book of Schedules. There are no options, warrants, rights, calls or
commitments of any character relating to any additional shares of the capital
stock of Bank. No capital stock or other security issued by Bank has been issued
in violation of, or without compliance with, any preemptive rights of
stockholders. There are no outstanding securities of Bank that are convertible
into, or exchangeable for, any shares of Bank's capital stock, and Bank is not a
party to any Contract relating to the issuance, sale or transfer of any equity
securities or other securities of Bank. Bank does not own, or have any Contract
to acquire, any equity securities or other securities of any Person or any
direct or indirect equity or ownership interest in any other business, except as
set forth in Schedule 4.6 of the First Kansas Book of Schedules.
Section 4.7 Financial Statements and Reports. True, correct and
-----------------------------------
complete copies of the following financial statements of First Kansas are
included in Schedule 4.7 of the First Kansas Book of Schedules:
(a) Consolidated Balance Sheets and the related Statements of
Income, Statements of Changes in Stockholders' Equity and Statements of Cash
Flows of First Kansas for the years ended December 31, 2000, 2001 and 2002;
(b) Consolidated Balance Sheet and the related Statement of
Income of First Kansas for the six months ended June 30, 2003; and
(c) TFRs for Bank at the close of business on December 31, 2000,
2001 and 2002, and for the six months ended June 30, 2003.
The financial statements described in this Section (the "First Kansas
Financial Statements") are complete and correct in all material respects and
fairly and accurately present the respective financial position, assets,
liabilities and results of operations of First Kansas and the First Kansas
Subsidiaries at the respective dates of, and for the periods referred to in, the
First Kansas Financial Statements. The financial statements described in clause
(a) above are audited statements and have been prepared in conformity with GAAP.
The financial statements described
A-21
in clauses (b) and (c) above have been prepared on a basis consistent with past
accounting practices and as required by applicable rules or regulations and
fairly present the consolidated financial condition and results of operations at
the dates and for the periods presented, subject to year-end audit adjustments
(which changes in the aggregate would not reasonably be expected to have a
Material Adverse Effect on First Kansas on a consolidated basis). The First
Kansas Financial Statements do not include any material assets or omit to state
any material liabilities, absolute or contingent, or other facts, which
inclusion or omission would render the First Kansas Financial Statements
misleading in any material respect.
Section 4.8 Books and Records. The books of account, minute books,
------------------
stock record books and other records of First Kansas and each First Kansas
Subsidiary are complete and correct in all material respects and have been
maintained in accordance with sound business practices and all applicable Legal
Requirements, including the maintenance of any adequate system of internal
controls. The minute books of First Kansas and each First Kansas Subsidiary
contain accurate and complete records in all material respects of all meetings
held of, and corporate action taken by, its respective stockholders, board of
directors and committees of the board of directors. At the Closing, all of those
books and records will be in the possession of First Kansas and the First Kansas
Subsidiaries.
Section 4.9 Title to Properties. First Kansas and each First Kansas
--------------------
Subsidiary has good and marketable title to all assets and properties, whether
real or personal, tangible or intangible, that it purports to own, subject to no
valid liens, mortgages, security interests, encumbrances or charges of any kind
except: (a) as noted in the most recent First Kansas Financial Statement or in
Schedule 4.9 of the First Kansas Book of Schedules; (b) statutory liens for
Taxes not yet delinquent or being contested in good faith by appropriate
Proceedings and for which appropriate reserves have been established and
reflected on the First Kansas Financial Statements; (c) pledges or liens
required to be granted in connection with the acceptance of government deposits,
granted in connection with repurchase or reverse repurchase agreements or
otherwise incurred in the Ordinary Course of Business; and (d) minor defects and
irregularities in title and encumbrances that do not materially impair the use
thereof for the purposes for which they are held. Except as set forth in
Schedule 4.9 of the First Kansas Book of Schedules, First Kansas and each First
Kansas Subsidiary as lessee has the right under valid and existing leases to
occupy, use, possess and control any and all of the respective property leased
by it. Except where any failure would not reasonably be expected to have a
Material Adverse Effect on First Kansas on a consolidated basis, all buildings
and structures owned by First Kansas and each First Kansas Subsidiary lie wholly
within the boundaries of the real property owned or validly leased by it, do not
encroach upon the property of, or otherwise conflict with the property rights
of, any other Person
Section 4.10 Condition and Sufficiency of Assets. Except as set forth
------------------------------------
in Schedule 4.10 of the First Kansas Book of Schedules, the buildings,
structures and equipment of First Kansas and each First Kansas Subsidiary are in
good operating condition and repair, and are adequate for the uses to which they
are being put, and none of such buildings, structures or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in the aggregate in nature or in cost. Except where any failure
would not reasonably be expected to have a Material Adverse Effect on First
Kansas on a consolidated
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basis, the real property, buildings, structures and equipment owned or leased by
First Kansas and each First Kansas Subsidiary are in compliance with the
Americans with Disabilities Act of 1990, as amended, and the regulations
promulgated thereunder, and all other building and development codes and other
restrictions, including subdivision regulations, building and construction
regulations, drainage codes, health, fire and safety laws and regulations,
utility tariffs and regulations, conservation laws and zoning laws and
ordinances. The assets and properties, whether real or personal, tangible or
intangible, that First Kansas or any First Kansas Subsidiary purport to own are
sufficient for the continued conduct of the business of First Kansas and such
First Kansas Subsidiary after the Closing in substantially the same manner as
conducted prior to the Closing.
Section 4.11 Loan Loss Reserve. All loans and loan commitments extended
-----------------
by Bank and any extensions, renewals or continuations of such loans and loan
commitments (the "First Kansas Loans") were made in accordance with customary
lending standards of Bank in the Ordinary Course of Business. The First Kansas
Loans are evidenced by appropriate and sufficient documentation and constitute
valid and binding obligations to Bank enforceable in accordance with their
terms, except as may be limited by any bankruptcy, insolvency, moratorium or
other laws affecting creditors' rights generally by the exercise of judicial
discretion. All such First Kansas Loans are, and at the Closing will be, free
and clear of any encumbrance or other charge, except for permitted liens, and
Bank has materially complied, and at the Closing will have materially complied
with, all Legal Requirements relating to the First Kansas Loans. The reserve for
probable loan and lease losses of Bank is adequate in all material respects to
provide for probable or specific losses, net of recoveries relating to loans
previously charged off. None of the First Kansas Loans is subject to any
material offset or claim of offset, and the aggregate loan balances in excess of
First Kansas's consolidated reserve for loan and lease losses are to First
Kansas's Knowledge, based on past loan loss experience, collectible in
accordance with their terms (except as limited above) and all uncollectible
loans have been charged off.
Section 4.12 Undisclosed Liabilities; Adverse Changes. Except as set
------------------------------------------
forth in Schedule 4.12 of the First Kansas Book of Schedules, neither First
Kansas nor any First Kansas Subsidiary has any material liabilities or
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent or otherwise), except for liabilities or obligations
reflected or reserved against in the First Kansas Financial Statements,
liabilities and obligations arising under contracts and arrangements which are
either set forth in Schedule 4.18 of the First Kansas Book of Schedules, or are
of a type described in Section 4.18, but not included in Schedule 4.18 of the
First Kansas Book of Schedules because the amounts involved do not meet the
amounts specified for inclusion in Schedule 4.18 of the First Kansas Book of
Schedules, current liabilities incurred in the Ordinary Course of Business since
the respective dates thereof and other liabilities or obligations that in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
First Kansas on a consolidated basis. Since the date of the latest First Kansas
Financial Statement, there has not been any change in the business, operations,
properties, prospects, assets or condition of First Kansas or any First Kansas
Subsidiary, and no event has occurred or circumstance exists, that has had, or
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would reasonably be expected to have, a Material Adverse Effect on First Kansas
on a consolidated basis.
Section 4.13 Taxes. First Kansas and each First Kansas Subsidiary has
-----
duly filed or will duly file all material Tax Returns required to be filed by it
for all periods prior to the Closing, and each such Tax Return is or will be
complete and accurate in all material respects. Except as set forth on Schedule
4.13 of the First Kansas Book of Schedules, neither First Kansas nor any First
Kansas Subsidiary is: (a) delinquent in the payment of any Taxes shown on such
Tax Returns or on any assessments received by it for such Taxes; (b) a party to
or is the subject of any pending Order, Proceeding, audit, examination or
investigation by any Regulatory Authority that is related to assessment or
collection of Taxes paid or payable by First Kansas or any First Kansas
Subsidiary for any year, nor does First Kansas have any Knowledge of any of the
foregoing that are Threatened; or (c) subject to any agreement extending the
period for assessment or collection of any Tax. None of the Tax liabilities of
First Kansas or any First Kansas Subsidiary has ever been audited by any
Regulatory Authority since January 1, 1998. The reserve for Taxes in the audited
financial statements of First Kansas for the year ended December 31, 2002, is
adequate to cover all of the Tax liabilities of First Kansas and each First
Kansas Subsidiary that may become payable in future years in respect to any
transactions consummated prior to December 31, 2002. Neither First Kansas nor
any First Kansas Subsidiary has and, to First Kansas's Knowledge, will not have
any liability for Taxes of any nature for or in respect of the operation of its
respective businesses or ownership of its respective assets from December 31,
2002, up to and including the Effective Time, except to the extent reflected on
the audited First Kansas Financial Statements for the year ended December 31,
2002, or on the Subsequent First Kansas Financial Statements (as such term is
defined below) or otherwise reflected in the books and records of First Kansas
and the First Kansas Subsidiaries for the period following its then most recent
of the Subsequent First Kansas Financial Statements. First Kansas has delivered
to Acquiror true, correct and complete copies of all income Tax Returns
previously filed with respect to the last three fiscal years of First Kansas and
the First Kansas Subsidiaries and any tax examination reports and statements of
deficiencies assessed or agreed to for any of First Kansas or any First Kansas
Subsidiary for any such time period.
Section 4.14 Compliance With ERISA. Except as set forth in Schedule
----------------------
4.14 of the First Kansas Book of Schedules, all employee benefit plans (as
defined in Section 3(3) of ERISA) established or maintained by First Kansas or
any First Kansas Subsidiary or to which First Kansas or any First Kansas
Subsidiary contributes, are in compliance in all material respects with all
applicable requirements of ERISA, and are in compliance in all material respects
with all applicable requirements (including qualification and non-discrimination
requirements in effect as of the Effective Time) of the Code for obtaining the
tax benefits the Code thereupon permits with respect to such employee benefit
plans. Each employee benefit plan established or maintained by First Kansas or
and First Kansas Subsidiaries that is intended to be a pension, profit sharing,
stock bonus, savings or employee stock ownership plan that is qualified under
Section 401(a) of the Code has been determined by the Internal Revenue Service
to qualify under Section 401(a) of the Code and an application for determination
of such qualification has been timely made to the Internal Revenue Service prior
to the end of the applicable remedial amendment period under Section 401(b) of
the Code (a copy of each such determination letter and each pending
A-24
application is included in Schedule 4.14 of the First Kansas Book of Schedules.
To the knowledge of First Kansas, no employee benefit plan of First Kansas or
any First Kansas Subsidiary has engaged in or been a party to a "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
without an exemption thereto under Section 408 of ERISA or Section 4975(d) of
the Code. For purposes of this Section, non-compliance with the Code and ERISA
is material if such non-compliance would reasonably be expected to have a
Material Adverse Effect on First Kansas. No such employee benefit plan has, or
as of the Closing will have, any amount of unfunded benefit liabilities (as
defined in Section 4001(a)(18) of ERISA) for which First Kansas or any First
Kansas Subsidiary would be liable to any Person under Title IV of ERISA if any
such employee benefit plan were terminated as of the Closing. Each employee
benefit plan as defined in Section 3(3) of ERISA satisfies the minimum funding
standards of Section 412 of the Code (if applicable). There would be no
obligations of First Kansas or any First Kansas Subsidiary under Title IV of
ERISA or under the terms of the plan relating to any employee benefit plan that
is a multiple employer plan if any such plan were terminated as of the Closing
or if First Kansas or any First Kansas Subsidiary withdrew from any such plan as
of the Closing. No payments will be made as a result of the Merger that will be
subject to nondeductibility under Section 280G of the Code or subject to an
excise tax under Section 4999 of the Code. There are no material outstanding
liabilities of any such employee benefit plan other than liabilities for
benefits to be paid to participants in such plans and their beneficiaries in
accordance with the terms of such plan and the liabilities of the First Kansas
ESOP related to the First Kansas ESOP Loan. Schedule 4.14 of the First Kansas
Book of Schedules includes a true and correct copy of the promissory note and
all agreements relating to the First Kansas ESOP Loan. First Kansas has provided
notice of withdrawal from its participation in the multiple employer defined
benefit plan and all correspondence regarding such withdrawal is included in
Schedule 4.14 of the First Kansas Book of Schedules.
Section 4.15 Compliance With Legal Requirements. First Kansas and each
----------------------------------
First Kansas Subsidiary holds all licenses, certificates, permits, franchises
and rights from all appropriate Regulatory Authorities necessary for the conduct
of its respective business and where failure to do so would reasonably be
expected to have a Material Adverse Effect on First Kansas. Except as set forth
in Schedule 4.15 of the First Kansas Book of Schedules, First Kansas and each
First Kansas Subsidiary is, and at all times since January 1, 2000, has been, in
compliance with each Legal Requirement that is or was applicable to it or to the
conduct or operation of its respective businesses or the ownership or use of any
of its respective assets, except in each case where any non-compliance did not
have, or would not reasonably be expected to have, a Material Adverse Effect on
First Kansas on a consolidated basis. No event has occurred or circumstance
exists that (with or without notice or lapse of time): (a) may constitute or
result in a violation by First Kansas or any First Kansas Subsidiary of, or a
failure on the part of First Kansas or any First Kansas Subsidiary to comply
with, any Legal Requirement; or (b) may give rise to any obligation on the part
of First Kansas or any First Kansas Subsidiary to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature in connection with
a failure to comply with any Legal Requirement, except for any of the foregoing
that would not reasonably be expected to have a Material Adverse Effect on First
Kansas on a consolidated basis. Except as set forth in Schedule 4.15 of the
First Kansas Book of Schedules, neither First Kansas nor any First Kansas
Subsidiary has received, at any time since January 1, 2000, any notice or other
A-25
communication (whether oral or written) from any Regulatory Authority or any
other Person, nor does First Kansas have any Knowledge, regarding any actual,
alleged, possible or potential: (x) violation of, or failure to comply with, any
material Legal Requirement to which First Kansas or any First Kansas Subsidiary,
or any of the assets owned or used by any of them, is or has been subject, or
investigation with respect to any of the foregoing conducted by any Regulatory
Authority; or (y) obligation on the part of First Kansas or any First Kansas
Subsidiary to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature in connection with a failure to comply with any
material Legal Requirement.
Section 4.16 Legal Proceedings; Orders. Schedule 4.16 of the First
---------------------------
Kansas Book of Schedules is a true and correct list of all Proceedings and
Orders pending, entered into or, to the Knowledge of First Kansas, Threatened
against, affecting or involving First Kansas or any First Kansas Subsidiary or
any of their respective assets or businesses, or the Contemplated Transactions,
since January 1, 2000, that had, or would reasonably be expected to have, a
Material Adverse Effect on First Kansas on a consolidated basis or that would
impair First Kansas's ability to consummate any of the Contemplated
Transactions, and there is no fact to First Kansas's Knowledge that would
provide a basis for any other Proceeding or Order involving First Kansas or any
First Kansas Subsidiary, or any of its respective officers or directors in their
capacities as such, or its assets, business or goodwill that would reasonably be
expected to have a Material Adverse Effect on First Kansas or that would impair
First Kansas's ability to consummate any of the Contemplated Transactions. To
the Knowledge of First Kansas, no officer, director, agent or employee of First
Kansas or any First Kansas Subsidiary is subject to any Order that prohibits
such officer, director, agent or employee from engaging in or continuing any
conduct, activity or practice relating to the businesses of First Kansas or any
First Kansas Subsidiary.
Section 4.17 Absence of Certain Changes and Events. Except as set forth
-------------------------------------
in Schedule 4.17 of the First Kansas Book of Schedules, since December 31, 2002,
First Kansas and each First Kansas Subsidiary has conducted its respective
business only in the Ordinary Course of Business and with respect to each there
has not been any:
(a) change in its authorized or issued capital stock; grant of
any stock option or right to purchase shares of its capital stock; grant of any
shares pursuant to the First Kansas Restricted Stock Plan; issuance of any
security convertible into such capital stock or evidences of indebtedness
(except in connection with customer deposits); grant of any registration rights;
purchase, redemption, retirement or other acquisition by it of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of its capital stock (except for
payment of dividends and distributions from any wholly-owned First Kansas
Subsidiary to First Kansas and pursuant to Section 6.4);
(b) amendment to its certificate or articles of incorporation,
charter, articles of association or bylaws or any resolutions adopted by its
board of directors or stockholders with respect to the same;
(c) payment or increase of any bonuses, salaries or other
compensation to any of its stockholders, directors, officers or employees,
except for normal increases in the Ordinary
A-26
Course of Business or in accordance with any then existing First Kansas Employee
Benefit Plan (as defined below), or entry by it into any employment, consulting,
non-competition, change in control, severance or similar Contract with any
stockholder, director, officer or employee;
(d) adoption, amendment (except for any amendment necessary to
comply with any Legal Requirement) or termination of, or increase in the
payments to or benefits under, First Kansas Employee Benefit Plan, including the
amendment, revision or termination, or increase in the payments under, any
agreement or promissory note evidencing the First Kansas ESOP Loan;
(e) material damage to or destruction or loss of any of its
assets or property, whether or not covered by insurance;
(f) entry into, termination or extension of, or receipt of
notice of termination of, any joint venture or similar agreement pursuant to any
Contract or any similar transaction;
(g) except for this Agreement, entry into any Contract or
incurrence of any obligation or liability (fixed or contingent) other than in
the Ordinary Course of Business;
(h) material change in any existing lease of real or personal
property to which it is a party;
(i) sale (other than any sale in the Ordinary Course of
Business), lease or other disposition of any of its assets or properties or
mortgage, pledge or imposition of any lien or other encumbrance upon any of its
material assets or properties, except for tax and other liens that arise by
operation of law and with respect to which payment is not past due and except
for pledges or liens: (i) required to be granted in connection with the
acceptance by any First Kansas Subsidiary of government deposits; (ii) granted
in connection with repurchase or reverse repurchase agreements; or (iii)
otherwise incurred in the Ordinary Course of Business;
(j) incurrence by it of any obligation or liability (fixed or
contingent) other than in the Ordinary Course of Business;
(k) other than in the Ordinary Course of Business, cancellation
or waiver by it of any debts, claims or rights with a value in excess of
$10,000;
(l) any investment by it of a capital nature exceeding $30,000
or aggregate investments of a capital nature exceeding $60,000;
(m) except for the Contemplated Transactions, merger or
consolidation with or into any other Person, or acquisition of any stock, equity
interest or business of any other Person;
(n) transaction for the borrowing or loaning of monies, other
than in the Ordinary Course of Business;
(o) suffered any change or changes having a Material Adverse
Effect on it, or in the operation or conduct of its respective business;
A-27
(p) conducted its respective business in any manner other than
substantially as it was being conducted prior to such time;
(q) purchased any investment security that is callable prior to
its stated maturity or that has a stated maturity of thirty (30) months or more
or has a purchase price of greater than $250,000;
(r) obtained any advances with maturities of greater than one
(1) year from the Federal Home Loan Bank;
(s) agreed to a material change in its accounting methods used;
or
(t) agreement, whether oral or written, by it to do any of the
foregoing.
Section 4.18 Properties, Contracts, Employee Benefit Plans and Other
---------------------------------------------------------
Agreements. Except for loan agreements evidencing loans or loan commitments made
- ----------
by Bank in the Ordinary Course of Business, Schedule 4.18 of the First Kansas
Book of Schedules lists or describes the following with respect to First Kansas
and each First Kansas Subsidiary:
(a) all real property owned by First Kansas and each First
Kansas Subsidiary and the principal buildings and structures located thereon,
together with a legal description of such real estate, and each lease of real
property to which First Kansas and each First Kansas Subsidiary is a party,
identifying the parties thereto, the annual rental payable, the expiration date
thereof and a brief description of the property covered, and in each case of
either owned or leased real property, the proper identification, if applicable,
of each such property as a branch or main office or other office of First Kansas
or any First Kansas Subsidiary;
(b) all loan and credit agreements, conditional sales contracts
or other title retention agreements or security agreements relating to money
borrowed by First Kansas or any First Kansas Subsidiary, exclusive of deposit
agreements with customers of Bank entered into in the Ordinary Course of
Business, agreements for the purchase of federal funds and repurchase
agreements;
(c) each Applicable Contract that involves performance of
services or delivery of goods or materials by First Kansas or any First Kansas
Subsidiary of an amount or value in excess of $30,000;
(d) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of First
Kansas or any First Kansas Subsidiary in excess of $30,000;
(e) each Applicable Contract not referred to elsewhere in this
Section which:
(i) relates to the future purchase of goods or services in
excess of the requirements of its respective business at current levels or for
normal operating purposes;
A-28
(ii) materially affect the business or financial condition
of First Kansas or any First Kansas Subsidiary;
(f) each lease, rental, license, installment and conditional
sale agreement and other Applicable Contract affecting the ownership of, leasing
of, title to or use of any personal property having a value per item or
requiring payments in excess of $30,000, or with terms of more than one year;
(g) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual property
(collectively, "Intellectual Property Assets"), including agreements with
current or former employees, consultants or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual Property Assets
of First Kansas or any First Kansas Subsidiary;
(h) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees;
(i) each joint venture, partnership and other Applicable
Contract (however named) involving a sharing of profits, losses, costs or
liabilities by First Kansas or any First Kansas Subsidiary with any other
Person;
(j) each Applicable Contract containing covenants that in any
way purport to restrict the business activity of First Kansas or any First
Kansas Subsidiary or any Affiliate of any of the foregoing, or limit the ability
of First Kansas or any First Kansas Subsidiary or any Affiliate of any of the
foregoing to engage in any line of business or to compete with any Person;
(k) each Applicable Contract providing for payments to or by any
Person based on sales, purchases or profits, other than direct payments for
goods;
(l) the name and annual salary of each officer and board fees of
each director of First Kansas and each First Kansas Subsidiary, and the profit
sharing, bonus or other form of compensation (other than salary) paid or payable
by First Kansas, each First Kansas Subsidiary or a combination of any of them to
or for the benefit of each such person in question for the years ended December
31, 2002 and 2001, and for the current fiscal year of First Kansas, and any
employment agreement, consulting agreement, non-competition, severance or change
in control agreement or other similar arrangement or plan with respect to each
such person, and the amount of the benefits payable under any supplemental
executive retirement plan and the funding status thereof;
(m) each profit sharing, group insurance, hospitalization, stock
option, pension, retirement, bonus, employment, severance, change in control,
deferred compensation, stock bonus, stock purchase or other employee welfare or
benefit agreements, plans or arrangements established, maintained, sponsored or
undertaken by First Kansas or any First Kansas Subsidiary for the benefit of the
officers, directors or employees of First Kansas or any First Kansas Subsidiary,
including each trust or other agreement with any custodian or any trustee for
funds held under any such agreement, plan or arrangement, and all other
Contracts or
A-29
arrangements under which pensions, deferred compensation or other retirement
benefits are being paid or may become payable by First Kansas or any First
Kansas Subsidiary for the benefit of the employees or directors of First Kansas
or any First Kansas Subsidiary (collectively, the "First Kansas Employee Benefit
Plans"), and, in respect to any of them, the latest three (3) reports or forms,
if any, filed with the Department of Labor and Pension Benefit Guaranty
Corporation under the ERISA, the latest three (3) financial or actuarial reports
and any currently effective Internal Revenue Service private rulings or
determination letters obtained by or for the benefit of First Kansas or any
First Kansas Subsidiary;
(n) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by First Kansas or any First Kansas Subsidiary to be responsible for
consequential damages;
(o) each Applicable Contract for capital expenditures in excess
of $30,000 or all Applicable Contracts for all capital expenditures which in the
aggregate require payments in excess of $60,000; and
(p) the name of each Person who is or would be entitled pursuant
to any Contract or First Kansas Employee Benefit Plan to receive any payment
from First Kansas or any First Kansas Subsidiary as a result of the consummation
of the Contemplated Transactions (including any payment that is or would be due
as a result of any actual or constructive termination of a Person's employment
or position following such consummation) and the maximum amount of such payment;
(q) each amendment, supplement and modification (whether oral or
written) in respect of any of the foregoing.
Copies of each document, plan or Contract listed and described in
Schedule 4.18 of the First Kansas Book of Schedules are appended to such
Schedule.
Section 4.19 No Defaults. Except as set forth in Schedule 4.19 of the
-----------
First Kansas Book of Schedules, each Contract identified or required to be
identified in Schedule 4.18 of the First Kansas Book of Schedules is in full
force and effect in all material respects and is valid and enforceable in
accordance with its terms, except as may be limited by any bankruptcy,
insolvency, moratorium or by the exercise of judicial discretion. First Kansas
and each First Kansas Subsidiary is, and at all times since January 1, 2000, has
been, in full compliance with all applicable terms and requirements of each
Contract under which First Kansas or any First Kansas Subsidiary has or had any
obligation or liability or by which First Kansas or any First Kansas Subsidiary
or any of their respective assets owned or used by them is or was bound, except
where any such failure to be in full compliance did not have or would reasonably
be expected not to have a Material Adverse Effect on First Kansas on a
consolidated basis. Each other Person that has or had any obligation or
liability under any such Contract under which First Kansas or any First Kansas
Subsidiary has or had any rights is, and at all times since January 1, 2000, has
been, to the Knowledge of First Kansas, in compliance with applicable terms and
requirements of such Contract in all material respects. No event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with or result in a violation or breach of,
A-30
or give First Kansas, any First Kansas Subsidiary or other Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any material Applicable
Contract. Except in the Ordinary Course of Business with respect to loans made
by Bank, neither First Kansas nor any First Kansas Subsidiary has given to or
received from any other Person, at any time since January 1, 2000, any notice or
other communication (whether oral or written) regarding any actual, alleged,
possible or potential material violation or breach of, or default under, any
Contract. Other than in the Ordinary Course of Business in connection with
workouts and restructured loans, there are no renegotiations of, attempts to
renegotiate or outstanding rights to renegotiate any material amounts paid or
payable to First Kansas or any First Kansas Subsidiary under current or
completed Contracts with any Person, and no such Person has made written demand
for such renegotiation.
Section 4.20 Insurance. Schedule 4.20 of the First Kansas Book of
---------
Schedules lists the policies of insurance (including bankers blanket bond and
insurance providing benefits for employees) owned or held by First Kansas or any
First Kansas Subsidiary on the date hereof. Each policy is in full force and
effect (except for any expiring policy that is replaced by coverage at least as
extensive) until the Closing. All premiums due on such policies have been paid
in full.
Section 4.21 Compliance with Environmental Laws. Except as set forth in
----------------------------------
Schedule 4.21 of the First Kansas Book of Schedules and except for any of the
following that did not have or would not reasonably be expected to have a
Material Adverse Effect on First Kansas and the First Kansas Subsidiaries on a
consolidated basis, there are no actions, suits, investigations, liabilities,
inquiries, Proceedings or Orders involving First Kansas or any First Kansas
Subsidiary or any of their respective assets that are pending or, to the
Knowledge of First Kansas, Threatened, nor to the Knowledge of First Kansas is
there any factual basis for any of the foregoing, as a result of any asserted
failure of First Kansas or any First Kansas Subsidiary, or any predecessor
thereof, to comply with any federal, state, county and municipal law, including
any statute, regulation, rule, ordinance, Order, restriction and requirement,
relating to underground storage tanks, petroleum products, air pollutants, water
pollutants or process waste water or otherwise relating to the environment or
toxic or hazardous substances or to the manufacture, processing, distribution,
use, recycling, generation, treatment, handling, storage, disposal or transport
of any hazardous or toxic substances or petroleum products (including
polychlorinated biphenyls, whether contained or uncontained, and
asbestos-containing materials, whether friable or not), including, the Federal
Solid Waste Disposal Act, the Hazardous and Solid Waste Amendments, the Federal
Clean Air Act, the Federal Clean Water Act, the Occupational Health and Safety
Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances
Control Act, the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 and the Superfund Amendments and Reauthorization Act of
1986, all as amended, and regulations of the Environmental Protection Agency,
the Nuclear Regulatory Agency and any state department of natural resources or
state environmental protection agency now or at any time hereafter in effect
(collectively, the "Environmental Laws"). No environmental clearances or other
governmental approvals are required for the conduct of the business of First
Kansas or any First Kansas Subsidiary or the consummation of the Contemplated
Transactions. To the Knowledge of First Kansas, neither First Kansas nor any
First Kansas Subsidiary is the owner of any interest in real estate on which any
substances have
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been used, stored, deposited, treated, recycled or disposed of, which substances
if known to be present on, at or under such property, would require clean-up,
removal or some other remedial action under any Environmental Law.
Section 4.22 Regulatory Filings. First Kansas and each First Kansas
-------------------
Subsidiary has filed in a timely manner all required filings with all proper
Regulatory Authorities, including: (a) the SEC; and (b) the OTS. To the
Knowledge of First Kansas, all filings with such federal and state regulatory
agencies were accurate and complete in all material respects as of the dates of
the filings, and no such filing has made any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements
made, in the light of the circumstances under which they were made, not
misleading.
Section 4.23 Agency and Custodial Accounts. Each First Kansas
---------------------------------
Subsidiary has properly administered all accounts for which it acts as
fiduciary, agent, custodian or investment advisor, in accordance with the terms
of the governing documents and applicable Legal Requirements and common law. No
First Kansas Subsidiary or any of its respective directors, officers or
employees has committed any breach of trust with respect to any such account,
and the accountings for each such account are true and correct in all material
respects and accurately reflect the assets of such account.
Section 4.24 Disclosure. No representation or warranty made in this
----------
Agreement by First Kansas contains any untrue statement of a material fact, or
omits to state a material fact necessary to make the statements contained herein
under the circumstances under which they were made not misleading. Except as and
to the extent reflected or reserved against in First Kansas's audited financial
statements for the year ended December 31, 2002, or the Subsequent First Kansas
Financial Statements, neither First Kansas nor any First Kansas Subsidiary has,
and with respect to the Subsequent First Kansas Financial Statements will not
have, any liabilities or obligations, of any nature, secured or unsecured,
(whether accrued, absolute, contingent or otherwise) including, any Tax
liabilities due or to become due, which would reasonably be expected to have a
Material Adverse Effect on First Kansas.
Section 4.25 Brokerage Commissions. Except as set forth in Schedule
----------------------
4.25 of the First Kansas Book of Schedules, none of First Kansas or any First
Kansas Subsidiary or any of their respective Representatives has incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
Section 4.26 Delays. To the Knowledge of First Kansas, there is no
------
reason why the granting of any of the regulatory approvals referred to in
Section 8.1 would be denied, unduly delayed or otherwise unavailable. The most
recent regulatory rating given to Bank as to compliance with the Community
Reinvestment Act ("CRA") is satisfactory or better.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND ACQUISITION CORP
Acquiror and Acquisition Corp hereby represent and warrant to First
Kansas that the following are true and correct as of the date hereof, and will
be true and correct as of the Effective Date:
Section 5.1 Organization. Each of Acquiror, Acquisition Corp and
------------
Landmark Bank: (a) is an entity duly organized, validly existing and in good
standing under the laws of the State of Delaware, the State of Kansas or the
United States of America, respectively, and is also in good standing in each
other jurisdiction in which the nature of the business conducted or the
properties or assets owned or leased by it makes such qualification necessary;
and (b) has full power and authority, corporate and otherwise, to own, operate
and lease its properties as presently owned, operated and leased, and to carry
on its business as it is now being conducted, except where the failure to be so
qualified or to have such power and authority would not have a Material Adverse
Effect on Acquiror on a consolidated basis.
Section 5.2 Authorization. Acquiror and Acquisition Corp each has the
-------------
requisite corporate power and authority to enter into and perform its respective
obligations under this Agreement and the execution, delivery and performance of
this Agreement by each of Acquiror and Acquisition Corp and the consummation by
each of them of the transactions contemplated thereby, have been duly authorized
by all necessary corporate action. This Agreement constitutes a legal, valid and
binding obligation of each of Acquiror and Acquisition Corp enforceable in
accordance with its terms except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws and subject to
general principles of equity.
Section 5.3 No Conflict. Neither the execution nor delivery of this
------------
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time): (a) contravene, conflict with or result in a violation of any provision
of the certificate or articles of incorporation, charter, bylaws or any
resolution adopted by the board of directors or stockholders of, Acquiror or any
Acquiror Subsidiary; (b) contravene, conflict with or result in a violation of
any Legal Requirement or any Order to which Acquiror or any Acquiror Subsidiary,
or any of the assets that are owned or used by them, may be subject, other than
any of the foregoing that would be satisfied by compliance with the provisions
of the Bank Holding Company Act of 1956, as amended (the "BHCA"), the Securities
Act, the Exchange Act, the National Bank Act and the DGCL; and (c) contravene,
conflict with or result in a violation or breach of any provision of, or give
any Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate or modify any
material Applicable Contract to which Acquiror or any Acquiror Subsidiary is a
party or by which any of their respective assets is bound; or (d) result in the
creation of any lien, charge or encumbrance upon, or with respect to, any of the
assets owned or used by Acquiror or any Acquiror Subsidiary. Except as otherwise
provided in this Agreement, neither Acquiror nor any Acquiror Subsidiary is or
will be required to give any notice to, or obtain any consent from, any Person
in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
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Section 5.4 Acquiror SEC Documents. Since January 1, 2002, Acquiror has
----------------------
timely filed all Acquiror SEC Documents and all such Acquiror SEC Documents have
complied in all material respects, as of their respective filing dates and
effective dates, as the case may be, with all applicable requirements of the
Exchange Act. As of their respective filing dates, none of the Acquiror SEC
Documents contained an untrue statement of a material fact or omitted 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.
Section 5.5 Undisclosed Liabilities; Adverse Changes. Neither Acquiror
-----------------------------------------
nor any Acquiror Subsidiary has any material liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent or
otherwise), except for liabilities or obligations reflected or reserved against
in the Acquiror SEC Documents, current liabilities incurred in the Ordinary
Course of Business since the respective dates thereof and other liabilities or
obligations that in the aggregate would not reasonably be expected to have a
Material Adverse Effect on Acquiror on a consolidated basis.
Section 5.6 Legal Proceedings; Orders. Except as disclosed in the
---------------------------
Acquiror SEC Documents, there have been no Proceedings or Orders pending,
entered into or, to the Knowledge of Acquiror, Threatened against, affecting or
involving Acquiror or any Acquiror Subsidiary or any of their respective assets
or businesses, or the Contemplated Transactions, since January 1, 2002, that
had, or would reasonably be expected to have, a Material Adverse Effect on
Acquiror on a consolidated basis or that would impair Acquiror's ability to
consummate any of the Contemplated Transactions, and there is no fact to
Acquiror's Knowledge that would provide a basis for any other Proceeding or
Order involving Acquiror or any Acquiror Subsidiary, or any of its respective
officers or directors in their capacities as such, or its assets, business or
goodwill that would reasonably be expected to have a Material Adverse Effect on
Acquiror or that would impair Acquiror's ability to consummate any of the
Contemplated Transactions.
Section 5.7 Disclosure. No representation or warranty made in this
----------
Agreement by Acquiror contains any untrue statement of a material fact, or omits
to state a material fact necessary to make the statements contained herein under
the circumstances under which they were made not misleading. Except as and to
the extent reflected or reserved against in Acquiror's audited financial
statements for the year ended December 31, 2002, or the Acquiror's subsequent
financial statements, as filed with the SEC, neither Acquiror nor any Acquiror
Subsidiary has, and with respect to the Acquiror's subsequent financial
statements , as filed with the SEC, will not have, any liabilities or
obligations, of any nature, secured or unsecured, (whether accrued, absolute,
contingent or otherwise) including, any Tax liabilities due or to become due,
which would reasonably be expected to have a Material Adverse Effect on
Acquiror.
Section 5.8 Delays. To the Knowledge of Acquiror, there is no reason
------
why the granting of any of the regulatory approvals referred to in Section 8.1
would be denied, unduly delayed or otherwise unavailable. The most recent
regulatory rating given to Landmark Bank as to compliance with the CRA is
satisfactory or better.
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Section 5.9 Financial Resources. Acquiror has, or will have prior to
--------------------
the Effective Time, sufficient funds and capital to perform its obligations
under this Agreement. Acquiror and each Acquiror Subsidiary are, and will be
immediately following the Merger, in material compliance with all applicable
capital, debt and financial regulations of state and federal banking agencies
having jurisdiction over them. Each Acquiror Subsidiary is, and will be
immediately following the Merger, at least "adequately capitalized" as such term
is defined in the rules and regulations promulgated by the FDIC, as applicable.
ARTICLE 6
COVENANTS OF FIRST KANSAS
From and after the date hereof and until the Effective Time, First
Kansas hereby covenants and agrees with Acquiror as follows:
Section 6.1 Information, Access and Confidentiality.
---------------------------------------
(a) Upon providing reasonable notice, Acquiror and its
Representatives shall, at all times during normal business hours prior to the
Closing Date, have full and continuing access to the facilities, operations,
records and properties of First Kansas and each First Kansas Subsidiary.
Acquiror and its Representatives may, prior to the Closing Date, make or cause
to be made such reasonable investigation of the operations, records and
properties of First Kansas and each First Kansas Subsidiary, including
observation of any audit of, and examination of any audit work papers with
respect to, First Kansas or any First Kansas Subsidiary, and of its and their
financial and legal condition as Acquiror shall deem necessary or advisable to
familiarize itself with such records, properties and other matters; provided,
that such access or investigation shall not interfere unnecessarily with the
normal operations of First Kansas or any of the First Kansas Subsidiary. Upon
request, First Kansas and each First Kansas Subsidiary will furnish Acquiror or
its Representatives its attorneys' responses to auditors' requests for
information and such financial and operating data and other information
reasonably requested by Acquiror developed by First Kansas or any First Kansas
Subsidiary, its auditors, accountants or attorneys (provided with respect to
attorneys, such disclosure shall be limited to information that would not result
in the waiver by First Kansas or any First Kansas Subsidiary of any claim of
attorney-client privilege), and will permit Acquiror or its Representatives to
discuss such information directly with any individual or firm performing
auditing or accounting functions for First Kansas or any First Kansas
Subsidiary, and such auditors and accountants shall be directed to furnish
copies of any reports or financial information as developed to Acquiror or its
Representatives. No investigation by Acquiror shall affect the representations
and warranties made by First Kansas. This Section shall not require the
disclosure of any information the disclosure of which to Acquiror would be
prohibited by law.
(b) First Kansas shall allow a representative of Acquiror to
attend as an observer all meetings of the board of directors and committees of
the board of directors of First Kansas and any First Kansas Subsidiary and any
meeting of the loan committee and asset liability management committee of First
Kansas or any First Kansas Subsidiary. First Kansas shall give reasonable notice
to Acquiror of any such meeting and, if known, the agenda for or business to
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be discussed at such meeting. First Kansas shall provide to Acquiror all
information provided to the directors on all such boards in connection with all
such meetings or otherwise provided to the directors, and shall provide any
other financial reports or other analysis prepared for senior management of
First Kansas or any First Kansas Subsidiary, in each case excluding information
which is privileged or is subject to any restriction on disclosure. It is
understood by the parties that Acquiror's representative will not have any
voting rights with respect to matters discussed at these meetings and that
Acquiror is not managing the business or affairs of First Kansas or any First
Kansas Subsidiary. All information obtained by Acquiror at these meetings shall
be treated in confidence as provided in Section 6.1(c) hereof. Notwithstanding
the foregoing, Acquiror shall not be permitted to attend any portion of a
meeting and First Kansas shall not be required to provide Acquiror with any
materials, in violation of applicable law or that relates to a Competing First
Kansas Proposal (except for information to be provided as required by Section
6.13 hereof), or that involve matters protected by the attorney-client
privilege.
(c) Any confidential information or trade secrets received by
First Kansas, its employees or agents in the course of the consummation of the
Contemplated Transactions shall be treated confidentially, and any
correspondence, memoranda, records, copies, documents and electronic or other
media of any kind containing either such confidential information, or trade
secrets or both shall be destroyed by First Kansas or, at Acquiror's request,
returned to Acquiror in the event this Agreement is terminated as provided in
Article 11. Such information shall not be used by First Kansas or its agents to
the detriment of Acquiror or any Acquiror Subsidiary.
(d) Any confidential information or trade secrets received by
Acquiror, its employees or agents in the course of the consummation of the
Contemplated Transactions shall be treated confidentially, and any
correspondence, memoranda, records, copies, documents and electronic or other
media of any kind containing either such confidential information, or trade
secrets or both shall be destroyed by Acquiror or, at First Kansas' request,
returned to First Kansas in the event this Agreement is terminated as provided
in Article 11. Such information shall not be used by Acquiror or its agents to
the detriment of First Kansas or any First Kansas Subsidiary.
Section 6.2 Carry on in Regular Course. First Kansas and each First
---------------------------
Kansas Subsidiary shall carry on its business diligently and substantially in
the same manner as is presently being conducted and shall not make or institute
any unusual or material change in its methods of doing business without the
prior written consent of Acquiror. First Kansas shall, and shall also cause each
First Kansas Subsidiary to, unless otherwise consented to in writing in advance
by Acquiror:
(a) conduct its business only in the Ordinary Course of
Business;
(b) use its Best Efforts to preserve intact its current business
organization, keep available the services of its current officers, employees and
agents, and maintain the relations and goodwill with its suppliers, customers,
landlords, creditors, employees, agents and others having business relationships
with it;
A-36
(c) confer and consult with Acquiror concerning operational
matters of a material nature, any sales of investment securities or loans that
were not originated with the intent to sell, and any changes or revisions to the
asset-liability management of Bank;
(d) enter into loan transactions only in accordance with sound
credit practices and only on terms and conditions which are not materially more
favorable than those available to the borrower from competitive sources in
transactions in the ordinary course of business and consistent with prudent
banking practices and policies and regulations of applicable regulatory
authorities, and in that connection, First Kansas will consult and discuss with
Acquiror all new credits or new lending relationships, or extensions or renewals
of any existing credit relationships, approved in excess of $500,000 to any
Person or Persons and his, her or their Affiliates from the date hereof to the
Effective Time;
(e) consistent with past practice, maintain a reserve for
probable loan and lease losses that is adequate in all material respects to
provide for probable losses, net of recoveries relating to loans previously
charged off, on loans outstanding (including accrued interest receivable);
(f) maintain all of its assets necessary for the conduct of its
business in good operating condition and repair, reasonable wear and tear and
damage by fire or unavoidable casualty excepted, and maintain policies of
insurance upon its assets and with respect to the conduct of its business in
amounts and kinds comparable to that in effect on the date hereof and pay all
premiums on such policies when due;
(g) file in a timely manner all required filings with all
Regulatory Authorities and cause such filings to be true and correct in all
material respects;
(h) maintain its books, accounts and records in the usual,
regular and ordinary manner, on a basis consistent with prior years and comply
with all Legal Requirements; and
(i) pay employees and directors salaries, bonuses, fees or any
other compensation in amounts no greater than that which was payable in the
ordinary course prior to the Effective Time and provided that any bonus payable
shall be in an amount no greater than that which was paid to the employee in
2002 and if the employee was not employed in 2002, an amount no greater than the
amount received by a similarly situated comparable employee, provided, however,
that no employee shall receive a bonus prior to the Effective Time if the
employee is covered by a written employment or severance agreement set forth in
Schedule 4.18 of the First Kansas Book of Schedules.
With respect to any written request by First Kansas for Acquiror's
consent to any non-permitted action of First Kansas or any First Kansas
Subsidiary described in this Section, First Kansas shall be entitled to
conclusively presume Acquiror has consented to any such action unless First
Kansas shall have received Acquiror's written objection to such action within
three (3) Business Days of the date of Acquiror's receipt of such written
request.
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Section 6.3 Negative Covenants. Except as otherwise provided by this
-------------------
Agreement, between the date of this Agreement and the Closing Date, First Kansas
will not, and will cause each First Kansas Subsidiary not to, without the prior
written consent of Acquiror, take any affirmative action, or fail to take any
reasonable action within its control, as a result of which any of the changes or
events listed in Section 4.17 is likely to occur. With respect to any written
request by First Kansas for Acquiror's consent to any non-permitted action of
First Kansas or any First Kansas Subsidiary described in this Section, First
Kansas shall be entitled to conclusively presume Acquiror has consented to any
such action unless First Kansas shall have received Acquiror's written objection
to such action within three (3) Business Days of the date of Acquiror's receipt
of such written request.
Section 6.4 Dividends. Notwithstanding anything contained herein to the
---------
contrary, First Kansas may declare and pay to its stockholders one cash dividend
not to exceed five cents ($0.05) per share of First Kansas Common Stock, in the
fourth quarter of 2003. First Kansas shall not declare, pay or make any other
dividend or other distribution or payment in respect of, or redemption of,
shares of First Kansas Common Stock.
Section 6.5 Subsequent First Kansas Financial Statements. As soon as
----------------------------------------------
available after the date hereof, First Kansas will furnish Acquiror copies of:
(a) each filing made by First Kansas with the SEC; (b) the monthly unaudited
balance sheets and profit and loss statements of First Kansas on a consolidated
basis, and Bank on a stand-alone basis, prepared in each case for First Kansas's
internal use, (c) the TFRs of Bank for each quarterly period completed after the
date of this Agreement and prior to the Effective Time; and (d) all other
financial reports or statements submitted by First Kansas or any First Kansas
Subsidiary to Regulatory Authorities after the date hereof, to the extent
permitted by law (collectively, the "Subsequent First Kansas Financial
Statements"). The Subsequent First Kansas Financial Statements shall be prepared
on a basis consistent with past accounting practices and shall fairly present in
all material respects the financial condition and results of operations for the
dates and periods presented, subject in the case of unaudited financial
statements to year-end audit adjustments (which changes in the aggregate would
not reasonably be expected to be materially adverse). The Subsequent First
Kansas Financial Statements will not include any material assets or omit to
state any material liabilities, absolute or contingent, or other facts, which
inclusion or omission would render such financial statements misleading in any
material respect.
Section 6.6 Advice of Changes. Between the date of this Agreement and
-----------------
the Closing Date, First Kansas will promptly notify Acquiror in writing if First
Kansas or any First Kansas Subsidiary becomes aware of any fact or condition
that causes or constitutes a Breach of any of First Kansas's representations and
warranties as of the date of this Agreement, or if First Kansas or any First
Kansas Subsidiary becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a Breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. If any such fact or condition
would require any change in the Schedules if such Schedules were dated the date
of the occurrence or discovery of any such fact or condition, First Kansas will
promptly deliver to Acquiror a supplement to the Schedules specifying such
change, provided, however, that receipt of notice of such facts after the date
of this Agreement shall have no effect on the truth and
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accuracy of the representations and warranties made in this Agreement and the
delivery of any such updated Schedule shall not in itself be sufficient to cure
any prior Breach. During the same period, First Kansas will promptly notify
Acquiror of the occurrence of any Breach of any covenant of First Kansas in this
Article or of the occurrence of any event that might reasonably be expected to
make the satisfaction of the conditions in Article 8 impossible or unlikely.
First Kansas shall also provide to Acquiror copies of each written communication
sent to its stockholders between the date of this Agreement and the Closing
Date.
Section 6.7 Stockholders' Meeting. First Kansas will take all steps
----------------------
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders, as soon as practicable, but in no event later than sixty (60) days
following the SEC's clearance of First Kansas's Proxy Statement, for the purpose
of obtaining stockholder approval of this Agreement and the Merger (the "Special
Meeting"). Notwithstanding anything to the contrary herein, First Kansas shall
be under no obligation to call its Special Meeting and mail the Proxy Statement
until such time that the parties have agreed, in writing, upon a course of
action for the remediation of any environmental condition pursuant to Section
6.10(b) or have agreed, in writing, that no such remediation is necessary.
Section 6.8 Proxy Statement. First Kansas will take all reasonable
----------------
steps necessary to submit the Proxy Statement to the SEC within forty (40) days
after the date of this Agreement. The Proxy Statement will satisfy all
requirements of the Exchange Act and the rules and regulations promulgated
thereunder and will include a recommendation, subject to its fiduciary duties,
by the board of directors of First Kansas that the stockholders of First Kansas
approve this Agreement and the Merger. First Kansas and its Representatives
shall solicit proxies from the stockholders of First Kansas. First Kansas shall
deliver a draft of the Proxy Statement to Acquiror and its counsel at least five
(5) Business Days prior to the filing of such draft with the SEC, and shall
provide Acquiror with summaries of any material oral communications with the
SEC, and copies of all responses or other written communications from the SEC,
relating to the Proxy Statement. First Kansas shall further deliver a draft of
the Proxy Statement to Acquiror and its counsel at least five (5) Business Days
prior to its mailing by First Kansas to its stockholders. The Proxy Statement
shall not be mailed to the holders of First Kansas Common Stock until Trident
Securities, Inc. has delivered to the board of directors of First Kansas for
inclusion in the Proxy Statement a fairness opinion (the "Fairness Opinion"),
dated within five (5) Business Days of the date of mailing, to the effect that
the Total Purchase Price is fair to the stockholders of First Kansas from a
financial point of view, which opinion shall be in standard industry form with
respect to transactions of this nature. First Kansas shall send the Proxy
Statement to its stockholders at least thirty (30) days prior to the Special
Meeting. Along with such notice, First Kansas shall include a copy of this
Agreement and a copy of Section 17-6712 of the Kansas Code governing the
procedures required to be met by dissenting stockholders.
Section 6.9 Information Provided to Acquiror. First Kansas agrees that
--------------------------------
none of the information concerning First Kansas or any First Kansas Subsidiary
that is provided or to be provided by First Kansas to Acquiror for inclusion or
that is included in the Proxy Statement and any other documents to be filed with
any Regulatory Authority in connection with the Contemplated Transactions will,
at the respective times such documents are filed and, with respect to the Proxy
Statement, when mailed, be false or misleading with respect to any material
fact, or
A-39
omit to state any material fact necessary in order to make the statements
therein not misleading or, in the case of the Proxy Statement, or any amendment
thereof or supplement thereto, at the time of the meeting of First Kansas's
stockholders referred to above, 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 meeting in connection with which the Proxy Statement shall be
mailed. Notwithstanding the foregoing, First Kansas shall have no responsibility
for the truth or accuracy of any information with respect to Acquiror or any
Acquiror Subsidiary or any of their Affiliates contained in the Proxy Statement
or in any document submitted to, or other communication with, any Regulatory
Authority.
Section 6.10 Environmental Investigation.
---------------------------
(a) Acquiror may in its discretion, within thirty (30) Business
Days of the date of this Agreement, retain at its own expense an independent
professional consultant to perform an environmental site assessment and render
to Acquiror a report (an "Environmental Report") to determine if any real
property in which First Kansas holds any interest contains or gives evidence
that any violations of Environmental Laws have occurred on any such property.
Neither Acquiror nor its independent professional consultant shall enter upon
any such real property in which First Kansas or any First Kansas Subsidiary
holds only a mortgagee's interest without the prior permission of First Kansas
and the Person in possession thereof. First Kansas shall not withhold such
permission unreasonably, and shall use all reasonable efforts to obtain such
permission for Acquiror from the Person in possession of any such mortgaged real
property for which Acquiror desires its independent professional consultant to
conduct a site assessment. Acquiror shall have no duty to act upon any
information produced by such reviews or investigations with or for the benefit
of First Kansas, any First Kansas Subsidiary or any other Person, but shall
provide such information to First Kansas as soon as practicable after such
information becomes available to Acquiror. If the Environmental Report discloses
any adverse environmental conditions, or reports a reasonable suspicion thereof,
Acquiror and First Kansas shall, within fifteen (15) Business Days of such
determination, obtain from one or more mutually acceptable consultants or
contractors, as appropriate (the "Remediation Expert"), an estimate of the cost
of any remediation or other follow-up work that may be necessary to address
those conditions in accordance with applicable laws and regulations.
(b) Upon receipt of the estimate of the costs of all follow-up
work to the Environmental Report or any subsequent investigation phases that may
be conducted, Acquiror and First Kansas shall attempt to agree upon a course of
action for further investigation and remediation of any environmental condition
suspected, found to exist, or that would tend to be indicated by the
Environmental Report. The estimated total cost for completing all necessary work
plans or removal or remediation actions is referred to collectively as the
"Remediation Cost." If the Remediation Cost exceeds One Hundred Thousand Dollars
($100,000) then the parties shall adjust the Purchase Price Per Share as
provided in Article 3. If the Remediation Cost exceeds Five Hundred Thousand
Dollars ($500,000), Acquiror or First Kansas may, at its sole option, terminate
this Agreement.
Section 6.11 Title Reports. By no later than forty-five (45) days after
-------------
the date of this Agreement, First Kansas shall obtain at its own expense and
deliver to Acquiror an owner's
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preliminary report of title covering a date subsequent to the date hereof,
issued by Chicago Title Insurance Company or such other title insurance company
as is reasonably acceptable to Acquiror with respect to all real property owned
by First Kansas or any First Kansas Subsidiary (the "First Kansas Real
Property"), showing fee simple title in First Kansas or a First Kansas
Subsidiary, and in each case, subject only to: (a) minor defects and
irregularities in title and encumbrances which would not materially impair the
use thereof for the purposes for which they are held; and (b) those exceptions
set forth in Schedule 6.10 of the Acquiror Book of Schedules, except that the
following exceptions shall be removed at or before Closing: (i) standard
exceptions that would be removed upon the delivery of a satisfactory survey;
(ii) taxes and special assessments due and payable prior to or as of the
Closing; (iii) all mortgages and financing statements; and (iv) rights of
tenants under unrecorded leases. On or before the Closing Date, Acquiror shall
deliver updated title commitments with respect to the First Kansas Real Property
and a receipt evidencing full payment for title insurance policies to be issued
as soon as practicable after the Closing in accordance with such updated title
commitments and in amounts of no less than the book value of the First Kansas
Real Property as shown on the First Kansas Financial Statements.
Section 6.12 Surveys. By no later than forty-five (45) days after the
-------
date of this Agreement, First Kansas shall obtain at its own expense and deliver
to Acquiror a current ALTA survey of each parcel of First Kansas Real Property
disclosing no survey defects that would materially impair the use thereof for
the purposes for which it is held or materially impair the value of such
property.
Section 6.13 Exclusivity. Subject to its fiduciary duties and except as
-----------
otherwise set forth herein, none of First Kansas, any First Kansas Subsidiary or
any of their respective directors, officers, employees, professional and
financial advisors, representatives, agents and Affiliates shall, directly or
indirectly, make, encourage, facilitate, solicit, initiate or assist any
inquiries, proposals, offers or expressions of interest from, or provide any
nonpublic information or access to First Kansas's or any First Kansas
Subsidiary's premises to, or participate in any discussions or negotiations
with, any Person (other than Acquiror and its directors, officers, employees,
professional and financial advisors, representatives, agents and Affiliates)
concerning or relating to: (a) any merger, sale of assets not in the Ordinary
Course of Business, acquisition, business combination, change of control or
other similar transaction involving First Kansas or any First Kansas Subsidiary,
or (b) any purchase or other acquisition by any Person of five percent (5%) or
more of the capital stock of First Kansas or of any capital stock of any First
Kansas Subsidiary, or (c) any issuance by any First Kansas Subsidiary of any
shares of its capital stock (collectively, a "Competing First Kansas Proposal").
First Kansas will promptly advise Acquiror of, and communicate to Acquiror the
terms and conditions of, and the identity of the Person making, any Competing
First Kansas Proposal, and will provide summaries of any non-privileged
communications with respect to such Competing First Kansas Proposal. Upon the
date of this Agreement, First Kansas will terminate all discussions and
negotiations that it has heretofore engaged in or conducted with any other
Person with respect to any of the above, and will advise its directors,
officers, employees, professional and financial advisors, representatives,
agents and Affiliates to also terminate the same. Notwithstanding the foregoing,
First Kansas may engage in discussions or negotiations with, furnish nonpublic
information concerning First Kansas
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and any First Kansas Subsidiary and their respective properties, assets and
business, and grant access to the facilities of First Kansas and any First
Kansas Subsidiary, to any Person that hereafter makes a Competing First Kansas
Proposal that was not directly or indirectly, after the date hereof, made,
encouraged, facilitated, solicited, initiated or assisted by First Kansas, any
First Kansas Subsidiary or any of their respective directors, officers,
employees, professional or financial advisors, representatives, agents or
Affiliates (an "Unsolicited First Kansas Proposal"), but only to the extent
that: (i) the board of directors of First Kansas receives a written opinion from
its independent financial advisor that such proposal may be superior to the
Contemplated Transactions from a financial point of view to First Kansas's
stockholders; (ii) First Kansas's outside legal counsel advises First Kansas
that the maker of the Unsolicited First Kansas Proposal may legally acquire
First Kansas and Bank; (iii) First Kansas's board of directors, after
consultation with its outside legal counsel, determines in good faith that such
action is necessary for First Kansas's board of directors to comply with its
fiduciary duties to its stockholders under all applicable Legal Requirements;
and (iv) prior to furnishing such information to, or entering into discussions
or negotiations with, such Person, First Kansas provides reasonable notice to
Acquiror to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such Person.
Section 6.14 Best Efforts; Cooperation. Subject to the terms and
---------------------------
conditions of this Agreement, First Kansas agrees to exercise good faith and use
its Best Efforts to satisfy the various covenants and conditions to Closing in
Articles 8 and 9, respectively, and to consummate the Contemplated Transactions
as promptly as possible. First Kansas will not intentionally take or
intentionally permit to be taken any action that would be a Breach of the terms
or provisions of this Agreement. Between the date of this Agreement and the
Closing Date, First Kansas will, and will cause each First Kansas Subsidiary and
all of the Affiliates and Representatives of First Kansas and each First Kansas
Subsidiary to, cooperate with Acquiror with respect to all filings that Acquiror
is required by Legal Requirements to make in connection with the Contemplated
Transactions. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
Acquiror or the Resulting Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of First Kansas, the proper
officers and directors of First Kansas shall take all such necessary action to
vest Acquiror or the Resulting Corporation with such rights.
Section 6.15 ESOP Loan. From and after the date of this Agreement
----------
through the Effective Time, First Kansas and/or the Bank shall make any further
contributions to the First Kansas ESOP only in accordance with First Kansas's
past practice. As of the Effective Time, the ESOP shall terminate in accordance
with its terms, as in effect on the date of this Agreement.
Section 6.16 Data and Item Processing Agreements. First Kansas agrees
------------------------------------
to consult with Acquiror prior to the entry by it or any First Kansas Subsidiary
by either action or inaction into any new, or any extension of any existing,
data or item processing agreements. First Kansas agrees to coordinate with
Acquiror the negotiation of any new or extension of any existing data or item
processing agreement with the purpose of achieving the best possible economic
and business result in light of the Bank Merger.
Section 6.17 Accrual of Costs. On or prior to the Closing Date, First
----------------
Kansas shall fully pay or accrue as may be required by GAAP: (a) the cost of any
benefits or contributions supplied
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or made or to be supplied or made through the Effective Time under any of the
First Kansas Employee Benefit Plans; (b) the costs of any corrective action to
bring any such plans into compliance with applicable law; (c) the aggregate cost
of complying with any representation, warranty or covenant of First Kansas set
forth in this Agreement; and (d) all First Kansas Transactional Expenses. For
purposes of the accruals made pursuant to this section, First Kansas shall
assume a tax rate of 34%.
Section 6.18 Accounting and Other Adjustments. First Kansas agrees that
--------------------------------
it shall, and shall cause Bank, to: (a) make any accounting adjustments or
entries to its books of account and other financial records; (b) make additional
provisions to any allowance for loan and lease losses; (c) sell or transfer any
investment securities held by it; (d) charge-off any loan or lease; (e) create
any new reserve account or make additional provisions to any other existing
reserve account; (f) make changes in any accounting method; (g) accelerate,
defer or accrue any anticipated obligation, expense or income item; and (h) make
any other adjustments which would affect the financial reporting of Acquiror, on
a consolidated basis after the Effective Time, in any case as Acquiror shall
reasonably request, provided, however, that neither First Kansas nor Bank shall
be obligated to take any such requested action until immediately prior to the
Closing and at such time as First Kansas shall have received reasonable
assurances that all conditions precedent to First Kansas's obligations under
this Agreement (except for the completion of actions to be taken at the Closing)
have been satisfied and no such adjustment which First Kansas or Bank would not
have been required to make but for the provisions of this Section shall have any
effect on the satisfaction by First Kansas of the condition in Section 9.11.
Section 6.19 Officer Agreements. Concurrently with the execution and
-------------------
delivery of this Agreement, First Kansas shall cause to be delivered to
Acquiror:
(a) a consulting agreement providing for aggregate payments of
$160,000, all in the form of Exhibit B, signed by Larry V. Bailey, which such
agreement shall become effective at the Effective Time; and
(b) a stay bonus agreement providing for an aggregate payment of
$50,000 made in two installments, in the form of Exhibit C signed by James J.
Casaert, which such agreement shall become effective at the Effective Time.
Section 6.20 Voting Agreement. Concurrently with the execution and
-----------------
delivery of this Agreement, First Kansas shall deliver to Acquiror a voting
agreement in the form of Exhibit D signed by each of the directors and executive
officers of First Kansas who are holders of First Kansas Common Stock.
Section 6.21 Non-Competition Agreements. Concurrently with the
----------------------------
execution and delivery of this Agreement, First Kansas shall deliver to Acquiror
a non-competition agreement in the form of Exhibit E signed by each of the
directors of First Kansas, with the exception of Larry V. Bailey. As
consideration for entering into a non-competition agreement, First Kansas shall
pay at the Closing to each individual director other than Mr. Bailey, the sum of
$12,000.
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Section 6.22 Tax Matters. Neither First Kansas nor any First Kansas
------------
Subsidiary shall make any election or settle or compromise any liability with
respect to Taxes without prior written notice to Acquiror. First Kansas and each
First Kansas Subsidiary shall timely file all Tax Returns required to be filed
prior to the Closing; provided, however, that each such Tax Return shall be
delivered to Acquiror at least five (5) business days prior to the anticipated
date of filing for Acquiror's review.
Section 6.23 Employee Severance. Any person who is currently serving as
------------------
an employee of either First Kansas or Bank and continues as such immediately
prior to the Effective Time (other than those employees covered by a written
employment or severance agreement set forth in Schedule 4.18 of the First Kansas
Book of Schedules) whose employment is discontinued by Landmark Bank or the Bank
within one year after the Effective Time shall be entitled to a severance
payment pursuant to a Transition Period Severance Plan to be adopted by Bank
prior to the Effective Time containing the terms outlined in Schedule 6.23 of
the First Kansas Book of Schedules.
Section 6.24 Retention Bonuses. In order to insure an orderly Closing
------------------
and transition period, the Bank shall pay each employee of the Bank (other than
those employees covered by a written employment or severance agreement set forth
in Schedule 4.18 of the First Kansas Book of Schedules) a "retention" bonus
equal to two weeks pay in the event that such employee remains an employee and
satisfactorily fulfills the duties and responsibilities of his or her position
through the Effective Time, to be paid by Bank immediately prior to the
Effective Time. Schedule 6.24 of the First Kansas Book of Schedules provides a
schedule of projected retention bonuses.
Section 6.25 Defined Benefit Plan. First Kansas will effect its
----------------------
withdrawal from the multiple employer plan as soon as practicable after the date
of this Agreement, but in no event later than December 31, 2003.
ARTICLE 7
ACQUIROR'S COVENANTS
From and after the date hereof and until the Effective Time, Acquiror
hereby covenants and agrees with First Kansas as follows:
Section 7.1 Advice of Changes. Between the date of this Agreement and
-----------------
the Closing Date, Acquiror will promptly notify First Kansas in writing if
Acquiror or any Acquiror Subsidiary becomes aware of any fact or condition that
causes or constitutes a Breach of any of Acquiror's representations and
warranties as of the date of this Agreement, or if Acquiror or any Acquiror
Subsidiary becomes aware of the occurrence after the date of this Agreement of
any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. If any such fact or condition
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would require any change in the Schedules if such Schedules were dated the date
of the occurrence or discovery of any such fact or condition, Acquiror will
promptly deliver to First Kansas a supplement to the Schedules specifying such
change, provided, however, that receipt of notice of such facts after the date
of this Agreement shall have no effect on the truth and accuracy of the
representations and warranties made in this Agreement and the delivery of any
such updated Schedule shall not in itself be sufficient to cure any prior
Breach. During the same period, Acquiror will promptly notify First Kansas of
the occurrence of any Breach of any covenant of Acquiror in this Article or of
the occurrence of any event that might reasonably be expected to make the
satisfaction of the conditions in Article 9 impossible or unlikely. Acquiror
shall also provide to First Kansas copies of each written communication sent to
its stockholders between the date of this Agreement and the Closing Date.
Section 7.2 Information Provided to First Kansas. Acquiror agrees that
------------------------------------
none of the information concerning Acquiror or any Acquiror Subsidiary that is
provided or to be provided by Acquiror to First Kansas for inclusion or that is
included in the Proxy Statement and any other documents to be filed with any
Regulatory Authority in connection with the Contemplated Transactions will, at
the respective times such documents are filed and, with respect to the Proxy
Statement, when mailed, be false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to make the
statements therein not misleading or, in the case of the Proxy Statement, or any
amendment thereof or supplement thereto, at the time of the meeting of
Acquiror's stockholders referred to above, 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 meeting in connection with which the Proxy Statement shall be
mailed. Notwithstanding the foregoing, Acquiror shall have no responsibility for
the truth or accuracy of any information with respect to First Kansas or any
First Kansas Subsidiary or any of their Affiliates contained in the Proxy
Statement or in any document submitted to, or other communication with, any
Regulatory Authority.
Section 7.3 Best Efforts; Cooperation. Subject to the terms and
---------------------------
conditions of this Agreement, Acquiror agrees to exercise good faith and use its
Best Efforts to satisfy the various covenants and conditions to Closing in
Articles 8 and 10, respectively, and to consummate the Contemplated Transactions
as promptly as possible. Acquiror will not intentionally take or intentionally
permit to be taken any action that would be a Breach of the terms or provisions
of this Agreement. Between the date of this Agreement and the Closing Date,
Acquiror will, and will cause each Acquiror Subsidiary and all of the Affiliates
and Representatives of Acquiror and each Acquiror Subsidiary to, cooperate with
First Kansas with respect to all filings that First Kansas is required by Legal
Requirements to make in connection with the Contemplated Transactions.
ARTICLE 8
COVENANTS OF ALL PARTIES
Section 8.1 Regulatory Approvals. Within forty (40) days after the date
--------------------
of this Agreement, Acquiror shall make all appropriate filings with Regulatory
Authorities for approval of the Contemplated Transactions, including the
preparation of an application or any amendment
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thereto or any other required statements or documents filed or to be filed by
any party with: (a) the Federal Reserve pursuant to the BHCA; (b) the OTS
pursuant to the HOLA; (c) the OCC pursuant to the National Bank Act; and (d) any
other Person or Regulatory Authority pursuant to any applicable Legal
Requirement, for authority to consummate the Contemplated Transactions. First
Kansas and Acquiror shall pursue in good faith the regulatory approvals
necessary to consummate the Contemplated Transactions. In advance of any filing
made under this Section 8.1, First Kansas and Acquiror and their respective
counsel shall be provided with the opportunity to comment thereon, and First
Kansas and Acquiror each agree promptly to advise each other and each other's
counsel of any material communication received by it or its counsel from any
Regulatory Authorities with respect to such filings. Each of First Kansas and
Acquiror and their respective Subsidiaries agree to cooperate fully and promptly
with each other and their respective counsel and accountants in connection with
any steps to be taken as part of their obligations under this Agreement.
Section 8.2 Customer and Employee Relationships. Each of First Kansas
------------------------------------
and Acquiror agrees that its respective representatives may jointly:
(a) participate in meetings or discussions with officers and
employees of First Kansas and its Subsidiaries in connection with employment
opportunities with Acquiror after the Effective Time; and
(b) contact Persons having dealings with First Kansas or any of
its Subsidiaries for the purpose of informing such Persons of the services to be
offered by Acquiror after the Effective Time.
Section 8.3 Publicity. Prior to the Effective Time, the parties to this
---------
Agreement will consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement or the
Contemplated Transactions and shall not issue any such press release or make any
such public statement without the prior consent of the other parties, except as
may be required by law.
Section 8.4 Employee Benefit Plan Payments. First Kansas agrees to take
------------------------------
or cause to be taken the actions described in Schedule 8.4 of the First Kansas
Book of Schedules with respect to the payment of amounts due under the First
Kansas Employee Benefits Plans. Immediately prior to the Effective Time, First
Kansas, or the Bank, shall make the payments set forth in Schedule 8.4 to
terminate the employment or severance agreements set forth in Schedule 8.4 of
the First Kansas Book of Schedules. First Kansas and Acquiror further agree to
cooperate to determine prior to the Closing the types of benefits to be offered
after the Effective Time by Acquiror to former employees of First Kansas who
become employees of Acquiror.
Section 8.5 Director and Officer Liability Coverage. Prior to the
-------------------------------------------
Effective Time, Acquiror will provide and will maintain in effect for a period
of not less than three (3) years after the Effective Time directors' and
officers' liability insurance coverage for the officers and directors of First
Kansas with respect to actions taken by them prior to the Effective Time to the
extent that such coverage is available and mutually determined by the parties to
be economically practicable ("Tail Coverage"). Any such coverage shall be on
substantially the same terms and
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conditions and provide the same coverage against personal liability as the most
protective coverage which is currently provided to officers and directors of
either Acquiror or First Kansas. The directors and officers of First Kansas
shall be third party beneficiaries to this Section and this Section shall
survive the Effective Time. Notwithstanding the provision of such Tail Coverage,
the parties further agree that after the Effective Time, Acquiror shall
indemnify for a period of six (6) years the officers and directors of First
Kansas for all actions taken by them prior to the Effective Time in their
capacities as officers and directors of First Kansas to the same extent as the
greatest indemnification which is currently provided by First Kansas.
Section 8.6 Trademarks. Acquiror will acquire any Intellectual Property
----------
Assets (including logos) and associated goodwill owned by First Kansas or any
First Kansas Subsidiary.
Section 8.7 Advisory Board. Acquiror shall create an advisory board
---------------
(the "Advisory Board") to assist in and advise with respect to integration of
the operations of First Kansas and Bank with and into those of Acquiror and
Landmark Bank. The Advisory Board shall consist of all of those individuals who
are serving as of the Effective Time as members of the board of directors of
First Kansas, but not including Larry V. Bailey. Members of the Advisory Board
shall serve with no compensation. Acquiror's board of directors shall review the
Advisory Board function annually to consider its continuation and may terminate
the Advisory Board at any time after the first anniversary of the Effective
Time.
Section 8.8 Employees
---------
(a) As of or after the Effective Date, and at Acquiror's
election and subject to the requirements of the Code and ERISA, the First Kansas
Employee Benefit Plans, other than ESOP, which will be terminated, may be
continued and maintained separately, consolidated with Acquiror's existing
plans, or terminated. Bank employees who continue employment with Landmark Bank
following the Merger Effective Date ("Continuing Employees") shall participate
in all Landmark Bank Employee Plans (including, without limitation, Landmark
Bank's ESOP, and its 401(k) plan) as of the first entry date coincident with or
following the Merger Effective Date, with recognition of prior service with Bank
for purposes of eligibility to participate and vesting, but not benefits
accrual.
(b) Continuing Employees shall be enrolled in the Bank medical,
dental, life insurance and disability insurance programs available to other
Landmark Bank employees immediately upon the termination of the Bank plans
without such Continuing Employees incurring any uninsured waiting periods or
pre-existing conditions exclusions for such Continuing Employees and dependents
participating in such similar Bank plans at such time. This Section 8.8 shall
survive the Effective Time. Landmark Bank will credit each Continuing Employee
with each such person's accrued and unused sick days, as reflected in First
Kansas's records, as of the Closing Date (up to a maximum of ninety (90) days).
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ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIROR
Acquiror's obligation to consummate the Contemplated Transactions and
to take the other actions required to be taken by Acquiror at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Acquiror, in whole or in
part):
Section 9.1 Accuracy of Representations and Warranties. All of the
---------------------------------------------
representations and warranties of First Kansas set forth in this Agreement shall
be true and correct in all material respects with the same force and effect as
if all of such representations and warranties were made at the Closing Date,
provided, however, that to the extent such representations and warranties
expressly relate to an earlier date, such representations shall be true and
correct in all material respects on and as of such earlier date, and provided
further, that to the extent that such representations and warranties are made in
this Agreement subject to a standard of materiality or Knowledge, such
representations and warranties shall be true and correct in all respects.
Section 9.2 First Kansas's Performance. First Kansas shall have
----------------------------
performed or complied in all material respects with all of the covenants and
obligations to be performed or complied with by it under the terms of this
Agreement on or prior to the Closing Date, provided, however, that to the extent
performance and compliance with such covenants and obligations are subject in
this Agreement to a standard of materiality, First Kansas shall have performed
and complied in all respects with such covenants and obligations.
Section 9.3 Proceedings and Documents Satisfactory. All proceedings,
---------------------------------------
corporate or other, to be taken by First Kansas in connection with the
Contemplated Transactions, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to counsel for Acquiror.
Section 9.4 Statutory Requirements. This Agreement shall have been duly
----------------------
and validly authorized by the stockholders of First Kansas. Such stockholder
approval shall have been obtained in conformity with all applicable laws at a
meeting of stockholders for which proxies are solicited in compliance with
applicable laws and requirements.
Section 9.5 No Proceedings. Neither First Kansas nor any First Kansas
---------------
Subsidiary shall be made a party to, or to the Knowledge of First Kansas,
Threatened by any Proceedings which, in the reasonable opinion of Acquiror, have
or are likely to have a Material Adverse Effect on First Kansas, and no
Proceeding shall have been instituted, made or threatened by any Person relating
to the Merger or the validity or propriety of the Contemplated Transactions that
Acquiror reasonably believes will result in material damages or an Order
enjoining the Merger or a determination that First Kansas failed to comply with
legal requirements of a material nature in connection with any of the
Contemplated Transactions.
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Section 9.6 Absence of Certain Changes or Events. From the date hereof
------------------------------------
to the Effective Time, there shall be and have been no Material Adverse Effect
on First Kansas, or any event or occurrence reasonably likely to result in a
Material Adverse Effect on First Kansas, excluding costs associated with the
Contemplated Transactions and any payments that become due and payable under any
First Kansas Employee Benefits Plans as a result of the occurrence of the
Contemplated Transactions.
Section 9.7 Regulatory Approvals. All of the approvals from Regulatory
--------------------
Authorities referred to in Section 8.1, or otherwise reasonably necessary in the
opinion of Acquiror to consummate the Contemplated Transactions, shall have been
obtained and shall be reasonably satisfactory to Acquiror.
Section 9.8 Environmental Reports. Acquiror shall have been granted
----------------------
acceptable access to any real property in which First Kansas or any First Kansas
Subsidiary has an interest and for which Acquiror desired its independent
professional consultant to prepare an Environmental Report.
Section 9.9 Other Consents and Approvals. Any consents or approvals
-------------------------------
other than those described in Section 9.6 that are required to be secured by
First Kansas to consummate the Contemplated Transactions shall have been
obtained and shall be reasonably satisfactory to Acquiror.
Section 9.10 Dissenting Shares. The total number of Dissenting Shares
------------------
shall be no greater than five percent (5%) of the number of shares of First
Kansas Common Stock issued and outstanding immediately prior to the Effective
Time.
Section 9.11 Minimum Stockholders' Equity. First Kansas's Adjusted
------------------------------
Stockholders' Equity (as calculated immediately prior to the Closing Date) shall
not be less than $13,100,000.
Section 9.12 Transactional Expenses. Acquiror shall have received proof
----------------------
satisfactory to it that First Kansas has paid all of First Kansas Transactional
Expenses.
ARTICLE 10
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FIRST KANSAS
First Kansas's obligation to consummate the Contemplated Transactions
and to take the other actions required to be taken by First Kansas at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by First Kansas, in whole
or in part):
Section 10.1 Accuracy of Representations and Warranties. All of the
---------------------------------------------
representations and warranties of Acquiror set forth in this Agreement shall be
true and correct in all material respects with the same force and effect as if
all of such representations and warranties were made at the Closing Date,
provided, however, that to the extent such representations and warranties
expressly relate to an earlier date, such representations shall be true and
correct in all material respects on and as of such earlier date, and provided
further, that to the extent that such
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representations and warranties are made in this Agreement subject to a standard
of materiality or Knowledge, such representations and warranties shall be true
and correct in all respects.
Section 10.2 Acquiror's Performance. Acquiror shall have performed or
-----------------------
complied in all material respects with all of the covenants and obligations to
be performed or complied with by it under the terms of this Agreement on or
prior to the Closing Date, provided, however, that to the extent performance and
compliance with such covenants and obligations are subject in this Agreement to
a standard of materiality, Acquiror shall have performed and complied in all
respects with such covenants and obligations.
Section 10.3 Proceedings and Documents Satisfactory. All proceedings,
---------------------------------------
corporate or other, to be taken by Acquiror in connection with the Contemplated
Transactions, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to counsel for First Kansas.
Section 10.4 No Proceedings. Neither Acquiror nor any Acquiror
---------------
Subsidiary shall be made a party to, or to the Knowledge of Acquiror, Threatened
by any Proceedings which, in the reasonable opinion of First Kansas, have or are
likely to have a Material Adverse Effect on Acquiror, and no Proceeding shall
have been instituted, made or threatened by any Person relating to the Merger or
the validity or propriety of the Contemplated Transactions that First Kansas
reasonably believes will result in material damages or an Order enjoining the
Merger or a determination that Acquiror failed to comply with legal requirements
of a material nature in connection with any of the Contemplated Transactions.
Section 10.5 Absence of Certain Changes or Events. From the date hereof
------------------------------------
to the Effective Time, there shall be and have been no Material Adverse Effect
on Acquiror, or any event or occurrence reasonably likely to result in a
Material Adverse Effect on Acquiror, excluding costs associated with the
Contemplated Transactions.
Section 10.6 Regulatory Approvals. All of the approvals from Regulatory
--------------------
Authorities referred to in Section 8.1, or otherwise reasonably necessary in the
opinion of First Kansas to consummate the Contemplated Transactions, shall have
been obtained and shall be reasonably satisfactory to First Kansas.
Section 10.7 Fairness Opinion. As of the date of this Agreement and
-----------------
prior to distribution of the Proxy Statement to the stockholders of First
Kansas, First Kansas shall have received an opinion from Trident Securities,
Inc. to the effect that the consideration to be received by First Kansas's
stockholders in connection with the Merger, from a financial point of view, is
fair to First Kansas's stockholders, and the same shall not have been withdrawn
prior to the Closing.
Section 10.8 Other Consents and Approvals. Any consents or approvals
------------------------------
other than those described in Section 9.9 that are required to be secured by
Acquiror to consummate the Contemplated Transactions shall have been obtained
and shall be reasonably satisfactory to First Kansas.
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ARTICLE 11
TERMINATION
Section 11.1 Reasons for Termination and Abandonment. Subject to
-------------------------------------------
Sections 11.2 and 11.3, this Agreement, by prompt written notice given to the
other parties prior to or at the Closing, may be terminated:
(a) by mutual consent of Acquiror and the board of directors of
First Kansas;
(b) by Acquiror if: (i) any of the conditions in Article 9 has
not been satisfied as of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Acquiror to comply
with its obligations under this Agreement); (ii) the failure to satisfy such
condition constitutes, or would be reasonable likely to constitute a Material
Adverse Effect upon First Kansas or Acquiror after the consummation of the
Contemplated Transactions; and (iii) Acquiror has not waived such condition on
or before the Closing Date;
(c) by First Kansas if: (i) any of the conditions in Article 10
has not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of First
Kansas to comply with its obligations under this Agreement); (ii) the failure to
satisfy such condition would prevent, or would be reasonable likely to prevent,
Acquiror from (A) paying the Total Purchase Price to the Paying Agent on the
Closing Date or (B) fulfilling its obligations under Section 8.4, Section 8.5 or
Section 8.8, and (iii) First Kansas has not waived such condition on or before
the Closing Date;
(d) by either Acquiror or First Kansas if the Closing has not
occurred (other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) by the
Termination Date;
(e) by Acquiror or First Kansas in accordance with the
provisions of Section 6.10;
(f) by First Kansas if First Kansas has received an Unsolicited
First Kansas Proposal that is determined in good faith by the First Kansas Board
of Directors, after consultation with its independent financial advisors, to be
more favorable to the First Kansas stockholders than the Contemplated
Transactions; or
(g) by Acquiror if First Kansas's Adjusted Stockholders' Equity
(as calculated immediately prior to the Closing Date) is less than $13,100,000.
Section 11.2 Effect of Termination. Except as provided in Section 11.3,
---------------------
in the event of termination of this Agreement pursuant to Section 11.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of Acquiror, First Kansas or Acquisition Corp or any of
their respective Representatives, and all rights and obligations of each party
hereto shall cease, provided, however, that, subject to Section 11.3,
A-51
nothing herein shall relieve any party from liability for the Breach of any of
its representations and warranties or the Breach of any of its covenants or
agreements set forth in this Agreement.
Section 11.3 Expenses.
--------
(a) Except as provided below, all out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its Affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
solicitation of stockholder approvals and all other matters related to the
consummation of the Merger shall be paid by the party incurring such expenses,
whether or not the Merger is consummated.
(b) If this Agreement is terminated by: (i) Acquiror because
First Kansas committed a Breach of its obligations under this Agreement, unless
such Breach is a result of the failure by Acquiror to perform and comply in all
material respects with any of its material obligations under this Agreement
which are to be performed or complied with by it prior to or on the date
required hereunder, (ii) Acquiror or First Kansas because of the failure of the
condition set forth in Section 10.7, or (iii) First Kansas pursuant to Section
11.1(f), then First Kansas shall pay to Acquiror, upon its written demand, an
amount equal to the sum of Acquiror's Expenses, but not in excess of
Seventy-Five Thousand Dollars ($75,000), plus an amount equal to Seven Hundred
Fifty Thousand Dollars ($750,000).
(c) If this Agreement is terminated by Acquiror or First Kansas
because First Kansas's stockholders fail to approve the Contemplated
Transactions and this Agreement on or before the Termination Date, provided,
however, that prior to such termination, First Kansas has not received notice of
a Competing First Kansas Proposal, then First Kansas shall pay to Acquiror, upon
its written demand, an amount equal to Five Hundred Thousand Dollars ($500,000).
(d) If this Agreement is terminated by Acquiror or First Kansas
because First Kansas's stockholders fail to approve the Contemplated
Transactions and this Agreement on or before the Termination Date, and prior to
such termination First Kansas has received a Competing First Kansas Proposal,
then First Kansas shall pay to Acquiror, upon its written demand, an amount
equal to the sum of Acquiror's Expenses, but not in excess of Seventy-Five
Thousand Dollars ($75,000), plus an amount equal to Seven Hundred Fifty Thousand
Dollars ($750,000).
(e) If this Agreement is terminated by Acquiror because
First Kansas's Adjusted Stockholders' Equity (as calculated immediately prior to
the Closing Date) is less than $13,100,000, then First Kansas shall pay to
Acquiror, upon its written demand, an amount equal to the sum of Acquiror's
Expenses, but not in excess of Seventy-Five Thousand Dollars ($75,000), plus an
amount equal to Seven Hundred Fifty Thousand Dollars ($750,000).
(f) In addition to the payments set forth in Sections
11.3(b), (d) and (e) (each such termination described in such sections a "First
Kansas Termination") if there is a First
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Kansas Termination, and within twenty four (24) months after the termination of
this Agreement First Kansas enters into a Contract with any party other than
Acquiror providing for the acquisition of control of First Kansas or Bank by
such other party, then First Kansas shall pay to Acquiror, upon its written
demand, the additional sum of Two Hundred Fifty Thousand Dollars ($250,000),
plus an amount equal to the amount of Acquiror's Expenses which exceeded
Seventy-Five Thousand Dollars ($75,000) but in no event shall First Kansas's
payment of Acquiror's Expenses pursuant to this Section 11.3(f) as a result of a
First Kansas Termination be greater than Seventy-Five Thousand Dollars
($75,000). If there is a termination of this Agreement pursuant to Section
11.3(c), in addition to the payment set forth therein, if within twenty four
(24) months after such termination First Kansas enters into a Contract with any
party other than Acquiror providing for the acquisition of control of First
Kansas or Bank by such other party, then First Kansas shall pay to Acquiror,
upon its written demand, the additional sum of Five Hundred Thousand Dollars
($500,000), plus an amount equal to the sum of the Acquiror's Expenses, but not
in excess of One Hundred Fifty Thousand Dollars ($150,000). Notwithstanding
Sections 11.3(d) and (f), the provisions of this Section shall in no way limit
Acquiror's rights against any such third party. For purposes of this Section
11.3(f), the phrase "control of First Kansas or Bank" means the acquisition by
any such third party of: (x) legal or beneficial ownership (as defined by Rule
13d-3 promulgated under the Exchange Act) of greater than twenty percent (20%)
of the then issued and outstanding voting stock of First Kansas or Bank through
any transaction to which First Kansas, the Bank or any Affiliate of First Kansas
or Bank is a party; or (y) all or substantially all of the assets of First
Kansas or Bank.
(g) Payment of the sums required by Sections 11.3(b), (c),
(d), (e) and (f) shall constitute liquidated damages and the receipt thereof
shall be Acquiror's sole and exclusive remedy under this Agreement for all
Breaches of this Agreement by First Kansas or such failure to approve the
Contemplated Transactions.
(h) If this Agreement is terminated by First Kansas because
Acquiror committed a Breach of its obligations under this Agreement, unless such
Breach is a result of the failure by First Kansas to perform and comply in all
material respects with any of its material obligations under this Agreement
which are to be performed or complied with by it prior to or on the date
required hereunder, and provided that First Kansas is in compliance with all of
its obligations under this Agreement, Acquiror shall pay to First Kansas, upon
its written demand, an amount equal to the sum of First Kansas's Expenses, but
not in excess of Seventy-Five Thousand Dollars ($75,000), plus an amount equal
to Seven Hundred Fifty Thousand Dollars ($750,000). Payment of the sums required
by this Section 11.3(h) shall constitute liquidated damages and the receipt
thereof shall be First Kansas's sole and exclusive remedy under this Agreement
for all Breaches of this Agreement by Acquiror.
ARTICLE 12
MISCELLANEOUS
Section 12.1 Governing Law. All questions concerning the construction,
-------------
validity and interpretation of this Agreement, and the performance of the
obligations imposed by this Agreement shall be governed by the internal laws of
the State of Kansas applicable to contracts
A-53
made and wholly to be performed in such state without regard to conflicts of
laws, except that the law of the state of Delaware shall apply to all matters of
corporate law and except to the extent superseded by federal law.
Section 12.2 Assignment. Neither this Agreement nor any of the rights
----------
or obligations hereunder may be assigned, in whole or in part, by any of the
parties to this Agreement without the prior written consent of the other parties
to this Agreement and any purported assignment in violation hereof shall be void
and of no effect.
Section 12.3 Amendment and Modification. The parties may by written
----------------------------
agreement signed by Acquiror and First Kansas: (a) extend the time for the
performance of any of the obligations or other acts of the parties hereto; (b)
waive any inaccuracies in the representations or warranties contained in this
Agreement or in any document delivered pursuant to this Agreement; and (c) waive
compliance with or modify, amend or supplement any of the conditions, covenants,
agreements, representations or warranties contained in this Agreement or waive
or modify performance of any of the obligations of any of the parties to this
Agreement, which are for the benefit of the waiving party, provided, however,
that no such modification, amendment or supplement agreed to after authorization
of this Agreement by First Kansas's stockholders shall affect the rights of such
respective stockholders in any manner which is materially adverse to such
stockholders. The failure of any party to this Agreement to enforce at any time
any provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way affect the validity of this Agreement or any part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
Section 12.4 Notices. All notices, requests and other communications
-------
hereunder shall be in writing (which shall include telecopier communication) and
shall be deemed to have been duly given if delivered by hand or by overnight
express delivery service, mailed certified or registered mail with first class
postage prepaid or telecopied if confirmed immediately thereafter by also
mailing a copy of any notice, request or other communication by certified or
registered mail with first class postage prepaid:
(a) If to First Kansas, to:
First Kansas Financial Corporation
600 Main Street
Osawatomie, Kansas 66064
Attention: Larry V. Bailey, President and CEO
Telephone: (913) 755-3033
Telecopier: (913) 755-2795
A-54
with copies to:
Malizia Spidi & Fisch, PC
1100 New York Avenue, N.W., Suite 340 West
Washington, D.C. 20005
Attention: Richard Fisch, Esq.
Telephone: (202) 434-4660
Telecopier: (202) 434-4661
or to such other Person and place as Acquiror shall furnish to First Kansas in
writing; or
(b) if to Acquiror or Acquisition Corp, to:
Landmark Bancorp, Inc.
800 Poyntz Avenue
Manhattan, Kansas 66502
Attention: Patrick L. Alexander, President and CEO
Telephone: (785) 565-2000
Telecopier: (785) 565-2055
with copies to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLC
333 West Wacker, Suite 2700
Chicago, Illinois 60606
Attention: John E. Freechack, Esq.
Telephone: (312) 984-3100
Telecopier: (312) 984-3150
or to such other Person or place as First Kansas shall furnish to Acquiror in
writing. Except as otherwise provided herein, all such notices, requests or
other communications shall be effective: (i) if delivered by hand, when
delivered; (ii) if mailed in the manner provided in this Section, five (5)
Business Days after deposit with the United States Postal Service; (iii) if
delivered by overnight express delivery service, on the next Business Day after
deposit with such service; (iv) if by telecopier, on the next Business Day if
also confirmed by mail in the manner provided in this Section.
Section 12.5 Entire Agreement. This Agreement and any documents
-----------------
executed by the parties pursuant to this Agreement and referred to herein
constitute the entire understanding and agreement of the parties to this
Agreement and supersede all other prior agreements and understandings, written
or oral, relating to such subject matter between the parties, except for the
Joint Confidentiality Agreement between Acquiror and First Kansas dated as of
April 15, 2003. This Agreement and every representation, warranty, covenant,
agreement and provision hereof shall be binding upon and inure to the benefit of
the parties to this Agreement and their respective successors and permitted
assigns.
Section 12.6 Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any
A-55
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement unless the consummation of the
Contemplated Transactions is adversely affected thereby.
Section 12.7 Further Instruments. The parties to this Agreement will,
--------------------
at or before the Effective Time, execute and deliver such further instruments as
may be reasonably requested by any other party which are necessary to or
appropriate with respect to the consummation of the transactions contemplated by
this Agreement.
Section 12.8 Counterparts. This Agreement and any amendments thereto
------------
may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 12.9 All Reasonable Efforts. Each party represents and warrants
----------------------
that it will use all reasonable efforts to bring about the transactions
contemplated by this Agreement as soon as practicable provided that this Section
shall not obligate Acquiror or First Kansas to remedy any breach of any of its
representations, warranties and covenants herein. In the event that any party
becomes aware of the occurrence or impending occurrence of any event which would
constitute or cause a breach by it of any of the representations or warranties
herein, or would have constituted or caused a breach by it of any of the
representations or warranties herein, had such an event occurred or been known
prior to the date hereof, said party shall immediately give detailed and written
notice thereof to the other party.
Section 12.10 Survival of Representations and Warranties. Except as
---------------------------------------------
otherwise expressly provided herein, including in Section 6.24, Section 8.4,
Section 8.5, and Section 8.8 the covenants, representations and warranties
contained in this Agreement shall survive only until the Effective Time.
Section 12.11 No Third Party Beneficiaries. This Agreement is not
------------------------------
intended to and shall not create any rights in or confer any benefits upon any
Person or entity other than the parties hereto and the Persons identified in
Section 8.5.
A-56
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first written above.
ATTEST LANDMARK BANCORP, INC.
By: /s/Mark A. Herpich By: /s/Patrick L. Alexander
----------------------------- -------------------------------------
Name: Mark A. Herpich Name: Patrick L. Alexander
Title: Vice President and Title:President and Chief Executive
Secretary Officer
ATTEST LANDMARK ACQUISITION CORPORATION
By: /s/Mark A. Herpich By: /s/Patrick L. Alexander
----------------------------- -------------------------------------
Name: Mark A. Herpich Name: Patrick L. Alexander
Title: Secretary Title:President and Chief Executive
Officer
ATTEST FIRST KANSAS
FINANCIAL CORPORATION
By: /s/Galen E. Graham /s/Larry V. Bailey
----------------------------- -------------------------------------
Name: Galen E. Graham Name: Larry V. Bailey
Title: Secretary and Senior Title:President and Chief Executive
Vice President Officer
A-57
Appendix B
Board of Directors
First Kansas Financial Corporation
600 Main Street
P.O. Box 9
Osawatomie, Kansas 66064
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the issued and outstanding shares of common stock (the
"First Kansas Common Stock") of First Kansas Financial Corporation ("First
Kansas"), of the consideration to be paid by Landmark Bancorp, Inc. ("Landmark")
pursuant to the Agreement and Plan of Merger, dated as of November 13, 2003 (the
"Agreement") by and among First Kansas and Landmark. Unless otherwise noted, all
terms used herein will have the same meaning as defined in the Agreement.
The Agreement provides for the merger (the "Merger") of the newly established
subsidiary of Landmark ("Acquisition Sub") with and into First Kansas, pursuant
to which, among other things, at the Effective Time (as defined in the
Agreement), each outstanding share of First Kansas Common Stock will be
exchanged for the right to receive $19.00 in cash (the "Merger Consideration").
The specific terms and conditions of the Merger are more fully set forth in the
Agreement.
Trident Securities ("Trident"), a division of McDonald Investments Inc., as part
of its investment banking business, is customarily engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes.
We have acted as First Kansas's financial advisor in connection with, and have
participated in certain negotiations leading to, the Agreement. In connection
with rendering our opinion set forth herein, we have among other things:
(i) Reviewed certain publicly available information concerning First
Kansas, including the Annual Reports on Form 10-K of First Kansas
for each of the years for the three-year period ended December 31,
2002 and the Quarterly Reports on Forms 10-Q of First Kansas for
the quarters ended March 31, 2003, June 30, 2003, and September
30, 2003;
B-1
Board of Directors
Page 2
(ii) Reviewed certain financial and operational information concerning
Landmark, including the consolidated statement of financial
condition as of September 30, 2003, related statements of income,
changes in stockholders' equity and cash flows for the year ended
December 31, 2002 accompanied by the audit report of Landmark's
independent public accountants;
(iii) Reviewed certain other internal information, primarily financial
in nature, relating to the respective businesses, earnings, assets
and prospects of First Kansas and Landmark provided to us or
publicly available for purposes of our analysis;
(iv) Participated in meetings and telephone conferences with members of
senior management of First Kansas concerning the financial
condition, business, assets, financial forecasts and prospects of
the company, as well as other matters we believed relevant to our
inquiry;
(v) Participated in meetings and telephone conferences with members of
senior management of Landmark concerning the financial condition,
business, assets, financial forecasts of Landmark, as well as
other matters we believed relevant to our inquiry;
(vi) Reviewed certain stock market information for First Kansas Common
Stock and compared it with similar information for certain
companies, the securities of which are publicly traded;
(vii) Compared the results of operations and financial condition of
First Kansas with that of certain companies, which we deemed to be
relevant for purposes of this opinion;
(viii) Reviewed the financial terms, to the extent publicly available, of
certain acquisition transactions, which we deemed to be relevant
for purposes of this opinion;
(ix) Reviewed financial projections prepared by management of First
Kansas;
(x) Reviewed the Agreement and certain related documents; and
(xi) Performed such other reviews and analyses as we have deemed
appropriate.
In our review and analysis and in arriving at our opinion, we have assumed and
relied upon the accuracy and completeness of all of the financial and other
information reviewed by us and have relied upon the accuracy and completeness of
the representations, warranties and covenants of First Kansas and Landmark
contained in the Agreement. We have not been engaged to undertake, and have not
assumed any responsibility for, nor have we conducted, an independent
investigation or verification of such matters. We have not been engaged to and
we have not conducted a physical inspection of any of the assets, properties or
facilities of either First Kansas
B-2
Board of Directors
Page 3
or Landmark, nor have we made or obtained or been furnished with any independent
valuation or appraisal of any of such assets, properties or facilities or any of
the liabilities of either First Kansas or Landmark.
With respect to financial forecasts used in our analysis, we have assumed that
such forecasts have been reasonably prepared by management of First Kansas on a
basis reflecting the best currently available estimates and judgments of the
management of First Kansas as to the future performance of First Kansas. We have
not been engaged to and we have not assumed any responsibility for, nor have we
conducted any independent investigation or verification of such matters, and we
express no view as to such financial forecasts or the assumptions on which they
are based. We have also assumed that all of the conditions to the consummation
of the Merger, as set forth in the Agreement, would be satisfied and that the
Merger would be consummated on a timely basis in the manner contemplated by the
Agreement.
This opinion is based on economic and market conditions and other circumstances
existing on, and information made available as of, the date hereof. In addition,
our opinion is, in any event, limited to the fairness, as of the date hereof,
from a financial point of view, of the Merger Consideration, to the holders of
First Kansas Common Stock, and does not address the underlying business decision
by First Kansas's Board of Directors to effect the Merger, does not compare or
discuss the relative merits of any competing proposal or any other terms of the
Merger, and does not constitute a recommendation to any First Kansas shareholder
as to how such shareholder should vote with respect to the Merger. This opinion
does not represent an opinion as to what the value of First Kansas Common Stock
may be at the Effective Time of the Merger or as to the prospects of First
Kansas's business or Landmark's business and Offering.
We have acted as financial advisor to First Kansas in connection with the Merger
and will receive from First Kansas a fee for our services, a significant portion
of which is contingent upon the consummation of the Merger, as well as First
Kansas's agreement to indemnify us under certain circumstances. We will also
receive a milestone fee in connection with the delivery of this opinion. In the
ordinary course of business, we may actively trade securities of First Kansas
for our own account and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
It is understood that this opinion was prepared solely for the confidential use
of the Board of Directors and senior management of First Kansas and may not be
disclosed, summarized, excerpted from or otherwise publicly referred to without
our prior written consent. Notwithstanding the foregoing, this opinion may be
included in the proxy statement to be mailed to the holders of First Kansas
Common Stock in connection with the Merger, provided that this opinion will be
reproduced in such proxy statement in full, and any description of or reference
to us or our actions, or any summary of the opinion in such proxy statement,
will be in a form reasonably acceptable to us and our counsel.
B-3
Board of Directors
Page 4
Based upon and subject to the foregoing and such other matters, as we consider
relevant, it is our opinion that as of the date hereof, the Merger Consideration
is fair, from a financial point of view, to the stockholders of First Kansas.
Very truly yours,
B-4
APPENDIX C
SECTION 17-6712 OF THE KANSAS GENERAL CORPORATION CODE
RELATING TO DISSENTERS' RIGHTS
17-6712. PAYMENT FOR "STOCK" OF "STOCKHOLDER" OBJECTING TO MERGER OR
CONSOLIDATION; DEFINITIONS; "STOCKHOLDER," "STOCK" AND "SHARE" DEFINED; NOTICE
TO OBJECTING "STOCKHOLDERS"; DEMAND FOR PAYMENT; APPRAISAL AND DETERMINATION OF
VALUE BY DISTRICT COURT, WHEN; TAXATION OF COSTS; RIGHTS OF OBJECTING
STOCKHOLDERS; STATUS OF STOCK; SECTION INAPPLICABLE TO CERTAIN SHARES OF STOCK.
(a) When used in this section, the word "stockholder" means a holder of
record of stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is ordinarily
meant by those words and also membership or membership interest of a member of a
nonstock corporation.
(b) The corporation surviving or resulting from any merger or
consolidation, within 10 days after the effective date of the merger or
consolidation, shall notify each stockholder of any corporation of this state so
merging or consolidating who objected thereto in writing and whose shares either
were not entitled to vote or were not voted in favor of the merger or
consolidation, and who filed such written objection with the corporation before
the taking of the vote on the merger or consolidation, that the merger or
consolidation has become effective. If any such stockholder, within 20 days
after the date of mailing of the notice, shall demand in writing, from the
corporation surviving or resulting from the merger or consolidation, payment of
the value of the stockholder's stock, the surviving or resulting corporation
shall pay to the stockholder, within 30 days after the expiration of the period
of 20 days, the value of the stockholder's stock on the effective date of the
merger or consolidation, exclusive of any element of value arising from the
expectation or accomplishment of the merger or consolidation.
(c) If during a period of 30 days following the period of 20 days
provided for in subsection (b), the corporation and any such stockholder fail to
agree upon the value of such stock, any such stockholder, or the corporation
surviving or resulting from the merger or consolidation, may demand a
determination of the value of the stock of all such stockholders by an appraiser
or appraisers to be appointed by the district court, by filing a petition with
the court within four months after the expiration of the thirty-day period.
(d) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the corporation, which shall file with the clerk
of such court, within 10 days after such service, a duly verified list
containing the names and addresses of all stockholders who have demanded payment
for their shares and with whom agreements as to the value of their shares have
not been reached by the corporation. If the petition shall be filed by the
corporation, the petition shall be accompanied by such duly verified list. The
clerk of the court shall give notice of the time and place fixed for the hearing
of such petition by registered or certified mail to the corporation and to the
stockholders shown upon the list at the addresses therein stated and notice
shall also be given by publishing a notice at least once, at least one week
before the day of the hearing, in a newspaper of general circulation in the
county in which the court is located. The court may direct such additional
publication of notice as it deems advisable. The forms of the notices by mail
and by publication shall be approved by the court.
(e) After the hearing on such petition the court shall determine the
stockholders who have complied with the provisions of this section and become
entitled to the valuation of and payment for their shares, and shall appoint an
appraiser or appraisers to determine such value. Any such appraiser may examine
any of the books and records of the corporation or corporations the stock of
which such appraiser is charged with the duty of valuing, and such appraiser
shall make a determination of the value of the shares upon such investigation as
seems proper to the appraiser. The appraiser or appraisers shall also afford a
reasonable opportunity to the parties interested to submit to the appraiser or
appraisers pertinent evidence on the value of the shares. The appraiser or
appraisers, also, shall have the powers and authority conferred upon masters by
K.S.A. 60-253 and amendments thereto.
C-1
(f) The appraiser or appraisers shall determine the value of the stock
of the stockholders adjudged by the court to be entitled to payment therefor and
shall file a report respecting such value in the office of the clerk of the
court, and notice of the filing of such report shall be given by the clerk of
the court to the parties in interest. Such report shall be subject to exceptions
to be heard before the court both upon the law and facts. The court by its
decree shall determine the value of the stock of the stockholders entitled to
payment therefor and shall direct the payment of such value, together with
interest, if any, as hereinafter provided, to the stockholders entitled thereto
by the surviving or resulting corporation. Upon payment of the judgment by the
surviving or resulting corporation, the clerk of the district court shall
surrender to the corporation the certificates of shares of stock held by the
clerk pursuant to subsection (g). The decree may be enforced as other judgments
of the district court may be enforced, whether such surviving or resulting
corporation be a corporation of this state or of any other state.
(g) At the time of appointing the appraiser or appraisers, the court
shall require the stockholders who hold certificated shares and who demanded
payment for their shares to submit their certificates of stock to the clerk of
the court, to be held by the clerk pending the appraisal proceedings. If any
stockholder fails to comply with such direction, the court shall dismiss the
proceedings as to such stockholder.
(h) The cost of any such appraisal, including a reasonable fee to and
the reasonable expenses of the appraiser, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to such appraisal or any of them as appears to be equitable, except
that the cost of giving the notice by publication and by registered or certified
mail hereinabove provided for shall be paid by the corporation. The court, on
application of any party in interest, shall determine the amount of interest, if
any, to be paid upon the value of the stock of the stockholders entitled
thereto.
(i) Any stockholder who has demanded payment of the stockholder's stock
as herein provided shall not thereafter be entitled to vote such stock for any
purpose or be entitled to the payment of dividends or other distribution on the
stock, except dividends or other distributions payable to stockholders of record
at a date which is prior to the effective date of the merger or consolidation,
unless the appointment of an appraiser or appraisers shall not be applied for
within the time herein provided, or the proceeding be dismissed as to such
stockholder, or unless such stockholder with the written approval of the
corporation shall deliver to the corporation a written withdrawal of the
stockholder's objections to and an acceptance of the merger or consolidation, in
any of which cases the right of such stockholder to payment for the
stockholder's stock shall cease.
(j) The shares of the surviving or resulting corporation into which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
(k) This section shall not apply to the shares of any class or series
of a class of stock, which, at the record date fixed to determine the
stockholders entitled to receive notice of and to vote at the meeting of
stockholders at which the agreement of merger or consolidation is to be acted
on, were either (1) registered on a national securities exchange or designated
as a national market system security on an interdealer quotation system by the
national association of securities dealers, inc., or (2) held of record by not
less than 2,000 stockholders, unless the articles of incorporation of the
corporation issuing such stock shall otherwise provide; nor shall this section
apply to any of the shares of stock of the constituent corporation surviving a
merger, if the merger did not require for its approval the vote of the
stockholders of the surviving corporation, as provided in subsection (f) of
K.S.A. 17-6701 and amendments thereto. This subsection shall not be applicable
to the holders of a class or series of a class of stock of a constituent
corporation if under the terms of a merger of consolidation pursuant to K.S.A.
17-6701 or 17-6702, and amendments thereto, such holders are required to accept
for such stock anything except (i) stock or stock and cash in lieu of fractional
shares of the corporation surviving or resulting from such merger or
consolidation, or (ii) stock or stock and cash in lieu of fractional shares of
any other corporation, which at the record date fixed to determine the
stockholders entitled to receive notice of and to vote at the meeting of
stockholders at which the agreement of merger or consolidation is to be acted
on, were either registered on a national securities exchange or held of record
by not less than 2,000 stockholders, or (iii) a combination of stock or stock
and cash in lieu of fractional shares as set forth in (i) and (ii) of this
subsection.
C-2
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FIRST KANSAS FINANCIAL CORPORATION
600 MAIN STREET
OSAWATOMIE, KANSAS 66064
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SPECIAL MEETING OF SHAREHOLDERS
_________________, 2004
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of First Kansas
Financial Corporation ("First Kansas"), or its designee, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of common stock of First Kansas which the undersigned is entitled to vote
at the Special Meeting of Shareholders (the "Meeting"), to be held at 600 Main
Street, Osawatomie, Kansas, 66064 on ______________, _________________, 2004, at
_:__ _.m., local time, and at any and all adjournments thereof, as follows:
FOR AGAINST ABSTAIN
--- ------- -------
1. Proposal to approve and adopt an agreement
and plan of merger, dated November 13, 2003,
by and among Landmark Bancorp, Inc., Landmark
Acquisition Corporation and First Kansas Financial
Corporation, pursuant to which, among other things,
(i) Landmark Acquisition Corporation, a newly-
formed subsidiary of Landmark will merge with
and into First Kansas and (ii) upon consummation
of the merger, each outstanding share of First Kansas
common stock (other than dissenting shares and certain
shares held by First Kansas or Landmark) will be
converted into the right to receive $19.00 in cash,
without interest, subject to reduction in certain
circumstances. [ ] [ ] [ ]
2. Any other matter which may properly come before the
Meeting or any adjournment thereof in the discretion
of the proxy holder.
The Board of Directors recommends a vote "FOR" the above proposition.
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
SIGNED PROXY WILL BE VOTED FOR THE PROPOSITION STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elects to vote at the Meeting, or at
any adjournments thereof, and after notification to the Secretary of First
Kansas at the Meeting of the shareholder's decision to terminate this proxy, the
power of said attorneys and proxies shall be deemed terminated and of no further
force and effect. The undersigned may also revoke this proxy by filing a
subsequently dated proxy or by notifying the Secretary of First Kansas of his or
her decision to terminate this proxy.
The undersigned acknowledges receipt from First Kansas prior to the
execution of this proxy of a Notice of Special Meeting and a Proxy Statement
dated ___________________, 2004.
Please check here if you
Dated: ______________, 2004 [ ] plan to attend the Meeting.
__________________________________ _______________________________________
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
__________________________________ _______________________________________
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
Please sign exactly as your name appears on this form of proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
FIRST KANSAS FINANCIAL CORPORATION
January ___, 2004
Dear ESOP Participant:
In connection with the Special Meeting of Stockholders of First Kansas
Financial Corporation (the "Company"), you may direct the voting of the shares
of Common Stock of the Company held by the First Kansas Federal Savings Bank
Employee Stock Ownership Plan and Trust ("ESOP") allocated to your ESOP account.
Unallocated shares in the ESOP and allocated shares for which voting
instructions are not received will be voted by the ESOP Trustee in accordance
with their fiduciary capacity.
We are forwarding to you the attached Proxy Statement dated January
___, 2004, and the Vote Authorization Form, provided for the purpose of
conveying your voting instructions to the ESOP Trustee.
At this time, in order to direct the voting of shares allocated to your
account under the ESOP, you must fill out and sign the enclosed Vote
Authorization Form and return it to the ESOP Trustee in the accompanying
envelope. Your votes will be tallied and the ESOP Trustee will vote your
allocated shares in the ESOP Trust based upon your directions received in a
timely manner.
Sincerely,
ESOP Trustee
VOTE AUTHORIZATION FORM
I, the undersigned, understand that the ESOP Trustee is the holder of
record and custodian of all shares attributable to me of First Kansas Financial
Corporation (the "Company") Common Stock under the First Kansas Federal Savings
Bank Employee Stock Ownership Plan and Trust. Further, I understand that my
voting instructions are solicited on behalf of the ESOP Trustee for the
Company's Special Meeting of Stockholders to be held on ________, 2004.
Accordingly, you are to vote all shares attributable to me as follows:
FOR AGAINST ABSTAIN
--- ------- -------
1. Proposal to approve and adopt an agreement and plan
of merger, dated November 13, 2003, by and among
Landmark Bancorp, Inc., Landmark Acquisition
Corporation and First Kansas Financial Corporation,
pursuant to which, among other things, Landmark
Acquisition Corporation, a newly-formed subsidiary
of Landmark will merge with and into First Kansas
and (ii) upon consummation of the merger, each
outstanding share of First Kansas common stock (other
than dissenting shares and certain shares held by
First Kansas or Landmark) will be converted into the
right to receive $19.00 in cash, without interest, subject
to reduction in certain circumstances. [ ] [ ] [ ]
2. Any other matter which may properly come before
the Meeting or any thereof in the discretion of the
proxy holder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE ABOVE PROPOSAL
The ESOP Trustee is hereby authorized to vote any shares attributable to me
in his or her trust capacities as indicated above. I understand that if I sign
this form without indicating specific instructions, shares attributable to me
will be voted FOR the listed proposals.
____________________- ____________________________
Date Signature
Please date, sign and return this form in the enclosed envelope.