[On letterhead of Boatmen's Bancshares, Inc.]
November 13, 1995
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders (the
"Boatmen's Meeting") of Boatmen's Bancshares, Inc., a Missouri corporation
("Boatmen's"), to be held on December 12, 1995. The Boatmen's Meeting will be
held at One Boatmen's Plaza, 800 Market Street, St. Louis, Missouri 63101,
commencing at 10:00 a.m., local time.
At the Boatmen's Meeting, you will be asked to consider and vote upon a
proposal to issue shares of Common Stock, par value $1.00 per share, of
Boatmen's (the "Boatmen's Common") and 7% Cumulative Convertible Preferred
Stock, Series A, stated value $100 per share, liquidation preference $400 per
share, of Boatmen's (the "Boatmen's New Preferred") to shareholders of Fourth
Financial Corporation, a Kansas corporation ("Fourth Financial"), pursuant to
the terms of an Agreement and Plan of Merger dated August 25, 1995 (the "Merger
Agreement"), among Fourth Financial, Boatmen's and Acquisition Sub, Inc., a
Kansas corporation and wholly-owned subsidiary of Boatmen's ("Acquisition Sub"),
pursuant to which Fourth Financial will merge (the "Merger") with and into
Acquisition Sub.
If the Merger is approved and consummated, (i) each issued and outstanding
share of Common Stock, par value $5.00 per share, of Fourth Financial will be
converted into the right to receive 1 share of Boatmen's Common, and (ii) each
issued and outstanding share of Class A 7% Cumulative Convertible Preferred
Stock, par value $100 per share, liquidation preference $400 per share, of
Fourth Financial (the "Fourth Financial Preferred") will be converted into 1
share of Boatmen's New Preferred having substantially the same rights and
preferences as the Fourth Financial Preferred (and, as a result, each depositary
share representing a 1/16 interest in a share of Fourth Financial Preferred will
be converted into the right to receive a depositary share representing a 1/16
interest in a share of Boatmen's New Preferred).
Upon consummation of this transaction, Boatmen's will be among the 25 largest
banking organizations in the United States (based on total assets), with the
leading deposit market share in five states -- Missouri, Kansas, Oklahoma,
Arkansas and New Mexico -- and an extensive network of more than 650 retail
offices and 1,350 ATMs throughout nine states. After the Merger, we believe that
Boatmen's will be better-positioned to meet the competitive challenges of the
rapidly restructuring financial services industry in the United States.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
MATTERS TO BE CONSIDERED AT THE BOATMEN'S MEETING.
Shareholders are urged to read carefully the accompanying Joint Proxy
Statement/Prospectus which contains detailed information concerning the matters
to be considered at the Boatmen's Meeting.
Your participation in the Boatmen's Meeting, in person or by proxy, is
important. Therefore, please mark, sign and date the enclosed proxy card and
return it as soon as possible in the enclosed postage-paid envelope. If you
attend the Boatmen's Meeting, you may vote in person if you wish, even if you
have previously mailed in your proxy card.
Sincerely,
/s/ Andrew B. Craig, III
Andrew B. Craig, III
Chairman of the Board and Chief Executive Officer
BOATMEN'S BANCSHARES, INC.
A MISSOURI CORPORATION
-----------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 12, 1995
-----------------------------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Boatmen's
Meeting") of Boatmen's Bancshares, Inc., a Missouri corporation ("Boatmen's"),
will be held on December 12, 1995, at 10:00 a.m., local time, at One Boatmen's
Plaza, 800 Market Street, St. Louis, Missouri 63101, for the following purpose:
To consider and vote upon a proposal to approve the issuance of shares of
Common Stock, par value $1.00 per share, of Boatmen's and 7% Cumulative
Convertible Preferred Stock, Series A, stated value $100 per share,
liquidation preference $400 per share, of Boatmen's to the shareholders of
Fourth Financial Corporation, a Kansas corporation ("Fourth Financial"),
pursuant to the Agreement and Plan of Merger (the "Merger Agreement"), dated
August 25, 1995, among Fourth Financial, Boatmen's and Acquisition Sub, Inc.,
a Kansas corporation and wholly-owned subsidiary of Boatmen's ("Acquisition
Sub"), pursuant to which Fourth Financial will be merged with and into
Acquisition Sub, upon the terms and subject to the conditions set forth in
the Merger Agreement, as are more fully described in the accompanying Joint
Proxy Statement/Prospectus.
A copy of the Merger Agreement is attached as Appendix A to the accompanying
Joint Proxy Statement/Prospectus.
The Board of Directors of Boatmen's has fixed the close of business on
October 23, 1995, as the record date for determination of shareholders entitled
to notice of and to vote at the Boatmen's Meeting or at any adjournments or
postponements thereof.
THE BOARD OF DIRECTORS OF BOATMEN'S UNANIMOUSLY RECOMMENDS THAT ITS
SHAREHOLDERS VOTE "FOR" THE ABOVE-MENTIONED ISSUANCE OF BOATMEN'S COMMON STOCK
AND BOATMEN'S 7% CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES A.
EACH SHAREHOLDER IS URGED TO COMPLETE AND RETURN PROMPTLY THE ACCOMPANYING
PROXY WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE BOATMEN'S MEETING. The prompt
return of each shareholder's signed proxy will help assure a quorum and aid
Boatmen's in reducing the expense of additional proxy solicitation. The giving
of such proxy does not affect a shareholder's right to vote in person in the
event the shareholder attends the Boatmen's Meeting.
By Order of the Board of Directors
/s/ David L. Foulk
David L. Foulk
Secretary
St. Louis, Missouri
November 13, 1995
[On letterhead of Fourth Financial Corporation]
November 13, 1995
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders (the
"Fourth Financial Meeting") of Fourth Financial Corporation, a Kansas
corporation ("Fourth Financial"), to be held on December 12, 1995. The Fourth
Financial Meeting will be held in the auditorium on the Lower Level of the
Fourth Financial Center, at 100 North Broadway, Wichita, Kansas 67202,
commencing at 10:00 a.m., local time.
At the Fourth Financial Meeting, holders of Common Stock, par value $5.00 per
share, (the "Fourth Financial Common") of Fourth Financial will be asked to
consider and vote upon a proposal to adopt an Agreement and Plan of Merger dated
August 25, 1995 (the "Merger Agreement"), among Fourth Financial, Boatmen's
Bancshares, Inc., a Missouri corporation ("Boatmen's"), and Acquisition Sub,
Inc., a Kansas corporation and wholly-owned subsidiary of Boatmen's
("Acquisition Sub"), pursuant to which Fourth Financial will merge (the
"Merger") with and into Acquisition Sub.
If the Merger is approved and consummated, (i) each issued and outstanding
share of Fourth Financial Common will be converted into the right to receive 1
share of Common Stock, par value $1.00 per share, of Boatmen's, and (ii) each
issued and outstanding share of Class A 7% Cumulative Convertible Preferred
Stock, par value $100 per share, liquidation preference $400 per share, of
Fourth Financial (the "Fourth Financial Preferred") will be converted into 1
share of 7% Cumulative Convertible Preferred Stock, Series A, stated value $100
per share, liquidation preference $400 per share, of Boatmen's having
substantially the same rights and preferences as the Fourth Financial Preferred
(the "Boatmen's New Preferred") (and, as a result, each depositary share
representing a 1/16 interest in a share of Fourth Financial Preferred will be
converted into the right to receive a depositary share representing a 1/16
interest in a share of Boatmen's New Preferred).
Holders of Fourth Financial Preferred (and depositary shares representing an
interest therein) are receiving a copy of the accompanying Joint Proxy
Statement/Prospectus, but proxies are not being solicited from such holders and
such holders are not entitled to vote at the Fourth Financial Meeting.
Your Board of Directors submits the proposed Merger to you after careful
review and consideration. Upon consummation of the Merger, the combined
organization will be among the 25 largest banking organizations in the United
States (based on total assets), with the leading deposit market share in five
states --Missouri, Kansas, Oklahoma, Arkansas and New Mexico -- and an extensive
network of more than 650 retail offices and 1,350 ATMs throughout nine states,
thus increasing Fourth Financial's geographic diversity. In addition, we believe
that the proposed Merger will provide significant value to all shareholders,
enabling shareholders of Fourth Financial to participate in the expanded
opportunities for growth that association with a larger, more geographically-
diversified super-regional financial organization makes possible. We are
confident that the combined organization and its shareholders will be well
positioned to take advantage of future opportunities as the banking industry
continues to consolidate and restructure.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT HOLDERS OF FOURTH
FINANCIAL COMMON STOCK VOTE IN FAVOR OF THE MERGER AT THE FOURTH FINANCIAL
MEETING.
Shareholders are urged to read carefully the accompanying Joint Proxy
Statement/Prospectus which contains detailed information concerning the matters
to be considered at the Fourth Financial Meeting.
Your participation in the Fourth Financial Meeting, in person or by proxy, is
important. Therefore, please mark, sign and date the enclosed proxy card and
return it as soon as possible in the enclosed postage-paid envelope. If you
attend the Fourth Financial Meeting, you may vote in person if you wish, even if
you have previously mailed in your proxy card.
Sincerely,
/s/ Darrell G. Knudson
Darrell G. Knudson
Chairman of the Board, President
and Chief Executive Officer
FOURTH FINANCIAL CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 12, 1995
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Fourth
Financial Meeting") of Fourth Financial Corporation, a Kansas corporation
("Fourth Financial"), will be held on December 12, 1995, at 10:00 a.m., local
time, in the auditorium on the Lower Level of the Fourth Financial Center, at
100 North Broadway, Wichita, Kansas 67202, for the following purpose:
To consider and vote upon a proposal to adopt the Agreement and Plan of
Merger (the "Merger Agreement"), dated August 25, 1995, among Fourth
Financial, Boatmen's Bancshares, Inc., a Missouri corporation ("Boatmen's"),
and Acquisition Sub, Inc., a Kansas corporation and wholly-owned subsidiary
of Boatmen's ("Acquisition Sub"), and the consummation of the transactions
contemplated thereby, pursuant to which Fourth Financial will be merged (the
"Merger") with and into Acquisition Sub, upon the terms and subject to the
conditions set forth in the Merger Agreement, as are more fully described in
the accompanying Joint Proxy Statement/Prospectus.
A copy of the Merger Agreement is attached as Appendix A to the accompanying
Joint Proxy Statement/Prospectus.
The Board of Directors of Fourth Financial has fixed the close of business on
October 23, 1995, as the record date for determination of shareholders entitled
to notice of and to vote at the Fourth Financial Meeting or at any adjournments
or postponements thereof.
THE BOARD OF DIRECTORS OF FOURTH FINANCIAL HAS APPROVED THE MERGER AGREEMENT
AND BELIEVES THAT THE MERGER IS FAIR TO, AND IS IN THE BEST INTERESTS OF, ITS
SHAREHOLDERS. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT ITS
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
EACH SHAREHOLDER IS URGED TO COMPLETE AND RETURN PROMPTLY THE ACCOMPANYING
PROXY WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE FOURTH FINANCIAL MEETING. The
prompt return of each shareholder's signed proxy will help assure a quorum and
aid Fourth Financial in reducing the expense of additional proxy solicitation.
The giving of such proxy does not affect a shareholder's right to vote in person
in the event the shareholder attends the Fourth Financial Meeting.
By Order of the Board of Directors
/s/ William J. Rainey
William J. Rainey
Secretary
Wichita, Kansas
November 13, 1995
Filed Pursuant to Rule 424(b)(3)
Registration No. 33-64087
[BOATMEN'S BANCSHARES, INC. LOGO] [FOURTH FINANCIAL CORPORATION LOGO]
PROXY STATEMENT PROXY STATEMENT
FOR FOR
BOATMEN'S BANCSHARES, INC. FOURTH FINANCIAL CORPORATION
PROSPECTUS
OF
BOATMEN'S BANCSHARES, INC.
This Joint Proxy Statement/Prospectus relates to the proposed acquisition of
Fourth Financial Corporation, a Kansas corporation ("Fourth Financial"), by
Boatmen's Bancshares, Inc., a Missouri corporation ("Boatmen's"), by means of
the merger (the "Merger") of Fourth Financial with and into Acquisition Sub,
Inc., a Kansas corporation and wholly-owned subsidiary of Boatmen's
("Acquisition Sub"), pursuant to the terms of an Agreement and Plan of Merger
(the "Merger Agreement"), dated August 25, 1995, among Fourth Financial,
Boatmen's and Acquisition Sub. The Merger Agreement is attached hereto as
Appendix A and is incorporated by reference herein.
This Joint Proxy Statement/Prospectus is being furnished in connection with
the solicitation of proxies by the Board of Directors of Boatmen's (the
"Boatmen's Board") to be used at the Special Meeting of Shareholders (the
"Boatmen's Meeting") of Boatmen's to be held on December 12, 1995. At the
Boatmen's Meeting, holders of the common stock, par value $1.00 per share, of
Boatmen's (the "Boatmen's Common") and 7% Cumulative Redeemable Preferred
Stock, Series B, stated value $100 per share (the "Boatmen's Series B
Preferred"; together with the Boatmen's Common, the "Boatmen's Voting Stock")
will consider and vote upon the issuance of shares of Boatmen's Common and
Boatmen's New Preferred (as such term is hereafter defined) to shareholders of
Fourth Financial pursuant to the terms of the Merger Agreement. See "BOATMEN'S
MEETING."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------------
THE SHARES OF BOATMEN'S COMMON AND BOATMEN'S NEW PREFERRED OFFERED HEREBY ARE
NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY
BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE
FUND OR ANY OTHER GOVERNMENTAL AGENCY.
-----------------------------------
THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IS NOVEMBER 13, 1995.
(continued on next page)
This Joint Proxy Statement/Prospectus is being furnished in connection with
the solicitation of proxies by the Board of Directors of Fourth Financial (the
"Fourth Financial Board") to be used at the Special Meeting of Shareholders
(the "Fourth Financial Meeting") of Fourth Financial to be held on December
12, 1995. At the Fourth Financial Meeting, holders of the common stock, par
value $5.00 per share, of Fourth Financial (the "Fourth Financial Common")
will consider and vote upon a proposal to adopt the Merger Agreement. Copies
of this Joint Proxy Statement/Prospectus are being furnished by Fourth
Financial to the holders of shares of Class A 7% Cumulative Convertible
Preferred Stock, par value $100 per share, liquidation preference $400 per
share, of Fourth Financial (the "Fourth Financial Preferred"), including the
holders of depositary shares each representing a 1/16 interest in a share of
Fourth Financial Preferred (the "Fourth Financial Preferred Depositary
Shares"), but proxies are not being solicited from such holders and such
holders are not entitled to vote at the Fourth Financial Meeting. See "FOURTH
FINANCIAL MEETING."
Pursuant to the Merger Agreement and in connection with the Merger, (i) each
issued and outstanding share of Fourth Financial Common, other than shares
held in the treasury of Fourth Financial or by Fourth Financial or its
subsidiaries (except shares held by Fourth Financial or its subsidiaries in a
fiduciary capacity or in respect of a debt previously contracted), will be
converted into the right to receive 1 share of Boatmen's Common, including the
associated preferred share purchase rights and cash in lieu of fractional
shares (the "Common Exchange Ratio"), and (ii) each issued and outstanding
share of Fourth Financial Preferred (except for shares as to which appraisal
rights are perfected) will be converted into the right to receive 1 share of
7% Cumulative Convertible Preferred Stock, Series A, stated value $100 per
share, liquidation preference $400 per share, (the "Boatmen's New Preferred")
of Boatmen's (the "Preferred Exchange Ratio") having substantially the same
rights and preferences as the Fourth Financial Preferred (and, as a result,
each Fourth Financial Preferred Depositary Share will be converted into the
right to a depositary share representing a 1/16 interest in a share of
Boatmen's New Preferred (a "Boatmen's New Preferred Depositary Share")). See
"MERGER--Merger Consideration" and "DESCRIPTION OF BOATMEN'S CAPITAL STOCK--
Boatmen's New Preferred" and "--Boatmen's New Preferred Depositary Shares."
This Joint Proxy Statement/Prospectus also constitutes the Prospectus of
Boatmen's, filed as part of the Registration Statement (as such term is
hereafter defined under "AVAILABLE INFORMATION"), covering a maximum of
29,300,812 shares of Boatmen's Common, 248,379 shares of Boatmen's New
Preferred and 3,974,060 Boatmen's New Preferred Depositary Shares,
representing shares to be issued to shareholders of Fourth Financial in
connection with the Merger.
The issued and outstanding shares of Boatmen's Common are, and the shares of
Boatmen's Common and Boatmen's New Preferred Depositary Shares to be issued in
connection with the Merger will be, included for quotation on the Nasdaq Stock
Market's National Market ("Nasdaq"). The last reported sale prices of a share
of Boatmen's Common, Fourth Financial Common and Fourth Financial Preferred
Depositary Shares on Nasdaq on November 8, 1995, were $38.75, $38.00 and
$32.50, respectively.
This Joint Proxy Statement/Prospectus and the accompanying form of proxy for
use in connection with the Boatmen's Meeting are first being mailed to
shareholders of Boatmen's on or about November 13, 1995, and this Joint Proxy
Statement/Prospectus and the accompanying form of proxy for use in connection
with the Fourth Financial Meeting are first being mailed to shareholders of
Fourth Financial on or about November 13, 1995.
Any proxy given pursuant to this solicitation may be revoked by the grantor
at any time prior to the voting thereof at the Boatmen's Meeting or the Fourth
Financial Meeting, as the case may be. See "BOATMEN'S MEETING--Voting and
Revocation of Proxies" and "FOURTH FINANCIAL MEETING--Voting and Revocation of
Proxies." Holders of Fourth Financial Preferred and Fourth Financial Preferred
Depositary Shares will be entitled to appraisal rights in connection with the
Merger as described herein. Holders of Boatmen's Voting Stock and Fourth
Financial Common are not entitled to appraisal rights in connection with the
Merger. See "MERGER--Appraisal Rights of Dissenting Shareholders."
This Joint Proxy Statement/Prospectus does not cover any resales of the
Boatmen's Common, Boatmen's New Preferred or Boatmen's New Preferred
Depositary Shares offered hereby to be received by the shareholders of Fourth
Financial deemed to be "affiliates" of Boatmen's or Fourth Financial upon
consummation of the Merger. No person is authorized to make use of this Joint
Proxy Statement/Prospectus in connection with such resales, although such
securities may be traded without the use of this Joint Proxy
Statement/Prospectus by those shareholders of Fourth Financial not deemed to
be "affiliates" of Boatmen's or Fourth Financial. See "MERGER--Resale of
Boatmen's Common, Boatmen's New Preferred and Boatmen's New Preferred
Depositary Shares."
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION.............................................. 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.................... 1
SUMMARY INFORMATION................................................ 3
Introduction..................................................... 3
Parties to Merger................................................ 3
Boatmen's...................................................... 3
Fourth Financial............................................... 3
Acquisition Sub................................................ 4
Recent Developments.............................................. 4
Special Meetings................................................. 4
Date, Time and Place of Special Meetings....................... 4
Matters to be Considered....................................... 4
Record Date.................................................... 5
Vote Required.................................................. 5
Security Ownership of Management............................... 6
Revocation of Proxies.......................................... 7
Merger........................................................... 7
Effects of Merger.............................................. 7
Value of Merger................................................ 8
Reasons for Merger and Recommendation of Boards of Directors... 9
Opinions of Financial Advisors................................. 9
Conditions to Merger........................................... 10
Regulatory Approvals........................................... 10
Business of Fourth Financial in Ordinary Course; Dividends..... 11
Termination of Merger Agreement................................ 12
Accounting Treatment........................................... 12
Effective Time................................................. 12
Fourth Financial Stock Option Agreement........................ 13
Interests of Certain Persons in Merger......................... 14
Federal Income Tax Consequences................................ 14
Appraisal Rights of Dissenting Shareholders.................... 15
Management and Operations After Merger......................... 15
Comparison of Shareholder Rights................................. 16
Comparative Stock Prices.......................................... 17
SELECTED COMPARATIVE PER SHARE DATA................................ 18
SELECTED FINANCIAL DATA............................................ 19
BOATMEN'S MEETING.................................................. 23
Date, Time and Place............................................. 23
Matters to be Considered......................................... 23
Record Date...................................................... 23
i
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Vote Required................................................... 23
Security Ownership of Management................................ 24
Voting and Revocation of Proxies................................ 24
Solicitation of Proxies......................................... 25
FOURTH FINANCIAL MEETING............................................ 25
Date, Time and Place............................................ 25
Matters to be Considered........................................ 26
Record Date..................................................... 26
Vote Required................................................... 26
Security Ownership of Management................................ 26
Voting and Revocation of Proxies................................ 27
Solicitation of Proxies......................................... 28
PARTIES............................................................. 29
Boatmen's....................................................... 29
General..................................................... 29
Recent and Pending Acquisitions............................. 29
Fourth Financial................................................ 30
Acquisition Sub................................................. 30
RECENT DEVELOPMENTS................................................. 31
Boatmen's....................................................... 31
Fourth Financial................................................ 33
MERGER.............................................................. 37
General......................................................... 37
Background of Merger............................................ 37
Reasons for Merger; Recommendation of Boatmen's Board........... 41
Reasons for Merger; Recommendation of Fourth Financial Board.... 42
Fairness Opinions of Financial Advisors......................... 45
Boatmen's................................................... 45
Fourth Financial............................................ 50
Form of Merger.................................................. 55
Merger Consideration............................................ 55
Fractional Shares............................................... 56
Share Adjustments............................................... 56
Dividends....................................................... 56
Effective Time.................................................. 57
Regulatory Approvals............................................ 57
Federal Reserve Board....................................... 57
State Regulatory Requirements............................... 59
Certain Conditions to Consummation of Merger.................... 59
Exchange of Stock Certificates and Depositary Receipts.......... 61
Fourth Financial............................................ 61
Boatmen's................................................... 62
Representations and Warranties.................................. 62
Certain Other Agreements........................................ 64
ii
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Business of Fourth Financial in Ordinary Course............. 64
Environmental Inspections................................... 65
Other Agreements of Fourth Financial........................ 66
Agreements of Boatmen's..................................... 66
Termination of Merger Agreement................................. 67
Effect of Merger on Employee Benefit and Stock Option Plans..... 67
Employee Benefit Plans...................................... 67
Stock Option and Stock Purchase Plans....................... 68
Interests of Certain Persons in Merger.......................... 68
Indemnification and Insurance............................... 69
Employment and Employee Benefits............................ 69
Stock Option and Stock Purchase Plans....................... 69
Change of Control and Severance Agreements.................. 70
Board Composition........................................... 71
Interests of Boatmen's Board and Management................. 71
Management and Operations After Merger.......................... 71
Accounting Treatment............................................ 72
Federal Income Tax Consequences................................. 73
Appraisal Rights of Dissenting Shareholders..................... 74
No Solicitation................................................. 76
Waiver and Amendment............................................ 77
Expenses and Fees............................................... 77
Resale of Boatmen's Common, Boatmen's New Preferred and
Boatmen's New Preferred Depositary Shares................... 77
Fourth Financial Stock Option Agreement......................... 78
Boatmen's Dividend Reinvestment and Stock Purchase Plan......... 82
PRO FORMA FINANCIAL DATA............................................ 83
DESCRIPTION OF BOATMEN'S CAPITAL STOCK.............................. 86
Boatmen's Common................................................ 86
Dividend Rights............................................. 86
Voting Rights............................................... 86
Classification of Board of Directors........................ 87
Preemptive Rights........................................... 87
Liquidation Rights.......................................... 87
Assessment and Redemption................................... 87
Boatmen's Series B Preferred.................................... 87
Dividend Rights............................................. 87
Liquidation Rights.......................................... 88
Redemption.................................................. 88
Voting Rights............................................... 88
Superior Stock.............................................. 88
Boatmen's New Preferred Depositary Shares....................... 88
General..................................................... 88
Dividends and Other Distributions........................... 89
Conversion.................................................. 89
iii
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Redemption of Boatmen's New Preferred Depositary Shares..... 89
Voting the Boatmen's New Preferred.......................... 90
Amendment and Termination of Deposit Agreement.............. 90
Charges of Depositary....................................... 91
Miscellaneous............................................... 91
Resignation and Removal of Depositary....................... 91
Boatmen's New Preferred......................................... 91
Dividends................................................... 91
Conversion Rights........................................... 92
Redemption.................................................. 93
Liquidation Rights.......................................... 94
Voting...................................................... 95
Other Aspects............................................... 95
COMPARISON OF SHAREHOLDER RIGHTS.................................... 96
Shareholder Vote Required for Certain Transactions.............. 96
Business Combinations....................................... 96
Removal of Directors........................................ 98
Amendments to Articles of Incorporation..................... 99
Notice of Shareholder Nominations of Directors.................. 100
Shareholder Proposal Procedures................................. 100
Shareholder Rights Plan......................................... 100
Dissenters' Rights.............................................. 104
Takeover Statutes............................................... 104
Liability of Directors; Indemnification......................... 106
Consideration of Non-Shareholder Interests...................... 107
LEGAL OPINION....................................................... 108
EXPERTS............................................................. 108
Independent Auditors for Boatmen's.............................. 108
Independent Auditors for Fourth Financial....................... 108
SHAREHOLDER PROPOSALS............................................... 108
APPENDICES
A Agreement and Plan of Merger................................. A-1
B Stock Option Agreement....................................... B-1
C Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation................................................ C-1
D Opinion of Goldman, Sachs & Co............................... D-1
E Section 17-6712 of General Corporation Code of Kansas........ E-1
iv
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS IN
CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND ANY SUCH INFORMATION OR
REPRESENTATION, IF GIVEN OR MADE, MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY BOATMEN'S OR FOURTH FINANCIAL. THIS JOINT PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE A SOLICITATION OR AN OFFERING OF ANY
SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT WOULD BE UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT ANY INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
Boatmen's and Fourth Financial each are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith file reports, proxy statements and other
information with the Securities and Exchange Commission (the "S.E.C."). The
reports, proxy statements and other information can be inspected and copied at
the public reference facilities of the S.E.C., Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
S.E.C. located at Suite 1300, Seven World Trade Center, New York, New York
10048, and Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661, and copies of such materials can be obtained from the public
reference section of the S.E.C. at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Reports, proxy statements and
other information concerning Boatmen's and Fourth Financial may also be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Boatmen's has filed with the S.E.C. a Registration Statement on Form S-4
(together with any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Boatmen's Common, Boatmen's New Preferred and Boatmen's New Preferred Depositary
Shares to be issued pursuant to the Merger described herein. This Joint Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto. Such additional information
may be obtained from the S.E.C.'s principal office in Washington, D.C.
Statements contained in this Joint Proxy Statement/Prospectus or in any document
incorporated in this Joint Proxy Statement/Prospectus by reference as to the
contents of any contract or other document referred to herein or therein are not
necessarily complete, and in each instance where reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement or such other document, each such statement is qualified in all
respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the S.E.C. by Boatmen's (File No. 1-3750)
and Fourth Financial (File No. 0-4170) pursuant to the Exchange Act are
incorporated by reference in this Joint Proxy Statement/Prospectus:
1. Boatmen's Annual Report on Form 10-K for the year ended December 31, 1994;
2. Boatmen's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1995 and June 30, 1995;
1
3. The description of the common stock of Boatmen's contained in Boatmen's
Registration Statement on Form 8-A under the Exchange Act, as amended
under cover of Form 8 dated July 15, 1988, and the description of the
preferred share purchase rights contained in Boatmen's Registration
Statement on Form 8-A under the Exchange Act, filed August 14, 1990;
4. Boatmen's Current Reports on Form 8-K dated January 20, 1995, March 14,
1995, April 28, 1995 and August 29, 1995;
5. Fourth Financial's Annual Report on Form 10-K for the year ended
December 31, 1994;
6. Fourth Financial's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995 and June 30, 1995;
7. The description of Fourth Financial's capital stock contained in its
Quarterly Report on Form 10-Q for the quarter ended June 30, 1992; and
8. Fourth Financial's Current Report on Form 8-K dated August 29, 1995.
All documents and reports filed by Boatmen's and Fourth Financial pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Joint Proxy Statement/Prospectus and prior to the date of the Boatmen's Meeting
and the Fourth Financial Meeting shall be deemed to be incorporated by reference
in this Joint Proxy Statement/Prospectus and to be a part hereof from the dates
of filing of such documents or reports. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Joint Proxy Statement/Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Joint Proxy Statement/Prospectus.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS RELATING TO
BOATMEN'S AND FOURTH FINANCIAL BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR
DELIVERED HEREWITH. THESE DOCUMENTS (EXCLUDING UNINCORPORATED EXHIBITS) ARE
AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO
WHOM THIS JOINT PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL
REQUEST TO, IN THE CASE OF DOCUMENTS RELATING TO BOATMEN'S, KEVIN R. STITT,
DIRECTOR OF INVESTOR RELATIONS, BOATMEN'S BANCSHARES, INC., ONE BOATMEN'S PLAZA,
800 MARKET STREET, ST. LOUIS, MISSOURI 63101 (TELEPHONE NUMBER (314) 466-7662),
OR IN THE CASE OF DOCUMENTS RELATING TO FOURTH FINANCIAL, WILLIAM J. RAINEY,
SECRETARY, FOURTH FINANCIAL CORPORATION, P. O. BOX 4, 100 NORTH BROADWAY,
WICHITA, KANSAS 67201 (TELEPHONE NUMBER (316) 261-4312). IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY DECEMBER 5,
1995.
2
SUMMARY INFORMATION
The following is a brief summary of certain information contained elsewhere
in this Joint Proxy Statement/Prospectus. Although the following summary
addresses all material information regarding the Merger, it is not intended to
be complete and is qualified in all respects by the information appearing
elsewhere herein or incorporated by reference into this Joint Proxy
Statement/Prospectus, the Appendices hereto and the documents referred to
herein. All information contained in this Joint Proxy Statement/Prospectus
relating to Boatmen's and its subsidiaries has been supplied by Boatmen's and
all information relating to Fourth Financial and its subsidiaries has been
supplied by Fourth Financial. Shareholders are urged to read this Joint Proxy
Statement/Prospectus and the Appendices hereto in their entirety.
INTRODUCTION
This Joint Proxy Statement/Prospectus relates to the Merger Agreement among
Fourth Financial, Boatmen's and Acquisition Sub. The Merger Agreement provides
for, among other things, Boatmen's acquisition of Fourth Financial by means of
the Merger of Fourth Financial with and into Acquisition Sub. Upon consummation
of the Merger, Acquisition Sub will continue to be a wholly-owned subsidiary of
Boatmen's and Fourth Financial will cease to exist as a separate entity. The
full text of the Merger Agreement is attached hereto as Appendix A and is
incorporated by reference herein.
PARTIES TO MERGER
BOATMEN'S
Boatmen's, a Missouri corporation, is a multi-bank holding company
headquartered in St. Louis, Missouri. At June 30, 1995, Boatmen's had
consolidated assets of approximately $33.4 billion and shareholders' equity of
$2.8 billion, making it the largest bank holding company in Missouri and among
the 30 largest in the United States. Boatmen's 55 subsidiary banks, including a
federal savings bank, operate from over 500 locations in Missouri, Arkansas,
Illinois, Iowa, Kansas, New Mexico, Oklahoma, Tennessee and Texas. Boatmen's
also ranks among the twenty largest providers of trust services in the nation,
with approximately $45 billion in assets under management as of June 30, 1995.
Boatmen's other principal businesses include a mortgage banking company, a
credit life insurance company, a credit card company and an insurance agency.
The principal executive offices of Boatmen's are at One Boatmen's Plaza, 800
Market Street, St. Louis, Missouri 63101 (telephone number (314) 466-6000). See
"PARTIES --Boatmen's."
FOURTH FINANCIAL
Fourth Financial, a Kansas corporation, is a multi-bank holding company
headquartered in Wichita, Kansas. At June 30, 1995, Fourth Financial had
consolidated assets of approximately $7.5 billion and shareholders' equity of
$650 million, making it the largest bank holding company based in Kansas.
Through its two banking subsidiaries, Fourth Financial operates 146 retail
banking offices, 87 in Kansas, 56 in Oklahoma and three in Missouri. Through
its non-banking subsidiaries, Fourth Financial also offers non-deposit
investment products and services and reinsures credit life and health insurance
policies. The principal executive offices of Fourth Financial are at 100 North
Broadway, Wichita, Kansas 67202 (telephone number (316) 261-4444). See "PARTIES
- -- Fourth Financial."
3
ACQUISITION SUB
Acquisition Sub, a Kansas corporation, was organized as a wholly-owned
subsidiary of Boatmen's solely to effectuate the Merger and has not been engaged
in any significant business activity. See "PARTIES -- Acquisition Sub".
RECENT DEVELOPMENTS
Effective June 1, 1995, the Federal Deposit Insurance Corporation (the
"F.D.I.C.") implemented a new assessment rate schedule for deposits insured by
the Bank Insurance Fund (the "B.I.F.") lowering the rate paid by most banks from
.23% to .04%. The rates paid for deposits insured by the Savings Association
Insurance Fund (the "S.A.I.F.") remain at a range of .23% to .31% of deposits.
Congress is considering proposals to recapitalize the S.A.I.F., including a one-
time levy of $6 billion on all S.A.I.F.-insured deposits, including such
deposits held by Boatmen's and Fourth Financial. Based upon proposals pending
in Congress, the one-time S.A.I.F. assessment on Boatmen's is estimated to be
$22.8 million to $25.0 million pre-tax compared to a reduction of F.D.I.C. fees
in 1995 of $19.2 million to $20.0 million pre-tax. The one-time S.A.I.F.
assessment on Fourth Financial is estimated to be $7.5 million to $8.7 million
pre-tax compared to a reduction of F.D.I.C. fees in 1995 of $5.0 million to $5.5
million pre-tax. The net effect of the revised F.D.I.C. fees and the S.A.I.F.
proposals is not expected to have a material effect on the operations of
Boatmen's and Fourth Financial.
Boatmen's and Fourth Financial each announced their third quarter earnings
on October 16, 1995. See "PARTIES -- Recent Developments."
SPECIAL MEETINGS
DATE, TIME AND PLACE OF SPECIAL MEETINGS
Boatmen's. The Boatmen's Meeting will be held at Boatmen's Plaza, 800
Market Street, St. Louis, Missouri 63101 on December 12, 1995, at 10:00 a.m.,
local time. See "BOATMEN'S MEETING -- Date, Time and Place."
Fourth Financial. The Fourth Financial Meeting will be held in the
auditorium on the Lower Level of the Fourth Financial Center, at 100 North
Broadway, Wichita, Kansas 67202, on December 12, 1995, at 10:00 a.m. local time.
See "FOURTH FINANCIAL MEETING -- Date, Time and Place."
MATTERS TO BE CONSIDERED
Boatmen's. At the Boatmen's Meeting, holders of Boatmen's Common and
Boatmen's Series B Preferred will be asked to consider and vote upon the
issuance of shares of Boatmen's Common and Boatmen's New Preferred to
shareholders of Fourth Financial pursuant to the terms of the Merger Agreement.
(The holders of Boatmen's Common and Boatmen's Series B Preferred may also be
asked to vote upon a proposal to adjourn or postpone the Boatmen's Meeting,
which adjournment or postponement could be used for the purpose, among others,
of allowing time for the solicitation of additional votes to approve the
issuance of shares of Boatmen's Common and Boatmen's New Preferred to
shareholders of Fourth Financial pursuant to the terms of the Merger Agreement.)
See "BOATMEN'S MEETING --Matters to be Considered."
4
Fourth Financial. At the Fourth Financial Meeting, holders of Fourth
Financial Common will be asked to consider and vote upon the adoption and
approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger. (The holders of Fourth Financial Common may also be asked
to vote upon a proposal to adjourn or postpone the Fourth Financial Meeting,
which adjournment or postponement could be used for the purpose, among others,
of allowing time for the solicitation of additional votes to approve and adopt
the Merger Agreement.) See "FOURTH FINANCIAL MEETING -- Matters to be
Considered."
RECORD DATE
Boatmen's. The record date (the "Boatmen's Record Date") for the Boatmen's
Meeting is October 23, 1995. Only the holders of record of the outstanding
shares of Boatmen's Common and Boatmen's Series B Preferred on the Boatmen's
Record Date will be entitled to notice of, and to vote at, the Boatmen's
Meeting. See "BOATMEN'S MEETING -- Record Date."
Fourth Financial. The record date (the "Fourth Financial Record Date") for
the Fourth Financial Meeting is October 23, 1995. Only holders of record of the
outstanding shares of Fourth Financial Common on the Fourth Financial Record
Date will be entitled to notice of, and to vote at, the Fourth Financial
Meeting. The holders of record of the outstanding shares of Fourth Financial
Preferred and Fourth Financial Preferred Depositary Shares on the Fourth
Financial Record Date will receive notice of, but are not entitled to vote at,
the Fourth Financial Meeting. See "FOURTH FINANCIAL MEETING -- Record Date."
VOTE REQUIRED
Boatmen's. The presence, in person or by proxy, of a majority of the issued
and outstanding shares of Boatmen's Voting Stock entitled to vote on the
Boatmen's Record Date is necessary to constitute a quorum at the Boatmen's
Meeting. Pursuant to the By-Laws of the National Association of Securities
Dealers, Inc. (the "NASD"), the affirmative vote of a majority of the shares of
Boatmen's Voting Stock present, in person or by proxy, at the Boatmen's Meeting
is required to approve the issuance of shares of Boatmen's Common and Boatmen's
New Preferred to shareholders of Fourth Financial pursuant to the terms of the
Merger Agreement. Approval of the issuance of shares of Boatmen's Common and
Boatmen's New Preferred to shareholders of Fourth Financial pursuant to the
terms of the Merger Agreement by the requisite vote of the holders of Boatmen's
Voting Stock is a condition to, and required for, consummation of the Merger.
The failure to submit a proxy card although present, or to vote in person, at
the Boatmen's Meeting, the abstention from voting at the Boatmen's Meeting and,
in the case of shares held in street name, the failure of the beneficial owner
thereof to give specific voting instructions to the broker holding such shares
(broker nonvotes), will have the same effect as a vote against the approval of
the issuance of shares of Boatmen's Common and Boatmen's New Preferred to
shareholders of Fourth Financial pursuant to the terms of the Merger Agreement.
See "BOATMEN'S MEETING -- Vote Required" and "MERGER --Certain Conditions to
Consummation of Merger."
Fourth Financial. The presence, in person or by proxy, of a majority of the
issued and outstanding shares of Fourth Financial Common entitled to vote on the
Fourth Financial Record Date is necessary to constitute a quorum at the Fourth
Financial Meeting. Pursuant to the General Corporation Code of Kansas (the
"Kansas Corporate Law"), the affirmative vote of the holders of a majority of
all of the issued and outstanding shares of Fourth Financial Common is required
to adopt the Merger Agreement and the transactions contemplated thereby,
including the Merger. Holders of shares of Fourth Financial Preferred are not
entitled to vote on the matters to be considered at the Fourth Financial
Meeting. Approval of the Merger Agreement by the requisite vote of the holders
of Fourth Financial Common is a condition to, and
5
required for, consummation of the Merger. The failure to submit a proxy card
(or to vote in person at the Fourth Financial Meeting), the abstention from
voting at the Fourth Financial Meeting and, in the case of shares held in street
name, the failure of the beneficial owner thereof to give specific voting
instructions to the broker holding such shares (broker nonvotes), will have the
same effect as a vote against the adoption and approval of the Merger Agreement.
See "FOURTH FINANCIAL MEETING -- Vote Required" and "MERGER -- Certain
Conditions to Consummation of Merger."
SECURITY OWNERSHIP OF MANAGEMENT
Boatmen's. As of the Boatmen's Record Date, 128,370,928 shares of Boatmen's
Common and 9,809 shares of Boatmen's Series B Preferred were issued and
outstanding, respectively, and approximately 1,391,239 shares, or 1.08%, of
Boatmen's Common, and no shares of Boatmen's Series B Preferred, were
beneficially owned by directors and executive officers of Boatmen's and their
affiliates. It is currently expected that each such director and executive
officer of Boatmen's will vote the shares of Boatmen's Common beneficially owned
by him or her for approval of the issuance of shares of Boatmen's Common and
Boatmen's New Preferred to shareholders of Fourth Financial pursuant to the
terms of the Merger Agreement. As of the Boatmen's Record Date, subsidiaries of
Boatmen's held 9,700,215, or 7.6%, of Boatmen's Common in various fiduciary
capacities and, by virtue of sole or shared voting or investment power in
respect of such shares, were deemed to own them beneficially. It is the
practice of these entities when holding shares as sole trustee or sole executor
to vote said shares but, where shares are held as co-executor or co-trustee,
approval is obtained from the co-fiduciary before voting. As of the Boatmen's
Record Date, directors and executive officers of Fourth Financial and their
affiliates did not beneficially own any shares of Boatmen's Common or Boatmen's
Series B Preferred. As of the Boatmen's Record Date, the banking and trust
subsidiaries of Fourth Financial, as fiduciaries, custodians or agents, held a
total of 51,372 shares, or less than 1%, of Boatmen's Common under trust
agreements and other instruments and agreements. See "BOATMEN'S MEETING --
Security Ownership of Management."
Fourth Financial. As of the Fourth Financial Record Date, 27,644,870 shares
of Fourth Financial Common were issued and outstanding and approximately
1,253,759 shares, or 4.54%, of Fourth Financial Common were beneficially owned
by directors and executive officers of Fourth Financial and their affiliates.
It is currently expected that each such director and executive officer of Fourth
Financial will vote the shares of Fourth Financial Common beneficially owned by
him or her for approval of the Merger Agreement and the consummation of the
transactions contemplated thereby, including the Merger. As of the Fourth
Financial Record Date, subsidiaries of Fourth Financial, in various fiduciary
capacities, held a total of 1,760,506 shares, or 6.37%, of Fourth Financial
Common under trust agreements and other instruments and agreements. It is the
practice of these entities when holding shares as sole trustee or sole executor
to vote said shares but, where shares are held as co-executor or co-trustee,
approval is obtained from the co-fiduciary before voting. As of the Fourth
Financial Record Date, directors and executive officers of Boatmen's and their
affiliates beneficially owned 1,000 shares, or less than 1%, of Fourth Financial
Common. As of the Fourth Financial Record Date, subsidiaries of Boatmen's held
44,849, or less than 1%, of Fourth Financial Common in various fiduciary
capacities and, by virtue of sole or shared voting or investment power in
respect of such shares, were deemed to own them beneficially. See "FOURTH
FINANCIAL MEETING -- Security Ownership of Management.
A number of executive officers of Fourth Financial, including those
individuals who have Severance Agreements, have indicated to Fourth Financial
that they may make sales of some or all of their respective holdings of Fourth
Financial Common, including shares that may be obtained pursuant to the exercise
of stock options, prior to the Effective Time of the Merger. Fourth Financial
has been advised by each of these executive officers that such sales will be
made exclusively at the discretion of the individual executive
6
officers, based on their own individual investment and tax planning
considerations, and will comply with the S.E.C. guidelines regarding pooling of
interests accounting treatment described under "MERGER --Resale of Boatmen's
Common, Boatmen's New Preferred and Boatmen's New Preferred Depositary Shares."
As of November 1, 1995, after giving effect to the vesting of various Fourth
Financial stock options that would occur as a result of a favorable Fourth
Financial shareholder vote with respect to the proposal to approve the Merger
Agreement, those executive officers who have Severance Agreements, as a group,
would beneficially own approximately 822,782 shares of Fourth Financial Common.
See "FOURTH FINANCIAL MEETING -- Security Ownership of Management."
REVOCATION OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the grantor
at any time prior to the voting thereof on the matters to be considered at the
Boatmen's Meeting or the Fourth Financial Meeting, as the case may be, by filing
with the Secretary of Boatmen's or Fourth Financial, as the case may be, a
written revocation or a duly executed proxy bearing a later date. A holder of
Boatmen's Voting Stock, or a holder of Fourth Financial Common, as the case may
be, may withdraw his or her proxy at the Boatmen's Meeting or the Fourth
Financial Meeting, as the case may be, at any time before it is exercised by
electing to vote in person; however, attendance at the Boatmen's Meeting or the
Fourth Financial Meeting, as the case may be, will not in and of itself
constitute a revocation of the proxy. See "BOATMEN'S MEETING --Voting and
Revocation of Proxies" and "FOURTH FINANCIAL MEETING -- Voting and Revocation of
Proxies."
MERGER
EFFECTS OF MERGER
Subject to the terms and conditions of the Merger Agreement and in
accordance with the Kansas Corporate Law, at the time the Merger is consummated
(the "Effective Time"), Fourth Financial will merge with and into Acquisition
Sub, and Acquisition Sub will be the surviving corporation in the Merger. At
the Effective Time, the separate corporate existence of Fourth Financial will
terminate.
As a result of the Merger, (i) each share of Fourth Financial Common issued
and outstanding immediately prior to the Effective Time, other than shares held
in the treasury of Fourth Financial or by Fourth Financial or its subsidiaries
(except shares held by Fourth Financial or its subsidiaries in a fiduciary
capacity or in respect of a debt previously contracted), will be converted into
the right to receive 1 share of Boatmen's Common, including the associated
preferred share purchase rights (see "COMPARISON OF SHAREHOLDER RIGHTS --
Shareholder Rights Plan"), and (ii) each share of Fourth Financial Preferred
issued and outstanding immediately prior to the Effective Time (except for
shares as to which appraisal rights are perfected; see "MERGER -- Appraisal
Rights of Dissenting Shareholders") will be converted into the right to receive
1 share of Boatmen's New Preferred (and, as a result, each Fourth Financial
Preferred Depositary Share will be converted into the right to 1 Boatmen's New
Preferred Depositary Share). The terms of the Boatmen's New Preferred will be
substantially the same as the terms of the Fourth Financial Preferred and, at
the Effective Time, the Deposit Agreement dated as of February 24, 1992,
pursuant to which shares of Fourth Financial Preferred are held subject to
depositary receipts will automatically be assumed by Acquisition Sub, will be
assigned by it to Boatmen's and will, thereafter, relate to the shares of
Boatmen's New Preferred to be issued in the Merger. See "MERGER -- Merger
Consideration," "-- Exchange of Stock Certificates and Depositary Shares" and
"DESCRIPTION OF BOATMEN'S CAPITAL STOCK -- Boatmen's New Preferred Depositary
Shares" and "-- Boatmen's New Preferred."
7
The shares of Boatmen's Common to be issued as described in the preceding
paragraph, together with any cash payment in lieu of fractional shares, as
provided in the following paragraph, are referred to herein as the "Common
Merger Consideration" and the shares of Boatmen's New Preferred to be issued as
described in the preceding paragraph are referred to herein as the "Preferred
Merger Consideration." The Common Merger Consideration and the Preferred Merger
Consideration are referred to herein together as the "Merger Consideration."
No fractional shares of Boatmen's Common will be issued and, in lieu
thereof, holders of fractional shares of Fourth Financial Common who would
otherwise be entitled to a fractional share interest in Boatmen's Common (after
taking into account all shares of Fourth Financial Common held by such holder)
will be paid an amount in cash equal to the product of such fractional share
interest and the closing price of a share of Boatmen's Common on Nasdaq on the
business day immediately preceding the date on which the Effective Time occurs.
See "MERGER -- Fractional Shares."
For information on how Fourth Financial shareholders will be able to
exchange certificates representing shares of Fourth Financial Common and Fourth
Financial Preferred for certificates representing shares of Boatmen's Common and
Boatmen's New Preferred, respectively, and depositary receipts representing
Fourth Financial Preferred Depositary Shares for depositary receipts
representing Boatmen's New Preferred Depositary Shares, see "MERGER -- Exchange
of Stock Certificates and Depositary Shares."
The obligation of Fourth Financial to consummate the Merger is not
conditioned upon Boatmen's Common continuing to trade at any specified minimum
price during any period prior to the Effective Time. Because the Common
Exchange Ratio and the Preferred Exchange Ratio are fixed at one-for-one and
because the market value of Boatmen's Common is, and the market value of the
Boatmen's New Preferred when issued in the Merger will be, subject to
fluctuation, the value of the Merger Consideration that shareholders of Fourth
Financial will receive in the Merger may increase or decrease prior to and
following the Merger. The market prices of Boatmen's Common and Fourth
Financial Common as of a recent date are set forth on the cover page of this
Joint Proxy Statement/Prospectus. Shareholders of Fourth Financial are advised
to obtain recent market quotations for Boatmen's Common and Fourth Financial
Common. No assurance can be given as to the market price of Boatmen's Common or
Fourth Financial Common or Fourth Financial Preferred on the Effective Time, or
as to the market price of Boatmen's Common or Boatmen's New Preferred
thereafter.
Shares of Boatmen's Common and Boatmen's Series B Preferred issued and
outstanding immediately prior to the Effective Time will remain issued and
outstanding immediately after the Merger.
VALUE OF MERGER
As of November 8, 1995, based on the Common Exchange Ratio and the closing
sales price of Boatmen's Common as reported on Nasdaq for that date, the Merger
had a per share value of $38.75 to holders of Fourth Financial Common, and the
approximate total value of the Merger Consideration to the shareholders of
Fourth Financial was $1.2 billion. The market value of the Merger Consideration
as stated above may increase or decrease depending on the market price of
Boatmen's Common.
Immediately following the Merger, shareholders of Boatmen's and Fourth
Financial will own approximately 82% and 18%, respectively, of the then
outstanding shares of Boatmen's Common (without giving effect to the shares of
Boatmen's Common issuable upon conversion of the Boatmen's New Preferred
8
or exercise of the Fourth Financial Employee Stock Options (as such term is
hereafter defined under "MERGER -- Effect of Merger on Employee Benefit and
Stock Option Plans")).
REASONS FOR MERGER AND RECOMMENDATION OF BOARDS OF DIRECTORS
The Boatmen's Board and the Fourth Financial Board believe that the terms of
the Merger Agreement are fair and in the best interests of Boatmen's and its
shareholders and Fourth Financial and its shareholders, respectively. The terms
of the Merger Agreement were reached on the basis of arms' length negotiations
between Boatmen's and Fourth Financial. In the course of reaching their
respective decisions to approve the Merger Agreement, the Boatmen's Board
consulted with its financial advisor, Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), regarding the financial terms of the Merger Agreement and
the fairness of the Common Exchange Ratio to the holders of Boatmen's Common
from a financial point of view and the Fourth Financial Board consulted with its
financial advisor, Goldman, Sachs & Co. ("Goldman Sachs"), regarding the
financial terms of the Merger Agreement and the fairness of the Common Exchange
Ratio and the Preferred Exchange Ratio to the holders of Fourth Financial Common
and Fourth Financial Preferred, respectively. See "MERGER -- Opinions of
Financial Advisors."
The Boatmen's Board and management of Boatmen's and the Fourth Financial
Board and management of Fourth Financial own shares of Boatmen's Common and
Fourth Financial Common, respectively and, therefore, have a financial interest
in the Merger similar to the interests of other shareholders of Boatmen's and
Fourth Financial generally. In addition, certain members of the Fourth
Financial Board and management of Fourth Financial may be deemed to have certain
interests in the Merger that are in addition to their interests as shareholders
of Fourth Financial generally. See "MERGER --Interests of Certain Persons in
Merger."
THE BOARD OF DIRECTORS OF EACH OF BOATMEN'S AND FOURTH FINANCIAL HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE BOARD OF DIRECTORS OF
BOATMEN'S UNANIMOUSLY RECOMMENDS THE ISSUANCE OF BOATMEN'S COMMON AND BOATMEN'S
NEW PREFERRED TO THE SHAREHOLDERS OF FOURTH FINANCIAL PURSUANT TO THE MERGER
AGREEMENT AND THE BOARD OF DIRECTORS OF FOURTH FINANCIAL UNANIMOUSLY RECOMMENDS
ADOPTION OF THE MERGER AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE MERGER.
For a discussion of the background of the Merger and the factors considered
by each of the Boatmen's Board and the Fourth Financial Board in reaching its
decision to approve the Merger Agreement, see "MERGER -- Background of Merger,"
"--Reasons for Merger; Recommendation of Boatmen's Board," and "--Reasons for
Merger; Recommendation of Fourth Financial Board."
OPINIONS OF FINANCIAL ADVISORS
Boatmen's advisor with respect to the financial aspects of the Merger, DLJ,
has rendered its written opinions to the Boatmen's Board that, as of August 25,
1995, and as of the date of this Joint Proxy Statement/Prospectus, based upon
the matters set forth in such opinions, the Common Exchange Ratio is fair, from
a financial point of view, to the holders of Boatmen's Common. For DLJ's
services in connection with the Merger, including the rendering of its opinions,
Boatmen's (i) has paid DLJ $500,000; (ii) has agreed to pay DLJ an additional
$500,000 upon the mailing of this Joint Proxy Statement/Prospectus; and (iii)
has agreed to reimburse DLJ for all reasonable out-of-pocket expenses and to
indemnify DLJ against certain expenses and liabilities incurred in connection
with its engagement.
9
Fourth Financial's advisor with respect to the financial aspects of the
Merger, Goldman Sachs, has rendered its written opinions to the Fourth Financial
Board that, as of August 25, 1995, and as of the date of this Joint Proxy
Statement/Prospectus, based upon the matters set forth in such opinions, the
Common Exchange Ratio and the Preferred Exchange Ratio are fair to the holders
of Fourth Financial Common and Fourth Financial Preferred, respectively. For
Goldman Sachs' services in connection with the Merger, Fourth Financial (i) has
agreed to pay Goldman Sachs $400,000 upon Goldman Sachs rendering its opinion in
connection with the Merger, which amount will be credited against a fee payable
at the closing of the Merger based on the per share consideration received by
Fourth Financial shareholders; and (ii) has agreed to pay Goldman Sachs its
reasonable out-of-pocket expenses and to indemnify Goldman Sachs against certain
liabilities. Based on current per share values the fee payable to Goldman Sachs
is presently estimated to be approximately $3.5 million.
The opinions of DLJ and Goldman Sachs are attached hereto as Appendices C
and D, respectively, and should be read in their entirety with respect to the
assumptions made, matters considered and limits of the reviews undertaken by DLJ
and Goldman Sachs in rendering their respective opinions. See "MERGER --
Fairness Opinions of Financial Advisors" for a further description of the
opinions of DLJ and Goldman Sachs and of the fees payable to DLJ and Goldman
Sachs by Boatmen's and Fourth Financial, respectively.
See "MERGER -- Fairness Opinions of Financial Advisors" and Appendices C and
D to this Joint Proxy Statement/Prospectus.
CONDITIONS TO MERGER
The Merger is subject to various conditions including, among other things
(i) approval of the issuance of the shares of Boatmen's Common and Boatmen's New
Preferred to shareholders of Fourth Financial pursuant to the Merger Agreement
by the shareholders of Boatmen's (see "BOATMEN'S MEETING -- Vote Required");
(ii) approval of the Merger Agreement by the holders of Fourth Financial Common
(see "FOURTH FINANCIAL MEETING -- Vote Required"); (iii) receipt of regulatory
approvals of the Merger (see "MERGER -- Regulatory Approvals"); (iv) receipt of
a legal opinion on certain tax aspects of the Merger (see "MERGER -- Federal
Income Tax Consequences"); and (v) receipt of an accounting opinion to the
effect that the Merger qualifies for "pooling of interests" accounting treatment
(see "MERGER -- Accounting Treatment"). The conditions described in items (i),
(ii) and (iii) above (the receipt of shareholder and regulatory approvals) may
not be waived by either party. Although the remaining conditions to effect the
Merger may be waived by the party entitled to the benefit thereof, neither
Boatmen's nor Fourth Financial intends to waive any such conditions except in
those circumstances where the Boatmen's Board or the Fourth Financial Board, as
the case may be, deems such waiver to be in the best interests of Boatmen's or
Fourth Financial, as the case may be, and its respective shareholders. There can
be no assurances as to when and if such conditions will be satisfied (or, where
permissible, waived) or that the Merger will be consummated. See "MERGER --
Certain Conditions to Consummation of Merger."
REGULATORY APPROVALS
The Merger is subject to approval by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") pursuant to Sections 3 and 4 of the
Bank Holding Company Act of 1956, as amended ("B.H.C.A."), and by the Kansas
State Banking Board and the Oklahoma State Bank Department.
Assuming Federal Reserve Board and other required regulatory approvals for
the Merger are obtained, the Merger may not be consummated for 30 days after
such approvals (or fifteen days in certain circumstances described more fully
under "MERGER -- Regulatory Approvals"), during which time the
10
United States Department of Justice (the "D.O.J.") may challenge the Merger on
antitrust grounds and seek the divestiture of assets and liabilities. Boatmen's
and Fourth Financial filed applications with the Federal Reserve Board, the
Kansas State Banking Board and the Oklahoma State Bank Department on September
29, 1995, October 2, 1995, and October 2, 1995, respectively, and such
applications are pending. The applications to the Federal Reserve Board were
accepted for processing on October 30, 1995. The Merger will not proceed until
all regulatory approvals required to consummate the Merger have been obtained,
such approvals are in full force and effect and all statutory waiting periods in
respect thereof have expired. There can be no assurance that the Merger will be
approved by the appropriate federal and state regulators whose approval is
required. See "MERGER -- Regulatory Approvals."
As part of the applications filed with the Federal Reserve Board and based
upon pre-filing discussions between Boatmen's and staff of the Federal Reserve
Board, Boatmen's committed to divest branches of Boatmen's subsidiary, Superior
Federal Bank, FSB and/or a Fourth Financial subsidiary bank in two relevant
banking markets in Oklahoma wherein both such institutions have branch offices.
The purpose of such divestitures would be to mitigate possible adverse effects
on competition in these two markets which might otherwise result from the
Merger. The divestiture commitment provides that, prior to consummation of the
Merger, binding agreements for the sale of such branches (having aggregate
deposits of not less than $19.6 million in the case of one market and $41.1
million in the case of the other market) will be entered into with one or more
unaffiliated third parties. The commitment requires that the subject branches
be placed into a trust for ultimate disposition by an independent trustee in the
event that such divestitures are not completed within six months after
consummation of the Merger.
Missouri banking law prohibits a bank holding company from acquiring control
of a bank, or one or more branches of a bank, if the total deposits in all
banks, and branches of banks, in Missouri controlled by the bank holding company
would exceed 13% of the total deposits in all depository financial institutions
in Missouri. The Missouri Division of Finance reports that Boatmen's controlled
approximately 15.7% of such total deposits in Missouri as of December 31, 1994
(after taking into account certain permissible deductions from Boatmen's
deposits). Fourth Financial's subsidiary BANK IV, N.A., has branches located in
Missouri with aggregate deposits of approximately $77.1 million. To comply with
this Missouri law, Boatmen's has committed to divest the Missouri branches of
BANK IV, N.A. The terms of such Missouri divestiture commitment are
substantially similar to those of the divestiture commitment made with respect
to the two Oklahoma relevant banking markets described above.
The Oklahoma and Missouri branch divestitures, which would represent in the
aggregate less than one percent (1%) of Boatmen's total deposits, would not be
material to Boatmen's. See "MERGER -- Regulatory Approvals."
BUSINESS OF FOURTH FINANCIAL IN ORDINARY COURSE; DIVIDENDS
Pursuant to the Merger Agreement, Fourth Financial has agreed to, and has
agreed to cause each of its subsidiaries to, carry on its respective business
and the discharge or incurrence of obligations and liabilities only in the
usual, regular and ordinary course or business, subject to obtaining Boatmen's
prior approval to certain specified actions. See "MERGER -- Certain Other
Agreements -- Business of Fourth Financial in Ordinary Course."
The Merger Agreement provides that beginning in the fourth quarter of 1995,
and for each quarter thereafter, Fourth Financial may declare and pay a
conforming quarterly dividend on the Fourth Financial Common not to exceed $0.37
per share and, in order to take into account the fact that Boatmen's quarterly
dividend is paid one month later than Fourth Financial's quarterly dividend,
Fourth Financial may pay a
11
single additional conforming dividend of $0.10 per share. Boatmen's and Fourth
Financial have also agreed, pursuant to the Merger Agreement, to coordinate the
record and payment dates for the quarter in which the Effective Time occurs such
that the Fourth Financial shareholders will receive a quarterly dividend from
either Fourth Financial or Boatmen's but not from both, with respect to such
quarter. See "MERGER --Dividends."
TERMINATION OF MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to the date on
which the Merger is closed (the "Closing Date") (i) by mutual written agreement
of Boatmen's and Fourth Financial; (ii) by Boatmen's or Fourth Financial in the
event of a material uncured breach by the other of any of its representations
and warranties or agreements under the Merger Agreement; (iii) by Boatmen's
following written notice to Fourth Financial if certain reports of environmental
inspection on the real properties of Fourth Financial to be obtained pursuant to
the Merger Agreement should disclose any matters requiring remedial or
corrective measures the cost of which exceeds $20 million (as determined in
accordance with the Merger Agreement and described under "MERGER -- Certain
Other Agreements -- Environmental Inspections"); (iv) by either party in the
event that all the conditions to its obligations are not satisfied or waived
(and not cured within any applicable cure period) (see "MERGER -- Certain
Conditions to Consummation of Merger"); (v) if any regulatory application is
finally denied or disapproved by the respective regulatory authority (see
"MERGER -- Regulatory Approvals"); (vi) by either party if the Merger Agreement
and the transactions contemplated thereby, including the Merger, are not
approved by the shareholders of Boatmen's or Fourth Financial (see "BOATMEN'S
MEETING -- Vote Required" and "FOURTH FINANCIAL MEETING -- Vote Required");
(vii) by Boatmen's or Fourth Financial in the event that the other or any of its
subsidiaries becomes a party or subject to any new or amended written agreement,
memorandum of understanding, cease and desist order, imposition of civil money
penalties or other regulatory enforcement action or proceeding with any
Regulatory Agency (as such term is hereafter defined under "MERGER --
Representations and Warranties") after the date of the Merger Agreement which
would have a Material Adverse Effect (as such term is hereafter defined under
"MERGER -- Representations and Warranties") on such other party; and (viii) by
either party if the Merger is not consummated on or prior to August 25, 1996.
See "MERGER -- Termination of Merger Agreement."
ACCOUNTING TREATMENT
The Merger is expected to qualify as a "pooling of interests" for accounting
and financial reporting purposes. The receipt of an opinion from Ernst & Young
LLP, the independent public accountants of Boatmen's and Fourth Financial,
confirming that the Merger will qualify for "pooling of interests" accounting,
is a condition to Boatmen's and Fourth Financial's obligations to consummate the
Merger. If such condition is not met, the Merger would not be consummated
unless the condition were waived by Boatmen's and Fourth Financial (which
Boatmen's has indicated it does not intend to do) and the approval of
shareholders of Boatmen's and Fourth Financial entitled to vote on the Merger
were resolicited if such failure to qualify for pooling of interests were deemed
material to the financial condition and results of operations of Boatmen's on a
pro forma basis assuming the completion of the Merger. As of the date of this
Joint Proxy Statement/Prospectus, Boatmen's and Fourth Financial are not aware,
after consultation with Ernst & Young LLP, of any existing facts or
circumstances which would preclude such a pooling opinion from being issued by
Ernst & Young LLP. See "MERGER -- Accounting Treatment."
12
EFFECTIVE TIME
The Merger Agreement provides that the Merger will become effective upon the
filing of a Certificate of Merger with the Secretary of State of the State of
Kansas. Assuming that the Merger is approved by the requisite vote of the
shareholders of Boatmen's and Fourth Financial and the other conditions to the
Merger are satisfied or waived (where permissible) (see "MERGER -- Certain
Conditions to Consummation of Merger"), it is presently anticipated that the
Merger will be consummated during the first quarter of 1996, but no assurance
can be given that such timetable will be met. See "MERGER -- Effective Time."
FOURTH FINANCIAL STOCK OPTION AGREEMENT
As an inducement to Boatmen's to enter into the Merger Agreement, Fourth
Financial (as issuer) and Boatmen's (as grantee) entered into the Stock Option
Agreement, dated August 26, 1995 (the "Fourth Financial Stock Option
Agreement"), pursuant to which Fourth Financial granted Boatmen's an irrevocable
option (the "Fourth Financial Option") to purchase from Fourth Financial
5,500,000 shares of Fourth Financial Common (subject to adjustment in certain
circumstances, but in no event to exceed 19.9% of the then outstanding shares of
Fourth Financial Common), at a price of $33.50 per share. The $33.50 exercise
price was determined through negotiations, taking into account the recently
prevailing price range of Fourth Financial Common prior to the announcement of
the Merger (the closing sale price of Fourth Financial Common on the last
trading preceding such announcement was $33.75). The Fourth Financial Stock
Option Agreement is attached hereto as Appendix B and is incorporated by
reference herein. Boatmen's may exercise the Fourth Financial Option only
under certain limited and specifically defined circumstances (none of which, to
the best knowledge of Boatmen's and Fourth Financial, has occurred as of the
date hereof). At the request of the holder of the Fourth Financial Option,
under certain circumstances, Fourth Financial will repurchase for a formula
price the Fourth Financial Option and any shares of Fourth Financial Common
purchased upon the exercise of the Fourth Financial Option and beneficially
owned by such holder at that time.
The purchase of any shares of Fourth Financial Common pursuant to the Fourth
Financial Option is subject to compliance with applicable law, including receipt
of any necessary approvals under the B.H.C.A. See "MERGER -- Regulatory
Approvals."
The Fourth Financial Stock Option Agreement is intended to increase the
likelihood that the Merger will be consummated in accordance with the terms set
forth in the Merger Agreement. Consequently, certain aspects of the Fourth
Financial Stock Option Agreement may have the effect of discouraging persons who
might now, or prior to the Effective Time, be interested in acquiring all of or
a significant interest in Fourth Financial from considering or proposing such an
acquisition, even if such persons were prepared to offer to pay consideration to
shareholders of Fourth Financial which had a higher current market price than
the shares of Boatmen's Common to be received for each share of Fourth Financial
Common pursuant to the Merger Agreement.
In the event that the shareholders of Fourth Financial fail to approve the
Merger Agreement, either Boatmen's or Fourth Financial may terminate the Merger
Agreement. See "MERGER -- Termination of Merger Agreement." If such
termination occurs prior to the occurrence of a Purchase Event or Preliminary
Purchase Event (as such terms are defined in the Fourth Financial Stock Option
Agreement; see "MERGER -- Fourth Financial Stock Option Agreement") under the
Fourth Financial Stock Option Agreement, the Fourth Financial Stock Option
Agreement will automatically terminate at such time. If a
13
Purchase Event occurs under the Fourth Financial Stock Option Agreement,
however, Boatmen's will be entitled to exercise the Fourth Financial Option in
accordance with its terms.
Upon the occurrence of certain events set forth in the Fourth Financial
Stock Option Agreement, at the election of Boatmen's, the Fourth Financial
Option (or shares issued pursuant to the exercise thereof) must be repurchased
by Fourth Financial (the "Repurchase") or converted into, or exchanged for, an
option of another corporation or Fourth Financial (the "Substitute Option"). In
addition, the Fourth Financial Stock Option Agreement grants certain
registration rights (the "Registration Rights") to Boatmen's with respect to the
shares represented by the Fourth Financial Option. The terms of such
Repurchase, Substitute Option and Registration Rights are set forth in the
Fourth Financial Stock Option Agreement, attached as Appendix B to this Joint
Proxy Statement/Prospectus, and described under "MERGER -- Fourth Financial
Stock Option Agreement."
INTERESTS OF CERTAIN PERSONS IN MERGER
Certain members of the Fourth Financial Board and management of Fourth
Financial have interests in the Merger that are in addition to and separate from
the interests of shareholders of Fourth Financial generally. These include,
among others, provisions in the Merger Agreement relating to director and
officer indemnification, employment and employee benefits after the Merger, the
conversion of employee stock options, rights under certain change in control and
severance agreements and Board composition.
Pursuant to the terms of a Change in Control Agreement between Fourth
Financial and Darrell G. Knudson, Chairman of the Board, President and Chief
Executive Officer of Fourth Financial, Mr. Knudson will be entitled to receive
$2,048,500 upon the approval of the Merger Agreement at the Fourth Financial
Meeting. Seventeen other executive officers of Fourth Financial will be
eligible to receive, upon the approval of the Merger Agreement at the Fourth
Financial Meeting, $7,621,000 in the aggregate.
In addition, Mr. Knudson will be an executive officer of Boatmen's following
the Merger and two persons, to be selected by Fourth Financial and approved by
Boatmen's, will be appointed to the Boatmen's Board following the Merger. Mr.
Knudson would serve as an executive vice president of Boatmen's and would have a
base salary equal to his current base salary with Fourth Financial. In
addition, Mr. Knudson would be eligible to receive bonuses and to participate in
employee benefit and stock plans generally available to other executive officers
of Boatmen's on the same basis as similarly situated executive officers of
Boatmen's, subject to the right of Boatmen's to amend or terminate any such
plans or programs in its discretion. Directors whose principal occupations are
with Boatmen's or any of its subsidiaries receive no Director's fees. All other
Directors receive quarterly retainer payments of $5,000 each, plus $1,000 for
each Board or committee meeting attended, except the chairman of any committee,
who receives $1,500 for each committee meeting attended. See "MERGER --
Interests of Certain Persons in Merger -- Change in Control and Severance
Agreements."
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Merger is conditioned upon receipt by Boatmen's and
Fourth Financial of opinions of Lewis, Rice & Fingersh, L.C. and Sullivan &
Cromwell, respectively, to the effect that no gain or loss will be recognized
for federal income tax purposes by holders of Fourth Financial Common or Fourth
Financial Preferred who receive shares of Boatmen's Common or Boatmen's New
Preferred, as the case may be, in the Merger, other than in respect of any cash
received in lieu of fractional share interests
14
in Boatmen's Common. Any holder of Fourth Financial Preferred who perfects his
or her dissenters' appraisal rights and receives cash will recognize taxable
gain or loss.
BECAUSE CERTAIN TAX CONSEQUENCES MAY VARY DEPENDING UPON THE PARTICULAR
CIRCUMSTANCES OF EACH FOURTH FINANCIAL SHAREHOLDER AND FOURTH FINANCIAL
PREFERRED DEPOSITARY SHAREHOLDER, IT IS RECOMMENDED THAT FOURTH FINANCIAL
SHAREHOLDERS AND FOURTH FINANCIAL PREFERRED DEPOSITARY SHAREHOLDERS CONSULT
THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL (AND ANY STATE, LOCAL AND FOREIGN)
TAX CONSEQUENCES OF THE MERGER IN THEIR PARTICULAR CIRCUMSTANCES.
APPRAISAL RIGHTS OF DISSENTING SHAREHOLDERS
Holders of shares of Fourth Financial Preferred who comply with the
requirements of Section 17-6712 of the Kansas Corporate Law will be entitled to
appraisal rights in connection with the Merger. A copy of Section 17-6712 of
the Kansas Corporate Law is attached hereto as Appendix E and is incorporated by
reference herein. Under Section 17-6712, a holder of Fourth Financial Preferred
Depositary Shares who desires to dissent from the Merger and receive a cash
payment for the value of his or her shares must deliver to Fourth Financial
written objection to the Merger before the taking of the vote on the Merger
Agreement at the Fourth Financial Meeting. The entity resulting from
consummation of the Merger (referred to herein as the "Surviving Corporation")
will, within ten days of the Effective Time, notify each objecting shareholder
that the Merger has become effective. A dissenting shareholder then has twenty
days from the date the Surviving Corporation mails such notice in which to
demand in writing from the Surviving Corporation payment of the value of his or
her Fourth Financial Preferred Depositary Shares. If, within 30 days following
such twenty day period, the Surviving Corporation and any dissenting shareholder
fail to agree on the value of such holder's Fourth Financial Preferred
Depositary Shares, either the Surviving Corporation or any dissenting
shareholder may, within four months after the expiration of such 30 day period,
file a petition with the district court seeking a determination of the value of
such shares by an appraiser(s) appointed by the court. After receiving the
report of the appraiser(s), the court then would determine the value of the
shares and would direct payment of such value, together with interest, if any,
to the parties entitled thereto. Holders of Fourth Financial Preferred
Depositary Shares who elect to dissent will be bound by their election and may
not thereafter withdraw their election and receive shares of Boatmen's New
Preferred Depositary Shares.
Neither holders of Boatmen's Common or Boatmen's Series B Preferred nor
holders of Fourth Financial Common have any dissenters' or appraisal rights
under The General Business Corporation Law of Missouri (the "Missouri Corporate
Law") or the Kansas Corporate Law, respectively, in connection with the Merger.
See "MERGER -- Appraisal Rights of Dissenting Shareholders."
MANAGEMENT AND OPERATIONS AFTER MERGER
Mr. Darrell G. Knudson, Chairman of the Board, President and Chief
Executive Officer of Fourth Financial, will be an executive officer of Boatmen's
following the Merger and two persons, to be selected by Fourth Financial and
approved by Boatmen's, will be appointed to the Boatmen's Board following the
Merger. It has not yet been determined, as of the date of this Joint Proxy
Statement/Prospectus, which two persons will be appointed as new Directors of
Boatmen's following the Merger. Except as provided above, it is not anticipated
that the management of Boatmen's or the Boatmen's Board will be affected as a
result
15
of the Merger. After the Effective Time of the Merger, the Board of Directors
of Acquisition Sub will be comprised of representatives of Boatmen's and
Acquisition Sub will operate in the same capacities as, and perform many of the
same functions presently performed by, Fourth Financial.
Following the Merger, Boatmen's intends to combine the operations of and,
subject to required regulatory approvals, to merge certain of the subsidiary
banks of Boatmen's and Fourth Financial and to consolidate the operations of
certain other Boatmen's and Fourth Financial subsidiaries which provide similar
services. The receipt of such required regulatory approvals is not a condition
to, or required for, consummation of the Merger. As of the date of this Joint
Proxy Statement/Prospectus, no final determination with respect to such matters
has been made.
While no assurance can be given, Boatmen's and Fourth Financial have
estimated, based on information available at this time, pretax expense savings
resulting from the Merger to be about $20 million in 1996, growing to about $60
million by 1998. The $60 million in expense savings is expected to be realized
in the consolidation of data processing and back office functions resulting in
$27 million of savings; the elimination of corporate overhead and duplicate
branch locations totalling $25 million and other efficiencies resulting mainly
from consolidation of operating units totalling $8 million. The extent to which
such expense savings will be achieved is dependent upon various factors, a
number of which are beyond the control of Boatmen's and Fourth Financial,
including the regulatory environment, economic conditions, unanticipated changes
in business conditions and inflation. Therefore, no assurances can be given
with respect to the ultimate level and composition of expense savings to be
realized, or that such savings will be realized in the time-frame currently
anticipated. In addition, as described in "MERGER -- Regulatory Approvals,"
certain regulatory agencies may seek the divestiture of certain assets and
liabilities of the combined company following the Merger. However, as of the
date of this Joint Proxy Statement/Prospectus neither Boatmen's nor Fourth
Financial can predict with any assurance what the aggregate amount of any such
divestitures may be. While divestitures may affect certain pro forma combined
financial statement amounts, merger and nonrecurring costs, expense savings and
revenues, Boatmen's believes that the aggregate amount and financial impact of
divestitures will not be material to the business, operations or financial
condition of the combined institution and its subsidiaries, taken as a whole.
See "PRO FORMA FINANCIAL DATA."
See "MERGER -- Management and Operations After Merger" and "-- Interests of
Certain Persons in Merger."
COMPARISON OF SHAREHOLDER RIGHTS
The rights of the shareholders of Fourth Financial Common and Boatmen's
Common differ in certain respects. The rights of the shareholders of Fourth
Financial who receive shares of Boatmen's Common and Boatmen's New Preferred in
the Merger will be governed by the Missouri Corporate Law, as Boatmen's is
incorporated in Missouri, and by the Restated Articles of Incorporation, Bylaws
and other corporate documents of Boatmen's. The governing law and documents of
Boatmen's differ from those which apply to Fourth Financial, which is a Kansas
corporation, in several respects, of which the material differences, as
hereafter described under "COMPARISON OF SHAREHOLDER RIGHTS," are the
shareholder votes required for certain business combinations; the removal of
directors; the submission of shareholder proposals; certain rights pursuant to
Boatmen's Rights Agreement (as hereafter defined under "COMPARISON OF
SHAREHOLDER RIGHTS -- Shareholder Rights Plan"); the circumstances under which a
shareholder may dissent from corporate action and receive fair value for his or
her shares; and the
16
consideration of certain non-shareholder interests pursuant to certain statutes.
See "DESCRIPTION OF BOATMEN'S CAPITAL STOCK" and "COMPARISON OF SHAREHOLDER
RIGHTS."
COMPARATIVE STOCK PRICES
Shares of Boatmen's Common are traded in the over-the-counter market and
are listed on Nasdaq under the symbol BOAT. Shares of Fourth Financial Common
and Fourth Financial Preferred Depositary Shares are traded in the over-the-
counter market and are listed on Nasdaq under the symbols FRTH and FRTHZ,
respectively. The following table sets forth the high and low last sale prices
of Boatmen's Common, Fourth Financial Common and Fourth Financial Preferred
Depositary Shares for the periods indicated, as reported on Nasdaq.
Fourth Financial
Boatmen's Fourth Financial Preferred
Common Common Depositary Shares
----------------- ----------------- -----------------
High Low High Low High Low
------ ------ ------ ------ ------ ------
1993 First Quarter ................................ $30.50 $27.00 $31.25 $28.50 $31.00 $28.75
Second Quarter ............................... 32.13 27.31 30.88 26.88 30.63 27.75
Third Quarter ................................ 32.19 29.25 31.25 28.50 31.00 29.50
Fourth Quarter ............................... 33.38 27.63 30.38 26.00 31.00 27.50
1994 First Quarter ................................ $30.50 $27.00 $29.00 $25.38 $29.75 $26.50
Second Quarter ............................... 34.88 29.25 31.50 26.63 28.88 26.50
Third Quarter ................................ 34.69 30.25 30.50 27.75 29.00 27.13
Fourth Quarter ............................... 31.13 26.25 32.50 29.50 29.75 27.38
1995 First Quarter ................................ $31.38 $27.25 $33.25 $29.88 $30.25 $27.50
Second Quarter ............................... 36.00 30.88 33.50 31.25 30.75 28.25
Third Quarter ................................ 38.00 34.75 36.00 33.00 32.00 30.00
Fourth Quarter (through November __, 1995) ... 39.75 36.50 38.38 35.50 34.00 31.13
On August 24, 1995, the last trading day before the announcement of the
Merger Agreement, the closing sale prices of Boatmen's Common, Fourth Financial
Common and Fourth Financial Preferred Depositary Shares, as reported on Nasdaq,
were $37.25 per share, $33.75 per share and $30.00 per depositary share,
respectively. The equivalent per common share price for the Fourth Financial
Common, which is calculated on the basis of the Common Exchange Ratio, was
$37.25 on such date.
On November __, 1995, the closing sale prices of Boatmen's Common, Fourth
Financial Common and Fourth Financial Preferred Depositary Shares, as reported
on Nasdaq, were $____________ per share, and $____________ per share and
$____________ per depositary share, respectively. The equivalent per common
share price for the Fourth Financial Common, which is calculated on the basis of
the Common Exchange Ratio, was $____________ on such date. On ____________,
1995, there were approximately ____________ and ____________ holders of record
of Boatmen's Common and Fourth Financial Common, respectively.
Shareholders are advised to obtain current market quotations for Boatmen's
Common and Fourth Financial Common.
17
SELECTED COMPARATIVE PER SHARE DATA
(unaudited)
The following summary presents comparative historical, pro forma and pro
forma equivalent unaudited per share data for both Boatmen's and Fourth
Financial. The pro forma amounts assume the Merger had been effective during
the periods presented and has been accounted for under the pooling of interests
method. For a description of pooling of interests accounting with respect to
the Merger, see "MERGER--Accounting Treatment." Boatmen's pro forma amounts
represent the pro forma results of the combined companies, and Fourth
Financial's equivalent pro forma amounts are computed by multiplying the pro
forma amounts by a factor of 1, to reflect the Common Exchange Ratio (which
equals 1 share of Boatmen's Common for each share of Fourth Financial Common).
The data presented should be read in conjunction with the historical financial
statements and the related notes thereto incorporated by reference herein, and
the pro forma financial statements included elsewhere in this Joint Proxy
Statement/Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and
"PRO FORMA FINANCIAL DATA."
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------- ----------------------------
1995 1994 1994 1993 1992
------ ------ ------ ------ ------
NET INCOME PER COMMON SHARE:
Historical
Boatmen's ...................................... $ 1.51 $ 1.57 $ 3.17 $ 2.91 $ 2.25
Fourth Financial ............................... 0.72 1.33 2.80 2.67 2.29
Pro forma combined per Boatmen's share ............. 1.37 1.52 3.10 2.86 2.26
Equivalent pro forma per Fourth Financial share .... 1.37 1.52 3.10 2.86 2.26
DIVIDENDS PER COMMON SHARE:
Historical
Boatmen's ...................................... $ 0.68 $ 0.62 $ 1.27 $ 1.15 $ 1.09
Fourth Financial ............................... 0.55 0.52 1.04 0.98 0.88
Pro forma combined per Boatmen's share /(1)/ ....... 0.68 0.62 1.27 1.15 1.09
Equivalent pro forma per Fourth Financial share .... 0.68 0.62 1.27 1.15 1.09
BOOK VALUE PER COMMON SHARE (PERIOD END):
Historical
Boatmen's ...................................... $21.55 $19.56 $19.95 $19.90 $17.67
Fourth Financial ............................... 19.93 18.29 18.57 18.65 16.55
Pro forma combined per Boatmen's share ............. 21.07 19.34 19.71 19.67 17.47
Equivalent pro forma per Fourth Financial share .... 21.07 19.34 19.71 19.67 17.47
- --------------
/(1)/ Boatmen's pro forma dividends per share represent historical dividends
per share paid by Boatmen's.
18
SELECTED FINANCIAL DATA
The following tables present selected consolidated historical financial
data for Boatmen's and Fourth Financial and unaudited pro forma combined amounts
reflecting the Merger. The pro forma amounts assume the Merger had been
effective during the periods presented. The data presented are derived from the
consolidated financial statements of Boatmen's and Fourth Financial and should
be read in conjunction with the more detailed information and financial
statements incorporated by reference in this Joint Proxy Statement/Prospectus.
The data should also be read in conjunction with the unaudited pro forma
financial statements included elsewhere in this Joint Proxy
Statement/Prospectus. See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE"
and "PRO FORMA FINANCIAL DATA."
BOATMEN'S/(1)/
SELECTED FINANCIAL DATA
(unaudited)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- ---------- ---------- ---------- -------- --------
(income statement amounts in thousands except per share
data and balance sheet amounts in millions)
SUMMARIZED INCOME STATEMENT:
Net Interest Income ....................... $596,914 $588,824 $1,188,288 $1,107,290 $1,001,455 $845,398 $748,821
Provision for Loan Losses ................. 18,881 13,586 25,340 64,812 139,475 118,017 125,662
Noninterest Income ........................ 327,653 307,563 615,144 545,218 500,360 401,694 335,074
Noninterest Expense ....................... 604,709 574,143 1,156,738 1,075,888 1,000,449 865,216 751,687
Income Tax Expense ........................ 106,471 107,054 213,552 162,139 99,228 63,925 38,808
Net Income ................................ 194,506 201,604 407,802 349,669 262,663 199,934 167,738
PER COMMON SHARE DATA:
Net Income ................................ $ 1.51 $ 1.57 $ 3.17 $ 2.91 $ 2.25 $ 1.78 $ 1.56
Cash Dividends Paid ....................... 0.68 0.62 1.27 1.15 1.09 1.07 1.06
Stockholders' Equity (period end) ......... 21.55 19.56 19.95 19.90 17.67 16.32 15.09
FINANCIAL POSITION AT PERIOD END:
Loans, Net of Unearned Income ............. $ 19,921 $ 17,737 $ 18,656 $ 16,538 $ 14,709 $ 13,777 $ 13,592
Total Assets .............................. 33,408 31,572 32,878 30,233 27,751 26,144 25,649
Deposits .................................. 24,417 23,472 25,384 23,952 22,723 20,826 20,608
Long-Term Debt ............................ 522 586 592 530 428 342 314
Stockholders' Equity ...................... 2,782 2,519 2,561 2,410 2,102 1,871 1,627
SELECTED FINANCIAL RATIOS:
Return on Average Assets .................. 1.20% 1.29% 1.29% 1.23% 0.99% 0.81% 0.75%
Return on Average Common Equity ........... 14.48 16.14 16.14 15.58 13.20 11.32 10.58
Return on Average Total Equity ............ 14.49 16.15 16.14 15.59 13.21 11.33 10.58
Net Interest Margin ....................... 4.25 4.40 4.35 4.49 4.35 4.01 3.98
Nonperforming Assets as % of Total Loans
and Foreclosed Property/(2)/ ............ 0.95 1.50 1.06 1.85 2.80 3.74 3.76
Nonperforming Loans as % of Total Loans ... 0.66 0.90 0.73 1.16 1.89 2.45 3.02
Loan Reserve as % of Net Loans ............ 1.93 2.14 2.02 2.26 2.26 2.05 1.91
Net Charge-Offs as % of Average Loans ..... 0.13 0.13 0.15 0.23 0.75 0.78 0.73
Earnings to Combined Fixed Charges and
Preferred Stock Dividends
Excluding Interest on Deposits/(3)/ ... 2.81 4.22 3.65 5.16 3.85 2.54 1.83
Including Interest on Deposits/(4)/ ... 1.55 1.81 1.74 1.71 1.43 1.23 1.17
Equity to Assets........................... 8.33 7.98 7.79 7.97 7.57 7.16 6.34
Tangible Equity to Assets/(5)/ ............ 7.47 7.03 6.92 7.04 6.80 6.44 5.68
Tier 1 Risk-Based Capital ................. 10.87 10.94 10.90 10.90 10.55 10.11 --
Total Risk-Based Capital .................. 13.90 14.23 14.03 14.39 13.74 13.05 --
- --------------
(footnotes on following page)
19
/(1)/ The information set forth in this table does not give effect to the
recent and pending acquisitions of other financial institutions. See
"PARTIES -- Boatmen's -- Recent and Pending Acquisitions." The Selected
Financial Data set forth in this table reflects Worthen Banking
Corporation, a pooling acquisition completed on February 28, 1995, for
all periods presented, as this represented a significant subsidiary. The
Selected Financial Data also reflects results from the pooling
acquisitions of Dalhart Bancshares, Inc., The First National Bank in
Pampa and National Mortgage Company (other minor pooling acquisitions
completed in 1995), for the 1995 and 1994 periods. Financial information
prior to 1994 does not reflect these smaller acquisitions due to the
immaterial impact on results of operations.
/(2)/ Nonperforming assets include nonaccrual loans, restructured loans, loans
past due 90 days or more and foreclosed property.
/(3)/ Earnings represent pretax income before fixed charges. Fixed charges,
excluding interest on deposits, include interest expense (other than on
deposits), one-third of net rental expense, which approximates the
interest component of such expense, and amortization of debt expense.
Preferred stock dividends have been adjusted to a pretax basis using
Boatmen's effective tax rate.
/(4)/ Earnings represent pretax income before fixed charges. Fixed charges,
including interest on deposits, include all interest expense, one-third
of net rental expense, which approximates the interest component of such
expense, and amortization of debt expense.
/(5)/ Tangible equity to assets is defined as total equity less all intangibles
as a percentage of total tangible assets.
20
FOURTH FINANCIAL
SELECTED FINANCIAL DATA
(unaudited)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
--------------------------- -----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------------- ------------ --------- --------- --------- --------- ---------
(income statement amounts in thousands except per share
data and balance sheet amounts in millions)
SUMMARIZED INCOME STATEMENT:
Net Interest Income........................ $135,547 $135,789 $280,653 $268,060 $244,842 $213,755 $183,123
Provision for Loan Losses.................. 2,033 331 836 7,037 21,433 43,926 49,527
Noninterest Income......................... 28,769 49,170 98,516 87,036 81,547 83,542 65,960
Noninterest Expense........................ 126,406 124,355 254,343 257,552 221,643 211,376 188,258
Income Tax Expense......................... 12,315 20,607 40,866 22,980 19,900 10,229 5,994
Net Income Before Extraordinary Items
and Changes in Accounting Principles...... 23,562 39,666 83,124 67,527 63,413 31,766 5,304
Extraordinary Items/Changes in
Accounting Principles/(1)/................ -- -- -- 10,582 2,503 1,397 3,900
Net Income................................. 23,562 39,666 83,124 78,109 65,916 33,163 9,204
PER COMMON SHARE DATA:
Net Income
Primary................................... $ 0.72 $ 1.33 $ 2.80 $ 2.67 $ 2.29 $ 1.33 $ 0.40
Fully Diluted............................. 0.72 1.29 2.71 2.55 2.21 1.30 0.40
Cash Dividends Paid........................ 0.55 0.52 1.04 0.98 0.88 0.88 0.88
Stockholders' Equity (period end).......... 19.93 18.29 18.57 18.65 16.55 15.29 14.68
FINANCIAL POSITION AT PERIOD END:
Loans, Net of Unearned Income.............. $ 4,386 $ 3,670 $ 4,062 $ 3,398 $ 2,966 $ 2,882 $ 3,065
Total Assets............................... 7,505 7,726 7,814 6,966 6,794 5,791 5,899
Deposits................................... 6,042 5,796 5,725 5,510 5,583 4,181 3,671
Long-Term Debt............................. 268 503 449 273 39 53 24
Stockholders' Equity....................... 650 597 605 610 536 386 366
SELECTED FINANCIAL RATIOS:
Return on Average Assets................... 0.62% 1.12% 1.12% 1.16% 1.10% 0.57% 0.17%
Return on Average Common Equity............ 7.64 14.37 15.13 15.21 14.48 8.84 2.63
Return on Average Total Equity............. 7.58 13.17 13.79 13.71 13.14 8.78 2.61
Net Interest Margin........................ 4.05 4.38 4.32 4.56 4.67 4.35 4.28
Nonperforming Assets as % of
Total Loans and Foreclosed Property/(2)/. 0.97 1.25 1.20 1.57 2.36 3.64 4.69
Nonperforming Loans as % of
Total Loans.............................. 0.85 1.02 1.06 1.28 1.68 2.31 3.02
Loan Reserve as % of Net Loans............. 1.64 2.02 1.79 2.01 2.53 2.46 2.09
Net Charge-Offs as % of Average
Loans.................................... 0.21 (0.01) 0.05 0.55 0.83 1.26 1.17
Equity to Assets........................... 8.66 7.72 7.75 8.76 7.89 6.66 6.21
Tangible Equity to Assets/(3)/............. 7.48 6.40 6.60 7.88 6.99 5.63 5.54
Tier 1 Risk-Based Capital.................. 10.74 10.92 11.05 12.68 13.18 10.47 --
Total Risk-Based Capital................... 11.99 12.17 12.30 13.93 14.43 11.73 --
___________________________
/(1)/ Includes cumulative effect of FAS No. 109 adoption in 1993 and 1992, and
tax benefit from utilization of net operating loss carryforwards in 1991
and 1990.
/(2)/ Nonperforming assets include nonaccrual loans, restructured loans, loans
past due 90 days or more and foreclosed property.
/(3)/ Tangible equity to assets is defined as total equity less all intangibles
as a percentage of total tangible assets.
21
BOATMEN'S AND FOURTH FINANCIAL
PRO FORMA COMBINED SELECTED FINANCIAL DATA
(unaudited)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
--------- --------- ----------- ----------- ----------- ----------- ---------
(income statement amounts in thousands except per share
data and balance sheet amounts in millions)
SUMMARIZED INCOME STATEMENT:
Net Interest Income................ $732,461 $724,613 $1,468,941 $1,375,350 $1,246,297 $1,059,153 $931,944
Provision for Loan Losses.......... 20,914 13,917 26,176 71,849 160,908 161,943 175,189
Noninterest Income................. 356,422 356,733 713,660 632,254 581,907 485,236 401,034
Noninterest Expense................ 731,115 698,498 1,411,081 1,333,440 1,222,092 1,076,592 939,945
Income Tax Expense/(1)/............ 118,786 127,661 254,418 174,537 116,625 72,757 40,902
Net Income/(1)/.................... 218,068 241,270 490,926 427,778 328,579 233,097 176,942
PER COMMON SHARE DATA/(1)(2)/:
Net Income......................... $ 1.37 $ 1.52 $ 3.10 $ 2.86 $ 2.26 $ 1.70 $ 1.36
Cash Dividends Paid................ 0.68 0.62 1.27 1.15 1.09 1.07 1.06
Stockholders' Equity (period end).. 21.07 19.34 19.71 19.67 17.47 16.13 15.01
FINANCIAL POSITION AT PERIOD END:
Loans, Net of Unearned Income...... $ 24,307 $ 21,407 $ 22,718 $ 19,936 $ 17,675 $ 16,659 $ 16,657
Total Assets....................... 40,913 39,298 40,692 37,199 34,545 31,935 31,548
Deposits........................... 30,459 29,268 31,109 29,462 28,306 25,007 24,279
Long-Term Debt..................... 709 1,089 1,041 803 467 395 338
Stockholders' Equity............... 3,401 3,116 3,166 3,020 2,638 2,257 1,993
SELECTED FINANCIAL RATIOS:
Return on Average Assets........... 1.08% 1.26% 1.26% 1.21% 1.01% 0.77% 0.64%
Return on Average Common...........
Equity........................... 13.35 15.82 15.97 15.52 13.42 10.89 9.14
Return on Average Total Equity..... 13.17 15.54 15.69 15.21 13.19 10.88 9.13
Net Interest Margin................ 4.21 4.39 4.35 4.50 4.41 4.08 4.03
Nonperforming Assets as % of
Total Loans and Foreclosed
Property/(3)/.................... 0.96 1.46 1.08 1.80 2.73 3.73 3.93
Nonperforming Loans as % of
Total Loans...................... 0.70 0.92 0.79 1.18 1.86 2.43 3.02
Loan Reserve as % of Net Loans..... 1.88 2.12 1.98 2.22 2.30 2.12 1.95
Net Charge-Offs as % of Average
Loans............................ 0.14 0.10 0.13 0.29 0.77 0.86 0.81
Equity to Assets................... 8.31 7.93 7.78 8.12 7.64 7.07 6.32
Tangible Equity to Assets/(4)/..... 7.39 6.91 6.86 7.20 6.84 6.29 5.66
Tier 1 Risk-Based Capital.......... 10.73 10.94 10.93 11.21 10.98 10.16 --
Total Risk-Based Capital........... 13.45 13.86 13.72 14.31 13.85 12.86 --
___________________________
/(1)/ Net income includes $10,582 for the year ended December 31, 1993 and
$2,503 for the year ended December 31, 1992, for the cumulative effect of
SFAS No. 109 adoption by Fourth Financial and $1,397 and $3,900 for the
years ended December 31, 1991 and 1990, respectively, for tax benefit
from utilization of net operating loss carryforwards at Fourth Financial.
While the impact of this activity was separately reported as
extraordinary items and changes in accounting principles in the Fourth
Financial Selected Financial Data, such adjustments are immaterial in
relation to Boatmen's and Fourth Financial pro forma combined results of
operations. Accordingly, such adjustments are included herein as a
component of income tax expense.
/(2)/ Primary and fully diluted earnings per share calculations have not been
provided because dilution is less than 3%.
/(3)/ Nonperforming assets include nonaccrual loans, restructured loans, loans
past due 90 days or more and foreclosed property.
/(4)/ Tangible equity to assets is defined as total equity less all intangibles
as a percentage of total tangible assets.
22
BOATMEN'S MEETING
DATE, TIME AND PLACE
This Joint Proxy Statement/Prospectus is being furnished to shareholders of
Boatmen's in connection with the solicitation of proxies by the Boatmen's Board
for use at the Boatmen's Meeting to be held at Boatmen's Plaza, 800 Market
Street, St. Louis, Missouri 63101 on December 12, 1995, at 10:00 a.m., local
time, and at any adjournment or postponement thereof.
MATTERS TO BE CONSIDERED
At the Boatmen's Meeting, the holders of Boatmen's Common and Boatmen's
Series B Preferred will be asked, in accordance with the shareholder approval
requirements of the By-Laws of the NASD, to consider and vote upon the issuance
of shares of Boatmen's Common and Boatmen's New Preferred to shareholders of
Fourth Financial pursuant to the terms of the Merger Agreement. The By-Laws of
the NASD require shareholder approval of such issuance because the number of
shares of Boatmen's Common to be issued in the Merger (including the shares of
Boatmen's Common issuable upon conversion of the Boatmen's New Preferred) is
expected to exceed 20% of the shares of Boatmen's Common and voting power
outstanding immediately prior to such issuance. (The holders of Boatmen's
Common and Boatmen's Series B Preferred may also be asked to vote upon a
proposal to adjourn or postpone the Boatmen's Meeting which adjournment or
postponement could be used for the purpose, among others, of allowing additional
time for the soliciting of additional votes to approve the issuance of shares of
Boatmen's Common and Boatmen's New Preferred to shareholders of Fourth Financial
pursuant to the Merger Agreement.)
The date on which this Joint Proxy Statement/Prospectus is first being sent
to shareholders of Boatmen's is November 13, 1995.
RECORD DATE
The Boatmen's Board has fixed the close of business on October 23, 1995 as
the Boatmen's Record Date for the determination of shareholders of Boatmen's
Common and Boatmen's Series B Preferred to receive notice of and to vote at the
Boatmen's Meeting. On the Boatmen's Record Date there were 128,370,928 shares
of Boatmen's Common and 9,809 shares of Boatmen's Series B Preferred issued and
outstanding. Only holders of shares of Boatmen's Common and Boatmen's Series B
Preferred of record on the Boatmen's Record Date are entitled to vote at the
Boatmen's Meeting. No shares of Boatmen's Common and Boatmen's Series B
Preferred can be voted at the Boatmen's Meeting unless the record holder is
present in person or represented by proxy at the Boatmen's Meeting.
VOTE REQUIRED
The presence, in person or by proxy, of a majority of the issued and
outstanding shares of Boatmen's Voting Stock entitled to vote on the Boatmen's
Record Date is necessary to constitute a quorum at the Boatmen's Meeting.
Pursuant to the By-Laws of the NASD, the affirmative vote of a majority of the
shares of Boatmen's Voting Stock present, in person or by proxy, at the
Boatmen's Meeting is required to approve the issuance of shares of Boatmen's
Common and Boatmen's New Preferred to shareholders of Fourth
23
Financial pursuant to the terms of the Merger Agreement. Each holder of
Boatmen's Common and Boatmen's Series B Preferred is entitled to one vote per
share of Boatmen's Common and one vote per share of Boatmen's Series B
Preferred, respectively. Approval of the issuance of shares of Boatmen's Common
and Boatmen's New Preferred to shareholders of Fourth Financial pursuant to the
terms of the Merger Agreement by the requisite vote of the holders of Boatmen's
Voting Stock is a condition to, and required for, consummation of the Merger.
See "MERGER -- Certain Conditions to Consummation of Merger."
SECURITY OWNERSHIP OF MANAGEMENT
As of the Boatmen's Record Date, 128,370,928 shares of Boatmen's Common and
9,809 shares of Boatmen's Series B Preferred were issued and outstanding,
respectively, and approximately 1,391,239 shares, or 1.08%, of Boatmen's Common,
and no shares of Boatmen's Series B Preferred were beneficially owned by
directors and executive officers of Boatmen's and their affiliates. It is
currently expected that each such director and executive officer of Boatmen's
will vote the shares of Boatmen's Common beneficially owned by him or her for
approval of the issuance of shares of Boatmen's Common and Boatmen's New
Preferred to shareholders of Fourth Financial pursuant to the terms of the
Merger Agreement. As of the Boatmen's Record Date, subsidiaries of Boatmen's
held 9,700,215, or 7.6%, of Boatmen's Common in various fiduciary capacities
and, by virtue of sole or shared voting or investment power in respect of such
shares, were deemed to own them beneficially. It is the practice of these
entities when holding shares as sole trustee or sole executor to vote said
shares but, where shares are held as co-executor or co-trustee, approval is
obtained from the co-fiduciary before voting. As of the Boatmen's Record Date,
directors and executive officers of Fourth Financial and their affiliates did
not beneficially own any shares of Boatmen's Common or Boatmen's Series B
Preferred. As of the Boatmen's Record Date, the banking and trust subsidiaries
of Fourth Financial, as fiduciaries, custodians or agents, held a total of
51,372 shares, or less than 1%, of Boatmen's Common under trust agreements and
other instruments and agreements.
Additional information with respect to beneficial ownership of Boatmen's
Common and Boatmen's Series B Preferred by persons and entities owning more than
5% of such stock and more detailed information with respect to beneficial
ownership of Boatmen's Common by directors and executive officers of Boatmen's
is incorporated by reference to the 1994 Annual Report on Form 10-K of
Boatmen's. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
VOTING AND REVOCATION OF PROXIES
Proxies for use at the Boatmen's Meeting accompany this Joint Proxy
Statement/Prospectus. A shareholder may use his or her proxy if he or she is
unable to attend the Boatmen's Meeting in person or wishes to have his or her
shares voted by proxy even if he or she does attend the Boatmen's Meeting.
Shares of Boatmen's Voting Stock represented by a proxy properly signed and
returned to Boatmen's at, or prior to, the Boatmen's Meeting, unless
subsequently revoked, will be voted at the Boatmen's Meeting in accordance with
instructions thereon. If a proxy is properly signed and returned and the manner
of voting is not indicated on the proxy, any shares of Boatmen's Voting Stock
represented by such proxy will be voted FOR the issuance of shares of Boatmen's
Common and Boatmen's New Preferred to shareholders of Fourth Financial pursuant
to the terms of the Merger Agreement and FOR the proposal regarding any
adjournment or postponement. Any proxy given pursuant to this solicitation may
be revoked by the grantor at any time prior to the voting thereof on the matters
to be considered at the Boatmen's Meeting by filing with the Secretary of
Boatmen's a written revocation or a duly executed proxy bearing a later date.
All written notices of revocation and other communications with respect to
revocation of Boatmen's proxies should be
24
addressed to Boatmen's Bancshares, Inc., One Boatmen's Plaza, 800 Market Street,
St. Louis, Missouri 63101, Attention: Corporate Secretary. A holder of
Boatmen's Voting Stock who previously signed and returned a proxy and who elects
to attend the Boatmen's Meeting and vote in person may withdraw his or her proxy
at any time before it is exercised by giving notice of such revocation to the
Secretary of Boatmen's at the Boatmen's Meeting and voting in person by ballot
at the Boatmen's Meeting; however, attendance at the Boatmen's Meeting will not
in and of itself constitute a revocation of the proxy.
Boatmen's intends to count shares of Boatmen's Voting Stock present in person
at the Boatmen's Meeting but not voting, and shares of Boatmen's Voting Stock
for which it has received proxies but with respect to which holders of shares
have abstained, as present at the Boatmen's Meeting for purposes of determining
the presence or absence of a quorum for the transaction of business. In
addition, brokers who hold shares 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 with respect to the matters to be considered and
voted upon at the Boatmen's Meeting without specific instructions from such
customers. Since the affirmative vote of a majority of the shares of Boatmen's
Voting Stock present, in person or by proxy, at the Boatmen's Meeting is
required to approve the issuance of shares of Boatmen's Common and Boatmen's New
Preferred to shareholders of Fourth Financial pursuant to the terms of the
Merger Agreement, such non-voting shares and abstentions and the failure of such
customers to provide specific instructions with respect to their shares of
Boatmen's Voting Stock will have the effect of a vote against the approval of
the issuance of shares of Boatmen's Common and Boatmen's New Preferred to
shareholders of Fourth Financial pursuant to the terms of the Merger Agreement.
SOLICITATION OF PROXIES
In addition to solicitation of proxies from shareholders of Boatmen's Common
and Boatmen's Series B Preferred by use of the mail, proxies also may be
solicited by personal interview, telephone or other electronic means by
directors, officers and employees of Boatmen's, who will not be specifically
compensated for such services, and it is expected that banks, brokerage houses
and other institutions, nominees or fiduciaries will be requested to forward the
soliciting materials to their principals and obtain authorization for the
execution of proxies. All costs of soliciting proxies, assembling and mailing
the Joint Proxy Statement/Prospectus and all papers which now accompany or
hereafter may supplement the same, as well as reasonable out-of-pocket expenses
incurred by the above-mentioned banks, brokerage houses and other institutions,
nominees or fiduciaries for forwarding proxy materials to and obtaining proxies
from their principals will be borne by Boatmen's. Boatmen's has retained
Corporate Investor Communications, Inc. to assist in the solicitation of proxies
for an estimated fee of $6,000, plus reasonable out-of-pocket expenses.
FOURTH FINANCIAL MEETING
DATE, TIME AND PLACE
This Joint Proxy Statement/Prospectus is being furnished to shareholders of
Fourth Financial in connection with the solicitation of proxies by the Fourth
Financial Board for use at the Fourth Financial Meeting to be held in the
auditorium on the Lower Level of the Fourth Financial Center, at 100 North
Broadway, Wichita, Kansas 67202 on December 12, 1995, at 10:00 a.m., local time,
and at any adjournment or postponement thereof. Copies of this Joint Proxy
Statement/Prospectus also are being furnished by Fourth Financial to the holders
of Fourth Financial Preferred and Fourth Financial Preferred
25
Depositary Shares, but proxies are not being solicited from such holders and
such holders are not entitled to vote at the Fourth Financial Meeting.
MATTERS TO BE CONSIDERED
At the Fourth Financial Meeting, the holders of Fourth Financial Common will
be asked to consider and vote upon the adoption and approval of the Merger
Agreement providing for the Merger of Fourth Financial with and into Acquisition
Sub. (The holders of Fourth Financial Common may also be asked to vote upon a
proposal to adjourn or postpone the Fourth Financial Meeting which adjournment
or postponement could be used for the purpose, among others, of allowing
additional time for the soliciting of additional votes to approve the Merger
Agreement.)
The date on which this Joint Proxy Statement/Prospectus is first being sent
to shareholders of Fourth Financial is November 13, 1995.
RECORD DATE
The Fourth Financial Board has fixed the close of business on October 23,
1995 as the Fourth Financial Record Date for the determination of shareholders
of Fourth Financial Common to receive notice of and to vote at the Fourth
Financial Meeting. On the Fourth Financial Record Date there were 27,644,870
shares of Fourth Financial Common issued and outstanding. Only holders of
shares of Fourth Financial Common of record on the Fourth Financial Record Date
are entitled to vote at the Fourth Financial Meeting. The holders of record of
shares of Fourth Financial Preferred and Fourth Financial Preferred Depositary
Shares on the Fourth Financial Record Date will receive notice of, but will not
be entitled to vote at, the Fourth Financial Meeting. No shares of Fourth
Financial Common can be voted at the Fourth Financial Meeting unless the record
holder is present in person or represented by proxy at the Fourth Financial
Meeting.
VOTE REQUIRED
The presence, in person or by proxy, of a majority of the issued and
outstanding shares of Fourth Financial Common entitled to vote on the Fourth
Financial Record Date is necessary to constitute a quorum at the Fourth
Financial Meeting. Pursuant to the Kansas Corporate Law, the affirmative vote
of the holders of a majority of all of the issued and outstanding shares of
Fourth Financial Common is required to adopt the Merger Agreement and the
transactions contemplated thereby, including the Merger. Each holder of Fourth
Financial Common is entitled to one vote per share of Fourth Financial Common.
Holders of shares of Fourth Financial Preferred are not entitled to vote on the
matters to be considered at the Fourth Financial Meeting.
SECURITY OWNERSHIP OF MANAGEMENT
As of the Fourth Financial Record Date, 27,644,870 shares of Fourth Financial
Common were issued and outstanding and approximately 1,253,759 shares, or 4.54%,
of Fourth Financial Common were beneficially owned by directors and executive
officers of Fourth Financial and their affiliates. It is currently expected
that each such director and executive officer of Fourth Financial will vote the
shares of Fourth
26
Financial Common beneficially owned by him or her for approval of the Merger
Agreement and the consummation of the transactions contemplated thereby,
including the Merger. As of the Fourth Financial Record Date, subsidiaries of
Fourth Financial, in various fiduciary capacities, held a total of 1,760,506
shares, or 6.37%, of Fourth Financial Common under trust agreements and other
instruments and agreements. It is the practice of these entities when holding
shares as sole trustee or sole executor to vote said shares but, where shares
are held as co-executor or co-trustee, approval is obtained from the co-
fiduciary before voting. As of the Fourth Financial Record Date, directors and
executive officers of Boatmen's and their affiliates beneficially owned 1,000
shares, or less than 1%, of Fourth Financial Common. As of the Fourth Financial
Record Date, subsidiaries of Boatmen's held 44,849, or less than 1%, of Fourth
Financial Common in various fiduciary capacities and, by virtue of sole or
shared voting or investment power in respect of such shares, were deemed to own
them beneficially.
A number of executive officers of Fourth Financial, including those
individuals who have Severance Agreements, have indicated to Fourth Financial
that they may make sales of some or all of their respective holdings of Fourth
Financial Common, including shares that may be obtained pursuant to the exercise
of stock options, prior to the Effective Time of the Merger. Fourth Financial
has been advised by each of these executive officers that such sales will be
made exclusively at the discretion of the individual executive officers, based
on their own individual investment and tax planning considerations, and will
comply with the S.E.C. guidelines regarding pooling of interests accounting
treatment described under "MERGER --Resale of Boatmen's Common, Boatmen's New
Preferred and Boatmen's New Preferred Depositary Shares." As of November 1,
1995, after giving effect to the vesting of various Fourth Financial stock
options that would occur as a result of a favorable Fourth Financial shareholder
vote with respect to the proposal to approve the Merger Agreement, those
executive officers who have Severance Agreement as a group would beneficially
own approximately 822,782 shares of Fourth Financial Common.
Additional information with respect to beneficial ownership of Fourth
Financial Common by persons and entities owning more than 5% of such stock and
more detailed information with respect to beneficial ownership of Fourth
Financial Common by directors and executive officers of Fourth Financial is
incorporated by reference to the 1994 Annual Report on Form 10-K of Fourth
Financial. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
VOTING AND REVOCATION OF PROXIES
Proxies for use at the Fourth Financial Meeting accompany this Joint Proxy
Statement/Prospectus. A shareholder may use his or her proxy if he or she is
unable to attend the Fourth Financial Meeting in person or wishes to have his or
her shares voted by proxy even if he or she does attend the Fourth Financial
Meeting. Shares of Fourth Financial Common represented by a proxy properly
signed and returned to Fourth Financial at, or prior to, the Fourth Financial
Meeting, unless subsequently revoked, will be voted at the Fourth Financial
Meeting in accordance with instructions thereon. If a proxy is properly signed
and returned and the manner of voting is not indicated on the proxy, any shares
of Fourth Financial Common represented by such proxy will be voted FOR the
Merger Agreement and the transactions contemplated thereby, including the
Merger, and FOR the proposal regarding any adjournment or postponement. Any
proxy given pursuant to this solicitation may be revoked by the grantor at any
time prior to the voting thereof on the matters to be considered at the Fourth
Financial Meeting by filing with the Secretary of Fourth Financial a written
revocation or a duly executed proxy bearing a later date. All written notices
of revocation and other communications with respect to revocation of Fourth
Financial proxies should be addressed to Fourth Financial Corporation, 100 North
Broadway, Wichita, Kansas 67202, Attention: Corporate Secretary. A holder of
Fourth Financial Common who previously signed and returned a proxy
27
and who elects to attend the Fourth Financial Meeting and vote in person may
withdraw his or her proxy at any time before it is exercised by giving notice of
such revocation to the Secretary of Fourth Financial at the Fourth Financial
Meeting and voting in person by ballot at the Fourth Financial Meeting; however,
attendance at the Fourth Financial Meeting will not in and of itself constitute
a revocation of the proxy.
Fourth Financial intends to count shares of Fourth Financial Common present
in person at the Fourth Financial Meeting but not voting, and shares of Fourth
Financial Common for which it has received proxies but with respect to which
holders of shares have abstained, as present at the Fourth Financial Meeting for
purposes of determining the presence or absence of a quorum for the transaction
of business. In addition, brokers who hold shares 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 with respect to the adoption of the
Merger Agreement and the transactions contemplated thereby, including the
Merger, without specific instructions from such customers. Since the
affirmative vote of the holders of a majority of the issued and outstanding
shares of Fourth Financial Common entitled to vote on the Fourth Financial
Record Date is required to adopt the Merger Agreement and the transactions
contemplated thereby, including the Merger, such non-voting shares and
abstentions and the failure of such customers to provide specific instructions
with respect to their shares of Fourth Financial Common will have the effect of
a vote against the adoption and approval of the Merger Agreement.
SOLICITATION OF PROXIES
In addition to solicitation of proxies from shareholders of Fourth Financial
Common by use of the mail, proxies also may be solicited by personal interview,
telephone or other electronic means by directors, officers and employees of
Fourth Financial, who will not be specifically compensated for such services,
and it is expected that banks, brokerage houses and other institutions, nominees
or fiduciaries will be requested to forward the soliciting materials to their
principals and obtain authorization for the execution of proxies. All costs of
soliciting proxies, assembling and mailing the Joint Proxy Statement/Prospectus
and all papers which now accompany or hereafter may supplement the same, as well
as reasonable out-of-pocket expenses incurred by the above-mentioned banks,
brokerage houses and other institutions, nominees or fiduciaries for forwarding
proxy materials to and obtaining proxies from their principals, will be borne by
Fourth Financial. Fourth Financial has retained Corporate Investor
Communications, Inc. to assist in the solicitation of proxies for an estimated
fee of $5,000, plus reasonable out-of-pocket expenses.
Boatmen's and Fourth Financial have agreed to share in the expense of
preparation of this Joint Proxy Statement/Prospectus, and Boatmen's will bear
the entire cost of printing this Joint Proxy Statement/Prospectus and all S.E.C.
and other regulatory filing fees incurred in connection therewith.
28
PARTIES
BOATMEN'S
GENERAL
Boatmen's, a Missouri corporation, is a multi-bank holding company
headquartered in St. Louis, Missouri. Its largest subsidiary, The Boatmen's
National Bank of St. Louis, was founded in 1847 and is the oldest bank west of
the Mississippi River. Boatmen's owns substantially all of the capital stock of
55 subsidiary banks, including a federal savings bank, which operate from over
500 banking locations in Missouri, Arkansas, Illinois, Iowa, Kansas, New Mexico,
Oklahoma, Tennessee and Texas. Boatmen's other principal businesses include a
trust company, a mortgage banking company, a credit life insurance company, a
credit card bank and an insurance agency. At June 30, 1995, Boatmen's had
consolidated assets of $33.4 billion and total shareholders' equity of $2.8
billion, making it one of the 30 largest bank holding companies in the United
States.
Boatmen's is among the twenty largest providers of personal trust services in
the nation, providing personal trust services primarily within its banks' market
areas and institutional and pension-related trust services on a national scale.
Operating principally through Boatmen's Trust Company, its subsidiaries and
trust departments of selected banks, the combined trust operations had assets
under management totaling approximately $45 billion at June 30, 1995. The trust
operations, with revenues in 1994 of $164.9 million, provide Boatmen's with a
significant source of noninterest income.
Additional information regarding Boatmen's and its subsidiaries is set forth
in the Boatmen's documents incorporated by reference herein. See "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE."
RECENT AND PENDING ACQUISITIONS
Citizens Bancshares Corporation. On October 27, 1995, Boatmen's acquired, in
exchange for shares of Boatmen's Common, all of the issued and outstanding
shares of Citizens Bancshares Corporation ("Citizens"), a bank holding company
located in Little Rock, Arkansas, and its subsidiary, Citizens Bank of
Jonesboro, an Arkansas state-chartered bank headquartered in Jonesboro,
Arkansas. At June 30, 1995, Citizens had consolidated assets of approximately
$230 million and shareholders' equity of approximately $20.5 million. Boatmen's
exchanged approximately 1.125 million shares of Boatmen's Common for all of the
stock of Citizens, which represents less than 1% of the total number of shares
of Boatmen's Common outstanding as of the date hereof.
Tom Green National Bank. On August 29, 1995, Boatmen's entered into an
Agreement and Plan of Merger to acquire, in exchange for shares of Boatmen's
Common, all of the issued and outstanding shares of Tom Green National Bank, a
national banking association located in San Angelo, Texas ("Tom Green Bank").
At June 30, 1995, Tom Green Bank had assets of approximately $73 million and
shareholders' equity of approximately $4.7 million. Upon consummation of the
transaction, Boatmen's intends to merge Tom Green Bank with Boatmen's First
National Bank of Amarillo, a national banking association and indirect wholly-
owned subsidiary of Boatmen's headquartered in Amarillo, Texas. Boatmen's would
exchange approximately 220,000 shares of Boatmen's Common for all of the stock
of Tom Green Bank, which represents less than 1% of the total number of shares
of Boatmen's Common outstanding as of the
29
date hereof. The Tom Green Bank acquisition, which is subject to, among other
things, regulatory approval and approval by shareholders of Tom Green Bank, is
expected to be completed in the first quarter of 1996. There can be no
assurance that the Tom Green Bank transaction will be consummated. Consummation
of the Merger is not conditioned upon consummation of the Tom Green Bank
acquisition.
FOURTH FINANCIAL
Fourth Financial, a Kansas corporation, is a bank holding company
headquartered in Wichita, Kansas, which offers a broad range of bank and bank-
related services through its subsidiaries, BANK IV, National Association ("BANK
IV") and BANK IV Oklahoma, National Association ("BANK IV Oklahoma"; BANK IV and
BANK IV Oklahoma are referred to herein collectively as the "Fourth Financial
Subsidiary Banks"). At June 30, 1995, Fourth Financial was among the 80 largest
bank holding companies in the United States. Fourth Financial is the largest
bank holding company headquartered in Kansas and, at June 30, 1995, had total
consolidated assets of $7.5 billion, total deposits of $6.0 billion, and
shareholders' equity of $650 million. BANK IV, whose predecessor was originally
organized in 1887, is the largest commercial bank in Kansas and, at June 30,
1995, had approximately 12.0% of all insured deposits in Kansas. BANK IV, the
only major statewide bank in Kansas, has 87 offices in 36 communities in Kansas
and four offices in Independence, Missouri. BANK IV Oklahoma has 56 offices in
23 communities in Oklahoma and is the third largest bank in Oklahoma.
The Fourth Financial Subsidiary Banks provide a wide range of commercial and
retail banking services. Each separate BANK IV market-based unit is under the
management of a local president. Trust and customer investments, mortgage
banking, commercial finance and leasing, and bank card services are each managed
on a line-of-business basis. At June 30, 1995, the Fourth Financial Subsidiary
Banks held total assets of $5.4 billion in various fiduciary capacities and
exercised investment authority over $2.6 billion of these assets. Also on that
date, the Fourth Financial Subsidiary Banks serviced a $1.5 billion residential
mortgage loan portfolio, of which $662 million was serviced for others. BANK IV
operates the VIA system, a network of 334 automated teller machines located in
Kansas, Oklahoma and Missouri at which approximately 12.7 million electronic
banking transactions were initiated during 1994.
Fourth Financial also owns several other subsidiaries which perform various
financially-related services. These subsidiaries include a community
development corporation, which makes loans and investments to promote
redevelopment in low- and moderate-income neighborhoods of the communities
served by Fourth Financial Subsidiary Banks and to finance small and minority-
owned businesses; a subsidiary of BANK IV which offers non-deposit investment
products and services at offices of the Fourth Financial Subsidiary Banks; and a
company which reinsures credit life and health insurance policies. Such
subsidiaries in the aggregate do not account for a material portion of Fourth
Financial's revenues or profits.
Additional information regarding Fourth Financial and its subsidiaries is set
forth in the Fourth Financial documents incorporated by reference herein. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
ACQUISITION SUB
Acquisition Sub, a Kansas corporation, was organized as a wholly-owned
subsidiary of Boatmen's solely for the purpose of effectuating the Merger and
has not engaged in any significant business activity.
30
RECENT DEVELOPMENTS
BOATMEN'S
On October 16, 1995, Boatmen's issued a press release reporting its unaudited
financial results for the nine months ended September 30, 1995. The following
is a summary of such financial results.
CONDENSED FINANCIAL RESULTS
(unaudited)
Nine months ended September 30
-------------------------------------
1995 1994 % change
--------- --------- --------
(in millions except per share data)
SUMMARIZED INCOME STATEMENT:
Net Interest Income $ 901.8 $ 888.1 1.5%
Provision for Loan Losses 30.0 20.4 46.8
Noninterest Income 495.4 457.1 8.4
Noninterest Expense 896.2/(1)/ 860.4 4.2
Net Income 305.1 303.6 0.5
Net Income Before Nonrecurring
Merger Expenses 325.1 303.6 7.1
PER COMMON SHARE DATA:
Net Income $ 2.37 $ 2.36 0.4%
Net Income Before Nonrecurring
Merger Expenses 2.53 2.36 7.2
Cash Dividends Paid 1.02 0.93 9.7
Stockholders' Equity (period end) 21.90 19.87 10.2
FINANCIAL POSITION AT PERIOD END:
Total Assets $32,941.6 $32,264.0 2.1%
Earning Assets 29,571.3 28,838.2 2.5
Loans, Net of Unearned Income 19,780.5 18,212.4 8.6
Deposits 24,594.2 23,702.3 3.8
Long-Term Debt 524.3 594.0 (11.7)
Stockholders' Equity 2,809.0 2,559.7 9.7
SELECTED FINANCIAL RATIOS:
Return on Average Assets 1.24% 1.29%
Return on Average Assets Before
Nonrecurring Merger Expenses 1.33 1.29
Return on Average Equity 14.92 16.11
Return on Average Equity Before
Nonrecurring Merger Expenses 15.90 16.11
Net Interest Margin 4.24 4.37
Equity to Assets 8.53 7.93
_________________________
/(1)/ Includes nonrecurring merger expenses of $26 million.
31
PROVISION FOR LOAN LOSSES AND ASSET QUALITY
Summary of Reserve for Loan Losses
September 30 (in millions) 1995 1994
- ----------------------------------------------------------------------------
Balance, beginning of year $ 376.6 $ 376.3
- ----------------------------------------------------------------------------
Loans charged off (51.3) (52.7)
Recoveries on loans previously charged off 31.3 37.3
- ----------------------------------------------------------------------------
Net charge-offs (20.0) (15.4)
Provision charged to expense 30.0 20.4
Loan reserve from acquisitions 3.7 .9
- ----------------------------------------------------------------------------
Balance, end of period $ 390.3 $ 382.2
============================================================================
At end of period:
Loan reserve as % of net loans 1.97% 2.10%
Loan reserve as % of nonperforming loans 298.00 228.86
Net charge-offs as % of average loans .14 .12
============================================================================
Summary of Nonperforming Assets
September 30 (in millions) 1995 1994
- ----------------------------------------------------------------------------
Nonaccrual $ 97.4 $ 119.9
Restructured 6.6 7.1
Past due 90 days or more 27.0 40.0
- ----------------------------------------------------------------------------
Total nonperforming loans 131.0 167.0
- ----------------------------------------------------------------------------
Foreclosed property 45.4 105.3
- ----------------------------------------------------------------------------
Total nonperforming assets $ 176.4 $ 272.3
============================================================================
Nonperforming loans as % of total loans .66% .91%
Nonperforming assets as % of total loans and
foreclosed property .89 1.48
Nonperforming assets as % of total assets .54 .84
Loan reserve as % of nonperforming loans 298.00 228.86
============================================================================
Net income for the nine months of 1995 increased 7.1% to $325.1 million, or
$2.53 per share, from $303.6 million, or $2.36 per share, excluding the impact
of nonrecurring merger expenses in the first half of 1995. Net income in 1995
was reduced by after-tax merger expenses totaling $20 million or $.16 per share.
Including merger expense, net income for the nine months of 1995 was $305.1
million or $2.37 per share. The earnings improvement for the nine months
reflected higher net interest income and noninterest income, offset in part by
an increased provision for loan losses and higher noninterest expense.
32
Net interest income, on a fully-taxable equivalent basis, increased by 1.3%
over the nine months of 1994, due to moderate growth in average earning assets,
partially offset by a decrease in the net interest margin.
Average earning assets increased 4.6% for the nine months primarily due to
strong loan growth. The net interest margin for the nine months was 4.24%
compared to 4.37% for the same period last year. This decline reflected rising
short-term interest rates and an inverted yield curve which restricted the net
interest margin to some extent due to Boatmen's modest liability sensitive
position.
Noninterest income increased 8.4% for the nine months, primarily due to
growth in trust fees, mortgage banking revenues and credit card income. Trust
fees increased 7.5% for the nine months, due to new business within the
pension/institutional and personal trust lines of business, and an increase in
market values of trust assets on which some fees are based.
Credit card income increased 19.9% for the nine months, primarily due to
growth in cardholder revenues. Income from mortgage banking operations totaled
$58.9 million for the nine months, an increase of 30.0% over the year ago
period. Mortgage banking revenues in 1995 include a $7.9 million gain
recognized on the sale of approximately $700 million of mortgage servicing.
Noninterest expense increased 4.2% for the nine months, and excluding merger
expenses of $26 million, noninterest expense increased by only 1.1% over the
prior year. Staff expense increased by .3% and F.D.I.C. assessments decreased by
31.4% from the first nine months of 1994 due to a third quarter refund from the
F.D.I.C. Increases in other expense included higher levels of uninsured losses,
an increase in reserves for litigation and higher levels of yield maintenance
and fund support related to Boatmen's trust subsidiary's short-term money market
fund.
The provision for loan losses totaled $30.0 million for the nine months
compared to $20.4 million in 1994. For the nine months, net loan charge-offs
were $20 million compared to $15.4 million in 1994, and annualized net charge-
offs as a percentage of average loans were .14% in 1995 and .12% in 1994.
At September 30, 1995, total assets were $32.9 billion compared with $32.3
billion at September 30, 1994. At September 30, 1995, loans totaled $19.8
billion an increase of 8.6% over the same period of last year. Loan growth was
primarily due to an increase in middle-market loans and loans to Fortune 1,000
companies, partially offset by the sale of about $300 million in consumer loans
through an auto-loan securitization sale completed in the third quarter of 1995.
Loan growth was funded primarily by proceeds from maturing investment securities
and moderate growth in core deposits.
FOURTH FINANCIAL
On October 16, 1995, Fourth Financial issued a press release reporting its
unaudited financial results for the nine months ended September 30, 1995. The
following is a summary of such financial results. Prior year financial
information has been restated for a pooling of interests.
33
CONDENSED FINANCIAL RESULTS
(UNAUDITED)
Nine months ended September 30
------------------------------------
1995 1994 % change
---------- ---------- --------
(in thousands except per share data)
SUMMARIZED INCOME STATEMENT:
Net Interest Income $ 205,658 $ 209,173 (1.7)%
Provision for Loan Losses 3,294 340 8.7
Noninterest Income 56,590 73,501 (23.0)
Noninterest Expense 186,370 189,267 (1.5)
Net Income 46,606 61,650 (24.4)
PER COMMON SHARE DATA:
Net Income
Primary $ 1.50 $ 2.07 (27.5)%
Fully Diluted 1.50 2.01 (25.4)
Cash Dividends Paid 0.84 0.78 7.7
Stockholders' Equity (period end) 20.35 18.44 10.4
FINANCIAL POSITION AT PERIOD END:
Total Assets $7,341,820 $7,628,606 (3.8)%
Earning Assets 6,652,955 6,955,600 (4.4)
Loans, Net of Unearned 4,403,973 3,873,831 13.7
Deposits 5,945,992 5,731,180 3.7
Long-Term Debt 168,422 498,922 (66.2)
Stockholders' Equity 661,829 601,382 10.1
SELECTED FINANCIAL RATIOS:
Return on Average Assets 0.82% 1.13%
Return on Average Total Equity 9.83 13.64
Return on Average Common Equity 10.33 14.96
Net Interest Margin 4.09 4.36
Equity to Assets 9.01 7.88
34
PROVISION FOR LOAN LOSSES AND ASSET QUALITY
Summary of Reserve for Loan Losses
September 30 (in thousands) 1995 1994
- ------------------------------------------------------------------
Balance, beginning of year $ 72,867 $68,227
- ------------------------------------------------------------------
Loans charged off (15,920) (9,877)
Recoveries on loans previously charged off 9,134 9,275
- ------------------------------------------------------------------
Net charge-offs (6,786) (602)
Provision charged to expense 3,294 340
Loan reserve from acquisitions 1,633 5,449
- ------------------------------------------------------------------
Balance, end of period $ 71,008 $73,414
==================================================================
At end of period:
Loan reserve as % of net loans 1.61% 1.90%
Loan reserve as % of nonperforming loans 182.10 182.86
Net charge-offs as % of average loans 0.21 0.02
==================================================================
Summary of Nonperforming Assets
September 30 (in thousands) 1995 1994
- ------------------------------------------------------------------
Nonaccrual $ 26,664 $26,355
Restructured 545 631
Past due 90 days or more 11,785 13,161
- ------------------------------------------------------------------
Total nonperforming loans 38,994 40,147
- ------------------------------------------------------------------
Foreclosed property 5,935 7,660
- ------------------------------------------------------------------
Total nonperforming assets $ 44,929 $47,807
==================================================================
Nonperforming loans as % of total loans 0.88% 1.03%
Nonperforming assets as % of total loans and
foreclosed property 1.01 1.23
Nonperforming assets as % of total assets 0.61 0.63
==================================================================
Net income for the first nine months of 1995 was $46.6 million compared to
$61.7 million for the first nine months of 1994. Fully diluted earnings per
share were $1.50 and $2.01 for the comparable periods. Net income for the first
nine months of 1995 included securities losses from Fourth Financial's first
quarter balance sheet repositioning which amounted to $22.1 million before tax
and $13.4 million after tax. Exclusive of the first quarter securities losses,
1995 operating earnings were $60.0 million, or $1.93 per share. For the first
nine months of 1995, return on assets and return on common equity were .82% and
10.33%, respectively. Exclusive of the first quarter securities losses, 1995
return on assets and return on common equity were 1.05% and 13.69%,
respectively. Return on assets was 1.13% and return on common equity was 14.96%
for the first nine months of 1994.
35
Net interest income decreased by $3.5 million to total $205.7 million for the
first nine months of 1995 as compared to $209.2 million for the first nine
months of last year. On a tax-equivalent basis, net interest income decreased
$4.9 million. The decrease in net interest income was principally related to
the decrease in the net yield on earning assets caused by the cyclical increase
in interest rates and aggressive loan and deposit competition. The net yield on
earning assets decreased to 4.09% in the first nine months of 1995 from 4.36% in
the comparable period of 1994. The effect of the lower net yield on net
interest income was partially offset by an increased level of interest-earning
assets and loan growth. Total average interest-earning assets were $6.9 billion
for the first nine months of 1995, a $273.6 million, or 4.1%, increase over the
comparable period of 1994. For the same comparative periods, average loans and
leases increased $771.8 million or 21.9%, averaging $4.3 billion for the nine
months ended September 30, 1995.
The provisions for credit losses totaled $3.3 million and $340,000 for the
first nine months of 1995 and 1994, respectively. The increased provision
reflects the significant loan growth, a higher level of charge-offs and a desire
to maintain a strong reserve for loan losses. Net charge-offs totaled $6.8
million or .21% (computed on an annualized basis) of average loans and leases
for the current period. Net charge-offs for the comparable period of the prior
year were minimal. As of September 30, 1995 the reserve for loan losses was
1.61% of loans.
Noninterest income was $56.6 million in the first nine months of 1995
compared to $73.5 million in the same period of 1994. The first nine months of
1995 noninterest income includes $22.1 million of securities losses from Fourth
Financial's first quarter balance sheet repositioning. By comparison, the first
nine months of 1994 included $3.7 million of securities gains. Fees collected
in the normal course of business increased $8.4 million or 12.0% to total $77.7
million for the first nine months of 1995 from $69.3 million in the same period
of 1994.
The most significant changes in fee income between 1995 and 1994 occurred in
trust fees, service charges on deposit accounts, and bank card fees. Trust fees
increased $1.4 million or 9.1%; service charges on deposit accounts increased
$1.9 million or 6.5%; and bank card fees increased $3.7 million or 37.6%.
Exclusive of purchase acquisitions, 1995 trust fees increased approximately 5.8%
over the amounts earned in 1994. The increase in trust fees was the result of
increased sales efforts and the third-quarter-1994 introduction of Funds IV, a
family of seven no-load mutual funds managed by the trust division and marketed
to retirement plan sponsors. The increase in service charges was principally
attributable to purchase acquisitions. The increased bank card fees reflect
internal growth plus acquisitions.
Noninterest expense totaled $186.4 million in the first nine months of 1995
compared to $189.3 million for the same period of 1994. Merger and integration
costs associated with poolings of interests totaled $28,000 and $2.8 million for
the first nine months of 1995 and 1994, respectively.
Operating expense (noninterest expense less merger and integration costs and
net costs of operations of other real estate and nonperforming assets) decreased
$632,000 to total $186.2 million in the first nine months of 1995. This
decrease in operating expense reflects the third-quarter reduction in the
F.D.I.C. premium of $3.0 million, partially offset by increased costs associated
with business combinations accounted for as purchases.
36
MERGER
GENERAL
This section of the Joint Proxy Statement/Prospectus describes certain
aspects of the proposed Merger, including the principal provisions of the Merger
Agreement and the Fourth Financial Stock Option Agreement. The following
information relating to the Merger is qualified in its entirety by reference to
the other information contained elsewhere in this Joint Proxy
Statement/Prospectus, including the Appendices hereto and the documents
incorporated herein by reference. Copies of the Merger Agreement (excluding the
Schedules thereto) and the Fourth Financial Stock Option Agreement are attached
hereto as Appendices A and B, respectively, and are incorporated by reference
herein and reference is made thereto for a complete description of the terms of
the Merger. ALL SHAREHOLDERS OF BOATMEN'S AND FOURTH FINANCIAL ARE URGED TO
READ THE MERGER AGREEMENT AND THE FOURTH FINANCIAL STOCK OPTION AGREEMENT IN
THEIR ENTIRETY.
BACKGROUND OF MERGER
Boatmen's assets have increased from $9.9 billion at December 31, 1987 to
$33.4 billion at June 30, 1995. During this period, Boatmen's has pursued a
strategy of expansion through both internal growth and external acquisitions.
Boatmen's acquisition program has three objectives: geographic diversification,
growth in customer base and retail market share, and increased earnings
capacity. Boatmen's has made several sizable acquisitions during this period,
establishing leading market positions in Missouri, New Mexico, and Arkansas, and
significant presences in Oklahoma, southern Illinois, western Tennessee, Iowa,
and northern Texas. This growth has basically occurred in two distinct phases.
The first phase concentrated on intramarket transactions to fully establish the
Missouri cornerstone of the franchise and was substantially completed by 1990.
The second phase of the acquisition program, which commenced in 1991, has
concentrated on expansion into nearby states, thereby achieving geographic
diversification. From 1991 through June 30, 1995, acquisitions aggregating
$14.0 billion in assets were consummated in Oklahoma, Arkansas, Iowa, Kansas,
New Mexico and Texas. These transactions significantly changed the composition
of Boatmen's customer base, reducing the Missouri-based component from 90% at
year-end 1990 to 55% at June 30, 1995. The Boatmen's Board believes that this
expansion strategy increases long-term value for Boatmen's shareholders by
building a more geographically diversified organization with a growing customer
base and business volume. This growth in business volume, in turn, permits
Boatmen's to enhance revenue by cross-selling products to a larger customer base
while at the same time pursuing and implementing the rapidly evolving
technological advances in the financial services industry on a more cost
competitive basis as the attendant expenses are spread over a larger
organization.
The historical strategy of the Fourth Financial Board, similarly, has been to
enhance shareholder value through a combination of internal growth and
acquisitions of other financial institutions located within the limited
geographic area in which Fourth Financial has been permitted by banking laws to
expand. Commencing in 1985 (when Kansas banking laws were first relaxed to
permit multi-bank holding companies), Fourth Financial has acquired 27 Kansas
banks, sixteen Oklahoma banks and savings associations, one Missouri bank, and
assets of ten failed banks and savings associations, making it the owner of the
largest bank in Kansas and the owner of the third largest bank in Oklahoma.
During 1994, as Fourth Financial continued to implement its strategy of
growth through acquisitions and internal growth, management of Fourth Financial
initiated an overall review by the Fourth Financial Board as to the optimum
future course of action for Fourth Financial. In the spring of 1994, Darrell G.
37
Knudson, Chairman of the Board, President and Chief Executive Officer of Fourth
Financial, received a telephone call from Andrew B. Craig III, Chairman of the
Board and Chief Executive Officer of Boatmen's, expressing an interest in
discussing a merger of Boatmen's and Fourth Financial. No further discussions
occurred at that time.
On July 21, 1994, the Fourth Financial Board, led by Mr. Knudson, conducted a
lengthy strategic review of the various factors influencing the banking industry
in general and Fourth Financial in particular and of the various alternatives
available to Fourth Financial. Among the factors discussed at that meeting were
the rapidly changing nature of the banking industry, the national trend toward
consolidation of the banking industry, industry overcapacity, increased
competition both from other banks and from non-traditional competitors, and
recent and proposed legislation permitting nationwide interstate banking. It
was noted that smaller and mid-sized banking organizations were adversely
affected by the continuing high capital requirements for the additional
technology required to stay competitive and by the cost advantages enjoyed by
larger, more efficient competitors. It was also noted that the expansion
opportunities for Fourth Financial appeared to be diminishing as a result of the
moderate economic growth rates in Kansas and Oklahoma, Fourth Financial having
nearly reached its legal limit (the deposit cap limitation) on acquisitions in
Kansas, and the relatively high prices being demanded by owners of banks in
Oklahoma and the other states in which Fourth Financial could legally make
acquisitions. It was also noted that because Fourth Financial only operated in
Kansas and Oklahoma, Fourth Financial and its shareholders were more at risk in
the event of a regional economic turndown than an institution operating in a
larger, more economically diverse geographic area.
The four basic alternatives available to Fourth Financial were seen as: (i)
continuing as an independent organization and maintaining the existing expansion
program; (ii) remaining independent but ceasing an active acquisition program;
(iii) seeking out a compatible bank holding company that would participate in a
"merger of equals"; and (iv) seeking a sale or merger transaction with a larger
company. Mr. Knudson advised the Fourth Financial Board that he had from time
to time been approached by representatives of various potential acquirors but
that there had been no serious discussions or negotiations with any of them.
At the July 21, 1994 meeting, the Fourth Financial Board determined to create
a Special Projects Committee (the "Special Committee") composed of six
directors: Thomas R. Clevenger, Jordan L. Haines, Darrell G. Knudson, Russell
W. Meyer, Jr., Ken Wagnon, and Joseph M. Klein. The Special Committee's charge
was to study on an ongoing basis the various strategic alternatives available to
Fourth Financial and to assist the Chairman in considering and responding to
inquiries he might receive from potential purchasers of Fourth Financial. The
Fourth Financial Board also received a presentation from legal counsel
concerning the Board's responsibilities in connection with the consideration of
strategic alternatives and discussed and approved the "Change in Control"
agreements between Fourth Financial and selected members of senior management.
See "MERGER -- Interest of Certain Persons in Merger -- Change in Control and
Severance Agreements."
At its first meeting, on August 18, 1994, the Special Committee, among other
things, approved the retention of special legal counsel, a Sullivan & Cromwell.
A representative of Sullivan & Cromwell was present at the meeting and reviewed
with the Board its legal responsibilities when considering sales and other
alternatives. The Special Committee then discussed whether to continue the
corporation's present course or to explore seeking a sale or merger transaction
with a larger institution. It was determined that a decision as to whether to
remain independent could only be made in the context of a careful consideration
of all options, so Mr. Knudson was encouraged to maintain a dialogue with
potential acquirors who contacted him and report back to the Special Committee
as appropriate.
38
Meetings between representatives of Boatmen's and Fourth Financial were held
on August 25, 1994 and August 27, 1994, but the parties were not able to agree
on the terms of a transaction and discussions were mutually terminated on August
30, 1994.
The second meeting of the Special Committee was held on September 3, 1994.
Mr. Knudson reported on preliminary discussions with two potential acquirors and
one potential "merger-of-equals" partner. The Special Committee decided that
discussions with such companies should continue for four or five weeks and,
because of the need to make certain capital expenditures and take other actions,
such discussions should then be terminated if no serious negotiations had
resulted and Fourth Financial would continue its normal business operations.
The Special Committee after consulting with special counsel, Sullivan &
Cromwell, also instructed management to execute the "Change in Control"
agreements between Fourth Financial and selected members of senior management
that had been previously approved by the Board. The Special Committee also
authorized Mr. Knudson to retain an investment banker to advise the Fourth
Financial Board at such time as such an action appeared to be appropriate.
Goldman Sachs and Fourth Financial entered into a written agreement on November
10, 1994.
On October 9, 1994, the Special Committee met with representatives of Goldman
Sachs who reviewed with the Special Committee the various alternatives available
to Fourth Financial and the prevailing view of the investment banking community
that if the present consolidation trend in the banking industry continues many
corporations similarly situated to Fourth Financial would not remain independent
another ten years. Thus, it appeared that the realistic choices were probably a
sale or merger transaction in the near future or delaying such a transaction
temporarily with the objective of obtaining a better value later. The Goldman
Sachs representatives also noted that the prices of publicly traded bank stocks
had recently declined. The Goldman Sachs representatives then reviewed with the
members of the Special Committee various data on a group of eight financial
institutions that it considered to be the potential suitable acquirors most
likely to be interested in acquiring Fourth Financial. After a discussion of
whether Fourth Financial was likely to attain its financial objectives over the
next two years as an independent company, the inherent risks of remaining
independent, the relative attractiveness of being a Fourth Financial shareholder
or a shareholder of a larger institution during that period and recognizing that
no decision had been made to sell Fourth Financial, it was decided to request
Goldman Sachs to evaluate two additional potential acquirors in more detail and
provide information concerning them to the Special Committee. At a meeting on
October 19, Goldman Sachs provided additional detailed information on six of the
ten companies to the Special Committee, and a decision, based on the various
companies' ability to pay, interest in entering a transaction and strategic fit
with Fourth Financial, was made to contact the five companies that appeared to
be the most likely to be interested in acquiring Fourth Financial on terms
attractive to Fourth Financial shareholders.
During the remainder of 1994 and through mid-February of 1995,
representatives of Fourth Financial and Goldman Sachs contacted various
potential acquirors, including Boatmen's. Based on initial indications of
interest from the various potential acquirors, negotiations were pursued with
the two companies which had the highest offers. Serious negotiations with one
potential merger partner other than Boatmen's occurred during that period, but
those negotiations were mutually terminated in late February, 1995 when the
parties were unable to agree on price. Following the termination of those
negotiations, the Board determined that, pending inquiry from a serious
potential acquiror, Fourth Financial should continue as an independent company
for the foreseeable future, maintaining its focus on improving operations and
expanding customer services rather than pursuing additional acquisitions.
As a part of the Fourth Financial Board's ongoing efforts to be open to
various alternative methods of enhancing shareholder value, representatives of
Goldman Sachs were invited to meet with the Executive Committee of the Fourth
Financial Board on July 10, 1995. At that meeting the Executive Committee
39
received updated information on developments in the banking industry and
discussed various recent acquisitions and trends in the banking industry.
Later in July, 1995, a representative of Boatmen's telephoned a
representative of Goldman Sachs to inquire regarding the interest of Fourth
Financial in discussing a potential merger. Various telephone calls ensued and
the Executive Committee of the Fourth Financial Board discussed a potential
merger with Boatmen's on July 26 and July 30 resulting in Mr. Knudson being
instructed to continue negotiations with Boatmen's and to determine if any of
the other four former potential acquirors would be interested in a merger
transaction. On August 7, 1995, Mr. Knudson met in Chicago separately with
representatives of Boatmen's and with representatives of the only other
potential acquiror that had indicated an interest in a transaction in the same
value range as was being discussed with Boatmen's. At the August 8, 1995
regular meeting of the Boatmen's Board, Mr. Craig and other members of Boatmen's
senior management reviewed with the Boatmen's Board ongoing expansion program
and current conditions in the bank mergers and acquisitions area. During this
discussion, the Board was advised that preliminary discussions with Fourth
Financial representatives were taking place. Negotiations by Fourth Financial
with both companies then continued until it became apparent on August 21 that
the other potential acquiror would not make an offer that was considered to be
as attractive as, or that was higher in value than, the one-for-one exchange
that was being favorably considered by Boatmen's. On August 21, after the basic
terms of the transaction were beginning to become defined, subject to approval
by the boards of directors of both companies, preparation of a proposed Merger
Agreement and Fourth Financial Stock Option Agreement was commenced.
Representatives of Boatmen's and of Fourth Financial met at Boatmen's offices in
St. Louis, Missouri, on August 23, 1995 for the purposes of conducting
reciprocal due diligence and negotiating the terms of the Merger Agreement.
In the afternoon of August 24, 1995, the Fourth Financial Board held a
special telephonic meeting with all directors participating except for Thomas R.
Clevenger, who was out of the country. Also participating were representatives
of Goldman Sachs and legal counsel. During the meeting, Mr. Knudson presented
the results of Fourth Financial's preliminary due diligence review,
representatives of Goldman Sachs discussed the history of the efforts that had
been made to enhance shareholder value and investigate potential transactions
and discussed the terms of the proposed transaction, special legal counsel
advised the Fourth Financial Board on various matters, including the fact that
Boatmen's was unwilling to enter into the Merger Agreement unless Fourth
Financial would also enter into the Fourth Financial Stock Option Agreement, and
the directors asked questions and discussed the proposed transaction. No action
was taken at the meeting. Boatmen's required that Fourth Financial execute the
Fourth Financial Stock Option Agreement in connection with its execution of the
Merger Agreement in order to increase the likelihood that the Merger would be
consummated in accordance with the terms of the Merger Agreement as discussed
under "MERGER -- Fourth Financial Stock Option Agreement."
On the following day, August 25, 1995, the Fourth Financial Board held a
special meeting in Wichita, Kansas, with all directors present other than Mr.
Clevenger. At that meeting copies of the most current drafts of the Merger
Agreement and the Fourth Financial Stock Option Agreement were distributed and
discussed and representatives of Goldman Sachs presented the board with various
written materials which they then discussed. The Goldman Sachs representatives
also discussed the business terms of the proposed Merger, compared it with
various alternatives, and delivered its opinion that the proposed one-for-one
Common Exchange Ratio and the proposed one-for-one Preferred Exchange Ratio were
fair to the holders of Fourth Financial Common and Fourth Financial Preferred,
respectively. Presentations were also made by Mr. Knudson and Sullivan &
Cromwell, special legal counsel. After consideration of all the information
presented, the Fourth Financial Board, by unanimous vote of all directors
present, approved the Merger Agreement and the Fourth Financial Stock Option
Agreement and the transactions contemplated
40
thereby as being in the best interests of Fourth Financial and its shareholders.
The consideration to be received in the Merger was the highest offered to Fourth
Financial by any potential acquiror. The Fourth Financial Board also approved a
new change in control agreement for Mr. Knudson as described under "MERGER --
Interests of Certain Persons in Merger-- Change in Control and Severance
Agreements."
At a special meeting of the Boatmen's Board held on August 25, 1995, Mr.
Craig and other members of Boatmen's senior management team presented the
proposed terms of the possible Merger with Fourth Financial to the Boatmen's
Board. These presentations included information about Fourth Financial and its
financial condition, performance, markets and management and reasons for the
proposed Merger and its benefits to Boatmen's, plans for on-site due diligence,
the proposed addition of two directors to the Boatmen's Board from the Fourth
Financial Board and the desire of Boatmen's for Mr. Knudson to become an
executive officer of Boatmen's after completion of the proposed Merger.
Boatmen's legal counsel discussed the terms of the proposed Merger Agreement and
Fourth Financial Stock Option Agreement. DLJ made a presentation regarding the
financial aspects of the Merger, including the financial terms and an opinion as
to the fairness, from a financial point of view, of the proposed Common Exchange
Ratio to Boatmen's and holders of Boatmen's Common. After discussion and
consideration, the Boatmen's Board unanimously authorized and approved the
proposed Merger, the Merger Agreement and the Fourth Financial Stock Option
Agreement.
The Merger Agreement was executed and delivered on August 25, 1995, following
the board meetings of Fourth Financial and Boatmen's. The Fourth Financial
Stock Option Agreement was executed and delivered the following day, August 26,
1995.
REASONS FOR MERGER; RECOMMENDATION OF BOATMEN'S BOARD
In reaching its determination to approve the Merger, the Boatmen's Board
considered various factors, including the following:
(i) Consistency with Boatmen's Strategy. The consistency of the Merger with
Boatmen's strategy for enhancing long-term shareholder value through
external expansion. Relevant considerations included (a) the location of
Fourth Financial's franchise contiguous to and, to a significant degree,
overlapping Boatmen's banking franchise; (b) the leading market share of
Fourth Financial in the state of Kansas and the number three market
position of Fourth Financial in the state of Oklahoma; (c) the fact that
the Merger would result in a Boatmen's franchise having a number one
market share in five states (Missouri, Arkansas, New Mexico, Kansas, and
Oklahoma); (d) increased revenue opportunities from the sale of Boatmen's
products and services to Fourth Financial customers; (e) opportunities to
leverage capacity in technological advances over a larger customer base.
(ii) Certain Financial Information. Certain financial information about
the Merger, Boatmen's and Fourth Financial. This information included,
but was not limited to, information with regard to valuation analyses,
pro forma analyses, comparative financial data, efficiencies and cost
savings opportunities, and comparable merger and acquisition transactions
as presented by Boatmen's senior management and its financial advisor.
41
(iii) Certain Other Information. Certain terms and other aspects of the
Merger, including information about the terms of the Merger Agreement and
the Fourth Financial Stock Option Agreement, the need for Boatmen's to
hold a special meeting of its shareholders to consider and vote upon the
issuance of shares of Boatmen's Common and Boatmen's New Preferred to
shareholders of Fourth Financial pursuant to the Merger, the proposed
addition of two directors to the Boatmen's Board and of Mr. Knudson to
Boatmen's executive management team, the tax-free status of the
transaction to Boatmen's, the ability of Boatmen's to account for the
transaction as a pooling of interests, and the likelihood of all required
regulatory approvals being obtained in order to consummate the Merger.
(iv) Advice of Financial Advisor and Fairness Opinion. The opinion of DLJ
(including the assumptions and financial information and projections
relied upon by DLJ in arriving at such opinion) that, as of August 25,
1995, the Common Exchange Ratio was fair to Boatmen's and holders of
Boatmen's Common from a financial point of view.
The foregoing discussion of the information and factors considered by the
Boatmen's Board is not intended to be exhaustive but is believed to encompass
all material factors considered by Boatmen's Board in reaching its determination
to approve the Merger and recommend that Boatmen's shareholders vote to approve
the issuance of shares of Boatmen's Common and Boatmen's New Preferred to
shareholders of Fourth Financial pursuant to the Merger Agreement. In reaching
its determination, the Boatmen's Board did not assign any relative or specific
weights to the factors considered, and individual directors may have given
differing weights to different factors.
FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS OF BOATMEN'S
UNANIMOUSLY RECOMMENDS THAT THE BOATMEN'S SHAREHOLDERS VOTE "FOR" THE ISSUANCE
OF BOATMEN'S COMMON AND BOATMEN'S NEW PREFERRED TO SHAREHOLDERS OF FOURTH
FINANCIAL PURSUANT TO THE MERGER AGREEMENT.
REASONS FOR MERGER; RECOMMENDATION OF FOURTH FINANCIAL BOARD
In determining to approve the Merger, the Merger Agreement and the Fourth
Financial Stock Option Agreement, the Fourth Financial Board considered, among
others, the following factors:
(i) Financial and Other Terms. The Fourth Financial Board considered
the terms of the Merger Agreement and the transactions contemplated thereby,
including the Fourth Financial Stock Option Agreement. The Fourth Financial
Board took into account the historical trading ranges for Boatmen's Common
and Fourth Financial Common, the Merger Consideration (noting, in particular,
that it reflected a 10.4% premium for the shareholders of Fourth Financial
Common based on the closing prices of Fourth Financial Common and Boatmen's
Common on August 24, 1995, the last trading day prior to August 25, 1995,
which would result in a purchase price equivalent to 1.80 times book value
and 2.11 times tangible book value), the potential impact of the Merger on
the price of Boatmen's Common over the short- and medium-term, the resulting
relative interests of Fourth Financial and Boatmen's shareholders in the
equity of the combined company, and the potential for increased earnings and
book value per share for shareholders of Fourth Financial. The Fourth
Financial Board also noted that its outstanding series of Fourth Financial
Preferred would be exchanged for a corresponding series of Boatmen's New
Preferred. With respect to the Fourth
42
Financial Stock Option Agreement, the Fourth Financial Board was aware that
the existence of such agreement might discourage third parties from seeking
to acquire Fourth Financial, and might also preclude any third party from
being able to effect a merger with Fourth Financial that would qualify for
pooling of interests accounting treatment.
(ii) Advice of Financial Advisor and Fairness Opinion. The Fourth
Financial Board considered the advice of its financial advisor, Goldman
Sachs, and reviewed the detailed financial analyses, pro forma results and
other information presented by Goldman Sachs. The Fourth Financial Board
considered the opinion of Goldman Sachs (including the assumptions and
financial information and projections relied upon by them in arriving at such
opinion) that, as of August 25, 1995 and based upon the matters set forth in
its written opinion as of that date, the Common Exchange Ratio was fair to
the holders of Fourth Financial Common and the Preferred Exchange Ratio was
fair to the holders of Fourth Financial Preferred. (For a discussion of the
opinion of Goldman Sachs, including a summary of the procedures followed, the
matters considered, the scope of the review undertaken, and the assumptions
made with respect thereto, see "Merger -- Opinions of Financial Advisors --
Fourth Financial.")
(iii) Opportunity for Increased Revenue and Cost Savings. The Fourth
Financial Board considered the opportunity for revenue enhancement by
offering Boatmen's extensive array of commercial and consumer products and
investment banking services through Fourth Financial's branch network. The
Fourth Financial Board took into account the expectation that the Merger
would result in economies of scale and cost synergies. For a discussion of
the expected cost savings, see "MERGER -- Management and Operations After
Merger."
(iv) Increased Resources and Market Presence. The Fourth Financial
Board considered that the combined entity resulting from the Merger would be
the 22nd largest banking institution in the United States in terms of assets,
and the 21st largest in terms of market value based on market prices as of
August 24, 1995. The combined entity would be the largest commercial banking
organization in Missouri, New Mexico, Arkansas, Kansas, and Oklahoma and
would have significant presences in Texas, Tennessee, Iowa, and Illinois,
thus greatly increasing Fourth Financial's geographic diversity. The Fourth
Financial Board recognized that such an institution would be likely to
possess the financial resources to compete more effectively in the rapidly
changing marketplace for banking and financial services and would be
effective in fulfilling Fourth Financial's long-term objective of increasing
its overall size and enhancing its market presence, while maintaining its
asset quality and credit standards.
(v) Continuity of Management. The Fourth Financial Board took into
account that two members of the Fourth Financial Board would be elected or
appointed members of the Boatmen's Board following consummation of the
Merger. The Fourth Financial Board also considered that current Fourth
Financial management would be expected to play a continuing role in the
combined entity. See "MERGER -- Interests of Certain Persons in Merger" and
"-- Management and Operations After Merger."
(vi) Complementary Businesses and Managements. The Fourth Financial
Board considered the complementary nature of the businesses, business
strategies, and product offerings of Fourth Financial and Boatmen's, and that
both companies possess compatible and complementary management philosophies
and strategic objectives.
43
(vii) Impact on Fourth Financial Constituencies. The Fourth Financial
Board considered the general impact the Merger would have on the various
constituencies served by Fourth Financial, including its customers,
employees, and others. The Fourth Financial Board took into account that the
combined entity would be able to offer a more extensive range of products and
banking services to Fourth Financial's customers. The Fourth Financial Board
also took into account Boatmen's favorable ratings under the Community
Reinvestment Act and its stated policy of local community involvement.
(viii) Certain Financial and Other Information Concerning Boatmen's.
The Fourth Financial Board analyzed information with respect to, among other
things, the historical financial results of Boatmen's and the projected
financial results provided by Boatmen's management and reviewed information
with respect to Boatmen's business, operations, financial condition, and
future prospects. The Fourth Financial Board also considered, in particular,
Boatmen's approach to risk management and its capital position, asset
quality, management strength and strategic direction.
(ix) Due Diligence Review. The Fourth Financial Board considered the
results of the due diligence investigations conducted by Fourth Financial
management, including, among other things, assessments of Boatmen's credit
policies, asset quality, adequacy of loan loss reserves, and interest rate
risk.
(x) The Tax and Accounting Treatment of the Transaction. The Fourth
Financial Board considered that the Merger is expected to be tax-free (other
than with respect to cash paid in lieu of fractional shares and with respect
to holders of Fourth Financial Preferred and Fourth Financial Preferred
Depositary Shares who exercise dissenters' appraisal rights under the Kansas
Corporate Law) to Fourth Financial shareholders for federal income tax
purposes and to be accounted for under the pooling of interests method of
accounting for business combinations. See "MERGER -- Federal Income Tax
Consequences" and "-- Accounting Treatment."
(xi) Regulatory Approvals. The Fourth Financial Board considered the
nature of, and likelihood of obtaining, the regulatory approvals that would
be required with respect to the Merger. See "MERGER -- Regulatory
Approvals."
(xii) Geographic Continuity and Market Integration. The Fourth
Financial Board considered the geographic continuity of the regions currently
served by both companies.
(xiii) Economic and Competitive Environment. The Fourth Financial
Board took into account the current and prospective economic and competitive
environment facing the financial services industry generally and each
institution in particular.
(xiv) Alternatives to the Merger Agreement. The Fourth Financial Board
considered the effect on shareholder value of Fourth Financial continuing as
a stand-alone entity or combining with other potential merger partners
(including other potential merger partners with whom Fourth Financial
management had engaged in exploratory discussions), compared to the effect of
its combining with Boatmen's pursuant to the proposed Merger Agreement and
determined that the merger with Boatmen's presented the best opportunity for
maximizing shareholder value and achieving Fourth Financial's other strategic
objectives.
44
After deliberating with respect to the Merger Agreement and the transactions
contemplated thereby, and after considering the other alternatives to the Merger
Agreement the Fourth Financial Board, by the unanimous vote of all directors
present, approved the Merger Agreement and the transactions contemplated thereby
as being in the best interests of Fourth Financial and its shareholders. In
reaching its determination to approve the Merger Agreement, the Fourth Financial
Board did not assign any relative or specific weights to the various factors
considered by it, and individual directors may have given differing weights to
different factors. The foregoing discussion of the information and factors
considered by the Fourth Financial Board is not intended to be exhaustive but is
believed to include all material factors considered by the Fourth Financial
Board.
FOR THE REASONS DESCRIBED ABOVE, THE FOURTH FINANCIAL BOARD APPROVED THE
MERGER AGREEMENT AND BELIEVES THE MERGER IS FAIR TO, AND IS IN THE BEST
INTERESTS OF, ITS SHAREHOLDERS. ACCORDINGLY, THE FOURTH FINANCIAL BOARD
UNANIMOUSLY RECOMMENDS THAT FOURTH FINANCIAL SHAREHOLDERS VOTE "FOR" ADOPTION OF
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
MERGER.
FAIRNESS OPINIONS OF FINANCIAL ADVISORS
BOATMEN'S
At the meeting of the Boatmen's Board on August 25, 1995, at which the terms
of the proposed Merger were discussed and considered, DLJ rendered a written
opinion to the Boatmen's Board that, as of the date of such opinion and based
upon the matters set forth in such opinion, the Common Exchange Ratio was fair,
from a financial point of view, to the holders of Boatmen's Common. DLJ has
confirmed its August 25, 1995 opinion by delivery of a written opinion to the
Boatmen's Board dated the date of this Joint Proxy Statement/Prospectus stating
that, as of the date hereof and based on the matters set forth in such opinion,
the Common Exchange Ratio is fair, from a financial point of view, to the
holders of Boatmen's Common.
THE FULL TEXT OF DLJ'S OPINION DATED THE DATE HEREOF, WHICH SETS FORTH
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE
REVIEW UNDERTAKEN BY DLJ, IS ATTACHED HERETO AS APPENDIX C AND IS INCORPORATED
BY REFERENCE HEREIN. THE DESCRIPTION OF THE DLJ OPINION SET FORTH IN THIS JOINT
PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF SUCH OPINION. BOATMEN'S SHAREHOLDERS ARE URGED TO READ THE DLJ OPINION
IN ITS ENTIRETY.
DLJ's opinion dated the date hereof is substantially identical to the opinion
rendered on August 25, 1995. DLJ's opinion is limited to the fairness, from a
financial point of view, of the Common Exchange Ratio to the holders of
Boatmen's Common and does not address Boatmen's underlying business decision to
proceed with the Merger. The opinion is directed only to the Common Exchange
Ratio in the Merger and does not constitute a recommendation to any holder of
Boatmen's Voting Stock as to how such holder should vote with respect to the
Merger Agreement at the Boatmen's Meeting.
DLJ is a nationally recognized investment banking firm regularly engaged,
with respect to bank holding companies and other corporations, 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 corporate
and other purposes. The
45
Boatmen's Board selected DLJ on the basis of its familiarity with the financial
services industry, its qualifications, ability and previous experience, and its
reputation with respect to mergers and acquisitions.
For purposes of its opinion dated the date hereof and in connection with its
review of the proposed transaction, DLJ, among other things: (i) reviewed the
terms of the Merger Agreement and the Fourth Financial Stock Option Agreement;
(ii) reviewed this Joint Proxy Statement/Prospectus; (iii) reviewed certain
publicly available financial statements, both audited and unaudited, of Fourth
Financial and Boatmen's, including those included in their respective Annual
Reports on Form 10-K for the five years ended December 31, 1994 and their
respective Quarterly Reports on Form 10-Q for the periods ended March 31, 1995
and June 30, 1995; (iv) reviewed certain financial statements and other
financial and operating data concerning Fourth Financial and Boatmen's prepared
by their respective managements; (v) reviewed certain financial forecasts of
Fourth Financial and Boatmen's prepared by their respective managements and
certain financial forecasts of Fourth Financial and Boatmen's on a combined
basis prepared by management of Boatmen's; (vi) discussed certain aspects of the
past and current business operations, financial condition and future prospects
of Fourth Financial and Boatmen's with certain members of their respective
managements; (vii) reviewed reported market prices and historical trading
activity of Fourth Financial Common and Boatmen's Common; (viii) reviewed
certain aspects of the financial performance of Fourth Financial and Boatmen's
and compared such financial performance of Fourth Financial and Boatmen's,
together with the stock market data relating to Fourth Financial Common and
Boatmen's Common, with similar data available for certain other financial
institutions and certain of their publicly traded securities; (ix) reviewed
certain of the financial terms, to the extent publicly available, of certain
recent business combinations involving other financial institutions; and (x)
conducted such other studies, analyses, and examinations as DLJ deemed
appropriate.
In conducting its review and rendering its opinion dated the date hereof, DLJ
relied upon and assumed without independent verification the accuracy and
completeness of all of the financial and other information provided to DLJ by
Fourth Financial, Boatmen's and their respective representatives and of the
publicly available information reviewed by DLJ. At Boatmen's direction, DLJ
also relied upon the managements of both Fourth Financial and Boatmen's as to
the reasonableness and achievability of the financial and operating forecasts
provided to DLJ (and the assumptions and bases therefor). In that regard, DLJ
assumed with Boatmen's permission that such forecasts, including without
limitation projected cost savings and operating synergies resulting from the
Merger, reflect the best currently available estimates and judgments of such
managements and that such forecasts will be realized in the amounts and in the
time periods estimated by the managements of Fourth Financial and Boatmen's.
DLJ did not independently verify and relied on and assumed that the aggregate
allowances for loan losses set forth in the balance sheets of each of Fourth
Financial and Boatmen's at September 30, 1995 are adequate to cover such losses
and complied fully with applicable law, regulatory policy and sound banking
practice as of the date of such financial statements. DLJ was not retained to
and DLJ did not conduct a physical inspection of any of the properties or
facilities of Fourth Financial or Boatmen's, and did not make any independent
evaluation or appraisal of the assets, liabilities or prospects of Fourth
Financial or Boatmen's, was not furnished with any such evaluation or appraisal,
and did not review any individual credit files. In rendering its opinion, DLJ
was advised by Fourth Financial and Boatmen's and assumed with Boatmen's
permission that there were no other factors that would delay or subject to
adverse conditions any necessary regulatory or governmental approval for the
Merger, and further assumed that all conditions to the Merger will be satisfied
and not waived and that the Merger will be accounted for as a pooling of
interests.
The following is a brief summary of the analysis presented by DLJ to the
Boatmen's Board in connection with DLJ's written opinion to the Boatmen's Board
dated August 25, 1995.
46
Stock Trading History. DLJ examined the history of trading prices and volume
for Fourth Financial Common and Boatmen's Common and the relationship between
the movements of such trading prices to movements of the Standard & Poor's
Regional Bank Index and of the trading prices of the common stocks of the
companies in the Fourth Financial Peer Group (as hereafter defined) and the DLJ
Midwest Universe (consisting of Banc One Corporation, Comerica Incorporated,
Fifth Third Bancorp, First Bank System, Inc., First of America Bank Corporation,
Firstar Corporation, Huntington Bancshares Incorporated, KeyCorp, National City
Corporation, NBD Bancorp, Inc., Norwest Corporation, Old Kent Financial
Corporation, and Star Banc Corporation).
Comparison with Selected Companies. DLJ compared selected financial ratios
(at or for the twelve months ended June 30, 1995) and trading multiples (as of
August 24, 1995) for Fourth Financial to the corresponding ratios and multiples
of the "Fourth Financial Peer Group" (consisting of Commerce Bancshares, Inc.,
FirstMerit Corporation, FirsTier Financial Inc., Magna Group, Inc., Marshall &
Ilsley Corporation, Mercantile Bancorporation, Inc., Old Kent Financial
Corporation, Provident Bancorp, Inc., and Star Banc Corporation, all of which
are commercial bank holding companies headquartered in the Midwest with total
assets in the approximate range of $3 billion to $15 billion). DLJ also
calculated implied values for Fourth Financial Common based on the median
trading multiples for the Fourth Financial Peer Group. The trading multiples
used in calculating such implied values were market price as a multiple of: (i)
book value (which was 1.59x for Fourth Financial as compared to a median of
1.77x for the Fourth Financial Peer Group); (ii) tangible book value (which was
1.84x for Fourth Financial as compared to a median of 1.94x for the Fourth
Financial Peer Group); (iii) earnings per share ("EPS") for the twelve months
ended June 30, 1995 (which was 12.8x for Fourth Financial as compared to a
median of 12.9x for the Fourth Financial Peer Group); (iv) 1995 estimated EPS
(which was 12.8x for Fourth Financial as compared to a median of 12.0x for the
Fourth Financial Peer Group); and (v) 1996 estimated EPS (which was 11.3x for
Fourth Financial as compared to 10.8x for the Fourth Financial Peer Group). DLJ
used median projected earnings estimates as published by the Institutional
Brokers Estimate System ("IBES") for Fourth Financial and the companies
comprising the Fourth Financial Peer Group. IBES is a data service which
monitors and publishes a compilation of earnings estimates produced by selected
research analysts on companies of interest to investors. DLJ excluded a $0.47
per-share securities loss recorded by Fourth Financial during the first half of
1995 from Fourth Financial's EPS for the twelve months ended June 30, 1995 and
estimated EPS for 1995. The implied values derived from this analysis ranged
from $31.56 to $37.63 per share of Fourth Financial Common.
Analysis of Selected Mergers. As part of its analyses, DLJ reviewed ten
mergers and acquisitions of commercial banks announced from January 1, 1994 to
August 24, 1995 in which the total assets of the acquired company were between
$2 and $15 billion. The ten transactions involved the following pairs of
institutions (acquiror/acquiree): First Bank System, Inc./FirsTier Financial
Inc., Mercantile Bancorporation Inc./Hawkeye Bancorporation, Banc One
Corporation/Premier Bancorp Inc., PNC Bank Corp./Midlantic Corporation, US
Bancorp/West One Bancorp, National Australia Bank/Michigan National Corporation,
Boatmen's Bancshares, Inc./Worthen Banking Corporation, Union Planters
Corporation/Grenada Sunburst System Corp., First Fidelity
Bancorporation/Baltimore Bancorp, and National Westminster Bancorp/Citizens
First Bancorp. For each transaction, DLJ calculated the multiple of the offer
value to the acquired company's: (i) EPS for the twelve months preceding
("LTM"), fiscal year containing ("FY Est.") and fiscal year following ("FY+1
Est.") the announcement date of the transaction; (ii) book value per share;
(iii) tangible book value per share; and (iv) market price per share. DLJ also
calculated the multiple of the "adjusted offer value" over the acquired
company's "normalized book value" in each transaction. For purposes of the
latter multiple, DLJ assumed normalized book value to be the lesser of the
acquired company's actual tangible equity capital or 7.48% of its tangible total
assets (which represented Fourth
47
Financial's ratio of tangible total equity to tangible total assets as of June
30, 1995), and adjusted offer value to be the nominal offer value less the
acquired company's tangible book value in excess of its normalized book value.
The calculations for the foregoing ten transactions yielded a range of
multiples of offer value to LTM EPS of 9.7x to 31.4x, with a mean of 14.5x and a
median of 13.8x; a range of multiples of offer value to FY Est. EPS of 10.2x to
20.8x, with a mean of 14.3x and a median of 14.2x; a range of multiples of offer
value to FY+1 Est. EPS of 8.4x to 18.4x, with a mean of 13.1x and a median of
12.4x; a range of multiples of offer value to book value of 1.45x to 2.38x, with
a mean of 1.96x and a median of 1.96x; a range of multiples of offer value to
tangible book value of 1.61x to 2.47x, with a mean of 2.10x and a median of
2.14x; and a range of multiples of adjusted offer value to normalized book value
of 1.67x to 2.73x, with a mean of 2.31x and a median of 2.29x; and a range of
multiples of offer value to market price of 1.00x to 1.55x, with a mean of 1.28x
and a median of 1.24x.
DLJ compared these multiples with the corresponding multiples for the Merger,
valuing the per share Common Exchange Ratio at $37.25 (the "Exchange Value").
In calculating the multiples for the Merger, DLJ used Fourth Financial's EPS for
the twelve months ended June 30, 1995, estimated EPS for the year ending
December 31, 1995, estimated EPS for the year ending December 31, 1996, book
value per share and tangible book value per share as of June 30, 1995, and the
closing price per share of Fourth Financial Common on August 24, 1995. DLJ
calculated that the Exchange Value represented multiples of 14.1x Fourth
Financial's LTM EPS, 14.2x its 1995 estimated EPS, 12.4x its 1996 estimated EPS,
1.75x its book value per share, 2.03x its tangible book value per share, 2.03x
its normalized book value per share and 1.10x its market price per share.
No company or transaction used in the above analyses as a comparison is
identical to Boatmen's, Fourth Financial, or the Merger. Accordingly, an
analysis of the results of the foregoing is not mathematical; rather, it
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the companies and other facts that
could affect the public trading value of the companies to which they are being
compared.
Discounted Cash Flow Analysis. Using discounted cash flow analysis, DLJ
estimated the future dividend streams that Fourth Financial could produce over
the period from December 31, 1995 through December 31, 2000, assuming a minimum
required tangible equity level of 6.5% of tangible total assets, if Fourth
Financial performed in accordance with forecasts provided by management of
Fourth Financial and Boatmen's. DLJ also estimated the terminal value of Fourth
Financial's common equity as of December 31, 2000 by applying multiples of 9.0x
to 12.0x to Fourth Financial's projected 2000 earnings. DLJ selected the range
of terminal multiples on the basis of past and current trading multiples for
Fourth Financial and other commercial banks. The dividend streams and terminal
value were discounted to present values as of December 31, 1995 using discount
rates ranging from 11.5% to 12.5%, which reflect different assumptions regarding
the required rates of return of holders and prospective buyers of Fourth
Financial Common. The range of present values per fully diluted share of Fourth
Financial Common resulting from this analysis was $29.73 to $36.81. DLJ also
performed discounted cash flow analysis including cost savings and revenue
enhancements resulting from the Merger estimated at 15% to 25% of Fourth
Financial's expense base. Assuming annual growth rates of 2% to 4% for such
savings and enhancements, the analysis resulted in a range of present values per
fully-diluted share of Fourth Financial Common of $34.62 to $48.01.
Contribution Analysis. DLJ computed the contribution to the combined
entity's pro forma balance sheet and income statement at or for the six months
ended June 30, 1995. The computation showed, among other things, that Boatmen's
and Fourth Financial contributed to the combined entity approximately 81.7%
48
and 18.3% respectively, of total assets; 82.0% and 18.0%, respectively, of total
loans; 80.2% and 19.8%, respectively, of total deposits; 81.1% and 18.9%,
respectively, of fully-diluted equity; 81.7% and 18.3%, respectively, of fully
diluted tangible total equity; 83.2% and 16.8%, respectively, of total revenues
(defined as net interest income on a fully-taxable equivalent basis plus
noninterest income before securities gains and losses); 82.7% and 17.3%,
respectively, of noninterest expense before expenses associated with other real
estate owned; 80.8% and 19.2%, respectively, of net income before securities
gains and losses; and 79.8% and 20.2%, respectively, of the pro forma ownership
of the combined company based on the Merger Consideration.
Pro Forma Merger Analysis. In the course of discussions preceding execution
of the Merger Agreement, Boatmen's informed DLJ that, with various cost savings
and revenue enhancements that it believed could be obtained as a result of the
Merger, Boatmen's expected the transaction to be approximately 1.6% dilutive to
EPS in the first year following the Effective Time and 1.3% accretive in the
second. Boatmen's also informed DLJ that it anticipated the transaction would
be 0.3% dilutive to Boatmen's book value per share and 0.8% dilutive to its
tangible book value per share on a pro forma basis as of June 30, 1995.
In connection with its written opinion dated as of the date of this Joint
Proxy Statement/Prospectus, DLJ performed procedures to update certain of its
analyses and reviewed the assumptions on which such analyses were based and the
factors considered in connection therewith. In updating its opinion, DLJ did
not utilize any methods of analysis in addition to those described.
The summary set forth above describes the material analyses performed by DLJ
and presented to the Boatmen's Board on August 25, 1995 and does not purport to
be a complete description of such analyses. The preparation of a fairness
opinion is a complex process and is not necessarily susceptible to partial
analysis or summary description. DLJ believes that its analyses must be
considered as a whole and that selecting portions of its analyses, without
considering all factors and analyses, would create an incomplete view of the
process underlying the analyses by which DLJ reached its opinions. The ranges
of valuations resulting from any particular analysis described above should not
be taken to be DLJ's view of the actual value of Fourth Financial or the
combined company.
In performing its analyses, DLJ made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of Fourth Financial and Boatmen's.
The analyses performed by DLJ are not necessarily indicative of actual value or
actual future results, which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of DLJ's
analysis of the fairness of the Common Exchange Ratio, from a financial point of
view, to the holders of Boatmen's Common. The analyses do not purport to be
appraisals or to reflect the prices at which a company or its securities may
actually be bought or sold. DLJ used in its analyses various projections
prepared by the managements of Fourth Financial and Boatmen's. Neither Fourth
Financial nor Boatmen's publicly discloses internal management projections of
the type provided to DLJ in connection with its review. Such projections were
not prepared for, or with a view toward, public disclosure. In addition, such
projections were based on numerous variables and assumptions that are inherently
uncertain, including, without limitation, factors related to general economic
and competitive conditions, many of which are beyond the control of the
managements of Fourth Financial and Boatmen's. Accordingly, actual results
could vary significantly from those set forth in such projections.
Pursuant to the terms of a letter agreement dated August 21, 1995 (the
"Engagement Letter"), for DLJ's services in connection with the Merger,
including the rendering of its opinions, Boatmen's (i) has paid DLJ $500,000 and
(ii) has agreed to pay DLJ an additional $500,000 upon the mailing of this Joint
Proxy
49
Statement/Prospectus. Boatmen's has also agreed under the Engagement Letter to
reimburse DLJ for all reasonable out-of-pocket expenses, including reasonable
fees and expenses of counsel, and has agreed to indemnify DLJ against certain
expenses and liabilities incurred in connection with its engagement, including
liabilities under federal securities law.
DLJ may, in the ordinary course of its business, actively trade securities of
Boatmen's and Fourth Financial for its own account or for the accounts of
customers and thus may hold long or short positions in such securities at any
time.
DLJ has from time to time in the past been, and may in the future be,
considered or employed by Boatmen's to provide investment banking and securities
brokerage services. These relationships are considered by Boatmen's to be in
the ordinary course of business and to be immaterial to DLJ's engagement
relative to the Merger.
FOURTH FINANCIAL
On November 10, 1994, Goldman Sachs was retained by Fourth Financial to act
as its financial advisor in connection with the proposed Merger. At the meeting
of the Fourth Financial Board held on August 25, 1995, at which meeting the
terms of the proposed Merger were discussed and considered, Goldman Sachs
delivered to the Fourth Financial Board its oral opinion (which was confirmed in
a written opinion dated as of that date) to the effect that, as of the date of
such opinion, based on the matters set forth in such opinion, the Common
Exchange Ratio is fair to holders of Fourth Financial Common and the Preferred
Exchange Ratio is fair to the holders of Fourth Financial Preferred. Goldman
Sachs also has delivered its written opinion to the Fourth Financial Board dated
as of the date of this Joint Proxy Statement/Prospectus stating that, as of the
date hereof and based on the matters set forth in such opinion, the Common
Exchange Ratio is fair to holders of Fourth Financial Common and the Preferred
Exchange Ratio is fair to the holders of Fourth Financial Preferred.
Goldman Sachs is a nationally recognized investment banking firm and was
selected by Fourth Financial based on the firm's reputation and experience in
investment banking in general, its recognized expertise in the valuation of
banking businesses and because of its familiarity with Fourth Financial.
Goldman Sachs, as part of its investment banking business, is continually
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.
The full text of the Goldman Sachs opinion, dated as of the date of this
Joint Proxy Statement/Prospectus, which sets forth the assumptions made,
procedures followed, matters considered and limits on the review undertaken, is
attached hereto as Appendix D and is incorporated by reference herein. The
description of the Goldman Sachs opinion set forth herein is qualified in its
entirety by reference to Appendix D. Fourth Financial shareholders are urged to
read the Goldman Sachs opinion in its entirety.
Goldman Sachs' opinion is directed to the Fourth Financial Board and does not
constitute a recommendation to any Fourth Financial shareholder as to how such
shareholder should vote at the Fourth Financial Meeting.
In connection with its opinion, dated as of the date of this Joint Proxy
Statement/Prospectus, Goldman Sachs reviewed, among other things: (i) the
Merger Agreement; (ii) the Fourth Stock Option Agreement; (iii) a draft of the
Registration Statement on Form S-4 (of which this Joint
50
Proxy Statement/Prospectus is a part); (iv) Annual Reports to Shareholders and
Annual Reports on Form 10-K of Fourth Financial and Boatmen's for each of the
five fiscal years in the period ended December 31, 1994; (v) certain interim
reports to shareholders and Quarterly Reports on Form 10-Q of Fourth Financial
and Boatmen's; (vi) certain other communications from Fourth Financial and
Boatmen's to their respective shareholders; and (vii) certain internal financial
analyses and forecasts for Fourth Financial and Boatmen's prepared by their
respective managements. Goldman Sachs also discussed past and current business
operations, regulatory relationships, financial conditions and future prospects
of Fourth Financial and Boatmen's with members of their respective senior
managements. In addition, Goldman Sachs: (i) reviewed the reported price and
trading activity for Fourth Financial Common and Boatmen's Common; (ii) compared
certain financial and stock market information for Fourth Financial and
Boatmen's with similar information for certain other companies the securities of
which are publicly traded; (iii) reviewed the financial terms of certain recent
business combinations in the banking industry; and (iv) performed such other
studies and analyses as it deemed appropriate.
Goldman Sachs has relied, without assuming responsibility for independent
verification, upon the accuracy and completeness of all the financial and other
information reviewed by it for purposes of rendering its opinion. Goldman Sachs
has assumed, with Fourth Financial's consent, that the financial forecasts
(including, without limitation, projected cost savings and operating synergies
resulting from the Merger) referred to in the preceding paragraph were
reasonably prepared on a basis reflecting the best currently available judgments
and estimates of the respective managements of Fourth Financial and Boatmen's
and that such forecasts would be realized in the amounts and at the times
contemplated thereby. Goldman Sachs is not an expert in the evaluation of loan
portfolios for purposes of assessing the adequacy of the allowances for losses
with respect thereto, and has assumed, with Fourth Financial's consent, that
such allowances for each of Fourth Financial and Boatmen's are in the aggregate
adequate to cover all such losses. In addition, Goldman Sachs has not reviewed
individual credit files nor has it made an independent evaluation or appraisal
of the assets and liabilities of Fourth Financial or Boatmen's or any of their
respective subsidiaries and has not been furnished with any such evaluation or
appraisal. Goldman Sachs has assumed, with Fourth Financial's consent, that the
Merger would be accounted for as a pooling of interests under generally accepted
accounting principles.
For the services of Goldman Sachs as financial advisor to Fourth Financial in
connection with the Merger, Fourth Financial has agreed to pay Goldman Sachs a
fee at the closing of the Merger based on the per share consideration received
by Fourth Financial shareholders. Based on current per share values the fee is
presently estimated to be approximately $3.5 million. Fourth Financial has also
agreed to pay Goldman Sachs its reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of its counsel, and to indemnify Goldman Sachs
against certain liabilities, including certain liabilities arising under the
federal securities laws. Goldman Sachs has provided certain investment banking
and advisory services to Fourth Financial from time to time. In addition,
Goldman Sachs has provided certain investment banking services to Boatmen's, for
which it received customary compensation including the rendering of a fairness
opinion in connection with Boatmen's acquisition of Worthen Banking Corporation
in 1995 and may provide future investment banking services to Boatmen's.
Summary of Financial Analyses
The following is a summary of the material financial analyses presented by
Goldman Sachs to the Fourth Financial Board in connection with providing its
written opinion to the Fourth Financial Board as of August 25, 1995, but does
not purport to be a complete description of the analyses performed by Goldman
Sachs. Goldman Sachs used substantially the same types of financial analyses in
preparing its
51
written opinion dated as of the date of this Joint Proxy Statement/Prospectus as
it used in providing its opinion dated as of August 25, 1995.
Summary of Proposed Transaction. Goldman Sachs reviewed the terms of
the proposed Merger, including the Merger Consideration, the price per share
offered, the dividends per share and the resulting percentage ownership of
the combined company that would be held by Fourth Financial shareholders
immediately following the Merger. This analysis showed, among other things,
that Fourth Financial shareholders would own an estimated 19.7% of the
combined entity upon consummation of the Merger and would have an annual
dividend of $1.48 per share (based upon Boatmen's current per common share
dividend amount) representing an increase of 28% over Fourth Financial's
current per common share dividend amount and that (based upon the closing
share price of Boatmen's Common on August 24, 1995, and the Common Exchange
Ratio of one-for-one) the per share price to holders of Fourth Financial
Common in the Merger represented a premium of 10.4% over the August 24, 1995
closing price of Fourth Financial Common. Goldman Sachs estimated that the
combined entity would rank approximately twenty-second based on total assets
and twenty-first based on market value as of August 24, 1995 among U.S. bank
holding companies.
Selected Company Analysis. Goldman Sachs reviewed and compared actual
and estimated selected financial, operating and stock market information and
financial ratios of Fourth Financial and Boatmen's to corresponding
information and ratios for four small and mid-sized regional banking
organizations (the "Small and Mid-Sized Peer Banks") and eight super-regional
banking organizations, including Boatmen's (the "Super-Regional Banks"),
based on publicly available information and median Institutional Brokers
Estimate System (IBES) estimates. The Small and Mid-Sized Peer Banks were:
BOK Financial; Commerce Bancshares; First Commercial; and Mercantile
Bancorporation, Inc. The Super-Regional Banks were: Banc One Corporation;
BankAmerica; Boatmen's; First Bank System, Inc.; First Interstate Bancorp;
KeyCorp; NationsBank Corporation; and Norwest Corporation. Such information
and ratios included, among other things, equity market capitalization, price-
earnings ratios, market to book value per share, market to tangible book
value per share and certain profitability, capital adequacy and asset quality
ratios.
This analysis showed, among other things, that, as of June 30, 1995:
(i) Fourth Financial's and Boatmen's market to tangible book value was 1.9x
and 2.0x, respectively, compared to a mean market to tangible book value of
2.0x, in the case of the Small and Mid-Sized Peer Banks, and 2.4x, in the
case of the Super-Regional Banks; and (ii) Fourth Financial's and Boatmen's
market to book value was 1.6x and 1.7x, respectively, as compared to a mean
market to book value of 1.7x, in the case of the Small and Mid-Sized Peer
Banks, and 1.7x, in the case of the Super-Regional Banks.
This analysis also showed, among other things, that: (i) Fourth
Financial and Boatmen's had return on average assets and return on average
common equity for the latest twelve months ("LTM") ended June 30, 1995, of
1.07% and 15.55%, respectively, in the case of Fourth Financial (excluding
$22.1 million pre-tax loss due to portfolio restructuring), and 1.23% and
15.17%, respectively, in the case of Boatmen's, as compared with a mean
return on assets and return on common equity for the Small and Mid-Sized Peer
Banks and Super-Regional Banks for the LTM ended June 30, 1995, of 1.26% and
15.12%, respectively, in the case of the Small and Mid-Sized Peer Banks, and
1.21% and 17.02%, respectively, in the case of the Super-Regional Banks; (ii)
Fourth Financial and Boatmen's had tangible common equity to tangible assets,
common equity to assets and Tier 1 capital ratios as of June 30, 1995, of
7.48%, 8.66% and 10.74%, respectively, in the case of Fourth Financial, and
7.49%, 8.32% and 10.87%, respectively, in the case of Boatmen's, as compared
with mean tangible common equity to tangible assets, common equity to assets
and Tier 1 capital ratios
52
for the Small and Mid-Sized Peer Banks and Super-Regional Banks as of June
30, 1995, of 7.76%, 8.50% and 12.54%, respectively, in the case of the Small
and Mid-Sized Peer Banks, and 5.88%, 7.30% and 8.47%, respectively, in the
case of the Super-Regional Banks; (iii) Fourth Financial and Boatmen's had
reserves to nonperforming loans ratios as of June 30, 1995, of 198%, in the
case of Fourth Financial, and 291% in the case of Boatmen's, as compared with
mean reserves to nonperforming loans ratios for the Small and Mid-Sized Peer
Banks and Super-Regional Banks as of June 30, 1995, of 303% and 270%,
respectively; and (iv) Fourth Financial and Boatmen's had an efficiency ratio
(defined as noninterest expenses divided by net interest income plus
noninterest income) and a fee income to total revenues ratio for the latest
twelve months ended June 30, 1995, of 66.0% and 21.8%, respectively, in the
case of Fourth Financial (excluding $22.1 million pre-tax loss due to
portfolio restructuring), and 64.0% and 35.4%, respectively, in the case of
Boatmen's, as compared with efficiency ratios and mean fee income to total
revenues for the Small and Mid-Size Peer Banks and Super-Regional Banks for
the LTM ended June 30, 1995, of 63.8% and 28.9%, respectively, in the case of
the Small and Mid-Sized Peer Banks, and 62.1% and 33.2%, respectively, in the
case of the Super-Regional Banks.
Selected Transaction Analysis. Goldman Sachs analyzed certain
information relating to eighteen announced or completed bank merger
transactions since January 1993 (eight of which occurred during the period
from January 1, 1995 to August 24, 1995, four of which occurred during 1994,
and six of which occurred during 1993), in which the aggregate consideration
paid was in excess of $500 million (the "Selected Bank Mergers"). The
Selected Bank Mergers were (acquiror/acquiree): (i) for 1995, First Bank
System/FirstTier Financial; Banc One/Premier Bancorp; NBD Bancorp/First
Chicago; PNC Bank/Midlantic; First Union/First Fidelity; US Bancorp/West One
Bancorp; Fleet Financial/Shawmut National; and National Australia
Bank/Michigan National (collectively, the "1995 Selected Bank Mergers"); (ii)
for 1994, Boatmen's/Worthen Banking; BB&T Financial/Southern National;
National Westminster/Citizens First; and BankAmerica/Continental Bank
(collectively, the "1994 Selected Bank Mergers"); and (iii) for 1993, Core
States Financial/Independence Bancorp; Banc One/Liberty National;
KeyCorp/Society; Marshall & Ilsley/Valley Bancorp; NationsBank/MNC Financial;
and Bank of New York/National Community Bank (collectively, the "1993
Selected Bank Mergers"). For purposes of such analysis, Goldman Sachs
assumed a market price per share of Boatmen's Common Stock of $37.25 (the
closing price per share of Boatmen's Common Stock on August 24, 1995). This
analysis showed that the high, low and median multiples of per share
consideration paid to tangible book value per share and to the LTM earnings
per share were, in the case of the 1995 Selected Bank Mergers, 2.72x, 1.40x
and 1.98x, and 16.0x, 8.8x and 11.6x, respectively, in the case of the 1994
Selected Bank Mergers, 2.47x, 1.25x and 2.20x, and 14.0x, 6.7x and 11.9x,
respectively, and in the case of the 1993 Selected Bank Mergers, 2.60x, 1.50x
and 2.34x, and 47.1x, 10.7x and 24.1x, respectively, as compared with
multiples of per share consideration to be paid pursuant to the Merger to
tangible book value per share, as of June 30, 1995, and to the LTM earnings
per share of Fourth Financial of 2.11x and 14.3x, respectively (excluding
$22.1 million pre-tax loss due to portfolio restructuring). This analysis
also showed that the high, low and median values of the premium paid as a
percentage of market capitalization (calculated prior to the public
announcement of a possible acquisition of the acquired banking organization
or the acquiror's interest in the transaction) were, in the case of the 1995
Selected Bank Mergers, 46.0%, (2.6)% and 29.2%, respectively, in the case of
the 1994 Selected Bank Mergers, 35.7%, 0% and 16.9%, respectively, and, in
the case of the 1993 Selected Bank Mergers, 30.7%, 5.5% and 16.7%,
respectively, as compared to a premium of 10.4% to be paid pursuant to the
Merger as a multiple of the Fourth Financial Common closing price on August
24, 1995. In addition, Goldman Sachs reviewed certain bank and non-bank
merger transactions at or near market value for the period from May 1992
through August 1995 in which
53
the premium paid as a percentage to market capitalization ranged from a low
of minus 18% to a high of 5%.
Net Present Value Analysis. Using a net present value analysis based on
management estimates, Goldman Sachs estimated the present value of the
tangible book value and dividends per share for the pro forma combined entity
and Fourth Financial on a stand-alone basis based on estimated earnings per
share, dividends per share and tangible book value per share through 1998 at
various price earnings multiples. Based upon discount rates of 12.5% and
15.0% and a range of 1998 price/earnings multiples of 8.0x to 14.0x based on
1998 estimated earnings per share, this analysis showed a range of present
values for Boatmen's shares on a pro forma basis giving effect to the Merger
of $27.87 per share to $49.11 per share and a range of present values for
Fourth Financial shares on a stand-alone basis of $22.41 per share to $39.26
per share.
Stock Trading Analysis. Goldman Sachs reviewed and analyzed the
historical trading prices and volumes for Fourth Financial Common and
Boatmen's Common on a monthly basis from July 31, 1992 to July 31, 1995.
Goldman Sachs also compared the historical trading prices of each of Fourth
Financial Common and Boatmen's Common with both the Goldman Sachs composite
index of selected regional banks' historical trading prices on a daily basis
from August 23, 1994 to August 23, 1995, and on a weekly basis from August
18, 1992 to August 18, 1995. Goldman Sachs also compared the market value of
Boatmen's Common to the book value of such stock on a weekly basis from
January 1, 1993 to August 18, 1995.
Contribution Analysis. Goldman Sachs analyzed the respective
contributions of each of Fourth Financial and Boatmen's to selected income
statement, on a LTM basis, and balance sheet, as of June 30, 1995, items of
the pro forma combined entity as if the Merger had been consummated as of
June 30, 1995. This analysis showed, among other things, that Fourth
Financial shareholders would have contributed 19% of total revenue, 19% of
net income, 18% of total assets and 19% of shareholders' equity, with
Boatmen's contributing the balance in each case. Goldman Sachs did not
consider projected cost savings and operating synergies as part of its
contribution analysis.
Other Analyses. Goldman Sachs also reviewed selected investment
research reports on, and earnings estimates for, Boatmen's and analyzed
available information regarding the ownership of Boatmen's Common. In
addition, Goldman Sachs: (i) prepared an overview of the historical
financial performance of Boatmen's, including an asset quality analysis; (ii)
analyzed Boatmen's deposit and asset mix by geographic area; Boatmen's loan
portfolio, including a breakdown by project type of its commercial real
estate loans; and a history of Boatmen's nonperforming assets; and (iii)
presented a summary of Boatmen's financial forecast through 1997 and a list
of Boatmen's directors and senior management.
The summary set forth above describes the material analyses that Goldman
Sachs performed and presented to the Fourth Financial Board on August 25, 1995,
and does not purport to be a complete description of such analyses. The
preparation of a fairness opinion is a complex process and is not necessarily
susceptible to partial analysis or a summary description.
Goldman Sachs believes that its analyses must be considered as a whole and
that selecting portions of its analyses without considering all factors and
analyses would create an incomplete view of the analyses and processes
underlying its opinion. In its analyses, Goldman Sachs relied upon numerous
assumptions made by Fourth Financial and Boatmen's with respect to industry
performance, general business and
54
economic conditions, and other matters, many of which are beyond the control of
Fourth Financial or Boatmen's. Analyses based upon forecasts of future results
are not necessarily indicative of actual values, which may be significantly more
or less favorable than suggested by such analyses. No company or transaction
used as a comparison in the analyses is identical to Fourth Financial or
Boatmen's or to the Merger. Additionally, estimates of the value of businesses
do not purport to be appraisals or necessarily reflective of the prices at which
businesses actually may be sold. Because such estimates are inherently subject
to uncertainty, none of the Fourth Financial Board, Goldman Sachs, or any other
person assumes responsibility for the accuracy of such estimates. Goldman Sachs'
analyses were prepared solely for purposes of its written opinions, dated as of
August 25, 1995 and the date of this Joint Proxy Statement/Prospectus, provided
to the Fourth Financial Board regarding the fairness of the Common Merger
Consideration to holders of Fourth Financial Common and the Fourth Financial
Preferred Merger Consideration to holders of Fourth Financial Preferred, and do
not purport to be appraisals or necessarily reflect the prices at which Fourth
Financial or its securities actually may be sold.
FORM OF MERGER
The Merger Agreement provides that, subject to the satisfaction or waiver
(where permissible) of the conditions set forth therein (see "MERGER -- Certain
Conditions to Consummation of Merger") and in accordance with the Kansas
Corporate Law, at the Effective Time, Fourth Financial will merge with and into
Acquisition Sub and Acquisition Sub will be the surviving corporation in the
Merger. At the Effective Time, the separate corporate existence of Fourth
Financial will terminate.
Immediately following the Merger, shareholders of Boatmen's and Fourth
Financial will own approximately 82% and 18%, respectively, of the then
outstanding shares of Boatmen's Common (without giving effect to the shares of
Boatmen's Common issuable upon the conversion of the Boatmen's New Preferred or
exercise of the Fourth Financial Employee Stock Options).
MERGER CONSIDERATION
The Merger Agreement provides that, at the Effective Time of the Merger, (i)
each share of Fourth Financial Common issued and outstanding immediately prior
to the Effective Time, other than shares held in the treasury of Fourth
Financial or by Fourth Financial or its subsidiaries (except shares held by
Fourth Financial or its subsidiaries in a fiduciary capacity or in respect of a
debt previously contracted), will be converted into the right to receive 1 share
of Boatmen's Common, including the associated preferred share purchase rights
(see "COMPARISON OF SHAREHOLDER RIGHTS -- Shareholder Rights Plan"), and (ii)
each share of Fourth Financial Preferred issued and outstanding immediately
prior to the Effective Time (except for shares as to which appraisal rights are
perfected; see "MERGER -- Appraisal Rights of Dissenting Shareholders") will be
converted into the right to receive 1 share of Boatmen's New Preferred (and, as
a result, each Fourth Financial Preferred Depositary Share will be converted
into the right to 1 Boatmen's New Preferred Depositary Share). The terms of the
Boatmen's New Preferred will be substantially the same as the terms of the
Fourth Financial Preferred and, at the Effective Time, the Deposit Agreement
dated as of February 24, 1992, pursuant to which shares of Fourth Financial
Preferred are held subject to depositary receipts will automatically be assumed
by Acquisition Sub, will be assigned by it to Boatmen's and will, thereafter,
relate to the shares of Boatmen's New Preferred to be issued in the Merger. See
"DESCRIPTION OF BOATMEN'S CAPITAL STOCK -- Boatmen's New Preferred Depositary
Shares," "-- Boatmen's New Preferred" and "COMPARISON OF SHAREHOLDER RIGHTS."
55
The Merger Consideration was determined through negotiations, taking into
account the relative value of Fourth Financial Common and Boatmen's Common, and
Boatmen's and Fourth Financial were advised with respect to such negotiations by
their financial advisors, DLJ and Goldman Sachs, respectively.
The obligation of Fourth Financial to consummate the Merger is not
conditioned upon Boatmen's Common continuing to trade at any specified minimum
price during any period prior to the Effective Time. Because the Common
Exchange Ratio and the Preferred Exchange Ratio are fixed at one-for-one and
because the market value of Boatmen's Common is, and the market value of the
Boatmen's New Preferred when issued in the Merger will be, subject to
fluctuation, the value of the Merger Consideration that shareholders of Fourth
Financial will receive in the Merger may increase or decrease prior to and
following the Merger. The market prices of Boatmen's Common and Fourth
Financial Common as of a recent date are set forth on the cover page of this
Joint Proxy Statement/Prospectus. Shareholders of Fourth Financial are advised
to obtain recent market quotations for Boatmen's Common and Fourth Financial
Common. No assurance can be given as to the market price of Boatmen's Common or
Fourth Financial Common on the Effective Time, or as to the market price of
Boatmen's Common or Boatmen's New Preferred thereafter.
Shares of Boatmen's Common and Boatmen's Series B Preferred issued and
outstanding immediately prior to the Effective Time will remain issued and
outstanding immediately after the Merger.
FRACTIONAL SHARES
No fractional shares of Boatmen's Common will be issued and, in lieu thereof,
holders of fractional shares of Fourth Financial Common who would otherwise be
entitled to a fractional share interest in Boatmen's Common (after taking into
account all shares of Fourth Financial Common held by such holder) will be paid
an amount in cash equal to the product of such fractional share interest and the
closing price of a share of Boatmen's Common on Nasdaq on the business day
immediately preceding the date on which the Effective Time occurs.
SHARE ADJUSTMENTS
If, prior to the Effective Time, a share of Boatmen's Common would be changed
into a different number of shares of Boatmen's Common or a different class of
shares (a "Share Adjustment") by reason of reclassification, recapitalization,
splitup, exchange of shares or readjustment, or if a stock dividend thereon
should be declared with a record date within such period, then the number of
shares of Boatmen's Common into which a share of Fourth Financial Common would
be converted pursuant to the Merger Agreement would be appropriately and
proportionately adjusted so that each shareholder of Fourth Financial would be
entitled to receive such number of shares of Boatmen's Common as such
shareholder would have received pursuant to such Share Adjustment had the record
date therefor been immediately following the Effective Time of the Merger.
DIVIDENDS
The Merger Agreement provides that beginning in the fourth quarter of 1995,
and for each quarter thereafter, Fourth Financial may declare and pay a
conforming quarterly dividend on the Fourth Financial Common not to exceed $0.37
per share and, in order to take into account the fact that Boatmen's quarterly
dividend is paid one month later than Fourth Financial's quarterly dividend,
Fourth Financial may pay a
56
single additional conforming dividend of $0.10 per share. Boatmen's and Fourth
Financial have also agreed, pursuant to the Merger Agreement, to coordinate the
record and payment dates for the quarter in which the Effective Time occurs such
that the Fourth Financial shareholders will receive a quarterly dividend from
either Fourth Financial or Boatmen's, but not from both, with respect to such
quarter.
EFFECTIVE TIME
The Merger Agreement provides that the Merger will become effective upon the
filing of a Certificate of Merger with the Secretary of State of the State of
Kansas which is expected to occur on the Closing Date. The Closing Date will
occur, at the option of Boatmen's, on (i) the last business day of, or (ii) the
first business day of the month following, in each case, the month during which
all necessary regulatory approvals, consents, authorizations and approvals,
including approval of the shareholders of Boatmen's and Fourth Financial,
required by law for consummation of the Merger have been obtained and all
waiting periods required by law have expired. See "MERGER -- Regulatory
Approvals," "BOATMEN'S MEETING -- Vote Required" and "FOURTH FINANCIAL MEETING
- -- Vote Required."
Assuming that the Merger is approved by the requisite vote of the
shareholders of Boatmen's and Fourth Financial and the other conditions to the
Merger are satisfied or waived (where permissible) (see "MERGER -- Certain
Conditions to Consummation of Merger"), it is presently anticipated that the
Merger will be consummated during the first quarter of 1996, but no assurance
can be given that such timetable will be met. If the Merger is not effected on
or before August 25, 1996, the Merger Agreement may be terminated by either
Boatmen's or Fourth Financial. See "MERGER -- Termination of Merger Agreement."
REGULATORY APPROVALS
Boatmen's agreed, in the Merger Agreement, to promptly file all regulatory
applications to obtain the requisite regulatory approvals from the Federal
Reserve Board, the Kansas State Banking Board and the Oklahoma State Bank
Department. The Merger cannot proceed in the absence of the foregoing
regulatory approvals. There can be no assurance that such regulatory approvals
will be obtained and, if obtained, there can be no assurance as to the date of
any such approvals or the absence of any litigation challenging such approvals.
There can likewise be no assurance that the D.O.J. will not attempt to challenge
the Merger on antitrust grounds or, if such a challenge is made, as to the
result thereof.
Boatmen's and Fourth Financial are not aware of any other governmental
approvals or actions that are required prior to the parties' consummation of the
Merger other than those described herein. It is presently contemplated that if
any such additional governmental approvals or actions are required, such
approvals or actions will be sought. There can be no assurance, however, that
any such additional approvals or actions will be obtained.
Federal Reserve Board
The Merger is subject to approval by the Federal Reserve Board pursuant to
Sections 3 and 4 of the B.H.C.A. Boatmen's filed applications to obtain such
regulatory approval on September 29, 1995, such applications were accepted for
processing on October 30, 1995, and are currently pending.
The Federal Reserve Board is prohibited from approving any transaction under
the applicable statutes which (i) would result in a monopoly or which would be
in furtherance of any combination or conspiracy
57
to monopolize or to attempt to monopolize the business of banking in any part of
the United States, or (ii) may have the effect in any section of the United
States of substantially lessening competition, or tending to create a monopoly,
or resulting in a restraint of trade, unless the Federal Reserve Board finds
that the anti-competitive effects of the transaction are clearly outweighed in
the public interest by the probable effect of the transaction in meeting the
convenience and needs of the communities to be served.
In reviewing a transaction under the applicable statutes, the Federal Reserve
Board will also consider the financial and managerial resources of the companies
and their subsidiary banks and the convenience and needs of the communities to
be served. As part of, or in addition to, consideration of the above factors,
it is anticipated that the Federal Reserve Board will consider the regulatory
status of Boatmen's and Fourth Financial and the overall capital and safety and
soundness standards established by the Federal Deposit Insurance Corporation
Improvement Act of 1991 and the regulations promulgated thereunder.
Under the Community Reinvestment Act of 1977, as amended (the "C.R.A."), the
Federal Reserve Board must also take into account the record of performance of
each of Boatmen's and Fourth Financial in meeting the credit needs of the entire
community, including low and moderate income neighborhoods, served by each
company. As of the date of this Joint Proxy Statement/Prospectus, each of the
depository institution subsidiaries of Boatmen's and Fourth Financial received a
C.R.A. rating of "Outstanding" or "Satisfactory" in its most recent C.R.A.
examination.
The Federal Reserve Board will furnish notice and a copy of the application
for approval of the Merger to the Office of the Comptroller of the Currency (the
"O.C.C."), the F.D.I.C. and the appropriate state regulatory authorities. These
agencies have 30 days to submit their views and recommendations to the Federal
Reserve Board. The Federal Reserve Board is required to hold a public hearing
in the event it receives a written recommendation of disapproval of the
application from any of these agencies within such 30-day period. The B.H.C.A.
and Federal Reserve Board regulations also require publication of notice of, and
the opportunity for public comment on, the application submitted by Boatmen's
for approval of the Merger and authorize the Federal Reserve Board to hold a
public hearing in connection therewith if the Federal Reserve Board determines
that such a hearing would be appropriate. Any such hearing or comments provided
by third parties could prolong the period during which the application is
subject to review by the Federal Reserve Board.
The Merger may not be consummated until 30 days after Federal Reserve Board
approval, during which time the D.O.J. may challenge the Merger on antitrust
grounds and seek the divestiture of certain assets and liabilities. With the
approval of the Federal Reserve Board and the D.O.J., the waiting period may be
reduced to no less than fifteen days. The commencement of an antitrust action
by the D.O.J. would stay the effectiveness of Federal Reserve Board approval of
the Merger unless a court specifically orders otherwise. In reviewing the
Merger, the D.O.J. could analyze the effect of the Merger on competition
differently than the Federal Reserve Board and, thus, it is possible that the
D.O.J. could reach a different conclusion than the Federal Reserve Board
regarding the competitive effects of the Merger. Failure of the D.O.J. to
object to the Merger may not prevent the filing of antitrust actions by private
persons or state attorney generals.
In general, the Federal Reserve Board and the D.O.J. will examine the impact
of the Merger on competition in various product and geographic markets,
including competition for deposits and loans, especially loans to small and
middle market businesses. As part of the applications filed with the Federal
Reserve Board and based upon pre-filing discussions between Boatmen's and staff
of the Federal Reserve Board, Boatmen's committed to divest branches of
Boatmen's subsidiary, Superior Federal Bank, FSB and/or a Fourth Financial
subsidiary bank in two relevant banking markets in Oklahoma wherein both such
58
institutions have branch offices. The purpose of such divestitures would be to
mitigate possible adverse effects on competition in these two markets which
might otherwise result from the Merger. The divestiture commitment provides
that, prior to consummation of the Merger, binding agreements for the sale of
such branches (having aggregate deposits of not less than $19.6 million in the
case of one market and $41.1 million in the case of the other market) will be
entered into with one or more unaffiliated third parties. The commitment
requires that the subject branches be placed into a trust for ultimate
disposition by an independent trustee in the event that such divestitures are
not completed within six months after consummation of the Merger.
Missouri banking law prohibits a bank holding company from acquiring control
of a bank, or one or more branches of a bank, if the total deposits in all
banks, and branches of banks, in Missouri controlled by the bank holding company
would exceed 13% of the total deposits in all depository financial institutions
in Missouri. The Missouri Division of Finance reports that Boatmen's controlled
approximately 15.7% of such total deposits in Missouri as of December 31, 1994
(after taking into account certain permissible deductions from Boatmen's
deposits). Fourth Financial's subsidiary Bank IV, N.A., has branches located in
Missouri with aggregate deposits of approximately $77.1 million. To comply with
this Missouri law, Boatmen's has committed to divest the Missouri branches of
Bank IV, N.A. The terms of such Missouri divestiture commitment are
substantially similar to those of the divestiture commitment made with respect
to the two Oklahoma relevant banking markets described above.
The Oklahoma and Missouri branch divestitures, which would represent in the
aggregate less than one percent (1%) of Boatmen's total deposits, would not be
material to Boatmen's.
Boatmen's rights to exercise its option under the Fourth Financial Stock
Option Agreement are also subject to the prior approval of the Federal Reserve
Board, to the extent that the exercise of its option under the Fourth Financial
Stock Option Agreement would result in Boatmen's owning more than 5% of the
outstanding shares of Fourth Financial Common. See "MERGER -- Fourth Financial
Stock Option Agreement." In considering whether to approve Boatmen's right to
exercise its option, including its right to purchase more than 5% of the
outstanding shares of Fourth Financial Common, the Federal Reserve Board would
generally apply the same statutory criteria it would apply to its consideration
of approval of the Merger.
STATE REGULATORY REQUIREMENTS
The Merger is also subject to approval by the Kansas State Banking Board and
the Oklahoma State Bank Department. Boatmen's filed applications to obtain such
regulatory approvals on October 2, 1995 and such applications are pending.
CERTAIN CONDITIONS TO CONSUMMATION OF MERGER
The obligations of each party to effect the Merger are subject to the
fulfillment or waiver by each of the parties, at or prior to the Closing Date,
of the following conditions: (i) the representations and warranties of each
party set forth in the Merger Agreement (see "MERGER -- Representations and
Warranties of Parties") will be true and correct on the date thereof and as of
the Closing Date (except for any such representations and warranties made as of
a specified date which will be true and correct as of such date); provided,
however, that (a) in determining whether or not the foregoing condition is
satisfied, no effect will be given to any exceptions in such representations and
warranties relating to materiality or Material Adverse Effect, and (b) the
foregoing condition will be deemed to be satisfied unless the failure
59
of such representations and warranties to be true and correct would constitute,
individually or in the aggregate, a Material Adverse Effect on the party by
which such representation or warranty is made; (ii) each party will have
performed and complied in all material respects with all of its obligations and
agreements required to be performed under the Merger Agreement on or prior to
the Closing Date; (iii) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger will be
in effect, nor will any proceedings by any bank regulatory authority or other
governmental agency seeking any of the foregoing be pending and there will not
have been any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal; (iv) all necessary regulatory approvals,
consents and authorizations and other approvals required by law to consummate
the Merger, including the respective approvals of the shareholders of Boatmen's
and Fourth Financial, will have been obtained and all waiting periods will have
expired; provided, however, that the foregoing condition will be deemed
satisfied notwithstanding the failure of a party to receive any third-party non-
Regulatory Agency consents provided (a) such party used its reasonable efforts
to obtain such consents, and (b) the failure to obtain such consents would not
constitute, individually or in the aggregate, a Material Adverse Effect on such
party; (v) each party will have received all required documents from the other
party on or prior to the Closing Date, in form and substance reasonably
satisfactory to such party; (vi) the Registration Statement will have become
effective under the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement will be in effect or proceedings for
that purpose will have been pending before or threatened by the S.E.C.; (vii)
Boatmen's and Fourth Financial will have each received an opinion letter, dated
as of the Closing Date, from Ernst & Young LLP, the independent public
accountants of Boatmen's and Fourth Financial, to the effect that the Merger
qualifies for "pooling of interests" accounting treatment (see "MERGER --
Accounting Treatment"); and (viii) Fourth Financial will have received an
opinion of its counsel, Sullivan & Cromwell, and Boatmen's will have received an
opinion of its counsel, Lewis, Rice & Fingersh, L.C., to the effect that, if the
Merger is consummated in accordance with the terms set forth in the Merger
Agreement, (a) the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
(b) no gain or loss will be recognized by the holders of Fourth Financial Common
or Fourth Financial Preferred, as the case may be, upon receipt of the Merger
Consideration (except for cash received in lieu of fractional shares), (c) the
basis of shares of Boatmen's Common and Boatmen's New Preferred received by the
shareholders of Fourth Financial will be the same as the basis of shares of
Fourth Financial Common and Fourth Financial Preferred, as the case may be,
exchanged therefor, and (d) the holding period of the shares of Boatmen's Common
and Boatmen's New Preferred received by the shareholders of Fourth Financial
will include the holding period of the shares of Fourth Financial Common and
Fourth Financial Preferred, as the case may be, exchanged therefor, provided
such shares were held as capital assets as of the Effective Time (see "MERGER --
Federal Income Tax Consequences").
The obligation of Fourth Financial to effect the Merger is further subject to
the nonoccurrence of a "Shares Acquisition Date" or "Distribution Date" (as such
terms are defined in the Rights Agreement of Boatmen's) pursuant to the Rights
Agreement of Boatmen's prior to the Effective Time. See "COMPARISON OF
SHAREHOLDER RIGHTS -- Shareholder Rights Plan."
The conditions described in item (iv) above (the receipt of shareholder and
regulatory approvals) may not be waived by either party. Although the remaining
conditions to effect the Merger may be waived by the party entitled to the
benefit thereof, neither Boatmen's nor Fourth Financial intends to waive any
such conditions except in those circumstances where the Boatmen's Board or the
Fourth Financial Board, as the case may be, deems such waiver to be in the best
interests of Boatmen's or Fourth Financial, as the case may be, and its
respective shareholders. No assurance can be provided as to if or when all of
the foregoing conditions precedent to the Merger will be satisfied or waived
(where permissible) by the party permitted
60
to do so. If the Merger is not effected on or before August 25, 1996, the
Merger Agreement may be terminated by either Boatmen's or Fourth Financial. See
"MERGER -- Termination of Merger Agreement."
EXCHANGE OF STOCK CERTIFICATES AND DEPOSITARY RECEIPTS
FOURTH FINANCIAL
The conversion of Fourth Financial Common, Fourth Financial Preferred and
Fourth Financial Preferred Depositary Shares into Boatmen's Common, Boatmen's
New Preferred and Boatmen's New Preferred Depositary Shares, respectively, will
occur by operation of law at the Effective Time. After the Effective Time,
certificates theretofore evidencing shares of Fourth Financial Common and Fourth
Financial Preferred, as the case may be (such certificates are collectively
referred to herein as the "Fourth Financial Certificates"), and depository
receipts theretofore representing Fourth Financial Preferred Depositary Shares
(the "Fourth Financial Preferred Depositary Receipts") will be deemed, for all
corporate purposes other than the payment of dividends and other distributions
on such shares (except as described below), to evidence ownership of and
entitlement to receive such shares of Boatmen's Common, Boatmen's New Preferred
and depositary receipts representing Boatmen's New Preferred Depositary Shares
(the "Boatmen's New Preferred Depositary Receipts"), as the case may be.
As soon as reasonably practicable after the Effective Time, Boatmen's Trust
Company, the exchange agent in the Merger (the "Exchange Agent"), will mail a
transmittal letter and instructions to each record holder of a Fourth Financial
Certificate and a Fourth Financial Preferred Depositary Receipt whose shares or
depositary shares, as the case may be, were converted into the right to receive
the Merger Consideration, advising such holder of the number of shares of
Boatmen's Common, Boatmen's New Preferred and Boatmen's New Preferred Depositary
Shares, as the case may be, such holder is entitled to receive pursuant to the
Merger, the amount of cash such holder is due in lieu of a fractional share of
Boatmen's Common, and of the procedures for surrendering such Fourth Financial
Certificates and such Fourth Financial Preferred Depositary Receipts in exchange
for a certificate for the number of whole shares of Boatmen's Common and a
Boatmen's New Preferred Depositary Receipt, as the case may be, and a check for
the cash amount (if any) such holder is entitled to receive in lieu of a
fractional share of Boatmen's Common. The letter of transmittal will also
specify that delivery will be effected, and risk of loss and title to the Fourth
Financial Certificates and the Fourth Financial Preferred Depositary Receipts
will pass, only upon proper delivery of the Fourth Financial Certificates and
the Fourth Financial Preferred Depositary Receipts to the Exchange Agent and
will be in such form and have such provisions as Boatmen's may reasonably
specify. SHAREHOLDERS OF FOURTH FINANCIAL ARE REQUESTED NOT TO SURRENDER THEIR
FOURTH FINANCIAL CERTIFICATES AND THEIR FOURTH FINANCIAL PREFERRED DEPOSITARY
RECEIPTS FOR EXCHANGE UNTIL SUCH LETTER OF TRANSMITTAL AND INSTRUCTIONS ARE
RECEIVED. The shares of Boatmen's Common and Boatmen's New Preferred into which
Fourth Financial Common and Fourth Financial Preferred, respectively, will be
converted in the Merger and the Boatmen's New Preferred Depositary Receipts into
which Fourth Financial Preferred Depositary Receipts will be converted in the
Merger will be deemed to have been issued at the Effective Time. Unless and
until the Fourth Financial Certificates are surrendered, along with a duly
executed letter of transmittal, any other required documents and notification of
the holder's federal taxpayer identification number, dividends on the shares of
Boatmen's Common issuable with respect to such Fourth Financial Common which
would otherwise be payable after the sixtieth day after the Closing Date will
not be paid to the holders of such Fourth Financial Certificates. In such case,
upon surrender of the Fourth Financial Certificates and a duly executed letter
of transmittal, any other required documents and notification of taxpayer
identification number, there will be paid any dividends on such shares of
Boatmen's Common which became payable
61
between the sixtieth day after the Closing Date and the time of such surrender
and notification. No interest on any such dividends will accrue or be paid.
The Merger Agreement provides that, for a period of ninety days after the
Closing Date, holders of Fourth Financial Certificates representing shares of
Fourth Financial Common will be entitled to vote as holders of shares of
Boatmen's Common notwithstanding that such Fourth Financial Certificates have
not been exchanged for shares of Boatmen's Common as provided in the Merger
Agreement and described above.
Notwithstanding the foregoing, the Merger Agreement provides that no Common
Merger Consideration will be delivered to a person who is an "affiliate" of
Fourth Financial (as such term is hereafter defined) unless such affiliate has
theretofore executed and delivered to Boatmen's the agreement referred to in the
Merger Agreement. See "MERGER -- Resale of Boatmen's Common, Boatmen's New
Preferred and Boatmen's New Preferred Depositary Shares."
If a Fourth Financial Certificate or a Fourth Financial Preferred Depositary
Receipt has been lost, stolen or destroyed, the Exchange Agent will issue the
Merger Consideration properly payable in accordance with the Merger Agreement
upon receipt of an affidavit as to such loss, theft or destruction and, if
required by Boatmen's, the posting of a bond in an amount determined by
Boatmen's.
For a description of the differences between the rights of the holders of
Boatmen's Common and Fourth Financial Common, see "COMPARISON OF SHAREHOLDER
RIGHTS." For a description of the Boatmen's Common, the Boatmen's New Preferred
and the Boatmen's New Preferred Depositary Shares, see "DESCRIPTION OF BOATMEN'S
CAPITAL STOCK."
BOATMEN'S
Shares of Boatmen's Common and Boatmen's Series B Preferred issued and
outstanding immediately prior to the Effective Time will remain issued and
outstanding and will be unaffected by the Merger. Holders of such shares will
not be required to exchange the certificates representing such shares or take
any other action by reason of the consummation of the Merger.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of the
parties thereto. The representations and warranties by Fourth Financial,
include, among other things, except as otherwise disclosed to Boatmen's, those
as to (i) the due organization and good standing of Fourth Financial; (ii) the
capitalization of Fourth Financial; (iii) the due authorization and execution of
the Merger Agreement by Fourth Financial; (iv) the due organization, good
standing and ownership of subsidiaries of Fourth Financial; (v) the presentation
in accordance with generally accepted accounting principles on a consistent
basis and the fair presentation in all material respects of financial statements
and filings by Fourth Financial with the S.E.C. and filings of the Fourth
Financial Subsidiary Banks with the O.C.C.; (vi) the absence of any changes in
the financial condition, results of operations or business of Fourth Financial
which would have a Material Adverse Effect on Fourth Financial (except as
disclosed by Fourth Financial or by the Fourth Financial Subsidiary Banks since
December 31, 1994, in their reports with the S.E.C. and the O.C.C.,
respectively); (vii) the absence of any cease-and-desist order, agreement,
consent agreement, memorandum of understanding, or other regulatory enforcement
action, proceeding or order (a "Regulatory Agreement") between Fourth Financial
and its subsidiaries and any federal or state agency charged with the
supervision
62
or regulation of banks or bank holding companies or engaged in the insurance of
bank deposits, or any court, administrative agency or commission or other
governmental agency, authority or instrumentality (a "Regulatory Agency") having
supervisory or regulatory authority with respect to Fourth Financial or any of
its subsidiaries; (viii) the filing of tax returns and reports and payment of
taxes by Fourth Financial and its subsidiaries; (ix) the absence of material
pending or threatened litigation or other such actions which would have a
Material Adverse Effect on Fourth Financial; (x) the existence of agreements
with employees of Fourth Financial and its subsidiaries, including certain
employment agreements; (xi) the filing and material compliance of certain
reports required to be filed by Fourth Financial and its subsidiaries with
various Regulatory Agencies, including the Federal Reserve Board, the O.C.C.,
the F.D.I.C., the S.E.C. and Nasdaq; (xii) the loan portfolio of Fourth
Financial and its subsidiaries; (xiii) the investment portfolio of Fourth
Financial and its subsidiaries; (xiv) the interest rate risk management
instruments of Fourth Financial and its subsidiaries; (xv) certain employee
matters and matters under the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"); (xvi) the title to the properties of Fourth Financial and
its subsidiaries, the absence of liens (except as specified) and insurance
matters; (xvii) certain environmental matters with respect to real properties
owned, leased or operated by Fourth Financial and its subsidiaries; (xviii) the
compliance by Fourth Financial and the Fourth Financial Subsidiary Banks with
applicable laws and regulations; (xix) the absence of brokerage commissions or
similar finder's fees (except as specified) in connection with the Merger
payable by Fourth Financial or its subsidiaries; (xx) the non-banking activities
of Fourth Financial and its subsidiaries; (xxi) the trust administration of
Fourth Financial and its subsidiaries; (xxii) the inapplicability of certain
state takeover laws; (xxiii) certain pooling of interests and tax-free
reorganization matters; (xxiv) the existence of certain material contracts to
which Fourth Financial and its subsidiaries are a party; (xxv) the absence of
undisclosed liabilities of Fourth Financial and its subsidiaries; (xxvi) certain
fair lending and C.R.A. matters of Fourth Financial and its subsidiaries; and
(xxvii) the accuracy of information supplied by Fourth Financial or its
subsidiaries in connection with the Registration Statement, this Joint Proxy
Statement/Prospectus and any other documents to be filed with the S.E.C.,
Nasdaq, or any banking or other regulatory authority in connection with the
transactions contemplated by the Merger Agreement.
The representations and warranties of Boatmen's and Acquisition Sub include,
among other things, those as to (i) the due organization and good standing of
Boatmen's and Acquisition Sub; (ii) the capitalization of Boatmen's and
Acquisition Sub; (iii) the due authorization and execution of the Merger
Agreement by each of Boatmen's and Acquisition Sub, and the absence of the need
(except as specified) for governmental or third party consents to the Merger;
(iv) the significant subsidiaries of Boatmen's; (v) the presentation in
accordance with generally accepted accounting principles on a consistent basis
and the fair presentation in all material respects of Boatmen's financial
statements and filings with the S.E.C.; (vi) the absence of any changes in the
financial condition, results of operations or business of Boatmen's which would
have a Material Adverse Effect on Boatmen's (except as reported by Boatmen's
since December 31, 1994, in its reports with the S.E.C.); (vii) the absence of
material pending or threatened litigation or other such actions which would have
a Material Adverse Effect on Boatmen's; (viii) the filing and material
compliance of certain reports required to be filed by Boatmen's and its
significant subsidiaries with various Regulatory Agencies, including the S.E.C.,
the Federal Reserve Board, the O.C.C., the F.D.I.C. and Nasdaq; (ix) the
compliance by Boatmen's and its significant subsidiaries with applicable laws
and regulations; (x) certain pooling of interests and tax-free reorganization
matters; (xi) the filing of tax returns and reports and payment of taxes by
Boatmen's and its subsidiaries; (xii) the interest rate risk management
instruments of Boatmen's and its subsidiaries; (xiii) the absence of brokerage
commissions or similar finder's fees (except as specified) in connection with
the Merger payable by Boatmen's or its subsidiaries; (xiv) the non-banking
activities of Boatmen's and its subsidiaries; (xv) the inapplicability of
certain takeover laws; (xvi) certain fair lending and C.R.A. matters of
Boatmen's and its subsidiaries; (xvii) the absence of knowledge regarding the
possible nonreceipt by Boatmen's of the regulatory approvals, consents and
pooling
63
of interests opinion of Ernst & Young LLP required to consummate the Merger;
(xviii) the absence of Regulatory Agreements that would materially impair the
ability of Boatmen's to obtain the regulatory approvals of the Merger; and (xix)
the accuracy of information supplied by Boatmen's and Acquisition Sub in
connection with the Registration Statement, this Joint Proxy
Statement/Prospectus and any other documents to be filed with the S.E.C.,
Nasdaq, or any banking or other regulatory authority in connection with the
transactions contemplated by the Merger Agreement.
As used in the Merger Agreement, the term "Material Adverse Effect," with
respect to either Boatmen's or Fourth Financial, means any condition, event,
change or occurrence that has or will have a material adverse effect upon (a)
the financial condition, business or results of operations of Boatmen's or
Fourth Financial and their respective subsidiaries taken as a whole (other than
as a result of changes in federal laws or regulations and other than changes in
accounting rules of general applicability), or (b) the ability of Boatmen's or
Fourth Financial to perform its respective obligations under, and to consummate
the transactions contemplated by, the Merger Agreement.
CERTAIN OTHER AGREEMENTS
BUSINESS OF FOURTH FINANCIAL IN ORDINARY COURSE
Pursuant to the Merger Agreement, Fourth Financial has agreed, among other
things, that it will, and that it will cause each of its subsidiaries to,
continue to carry on its respective business and the discharge or incurrence of
obligations and liabilities, only in the usual, regular and ordinary course of
business and that neither it nor its subsidiaries will, without the prior
written consent of Boatmen's (which will not be unreasonably withheld), (i)
issue any Fourth Financial Common or other capital stock, options, warrants or
other rights to subscribe for or purchase Fourth Financial Common or any other
capital stock or any other securities convertible into or exchangeable for any
capital stock of Fourth Financial or any of its subsidiaries (except for the
issuance of Fourth Financial Common pursuant to the exercise of previously
outstanding Fourth Financial Employee Stock Options or pursuant to the
conversion of Fourth Financial Preferred pursuant to the terms thereof); (ii)
directly or indirectly redeem, purchase or otherwise acquire any Fourth
Financial Common or any other capital stock of Fourth Financial or its
subsidiaries; (iii) effect a reclassification, recapitalization, splitup,
exchange of shares, readjustment or other similar change in any capital stock of
Fourth Financial or otherwise reorganize or recapitalize; (iv) change its
certificate or articles of incorporation or association, as the case may be, or
bylaws; (v) grant any increase (other than ordinary and normal increases
consistent with past practices) in the compensation payable or to become payable
to officers or salaried employees, grant any stock options or, except as
required by law, adopt or change any bonus, insurance, pension, or other
employee plan, agreement, payment or arrangement made to, for or with any such
officers or employees; (vi) borrow or agree to borrow any amount of funds or
directly or indirectly guarantee any obligations of others, except in the
ordinary course of business; (vii) make or commit to make any new loan or letter
of credit or any new or additional discretionary advance under any existing line
of credit in excess of $6 million, or that would increase the aggregate credit
outstanding to any one borrower to more than $6 million, without the prior
approval of Boatmen's; provided, however, that if Boatmen's does not consent to
any of the foregoing loans or advances, neither Boatmen's nor its subsidiaries
will make or commit to make such loan or advance; (viii) purchase or otherwise
acquire any investment security for its own account having an average remaining
life to maturity greater than five years or any asset-backed securities other
than those issued or guaranteed by the Government National Mortgage Association,
the Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation; (ix) enter into any agreement, contract or commitment out of the
ordinary course of business other than letters of credit, loan agreements, and
other lending, credit and deposit agreements and documents made in the ordinary
64
course of business; (x) except in the ordinary course of business, place on any
of its assets or properties any mortgage, pledge, lien, charge or other
encumbrance; (xi) cancel or accelerate any material indebtedness owing to Fourth
Financial or its subsidiaries or any claims which Fourth Financial and its
subsidiaries may possess or waive any material rights with respect thereto,
except in the ordinary course of business; (xii) sell or otherwise dispose of
any real property or any material amount of tangible or intangible personal
property other than properties acquired in foreclosure or otherwise in the
ordinary collection of indebtedness to Fourth Financial and its subsidiaries;
(xiii) foreclose upon or otherwise take title to or possess or control any real
property, other than single family, non-agricultural residential property of one
acre or less, without first obtaining a phase one environmental report thereon
which indicates that the property is free of hazardous, toxic or polluting waste
materials; (xiv) commit any act or fail to do any act which will cause a breach
of any agreement, contract or commitment and which will have a Material Adverse
Effect on Fourth Financial; (xv) violate any law, statute, rule, governmental
regulation or order, which violation might have a Material Adverse Effect on
Fourth Financial; (xvi) purchase any real or personal property or make any other
capital expenditure in excess of $500,000; (xvii) take any action which would
adversely affect or delay the ability of either Boatmen's or Fourth Financial to
obtain any necessary approvals of any Regulatory Agency or other governmental
authority required for the transactions contemplated by the Merger Agreement or
to perform its covenants and agreements under the Merger Agreement or the Fourth
Financial Option Agreement; or (xviii) engage in any transaction or take any
action that would render untrue in any material respect any of the
representations and warranties made by Fourth Financial in the Merger Agreement,
if such representations or warranties were given as of the date of such
transaction or action.
ENVIRONMENTAL INSPECTIONS
Fourth Financial has agreed to provide Boatmen's a report of a phase one
environmental investigation on all real property owned, leased or operated by
Fourth Financial or its subsidiaries (excluding space in retail and similar
establishments leased by Fourth Financial for automatic teller machines or
branch bank facilities where the space leased comprises less than 20% of the
total space leased to all tenants of such property) and, if required by the
phase one investigation in Boatmen's reasonable opinion, a report of a phase two
investigation on properties requiring such additional study. If the cost of
taking all remedial or other corrective actions and measures required by
applicable law or reasonably likely to be required by applicable law, in the
aggregate, exceeds the sum of $20 million as reasonably estimated by an
environmental expert retained for such purpose by Boatmen's and reasonably
acceptable to Fourth Financial, then Boatmen's will have the right, for a period
of fifteen business days following receipt of such estimate, to terminate the
Merger Agreement, which will be Boatmen's sole remedy in such event. The Merger
Agreement provides, however, that for purposes of determining the cost of all
remedial or other corrective actions and measures as described in the preceding
sentence, there will be excluded any such costs which arise from or are
attributable to the contamination of the ground water underneath the banking
facilities owned by Fourth Financial in the downtown business district of
Wichita, Kansas provided (i) such contamination originated from sources other
than such Fourth Financial owned property; and (ii) liability for the clean-up
and remediation of such contamination continues to be undertaken by the City of
Wichita, Kansas or another governmental entity.
Environmental investigations routinely are conducted by Boatmen's in
connection with transactions involving the acquisition of real property, whether
in its ongoing business operations or pursuant to the acquisition of a bank or
other business. These investigations are intended to identify and quantify
potential environmental risks of ownership, such as contamination, which could
lead to liability for clean-up costs under the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, and
other applicable laws. A "phase one" investigation is an initial environmental
inquiry intended to identify areas of concern which might require more in-depth
assessment. The scope of a phase one
65
investigation varies depending on the environmental consultant utilized and the
property assessed, but will typically include (i) visual inspection of the
property; (ii) review of governmental records to ascertain the presence of such
things as "Superfund" sites, underground storage tanks or landfills, etc. on or
near the site; (iii) review of all relevant site records such as air or water
discharge permits and hazardous waste manifests; and (iv) research regarding
previous owners and uses of the property as well as those of surrounding
properties. In bank or other business acquisition transactions, Boatmen's
policy is to obtain phase one environmental investigations of real property to
ensure that environmental problems do not exist which could result in
unacceptably high risk to Boatmen's and its shareholders.
OTHER AGREEMENTS OF FOURTH FINANCIAL
Pursuant to the Merger Agreement, Fourth Financial has agreed to (i) give
Boatmen's prompt written notice of the occurrence, or impending or threatened
occurrence, of any event or condition which would cause or constitute a breach
of any of the representations or agreements of Fourth Financial in the Merger
Agreement (and use its best efforts to prevent or promptly remedy the same) or
of the occurrence of any matter or event known to and directly involving Fourth
Financial (not including changes in conditions that affect the banking industry
generally) that would constitute a Material Adverse Effect on Fourth Financial;
(ii) use its best efforts to obtain all necessary consents with respect to all
interests of Fourth Financial and its subsidiaries in any material leases,
licenses, contracts, instruments and rights which require the consent of another
person for their transfer or assumption pursuant to the Merger; (iii) use its
best efforts to perform and fulfill all conditions and obligations to be
performed or fulfilled under the Merger Agreement and to effect the Merger
promptly in accordance with the terms of the Merger Agreement; (iv) at the
request of Boatmen's, cause one or more of the Fourth Financial Subsidiary Banks
to enter into one or more merger agreements with any wholly-owned banking
subsidiary of Boatmen's (provided that the Merger will not be conditioned upon
the consummation of any such subsidiary bank merger); and (v) permit Boatmen's
reasonable access to its properties and disclose and make available to Boatmen's
all books, documents, papers and records relating to its assets, stock
ownership, properties, operations, obligations and liabilities in which
Boatmen's may have a reasonable and legitimate interest in furtherance of the
transactions contemplated by the Merger Agreement.
AGREEMENTS OF BOATMEN'S
Pursuant to the Merger Agreement, Boatmen's has agreed, among other things,
to (i) file all regulatory applications required in order to consummate the
Merger and to provide Fourth Financial with copies of all such applications;
(ii) file the Registration Statement with the S.E.C. and use its best efforts to
cause the Registration Statement to become effective; (iii) promptly file all
documents required to list on Nasdaq the shares of Boatmen's Common and
Boatmen's New Preferred to be issued pursuant to the Merger and to timely file
all documents required to obtain all necessary Blue Sky permits and approvals;
(iv) prepare and file any application required and any filings required under
the Exchange Act relating to the Merger and the transactions contemplated by the
Merger Agreement; (v) have the Boatmen's Board recommend to its shareholders the
issuance of the shares of Boatmen's Common and Boatmen's New Preferred to the
shareholders of Fourth Financial pursuant to the Merger Agreement; (vi) give
Fourth Financial prompt written notice of the occurrence, or impending or
threatened occurrence, of any event or condition which would cause or constitute
a breach of any of the representations or agreements of Boatmen's in the Merger
Agreement (and use its best efforts to prevent or promptly remedy the same) or
of the occurrence of any matter or event known to and directly involving
Boatmen's (not including changes in conditions that affect the banking industry
generally) that would constitute a Material Adverse Effect on Boatmen's; (vii)
use its best efforts to perform and fulfill all conditions and obligations to be
performed or fulfilled under the Merger Agreement and to effect the Merger
promptly in accordance with the terms of the Merger Agreement;
66
(viii) permit Fourth Financial reasonable access to its properties and disclose
and make available to Fourth Financial all books, documents, papers and records
relating to assets, stock ownership, properties, operations, obligations and
liabilities in which Fourth Financial may have a reasonable and legitimate
interest in furtherance of the transactions contemplated in the Merger
Agreement; (ix) not enter into any, and not permit any of its subsidiaries to
enter into, any agreement to acquire or merge with another company which results
in the Federal Reserve Board disapproving or materially delaying approval of the
Merger; (x) not, without the prior written consent of Fourth Financial, engage
in any transaction or take any action that would render untrue in any material
respect any of the representations and warranties of Boatmen's contained in the
Merger Agreement, if such representations and warranties were given as of the
date of such transaction or action; and (xi) not declare or pay any
extraordinary or special dividend on the Boatmen's Common.
TERMINATION OF MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to the Closing Date
(i) by mutual written agreement of Boatmen's and Fourth Financial (regardless of
whether shareholder approval of the Merger Agreement had been previously
obtained); (ii) by Boatmen's or Fourth Financial in the event of a material
breach by the other of any of its representations and warranties or agreements
under the Merger Agreement not cured within 30 days after notice to cure such
breach is given to the breaching party by the non-breaching party (regardless of
whether shareholder approval of the Merger Agreement had been previously
obtained); (iii) by Boatmen's if certain reports of environmental inspection on
the real properties of Fourth Financial to be obtained pursuant to the Merger
Agreement should disclose any matters requiring remedial or corrective measures
the cost of which exceeds $20 million (as determined in accordance with the
Merger Agreement and described under "MERGER -- Certain Other Agreements --
Environmental Inspections"); (iv) by either party in the event that all the
conditions to its obligations are not satisfied or waived (and not cured within
any applicable cure period) (see "MERGER -- Certain Conditions to Consummation
of Merger"); (v) if any regulatory application is finally denied or disapproved
by the respective regulatory authority (see "MERGER -- Regulatory Approvals");
(vi) by either party if the Merger Agreement and the transactions contemplated
thereby, including the Merger, are not approved by the shareholders of Boatmen's
and Fourth Financial (see "BOATMEN'S MEETING -- Vote Required" and "FOURTH
FINANCIAL MEETING -- Vote Required"); (vii) by Boatmen's or Fourth Financial in
the event that the other or any of its subsidiaries becomes a party or subject
to any new or amended written agreement, memorandum of understanding, cease and
desist order, imposition of civil money penalties or other regulatory
enforcement action or proceeding with any Regulatory Agency after the date of
the Merger Agreement which would have a Material Adverse Effect on such other
party; and (viii) by either party if the Merger is not consummated on or prior
to August 25, 1996.
EFFECT OF MERGER ON EMPLOYEE BENEFIT AND STOCK OPTION PLANS
EMPLOYEE BENEFIT PLANS
The Merger Agreement provides that each employee of Fourth Financial or its
subsidiaries who continues as an employee following the Closing Date will be
entitled, as a new employee of Boatmen's or a subsidiary of Boatmen's, to
participate in such employee benefit plans or deferred compensation, stock
option, bonus or incentive plans or other employee benefit or fringe benefit
programs that may be in effect generally for employees of all of Boatmen's
subsidiaries, on the same basis as similarly situated employees of other
Boatmen's subsidiaries if and as such employee is eligible and, if required,
selected for participation
67
therein under the terms thereof, subject to the right of Boatmen's to amend,
modify or terminate, in its sole discretion, any such plans or programs and
provided that such employee shall not be participating in a similar plan which
is maintained by Fourth Financial after the Closing Date. Fourth Financial
employees will be eligible to participate on the same basis as similarly
situated employees of other Boatmen's subsidiaries. Boatmen's will, for
purposes of vesting and any age or period of service requirements for
commencement of participation with respect to any such plans or programs in
which former employees of Fourth Financial may participate, credit each such
employee with his or her term of service with Fourth Financial and its
subsidiaries.
STOCK OPTION AND STOCK PURCHASE PLANS
At the Effective Time, each outstanding option to purchase shares of Fourth
Financial Common (a "Fourth Financial Employee Stock Option") issued pursuant to
the Amended and Restated Fourth Financial Corporation 1981 Incentive Stock
Option Plan, the Amended and Restated Fourth Financial Corporation 1986
Incentive Stock Option Plan, the Fourth Financial Corporation 1993 Incentive
Stock Option Plan, the Fourth Financial Corporation Non-Employee Directors Stock
Option Plan and the Fourth Financial Corporation 1993 Employee Stock Purchase
Plan (collectively, the "Fourth Financial Employee Stock Option Plans"), whether
or not exercisable or vested, will be assumed by Boatmen's. Each Fourth
Financial Employee Stock Option thereafter will be deemed to constitute an
option to acquire, on the same terms and conditions as were applicable under
such Fourth Financial Employee Stock Option, such number of full shares of
Boatmen's Common as the holder of such Fourth Financial Employee Stock Option
would have been entitled to receive pursuant to the Merger had such holder
exercised such Fourth Financial Employee Stock Option in full immediately prior
to the Effective Time, at an exercise price per share equal to the exercise
price per share of the shares of Fourth Financial Common otherwise purchasable
pursuant to such Fourth Financial Employee Stock Option. Each Fourth Financial
Employee Stock Option granted under the Amended and Restated Fourth Financial
Corporation 1981 Incentive Stock Option Plan and the Amended and Restated Fourth
Financial Corporation 1986 Incentive Stock Option Plan will become exercisable
for a 30-day period commencing upon adoption of the Merger Agreement by the
shareholders of Fourth Financial. Each Fourth Financial Employee Stock Option
granted under the Fourth Financial Corporation 1993 Incentive Stock Option Plan
and the Fourth Financial Corporation 1993 Employee Stock Purchase Plan, each of
which, prior to amendments thereto in October, 1994 and March, 1995,
respectively, were substantially identical to the Amended and Restated Fourth
Financial Corporation 1981 Incentive Stock Option Plan and the Fourth Financial
Corporation Amended and Restated 1986 Incentive Stock Option Plan with respect
to vesting and exercisability upon a change in control, will, pursuant to the
terms thereof as so amended, automatically become vested and exercisable upon
adoption of the Merger Agreement by the shareholders of Fourth Financial,
without the 30-day limitation on exercise.
INTERESTS OF CERTAIN PERSONS IN MERGER
Shareholders should be aware that certain members of the Fourth Financial
Board and management of Fourth Financial have interests in the Merger that are
in addition to and separate from the interests of shareholders of Fourth
Financial generally. The Boards of Directors of Boatmen's and Fourth Financial
were aware of these interests, and considered them, among other matters, in
approving the Merger Agreement and the transactions contemplated thereby,
including the Merger. Adoption and approval of the Merger Agreement by the
shareholders of Fourth Financial will also constitute approval of the following
benefits to be received by directors, executive officers and employees of Fourth
Financial.
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INDEMNIFICATION AND INSURANCE
Boatmen's has agreed, for a period of ten years after the Effective Time, to
indemnify, defend and hold harmless the present and former officers, directors,
employees and agents of Fourth Financial and its subsidiaries against all
losses, expenses, claims, damages or liabilities arising out of actions or
omissions occurring prior to the Effective Time (including, without limitation,
the transactions contemplated by the Merger Agreement and the Fourth Financial
Stock Option Agreement) to the fullest extent permitted by the Articles of
Incorporation of Fourth Financial as in effect on the date of the Merger
Agreement and by the Kansas Corporate Law.
Following the Effective Time, Boatmen's will provide the directors and
officers of Fourth Financial and its subsidiaries with the same directors' and
officers' liability insurance coverage that Boatmen's provides to directors and
officers of its other banking subsidiaries generally and, in addition, for a
period of five years, Boatmen's will use its best efforts to continue Fourth
Financial's directors' and officers' liability insurance coverage with respect
to actions occurring prior to the Effective Time to the extent that such
coverage is obtainable for an aggregate premium not to exceed 200% of the annual
premium presently paid by Fourth Financial for such coverage. If the premium
would exceed such maximum amount, Boatmen's will use its best efforts to procure
such level of coverage as can be obtained for a premium equal to such maximum
amount.
EMPLOYMENT AND EMPLOYEE BENEFITS
Mr. Knudson, Chairman, President and Chief Executive Officer of Fourth
Financial, will be an executive officer of Boatmen's following the Merger. Mr.
Knudson would serve as an executive vice president of Boatmen's and would have a
base salary equal to his current base salary with Fourth Financial. In
addition, Mr. Knudson would be eligible to receive bonuses and to participate in
employee benefit and stock plans generally available to other executive officers
of Boatmen's on the same basis as similarly situated executive officers of
Boatmen's, subject to the right of Boatmen's to amend or terminate any such
plans or programs in its discretion.
The Merger Agreement also contains certain provisions regarding employee
benefits which are described under "MERGER -- Effect of Merger on Employee
Benefit and Stock Option Plans -- Employee Benefit Plans."
STOCK OPTION AND STOCK PURCHASE PLANS
The Merger Agreement contains certain provisions regarding the assumption by
Boatmen's of outstanding Fourth Financial Employee Stock Options to acquire
shares of Fourth Financial Common which are described under "MERGER -- Effect of
Merger on Employee Benefit and Stock Option Plans -- Stock Option and Stock
Purchase Plans." Additional information with respect to Fourth Financial
Employee Stock Options granted to directors and executive officers of Fourth
Financial under the Fourth Financial Employee Stock Option Plans is incorporated
by reference to the 1994 Annual Report on Form 10-K of Fourth Financial which is
incorporated herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
69
CHANGE OF CONTROL AND SEVERANCE AGREEMENTS
In connection with the execution of the Merger Agreement, Fourth Financial
entered into a Change in Control Agreement with Darrell G. Knudson, Chairman,
President and Chief Executive Officer of Fourth Financial dated as of August 25,
1995 (the "Change in Control Agreement"). The Change in Control Agreement
replaced a Severance Agreement, dated October 1, 1994, between Fourth Financial
and Mr. Knudson which was identical in principal terms to the Severance
Agreements for Messrs. Greer and Keller described below. The Change in Control
Agreement provides that Mr. Knudson will continue employment with Fourth
Financial following the commencement of a tender or exchange offer or the
execution of a merger agreement which would result in a Change in Control (as
such term is defined in the Change in Control Agreement) of Fourth Financial
until the transaction is either completed or abandoned. In consideration of
this commitment, the Change in Control Agreement provides that upon the
occurrence of a Change in Control, in addition to compensation and benefits
already earned, Mr. Knudson will be entitled to receive (a) a lump sum payment
equal to two times the sum of his highest base salary during the twelve-month
period preceding the Change in Control and his three-year average bonus
percentage multiplied by his target bonus then in effect, (b) continuation in
effect for two years of all medical insurance, life insurance, and disability
benefit plans then in effect, (c) full vesting of all outstanding stock options,
(d) the present value, in a lump sum, of his enhanced benefit under the
Supplemental Executive Retirement Plan of Fourth Financial with his age and
credited service each increased by two years, (e) the amount of all accrued
vacation pay, and (f) the value of any unvested employer contributions with
respect to all defined contribution plans in which he participates; provided,
however, that no such payment can exceed the amount deductible for income tax
purposes under the Code. If Mr. Knudson's employment is terminated by Fourth
Financial (other than by reason of his Retirement or Disability as such terms
are defined in the Change in Control Agreement) prior to, but within six months
of, the date on which a Change in Control occurs, then Mr. Knudson will
nevertheless be entitled to receive the payments described above. The Change in
Control Agreement is for a term of two years renewable annually on a year-to-
year basis unless terminated by Fourth Financial at least 90 days prior to the
anniversary date. The approval of the Merger Agreement at the Fourth Financial
Meeting will constitute a Change in Control under the Change in Control
Agreement. Assuming the Merger occurred on December 31, 1995, the estimated
amount of payments and the value of the other benefits to Mr. Knudson would be
$2,048,500. On October 25, 1995, the Change in Control Agreement was amended to
delete the provision that provided for Fourth Financial's purchase of vested
options at their fair market value.
Fourth Financial has Severance Agreements with seventeen other officers of
either Fourth Financial or one of the Fourth Financial Subsidiary Banks
(including Messrs. Kenneth G. Greer, Chairman of the Board, President and Chief
Executive Officer of BANK IV, Edward F. Keller, Chairman of the Board, President
and Chief Executive Officer of BANK IV Oklahoma, Clayton D. Pledger, Executive
Vice President, Operations and Technology Division of Fourth Financial, and
Michael R. Ritchey, President, Trust and Asset Management, and Senior Trust
Officer of Fourth Financial). The Severance Agreements provide that the
officers will continue employment with Fourth Financial following the
commencement of a tender or exchange offer or the execution of a merger
agreement which would result in a Change of Control (as such term is defined in
the Severance Agreements) of Fourth Financial until the transaction is either
completed or abandoned. In consideration of this commitment, the Severance
Agreements also provide for severance benefits in the event of either
involuntary termination of employment (other than by reason of death,
Disability, or for Cause, as such term is defined in the Severance Agreements)
or termination of employment by the officer for Good Cause (as such term is
defined in the Severance Agreements) within two years following a Change in
Control of Fourth Financial. Upon any such termination of employment, in
addition to compensation and benefits already earned, the officer will be
entitled to receive (a) a lump sum severance payment equal to one and one-half
times (two times in the cases
70
of Messrs. Greer and Keller) the sum of such officer's highest base salary
during the twelve-month period preceding the Change in Control and the officer's
three-year average bonus percentage multiplied by the officer's target bonus
then in effect, (b) continuation in effect for 18 months (two years in the case
of Messrs. Greer and Keller) of all medical insurance, life insurance, and
disability benefit plans then in effect, (c) full vesting of all outstanding
stock options, (d) the present value, in a lump sum, of the officer's enhanced
benefit under the Supplemental Executive Retirement Plan of Fourth Financial
with the officer's age and credited service each increased by one and one-half
years (two years in the case of Messrs. Greer and Keller), (e) the amount of all
accrued vacation pay, and (f) the value of any unvested employer contributions
with respect to all defined contribution plans in which the officer
participates; provided, however, that no such payment can exceed the amount
deductible for income tax purposes under the Code. The Severance Agreements are
for terms of two years renewable annually on a year-to-year basis unless
terminated by Fourth Financial at least 90 days prior to the anniversary date,
except that they continue in effect automatically for a period of 24 months
following a Change in Control of Fourth Financial. The approval of the Merger
Agreement at the Fourth Financial Meeting will constitute a Change in Control
under the Severance Agreements. If, pursuant to the provisions described above,
payments were required to be made to Messrs. Greer, Keller, Pledger and Ritchey,
assuming the Change in Control occurred on December 31, 1995, the estimated
amount of payments and the value of the other benefits would be $1,007,200,
$756,600, $445,900 and $521,400, respectively. The estimated amount of payments
and other benefits to the seventeen officers as a group would be
$7,621,000.
On October 25, 1995, each of the Severance Agreements was amended to delete
the provision that provided for Fourth Financial's purchase of vested options at
their fair market value.
BOARD COMPOSITION
Pursuant to the Merger Agreement, two persons, to be selected by Fourth
Financial and approved by Boatmen's, will be appointed to the Boatmen's Board to
be effective as of the first meeting of the Board of Directors of Boatmen's
following the Merger. It has not yet been determined, as of the date of this
Joint Proxy Statement/Prospectus, which two persons will be appointed as new
Directors of Boatmen's following the Merger. Directors whose principal
occupations are with Boatmen's or any of its subsidiaries receive no Director's
fees. All other Directors receive quarterly retainer payments of $5,000 each,
plus $1,000 for each Board or committee meeting attended, except the chairman of
any committee, who receives $1,500 for each committee meeting attended. See
"MERGER -- Management and Operations After Merger."
INTERESTS OF BOATMEN'S BOARD AND MANAGEMENT
No member of the Boatmen's Board or management of Boatmen's or any other
affiliate of Boatmen's has an interest in the Merger, other than as a
shareholder of Boatmen's generally.
MANAGEMENT AND OPERATIONS AFTER MERGER
Mr. Darrell G. Knudson, Chairman of the Board, President and Chief Executive
Officer of Fourth Financial, will be an executive officer of Boatmen's following
the Merger and two persons, to be selected by Fourth Financial and approved by
Boatmen's, will be appointed to the Boatmen's Board following the Merger. See
"MERGER -- Interests of Certain Persons in Merger." It has not yet been
determined, as of the date of this Joint Proxy Statement/Prospectus, which two
persons will be appointed as new Directors of Boatmen's following the Merger.
Except as provided above, it is not anticipated that the management of Boatmen's
or the Boatmen's Board will be affected as a result of the Merger. After the
Effective Time of
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the Merger, the Board of Directors of Acquisition Sub will be comprised of
representatives of Boatmen's and Acquisition Sub will operate in the same
capacities as, and perform many of the same functions presently performed by,
Fourth Financial.
Following the Merger, Boatmen's intends to combine the operations of and,
subject to required regulatory approvals, to merge certain of the subsidiary
banks of Boatmen's and Fourth Financial and to consolidate the operations of
certain other Boatmen's and Fourth Financial subsidiaries which provide similar
services. The receipt of such required regulatory approvals is not a condition
to, or required for, consummation of the Merger. As of the date of this Joint
Proxy Statement/Prospectus, no final determination with respect to such matters
has been made.
While no assurance can be given, Boatmen's and Fourth Financial have
estimated, based on information available at this time, pretax expense savings
resulting from the Merger to be about $20 million in 1996, growing to about $60
million by 1998. The $60 million in expense savings is expected to be realized
in the consolidation of data processing and back office functions resulting in
$27 million of savings; the elimination of corporate overhead and duplicate
branch locations totalling $25 million and other efficiencies resulting mainly
from consolidation of operating units totalling $8 million. The extent to which
such expense savings will be achieved is dependent upon various factors, a
number of which are beyond the control of Boatmen's and Fourth Financial,
including the regulatory environment, economic conditions, unanticipated changes
in business conditions and inflation. Therefore, no assurances can be given
with respect to the ultimate level and composition of expense savings to be
realized, or that such savings will be realized in the time-frame currently
anticipated. In addition, as described in "MERGER -- Regulatory Approvals,"
certain regulatory agencies may seek the divestiture of certain assets and
liabilities of the combined company following the Merger. However, as of the
date of this Joint Proxy Statement/Prospectus neither Boatmen's nor Fourth
Financial can predict with any assurance what the aggregate amount of any such
divestitures may be. While divestitures may affect certain pro forma combined
financial statement amounts, merger and nonrecurring costs, expense savings and
revenues, Boatmen's believes that the aggregate amount and financial impact of
divestitures will not be material to the business, operations or financial
condition of the combined institution and its subsidiaries, taken as a whole.
See "Pro Forma Financial Data."
ACCOUNTING TREATMENT
The Merger is expected to qualify as a "pooling of interests" for accounting
and financial reporting purposes. Under this method of accounting, the assets
and liabilities of Boatmen's and Fourth Financial will be carried forward after
the Effective Time into the consolidated financial statements of Boatmen's at
their recorded amounts; the consolidated income of Boatmen's will include income
of Boatmen's and Fourth Financial for the entire fiscal year in which the Merger
occurs; the separately reported income of Boatmen's and Fourth Financial for
prior periods will be combined and restated as consolidated income of Boatmen's;
and no goodwill will be created.
The Merger Agreement provides that a condition to the obligations of
Boatmen's and Fourth Financial to consummate the Merger is each of their receipt
of an opinion from Ernst & Young LLP, the independent accountants for Boatmen's,
to the effect that the Merger will qualify for "pooling of interests" accounting
treatment under Accounting Principles Board Opinion No. 16 if consummated in
accordance with the Merger Agreement. In the event such condition is not met,
the Merger would not be consummated unless the condition was waived by Boatmen's
and Fourth Financial (which Boatmen's has indicated it does not intend to do)
and the approval of Boatmen's and Fourth Financial shareholders entitled to vote
on the Merger was resolicited if such change in accounting treatment were deemed
material to the financial
72
condition and results of operations of Boatmen's on a pro forma basis assuming
consummation of the Merger. As of the date of this Joint Proxy
Statement/Prospectus, Boatmen's and Fourth Financial are not aware, after
consultation with Ernst & Young LLP, of any existing facts or circumstances
which would preclude such a pooling opinion from being issued by Ernst & Young
LLP.
The unaudited pro forma financial information contained in this Joint Proxy
Statement/Prospectus has been prepared using the pooling of interests accounting
method to account for the Merger. See "SUMMARY -- Selected Comparative Per
Share Data" and "-- Selected Financial Data" and "PRO FORMA FINANCIAL DATA."
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the material federal income tax
consequences of the Merger to holders of Fourth Financial Common or Fourth
Financial Preferred who or which hold their shares as capital assets. This
summary deals only with holders who or which are (i) citizens or residents of
the United States; (ii) domestic corporations; or (iii) otherwise subject to
United States federal income tax on a net income basis in respect of shares of
Fourth Financial Common or Fourth Financial Preferred ("U.S. Holders"). This
summary does not address any tax consequences of the Merger to U.S. Holders who
or which exercise dissenters' rights. See "MERGER -- Appraisal Rights of
Dissenting Shareholders." This summary may not be applicable to certain classes
of taxpayers, including, without limitation, insurance companies, tax-exempt
organizations, financial institutions, dealers in securities, foreign persons,
persons who acquired Fourth Financial Common or Fourth Financial Preferred
pursuant to an exercise of employee stock options or rights or otherwise as
compensation and persons who hold shares of Fourth Financial Common or Fourth
Financial Preferred as part of a straddle or conversion transaction. The
discussion also does not address state, local or foreign tax consequences of the
Merger. Consequently, each holder should consult such holder's own tax advisor
as to the specific tax consequences of the Merger to such holder.
This summary is based on current laws, regulations, rulings, practice and
judicial decisions in effect on the date of this Joint Proxy
Statement/Prospectus and the opinion of Sullivan & Cromwell. Legislative,
judicial or administrative changes or interpretations may, however, be
forthcoming that could alter or modify the statements and conclusions set forth
herein. Any such changes may or may not be retroactive and could affect the tax
consequences to U.S. Holders described herein. The opinion of Sullivan &
Cromwell set forth in this summary is based, among other things, on assumptions
relating to certain facts and circumstances of, and the intentions of the
parties to, the Merger, which assumptions have been made with the consent of
Boatmen's and Fourth Financial.
In the opinion of Sullivan & Cromwell, the following will be the material
federal income tax consequences of the Merger to U.S. Holders of Fourth
Financial Common or Fourth Financial Preferred:
(i) no gain or loss will be recognized by U.S. Holders, except as
described below with respect to U.S. Holders of Fourth Financial Common who
receive cash in lieu of fractional shares of Boatmen's Common;
(ii) the aggregate adjusted tax basis of shares of Boatmen's Common
(including fractional shares of Boatmen's Common deemed received and redeemed
as described below) and Boatmen's New Preferred received by a U.S. Holder
will be the same as the aggregate adjusted tax basis of the shares of Fourth
Financial Common or Fourth Financial Preferred, as the case may be, exchanged
therefor;
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(iii) the holding period of the shares of Boatmen's Common (including
the holding period of fractional shares of Boatmen's Common) or Boatmen's New
Preferred received by a U.S. Holder will include the holding period of the
Fourth Financial Common or Fourth Financial Preferred, as the case may be,
exchanged therefor; and
(iv) a U.S. Holder of Fourth Financial Common who receives cash in the
Merger in lieu of fractional shares of Boatmen's Common will be treated as
having received such fractional shares and then as having received such cash
in redemption of such fractional shares. Under Section 302 of the Code,
provided that such deemed distribution is "substantially disproportionate"
with respect to such U.S. Holder or is "not essentially equivalent to a
dividend" after giving effect to the constructive ownership rules of the
Code, the U.S. Holder will generally recognize capital gain or loss equal to
the difference between the amount of cash received and the U.S. Holder's
adjusted tax basis in the fractional share interest in Boatmen's Common.
Such capital gain or loss will be long-term capital gain or loss if the U.S.
Holder's holding period in the fractional shares is more than one year.
The obligations of Fourth Financial and Boatmen's to consummate the Merger
are subject to the receipt of the opinions of tax counsel outlined below.
Neither Fourth Financial nor Boatmen's has requested or will request a ruling
from the Internal Revenue Service as to the tax consequences of the Merger.
The obligation of Fourth Financial to consummate the Merger is conditioned on
the receipt by Fourth Financial of an opinion of its counsel, Sullivan &
Cromwell, dated immediately prior to the Effective Time, to the effect that for
federal income tax purposes (i) the Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Code; (ii) no gain or loss will be
recognized by shareholders of Fourth Financial upon the receipt of Merger
Consideration (except cash received in lieu of fractional shares); (iii) the
basis of shares of Boatmen's Common and Boatmen's New Preferred received by
shareholders of Fourth Financial will equal the basis of the shares of Fourth
Financial Common or Fourth Financial Preferred, as the case may be, exchanged
therefor; and (iv) the holding period of the shares of Boatmen's Common or
Boatmen's New Preferred received by shareholders of Fourth Financial will
include the holding period of the shares of Fourth Financial Common or Fourth
Financial Preferred, as the case may be, exchanged therefor, provided that such
shares were held as capital assets as of the Effective Time. See "MERGER --
Certain Conditions to Consummation of Merger."
The obligation of Boatmen's to consummate the Merger is conditioned on the
receipt by Boatmen's of an opinion of its counsel, Lewis, Rice & Fingersh, L.C.,
dated immediately prior to the Effective Time, to the same effect. See "MERGER
- -- Certain Conditions to Consummation of Merger."
The above-described tax opinions will be based upon certain customary
representations and assumptions to be referred to in the opinion letters.
Subject to the receipt of such customary representations, Sullivan & Cromwell
and Lewis, Rice & Fingersh, L.C. anticipate that they will render the above-
described tax opinions.
APPRAISAL RIGHTS OF DISSENTING SHAREHOLDERS
Neither holders of Boatmen's Common or Boatmen's Series B Preferred nor
holders of Fourth Financial Common have any dissenters' or appraisal rights
under the Missouri Corporate Law or the Kansas Corporate Law, respectively, in
connection with the Merger.
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Only holders of record of Fourth Financial Preferred and Fourth Financial
Preferred Depositary Shares will have the right to exercise dissenters'
appraisal rights under the Kansas Corporate Law. Pursuant to Section 17-6712 of
the Kansas Corporate Law ("Section 17-6712"), holders of record of Fourth
Financial Preferred Depositary Shares who object to the Merger in writing and
who follow the procedures prescribed by Section 17-6712 will be entitled to
receive a cash payment equal to the value of the Fourth Financial Preferred
Depositary Shares held by them in lieu of receiving the consideration proposed
under the Merger Agreement. Set forth below is a summary of the procedures that
holders of Fourth Financial Preferred Depositary Shares must follow in order to
exercise dissenters' appraisal rights under Section 17-6712. This summary does
not purport to be complete and is qualified in its entirety by reference to
Section 17-6712, a copy of which, as of the date hereof, is attached hereto as
Appendix E and is incorporated herein by reference, and to any amendments to, or
modifications of, such provisions as may be adopted after the date hereof. For
the purposes of this discussion of dissenters' appraisal rights, "Surviving
Corporation" will be deemed to refer, where applicable, to the entity resulting
from consummation of the Merger.
ANY HOLDER OF FOURTH FINANCIAL PREFERRED DEPOSITARY SHARES CONTEMPLATING THE
POSSIBILITY OF OBJECTING TO THE MERGER IN WRITING SHOULD CAREFULLY REVIEW THE
TEXT OF APPENDIX E (PARTICULARLY THE SPECIFIED PROCEDURAL STEPS REQUIRED TO
PERFECT DISSENTERS' APPRAISAL RIGHTS) AND SHOULD CONSULT AS APPROPRIATE WITH
SUCH HOLDER'S LEGAL COUNSEL. DISSENTERS' APPRAISAL RIGHTS WILL BE LOST IF THE
PROCEDURAL REQUIREMENTS OF SECTION 17-6712 OF THE KANSAS CORPORATE LAW ARE NOT
FULLY AND PRECISELY SATISFIED.
Under Section 17-6712, a holder of Fourth Financial Preferred Depositary
Shares who desires to dissent from the Merger pursuant to Section 17-6712 and
receive a cash payment for his or her Fourth Financial Preferred Depositary
Shares must deliver to Fourth Financial written objection to the Merger before
the taking of the vote on the Merger Agreement at the Fourth Financial Meeting
(see "FOURTH FINANCIAL MEETING"). Such objection should be delivered or mailed
in time to arrive before the Fourth Financial Meeting to: Fourth Financial
Corporation, 100 North Broadway, Wichita, Kansas 67202, Attention: Corporate
Secretary. Notwithstanding the foregoing, any holder of Fourth Financial
Preferred Depositary Shares who also holds shares of Fourth Financial Common
eligible to vote at the Fourth Financial Meeting will be ineligible to exercise
dissenters' appraisal rights with regard to such holder's Fourth Financial
Preferred Depositary Shares if such holder votes such Fourth Financial Common in
favor of approval of the Merger Agreement. A failure, however, by any such
holder of Fourth Financial Preferred Depositary Shares to vote such holder's
Fourth Financial Common against approval of the Merger Agreement will not, in
and of itself, constitute a waiver of such holder's dissenters' appraisal rights
under Section 17-6712. In addition, a holder of Fourth Financial Preferred
Depositary Shares who votes such holder's Fourth Financial Common against
approval of the Merger Agreement will not, solely by virtue of such vote,
satisfy the notice requirement referred to above. A holder of Fourth Financial
Preferred Depositary Shares who does not satisfy each of the requirements of
Section 17-6712 will not be entitled to dissenters' appraisal rights under the
provisions of the Kansas Corporate Law and will be entitled to receive the
Merger Consideration.
Within ten days from the Effective Time, Surviving Corporation must mail to
any shareholder who has complied with the foregoing conditions (a "dissenting
shareholder") written notice that the Merger has become effective. A dissenting
shareholder who desires to pursue his or her rights as a dissenting shareholder
then has twenty days from the date Surviving Corporation mails such notice in
which to demand in writing from Surviving Corporation payment of the value of
his or her Fourth Financial Preferred Depositary Shares.
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Surviving Corporation must then pay to such dissenting shareholder the value
of the holder's Fourth Financial Preferred Depositary Shares at the Effective
Time, exclusive of any element of value arising from the expectation or
accomplishment of the Merger. If, within 30 days following the twenty-day
period provided for dissenting shareholders to demand payment, Surviving
Corporation and any dissenting shareholder fail to agree on such value of such
holder's Fourth Financial Preferred Depositary Shares, either Surviving
Corporation or any dissenting shareholder may, within four months after the
expiration of such 30-day period, file a petition with the district court for
the value of the Fourth Financial Preferred Depositary Shares of all dissenting
shareholders to be determined by an appraiser or appraisers appointed by the
district court. All dissenting shareholders, whether or not residents of the
State of Kansas, would be parties to such action.
The court would then appoint one or more appraisers to determine the value of
the Fourth Financial Preferred Depositary Shares of all of the dissenting
shareholders. In reaching the determination of the value of the Fourth
Financial Preferred Depositary Shares, the appraiser or appraisers, as the case
may be, will make a determination based upon such investigation as seems proper
to the appraiser or appraisers. The appraiser or appraisers must afford all
interested parties a reasonable opportunity to submit pertinent evidence of the
value of the Fourth Financial Preferred. After receiving the report of the
appraisers, the court then would determine the value of the Fourth Financial
Preferred Depositary Shares of all of the dissenting shareholders and would
direct payment of such value, together with such interest as the court orders,
if any, to the parties entitled thereto. The costs of the appraisal, including
a reasonable fee and expenses of the appraisers, but exclusive of fees and
expenses of counsel and experts retained by any party, would be assessed against
the parties as the court deems equitable except that the cost of mailing and
publishing the required notices of the proceedings would be assessed against
Surviving Corporation.
Any shareholder who has duly demanded appraisal in compliance with Section
17-6712 will not, after the Effective Time, be entitled to vote for any purpose
the shares of Fourth Financial Preferred Depositary Shares subject to such
demand or to receive payment of dividends or other distributions with respect to
the shares held by such holder, except for dividends or distributions payable to
holders of record of Fourth Financial Preferred Depositary Shares at a date
prior to the Effective Time of the Merger and with certain other limited
exceptions as set forth in Section 17-6712(i).
A demand for appraisal must be made by or for and in the name of the holder
of record of the Fourth Financial Preferred Depositary Shares, fully and
correctly, as such shareholder's name appears on the Fourth Financial Preferred
Depositary Shares. Such demand cannot be made by the beneficial owner if the
shareholder does not also hold the shares of record.
Holders of Fourth Financial Preferred Depositary Shares who have elected to
dissent are bound by their election and may not thereafter withdraw their
election and receive shares of Boatmen's New Preferred Depositary Shares.
Except as provided herein with respect to the holders of Fourth Financial
Preferred Depositary Shares, no other holders of Fourth Financial securities
will be entitled to dissenters' appraisal rights in connection with the Merger.
NO SOLICITATION
The Merger Agreement provides that, unless and until the Merger Agreement has
been terminated, Fourth Financial will not solicit or encourage or, subject to
the fiduciary duties of the directors of Fourth
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Financial as advised by counsel, hold discussions or negotiations with or
provide information to, any person in connection with any proposal from any
person relating to the acquisition of all or a substantial portion of the
business, assets or stock of Fourth Financial or any of its subsidiaries.
Fourth Financial is required to promptly (within twenty-four hours) advise
Boatmen's of its receipt of any such proposal or inquiry.
WAIVER AND AMENDMENT
Prior to or at the Effective Time, any provision of the Merger Agreement,
including, without limitation, the conditions to consummation of the Merger, may
be (i) waived, to the extent permitted under law, in writing by the party which
is entitled to the benefits thereof; or (ii) amended at any time by written
agreement of the parties, whether before or after the receipt of the approval of
shareholders of either Boatmen's or Fourth Financial; provided, however, that
the provisions relating to the conversion of the shares of Fourth Financial
Common and Fourth Financial Preferred into shares of Boatmen's Common and
Boatmen's New Preferred, respectively, will not be amended after the receipt of
the approval of Boatmen's and Fourth Financial shareholders unless the approval
of such shareholders is resolicited. It is anticipated that a condition to the
obligations of Boatmen's and Fourth Financial to consummate the Merger would be
waived only in those circumstances where the Boatmen's Board or the Fourth
Financial Board, as the case may be, deems such waiver to be in the best
interests of such company and its shareholders.
EXPENSES AND FEES
In the event the Merger Agreement is terminated or the Merger is abandoned,
all costs and expenses incurred in connection with the Merger Agreement will be
paid by the party incurring such costs and expenses, and no party shall have any
liability to the other party for costs, expenses, damages or otherwise, except
that in the event the Merger Agreement is terminated on account of a willful
breach of any of the representations and warranties set forth in the Merger
Agreement or any breach of any of the agreements set forth in the Merger
Agreement, the non-breaching party will be entitled to recover appropriate
damages from the breaching party.
RESALE OF BOATMEN'S COMMON, BOATMEN'S NEW PREFERRED AND BOATMEN'S NEW PREFERRED
DEPOSITARY SHARES
The shares of Boatmen's Common, Boatmen's New Preferred and Boatmen's New
Preferred Depositary Shares issuable pursuant to the Merger will be freely
transferable under the Securities Act except for shares issued to any Fourth
Financial shareholder who may be deemed to be an "affiliate" of Boatmen's for
purposes of Rule 144 under the Securities Act or an "affiliate" of Fourth
Financial for purposes of Rule 145 under the Securities Act. Persons who may be
deemed to be affiliates of Fourth Financial or Boatmen's generally include
individuals who, or entities which, control, are controlled by or are under
common control with Fourth Financial or Boatmen's and will include directors and
certain officers of Fourth Financial and Boatmen's and may include, if any,
principal shareholders of Fourth Financial and Boatmen's.
Rules 144 and 145 under the Securities Act will restrict the sale of
Boatmen's Common, Boatmen's New Preferred and Boatmen's New Preferred Depositary
Shares received in the Merger by affiliates and certain of their family members
and related interests. Generally, during the two years following the Effective
Time, those persons who are affiliates of Fourth Financial at the time of the
Fourth Financial Meeting, provided they are not affiliates of Boatmen's at or
following the Effective Time, may publicly
77
resell any Boatmen's Common, Boatmen's New Preferred and Boatmen's New Preferred
Depositary Shares received by them in the Merger, subject to certain limitations
as to, among other things, the amount of Boatmen's Common, Boatmen's New
Preferred and Boatmen's New Preferred Depositary Shares, as the case may be,
sold by them in any three-month period and as to the manner of sale. After the
two-year period, such affiliates may resell their shares without such
restrictions so long as there is adequate current public information with
respect to Boatmen's as required by Rule 144 under the Securities Act.
The ability of affiliates to resell shares of Boatmen's Common, Boatmen's New
Preferred and Boatmen's New Preferred Depositary Shares received in the Merger
under Rule 144 or 145 under the Securities Act as summarized herein generally
will be subject to Boatmen's having satisfied its Exchange Act reporting
requirements for specified periods prior to the time of sale. Affiliates also
would be permitted to resell shares of Boatmen's Common and Boatmen's New
Preferred received in the Merger pursuant to an effective registration statement
under the Securities Act or another available exemption from the Securities Act
registration requirements.
Guidelines of the S.E.C. regarding qualifying for the pooling of interests
method of accounting also limit sales of shares of the acquiring and acquired
company by affiliates of either company in a business combination. Guidelines
of the S.E.C. indicate further that the pooling of interests method of
accounting will generally not be challenged on the basis of sales by affiliates
of the acquiring or acquired company if they do not dispose of any of the shares
of the corporation they own or shares of a corporation they receive in
connection with a merger during the period beginning 30 days before the merger
and ending when financial results covering at least 30 days of post-merger
operations of the combined entity have been published.
The Merger Agreement provides that Fourth Financial will use its best efforts
to obtain and deliver to Boatmen's an agreement from each such affiliate
providing that such affiliate will not transfer any shares of Boatmen's Common
or Boatmen's New Preferred received in the Merger except in compliance with the
Securities Act and in compliance with the requirements of Accounting Principles
Board Opinion No. 16 regarding the non-disposition of any shares of Fourth
Financial Common, Fourth Financial Preferred, Boatmen's Common or Boatmen's New
Preferred (or any interest therein) during the period commencing 31 days prior
to the Closing Date through the date on which financial results covering at
least 30 days of combined operations of Boatmen's and Fourth Financial after the
Merger have been published. No Common Merger Consideration will be delivered to
an affiliate of Fourth Financial or Boatmen's until such affiliate has executed
and delivered the aforementioned agreement to Boatmen's and satisfied the other
requirements described above under "MERGER -- Exchange of Stock Certificates and
Depositary Receipts."
This Joint Proxy Statement/Prospectus does not cover resales of shares of
Boatmen's Common, Boatmen's New Preferred and Boatmen's New Preferred Depositary
Shares received by any person who may be deemed to be an affiliate of Fourth
Financial or Boatmen's.
FOURTH FINANCIAL STOCK OPTION AGREEMENT
As an inducement to Boatmen's to enter into the Merger Agreement, Fourth
Financial (as issuer) entered into the Fourth Financial Stock Option Agreement
with Boatmen's (as grantee), pursuant to which Fourth Financial granted the
Fourth Financial Option to Boatmen's to purchase from Fourth Financial 5,500,000
shares of Fourth Financial Common (subject to adjustment in certain
circumstances, but in no event to exceed 19.9% of the then outstanding shares of
Fourth Financial Common) at a price of $33.50 per share. The $33.50 exercise
price was determined through negotiations, taking into account the recently
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prevailing price range of Fourth Financial Common prior to the announcement of
the Merger (the closing sale price of Fourth Financial Common on the last
trading day preceding such announcement was $33.75). The purchase of any shares
of Fourth Financial Common pursuant to the Fourth Financial Option is subject to
compliance with applicable law, including the receipt of necessary approvals
under the B.H.C.A. See "MERGER -- Regulatory Approvals."
If Boatmen's is not in material breach of the Fourth Financial Stock Option
Agreement or the Merger Agreement and if no injunction or other court order
against delivery of the shares covered by the Fourth Financial Option is in
effect, Boatmen's may exercise the Fourth Financial Option, in whole or in part,
at any time and from time to time following the happening of certain events
(each a "Purchase Event"), including:
(i) without Boatmen's prior written consent, Fourth Financial taking
certain actions (each an "Acquisition Transaction"), including
authorizing, recommending, proposing or entering into an agreement
with any third party to effect (a) a merger, consolidation or similar
transaction involving Fourth Financial or any of its significant
subsidiaries, (b) the sale, lease, exchange or other disposition of
25% or more of the consolidated assets or deposits of Fourth Financial
and its subsidiaries, or (c) the issuance, sale or other disposition
of securities representing 25% or more of the voting power of Fourth
Financial or any of its significant subsidiaries, in each case except
as otherwise permitted by the Fourth Financial Stock Option Agreement;
or
(ii) any third party acquiring or having the right to acquire securities
representing 25% or more of the voting power of Fourth Financial or
any of its significant subsidiaries, except as otherwise permitted by
the Fourth Financial Stock Option Agreement;
provided that the Fourth Financial Option will terminate upon the earliest to
occur of certain events, including:
(i) consummation of the Merger;
(ii) termination of the Merger Agreement prior to the happening of a
Purchase Event or Preliminary Purchase Event (as hereafter defined)
(other than a termination by Boatmen's under certain circumstances
described in the Fourth Financial Stock Option Agreement (a "Default
Termination"));
(iii) fifteen months after a Default Termination; or
(iv) fifteen months after termination of the Merger Agreement (other than
by reason of a Default Termination) following the occurrence of a
Purchase Event or a Preliminary Purchase Event.
The term "Preliminary Purchase Event" means the occurrence of certain events,
including:
(i) commencement by any third party of a tender or exchange offer to
purchase 15% or more of the outstanding shares of Fourth Financial
Common;
(ii) failure of the shareholders of Fourth Financial to approve the Merger
Agreement or the failure of the Fourth Financial Meeting to have been
held or cancellation of such meeting prior to the termination of the
Merger Agreement or the Fourth Financial Board will have
79
withdrawn or modified in any manner adverse to Boatmen's the
recommendations of the Fourth Financial Board with respect to the
Merger Agreement, in each case after public announcement that a third
party:
(a) proposes to engage in an Acquisition Transaction; or
(b) commences a tender offer or exchange offer to purchase 15% or
more of the outstanding shares of Fourth Financial Common; or
(c) files an application under certain federal statutes relating to
the regulation of banks and other financial institutions or their
holding companies, to engage in an Acquisition Transaction;
(iii) any third party proposal to Fourth Financial or its shareholders,
publicly or in any writing that becomes publicly disclosed, to engage
in an Acquisition Transaction;
(iv) after a proposal by a third party to Fourth Financial or its
shareholders to engage in an Acquisition Transaction, Fourth Financial
breaches any representation or covenant in the Merger Agreement which
would entitle Boatmen's to terminate the Merger Agreement; or
(v) any third party filing an application with any federal or state bank
regulatory authority for approval to engage in an Acquisition
Transaction.
To the knowledge of Fourth Financial and Boatmen's, no Purchase Event or
Preliminary Purchase Event has occurred as of the date of this Joint Proxy
Statement/Prospectus.
Until such time as the right to exercise the Fourth Financial Option
terminates, at the request of the holder at any time commencing upon the first
occurrence of a Repurchase Event (as defined below) and ending twelve months
immediately thereafter, Fourth Financial is required to repurchase from the
holder (i) the Fourth Financial Option; and (ii) all shares of Fourth Financial
Common purchased by the holder pursuant to the Fourth Financial Stock Option
Agreement with respect to which the holder then has beneficial ownership. The
repurchase will be at an aggregate price (the "Repurchase Consideration") equal
to the sum of: (x) the aggregate exercise price paid by the holder for any
shares of Fourth Financial Common acquired pursuant to the Fourth Financial
Option with respect to which the holder then has beneficial ownership; (y) the
excess, if any, of (A) the Applicable Price (as defined below) for each share of
Fourth Financial Common over (B) the exercise price (subject to adjustment as
provided in the Fourth Financial Stock Option Agreement), multiplied by the
number of shares of Fourth Financial Common with respect to which the Fourth
Financial Option has not been exercised; and (z) the excess, if any, of the
Applicable Price over the exercise price (subject to adjustment as provided in
the Fourth Financial Stock Option Agreement) paid (or, in the case of shares of
Fourth Financial Common covered by the Fourth Financial Option with respect to
which the Fourth Financial Option has been exercised but the closing date for
such purchase has not occurred, payable) by the holder for each share of Fourth
Financial Common with respect to which the Fourth Financial Option has been
exercised and with respect to which the holder then has beneficial ownership,
multiplied by the number of such shares. As used in the Fourth Financial Stock
Option Agreement, the term "Applicable Price" means the highest of (i) the
highest price per share of Fourth Financial Common paid for any such share by
the person or groups described in subsection (x) of the definition of Repurchase
Event (as defined below), (ii) the price per share of Fourth Financial Common
received by holders of Fourth Financial Common in connection with any merger or
other business combination transaction described in subsections (i) through
(iii) in the next paragraph (with respect to
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substitute options), or (iii) the highest closing sales price per share of
Fourth Financial Common on Nasdaq (or if Fourth Financial Common is not traded
on Nasdaq, the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are traded as reported by a
recognized source chosen by the holder) during the 40 business days preceding
the date upon which the holder exercises the repurchase right described in this
paragraph (in the event of a sale of less than all of Fourth Financial's assets,
the Applicable Price will be the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of Fourth Financial
as determined by a nationally recognized investment banking firm selected by the
holder, divided by the number of shares of the Fourth Financial Common
outstanding at the time of such sale). As used in the Fourth Financial Stock
Option Agreement, the term "Repurchase Event" occurs if (i) any person (other
than Boatmen's or any subsidiary of Boatmen's) acquires beneficial ownership of
(as such term is defined in Rule 13d-3 promulgated under the Exchange Act), or
the right to acquire beneficial ownership of, or any "group" (as such term is
defined under the Exchange Act) is formed which beneficially owns or has the
right to acquire beneficial ownership of, 50% or more of the then outstanding
shares of Fourth Financial Common, or (ii) any of the merger or other business
combination transactions described in subsections (i) through (iii) in the next
paragraph (with respect to substitute options) is consummated.
In the event that prior to the termination of the Fourth Financial Stock
Option Agreement, Fourth Financial enters into an agreement (i) to consolidate
with or merge into any person, other than Boatmen's or one of its subsidiaries,
and shall not be the continuing or surviving corporation of such consolidation
or merger; (ii) to permit any person, other than Boatmen's or one of its
subsidiaries, to merge into Fourth Financial with Fourth Financial as the
continuing or surviving corporation, but, in connection therewith, the then
outstanding shares of Fourth Financial Common are changed into or exchanged for
stock or other securities of Fourth Financial or any other person or cash or any
other property, or the outstanding shares of Fourth Financial Common after such
merger represent less than 50% of the outstanding shares and share equivalents
of the merged company; or (iii) to sell or otherwise transfer all or
substantially all of its assets or deposits to any person, other than Boatmen's
or one of its subsidiaries, then such agreement shall provide that the Fourth
Financial Stock Option be converted or exchanged for an option (a "Substitute
Option") to purchase shares of common stock of, at the holder's option, either
(x) the continuing or surviving corporation of a merger or consolidation or the
transferee of all or substantially all of Fourth Financial's assets, or (y) any
person controlling such continuing or surviving corporation or transferee. The
number of shares subject to the Substitute Option and the exercise price per
share will be determined in accordance with a formula in the Fourth Financial
Stock Option Agreement. To the extent possible, the Substitute Option will
contain terms and conditions that are the same as those in the Fourth Financial
Stock Option Agreement.
Fourth Financial is required (but not more than once during any calendar year
and subject to certain other conditions described in the Fourth Financial Stock
Option Agreement), if requested by any holder, including Boatmen's and any
permitted transferee (a "Selling Shareholder"), as expeditiously as possible to
prepare and file a registration statement under the Securities Act if such
registration is necessary in order to permit the sale or other disposition of
any or all shares of Fourth Financial Common or other securities that have been
acquired by or are issuable to the Selling Shareholder upon exercise of the
Fourth Financial Option in accordance with the intended method of sale or other
disposition stated by the Selling Shareholder in such request, and Fourth
Financial is required to use its best efforts to qualify such shares or other
securities for sale under any applicable state securities laws. The Selling
Shareholder also has the right, as described in the Fourth Financial Stock
Option Agreement, to include the Selling Shareholder's shares in certain
underwritten public offerings of Fourth Financial Common by Fourth Financial
after the exercise of the Fourth Financial Option. Except where applicable
state law prohibits such payments, Fourth Financial
81
will pay all expenses, excluding discounts and commissions but including
liability insurance if Fourth Financial so desires or the underwriters so
require, in connection with each registration described above.
The Fourth Financial Stock Option Agreement is intended to increase the
likelihood that the Merger will be consummated in accordance with the terms set
forth in the Merger Agreement. Consequently, certain aspects of the Fourth
Financial Stock Option Agreement may have the effect of discouraging persons who
might now, or prior to the Effective Time, be interested in acquiring all of or
a significant interest in Fourth Financial from considering or proposing such an
acquisition, even if such persons were prepared to offer to pay consideration to
shareholders of Fourth Financial which had a higher current market price than
the shares of Boatmen's Common to be received for each share of Fourth Financial
Common pursuant to the Merger Agreement.
The Fourth Financial Stock Option Agreement is attached hereto as Appendix B
and is incorporated by reference herein and reference is made thereto for the
complete terms of the Fourth Financial Stock Option Agreement and the Fourth
Financial Option. The foregoing discussion is qualified in its entirety by
reference to the Fourth Financial Stock Option Agreement.
BOATMEN'S DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Boatmen's has an automatic Dividend Reinvestment and Stock Purchase
Plan (the "Boatmen's DRP") which provides, in substance, for those shareholders
who elect to participate, that dividends on Boatmen's Common and optional cash
payments of not less than $100 per payment, up to a maximum of $10,000 for each
quarter will be invested in shares of Boatmen's Common. The purchase price for
Boatmen's Common purchased under the Boatmen's DRP is 100% of the market price.
The Boatmen's DRP provides for the payment by Boatmen's of any brokerage
commissions or service charges with respect to such purchases. After the
Effective Time, shareholders of Fourth Financial who receive Boatmen's Common in
the Merger will have the right to participate in the Boatmen's DRP.
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PRO FORMA FINANCIAL DATA
The following unaudited pro forma combined condensed balance sheet as of June
30, 1995, and the pro forma combined condensed statements of income for the six
months ended June 30, 1995 and 1994, and for each of the years in the three-year
period ended December 31, 1994, give effect to the Merger based on the
historical consolidated financial statements of Boatmen's and Fourth Financial
and their subsidiaries under the assumptions and adjustments set forth in the
accompanying notes to the pro forma financial statements.
The pro forma combined condensed balance sheet assumes the Merger was
consummated on June 30, 1995, and the pro forma condensed statements of income
assume that the Merger was consummated on January 1 of each period presented.
The pro forma statements may not be indicative of the results that actually
would have occurred if the Merger had been in effect on the dates indicated or
which may be obtained in the future. The pro forma financial statements should
be read in conjunction with the historical consolidated financial statements and
notes thereto of Boatmen's and Fourth Financial incorporated by reference
herein. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." The pro forma
financial data reflects Worthen Banking Corporation, a pooling acquisition
completed on February 28, 1995, for all periods presented, as this represented a
significant subsidiary. The pro forma financial information also reflects the
acquisitions of Dalhart Bancshares, Inc., The First National Bank in Pampa and
National Mortgage Company (other minor pooling acquisitions completed in 1995)
for the 1995 and 1994 periods. Pro forma financial information prior to 1994
does not reflect these smaller acquisitions due to the immaterial impact on the
pro forma combined results of operations. The pro forma financial data does not
give effect to the recent and pending acquisitions of other financial
institutions, which acquisitions are not material to Boatmen's individually or
in the aggregate as these acquisitions represent less than 1% of Boatmen's
consolidated assets at June 30, 1995. See "PARTIES -- Boatmen's -- Recent and
Pending Acquisitions."
83
BOATMEN'S/FOURTH FINANCIAL
PRO FORMA COMBINED CONDENSED BALANCE SHEET
(unaudited)
June 30, 1995
(in thousands)
FOURTH
BOATMEN'S FINANCIAL PRO FORMA
BANCSHARES, INC. CORPORATION ADJUSTMENTS COMBINED
---------------- ----------- ----------- -----------
ASSETS:
Cash and noninterest-bearing balances due from banks $ 1,903,375 $ 407,145 $ 2,310,520
Short term investments 51,470 1,280 52,750
Securities:
Held to Maturity 5,164,908 1,846,091 7,010,999
Available for Sale 3,984,903 507,726 4,492,629
Trading 27,565 690 28,255
Federal funds sold and securities purchased under
resale agreements 732,539 51,715 784,254
Loans, net of unearned 19,921,345 4,386,184 24,307,529
Less reserve for loan losses 385,104 72,117 457,221
-----------------------------------------------------------
Loans, net 19,536,241 4,314,067 23,850,308
-----------------------------------------------------------
Property and equipment 640,924 160,475 801,399
Intangibles 310,993 95,288 406,281
Other assets 1,055,022 120,117 1,175,139
-----------------------------------------------------------
Total Assets $33,407,940 $7,504,594 $ 0 $40,912,534
===========================================================
LIABILITIES AND EQUITY:
Noninterest-bearing deposits $ 5,256,042 $ 977,268 $ 6,233,310
Interest-bearing deposits 19,160,895 5,064,340 24,225,235
-----------------------------------------------------------
Total deposits 24,416,937 6,041,608 30,458,545
-----------------------------------------------------------
Federal funds purchased and other short-term borrowings 5,078,583 485,223 5,563,806
Long-term debt 522,215 268,347 790,562
Capital lease obligations 39,523 176 39,699
Other liabilities 567,220 59,529 $ 31,000 (2) 657,749
-----------------------------------------------------------
Total liabilities 30,624,478 6,854,883 31,000 37,510,361
-----------------------------------------------------------
Redeemable preferred stock 1,132 1,132
Stockholders' equity:
Preferred stock 99,469 99,469
Common stock 129,830 138,133 (110,521)(1) 157,442
Surplus 987,673 108,402 110,041 (1) 1,206,116
Retained earnings 1,698,469 299,316 (31,000)(2) 1,996,785
Less: Treasury stock (23,194) (480) 480 (1) (23,194)
Stock option loans (1,679) (1,679)
Unrealized net appreciation (depreciation),
available for sale securities (10,448) 6,550 (3,898)
-----------------------------------------------------------
Total stockholders' equity 2,782,330 649,711 0 3,401,041
-----------------------------------------------------------
Total liabilities and stockholders' equity $33,407,940 $7,504,594 $ 0 $40,912,534
===========================================================
Stockholders' equity per share $21.55 $21.07
============= ===========
- --------------
NOTES TO PRO FORMA COMBINED CONDENSED BALANCE SHEET
(unaudited)
/(1)/ Based on the exchange ratio of 1 share of Boatmen's Common for each share
of Fourth Financial Common, 27.6 million additional shares of Boatmen's
Common would have been issued as of June 30, 1995, on the acquisition of
Fourth Financial.
/(2)/ It is anticipated that Merger expenses and nonrecurring charges directly
related to the business combination will be recorded in the first quarter
of 1996 upon consummation of the Merger. Boatmen's estimates the total
of such charges will approximate $45 million on a pretax basis, and $31
million on an after-tax basis, or a reduction of $0.20 in earnings per
share. The effect of such charges are not reflected in the Pro Forma
Combined Condensed Statement of Income.
84
BOATMEN'S/FOURTH FINANCIAL
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(unaudited)
(in thousands, except per share data)
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------------ --------------------------------------
1995 1994 1994 1993 1992
---------- ---------- ---------- ---------- ----------
Interest income $1,418,595 $1,194,193 $2,511,119 $2,267,993 $2,283,463
Interest expense 686,134 469,580 1,042,178 892,643 1,037,166
------------------------------------------------------------------
Net interest income 732,461 724,613 1,468,941 1,375,350 1,246,297
Provision for loan losses 20,914 13,917 26,176 71,849 160,908
------------------------------------------------------------------
Net interest income after provision for loan losses 711,547 710,696 1,442,765 1,303,501 1,085,389
Noninterest income 356,422 356,733 713,660 632,254 581,907
Noninterest expense 731,115 698,498 1,411,081 1,333,440 1,222,092
------------------------------------------------------------------
Income before income taxes 336,854 368,931 745,344 602,315 445,204
Income tax expense 118,786 127,661 254,418 174,537 116,625
------------------------------------------------------------------
Net income $ 218,068 $ 241,270 $ 490,926 $ 427,778 $ 328,579
==================================================================
Net income available to common shareholders $ 214,438 $ 237,730 $ 483,846 $ 420,693 $ 322,540
==================================================================
Net income per common share $1.37 $1.52 $3.10 $2.86 $2.26
==================================================================
Average common shares outstanding 156,541 155,915 155,882 146,947 142,822
85
DESCRIPTION OF BOATMEN'S CAPITAL STOCK
The Restated Articles of Incorporation of Boatmen's currently authorize the
issuance of 200,000,000 shares of common stock, par value $1.00 per share, and
10,300,000 preferred shares, no par value per share, of which 250,000 shares
will be designated "7% Cumulative Convertible Preferred Stock, Series A" stated
value $100 per share, liquidation preference $400 per share (referred to herein
as the Boatmen's New Preferred), 35,045 shares are designated "7% Cumulative
Redeemable Preferred Stock, Series B," $100.00 stated value per share (referred
to herein as the Boatmen's Series B Preferred), and 2,000,000 are designated
"Junior Participating Preferred Stock, Series C," $100 stated value per share
(the "Boatmen's Series C Preferred").
As of November 8, 1995, approximately 129,375,574 million shares of Boatmen's
Common were issued and outstanding, no shares of Boatmen's New Preferred were
issued and outstanding, 9,809 shares of Boatmen's Series B Preferred were issued
and outstanding and 2,000,000 shares of Boatmen's Series C Preferred were
reserved for issuance with none outstanding. For a description of the Boatmen's
Series C Preferred, see "COMPARISON OF SHAREHOLDER RIGHTS --Shareholder Rights
Plan."
With respect to the remaining authorized but unissued preferred shares,
Boatmen's Restated Articles of Incorporation provide that the Boatmen's Board
may, by resolution, cause such preferred shares to be issued from time to time,
in series, and fix the powers, designations, preferences and relative,
participating, optional and other rights, and qualifications, limitations and
restrictions of such shares.
The following is a brief description of the terms of Boatmen's Common,
Boatmen's Series B Preferred, Boatmen's New Preferred and Boatmen's New
Preferred Depositary Shares. The information is qualified in all respects by
reference to the provisions of the Restated Articles of Incorporation and Bylaws
of Boatmen's, the Deposit Agreement and the Boatmen's New Preferred Depositary
Receipts (as defined under "-- Boatmen's New Preferred Depositary Shares")
relating to the Boatmen's New Preferred filed with the Commission as exhibits to
the Registration Statement.
BOATMEN'S COMMON
DIVIDEND RIGHTS
The holders of Boatmen's Common are entitled to share ratably in dividends
when, as and if declared by the Boatmen's Board from funds legally available
therefor, after full cumulative dividends have been paid, or declared and funds
sufficient for the payment thereof set apart, on all shares of Boatmen's Series
B Preferred and Boatmen's New Preferred, and any other class or series of
preferred stock ranking superior as to dividends to Boatmen's Common. The
ability of the subsidiary banks of Boatmen's to pay cash dividends, which are
expected to be Boatmen's principal source of income, is restricted by applicable
banking laws.
VOTING RIGHTS
Each holder of Boatmen's Common has one vote for each share held on matters
presented for consideration by the shareholders, except that, in the election of
directors, such shareholder has cumulative voting rights which entitle each such
shareholder to the number of votes which equals the
86
number of shares held by the shareholder multiplied by the number of directors
to be elected. All such cumulative votes may be cast for one candidate for
election as a director or may be distributed among two or more candidates.
CLASSIFICATION OF BOARD OF DIRECTORS
The Boatmen's Board is divided into three classes, and the directors are
elected by classes to three-year terms, so that approximately one-third of the
directors of Boatmen's will be elected at each annual meeting of the
shareholders. Although it promotes stability and continuity of the Board of
Directors, classification of the Boatmen's Board may have the effect of
decreasing the number of directors that could otherwise be elected by anyone who
obtains a controlling interest in Boatmen's Common and thereby could impede a
change in control of Boatmen's. Because fewer directors will be elected at each
annual meeting, such classification also will reduce the effectiveness of
cumulative voting as a means of establishing or increasing minority
representation on the Boatmen's Board.
PREEMPTIVE RIGHTS
The holders of Boatmen's Common have no preemptive right to acquire any
additional unissued shares or treasury shares of Boatmen's.
LIQUIDATION RIGHTS
In the event of liquidation, dissolution or winding up of Boatmen's, whether
voluntary or involuntary, the holders of Boatmen's Common will be entitled to
share ratably in any of its assets or funds that are available for distribution
to its shareholders after the satisfaction of its liabilities (or after adequate
provision is made therefor) and after preferences on any outstanding preferred
stock.
ASSESSMENT AND REDEMPTION
Shares of Boatmen's Common presently issued and outstanding are, and shares to
be issued in the Merger will be, validly issued, fully paid and non-assessable.
Shares of Boatmen's Common do not have any redemption provisions.
BOATMEN'S SERIES B PREFERRED
DIVIDEND RIGHTS
Holders of shares of Boatmen's Series B Preferred will be entitled to receive,
when and as declared by the Boatmen's Board, out of any funds legally available
for such purpose, cumulative cash dividends at an annual dividend rate per share
of 7% of the stated value thereof, payable quarterly. Dividends on Boatmen's
Series B Preferred are cumulative and no cash dividends can be declared or paid
on any shares of Boatmen's Common unless full cumulative dividends on Boatmen's
Series B Preferred have been paid, or declared and funds sufficient for the
payment thereof set apart.
87
LIQUIDATION RIGHTS
In the event of the dissolution, liquidation or winding up of Boatmen's, the
holders of Boatmen's Series B Preferred will be entitled to receive, after
payment of the full liquidation preference on shares of any class of preferred
stock ranking superior to Boatmen's Series B Preferred (if any such shares are
then outstanding) but before any distribution on shares of Boatmen's Common,
liquidating dividends of $100 per share plus accumulated dividends.
REDEMPTION
Shares of Boatmen's Series B Preferred are redeemable, in whole or in part, at
the option of the holders thereof, at the redemption price of $100 per share
plus accumulated dividends, provided, that (i) full cumulative dividends have
been paid, or declared and funds sufficient for payment set apart, upon any
class or series of preferred stock ranking superior to Boatmen's Series B
Preferred; and (ii) Boatmen's is not then in default or arrears with respect to
any sinking or analogous fund or call for tenders obligation or agreement for
the purchase or any class or series of preferred stock ranking superior to
Boatmen's Series B Preferred.
VOTING RIGHTS
Each share of Boatmen's Series B Preferred has equal voting rights, share for
share, with each share of Boatmen's Common.
SUPERIOR STOCK
Boatmen's may, without the consent of holders of Boatmen's Series B Preferred,
issue preferred stock with superior or equal rights or preferences. The shares
of Boatmen's New Preferred to be issued in the Merger will rank prior to the
Boatmen's Series B Preferred as to dividends and upon liquidation.
BOATMEN'S NEW PREFERRED DEPOSITARY SHARES
The Boatmen's New Preferred Depositary Shares, as described below, are
substantially similar to the Fourth Financial Preferred Depositary Shares.
GENERAL
The shares of Boatmen's New Preferred are represented by the Boatmen's New
Preferred Depositary Shares. Each Boatmen's New Preferred Depositary Share
represents a 1/16th interest in a share of Boatmen's New Preferred. Pursuant to
the Merger Agreement, Boatmen's has agreed to file all documents required to
list the Boatmen's New Preferred Depositary Shares on Nasdaq. See "MERGER --
Certain Other Agreements -- Agreements of Boatmen's." The Boatmen's New
Preferred Depositary Shares will be freely transferrable under the Securities
Act, subject to the restrictions described under "MERGER -- Resale of Boatmen's
Common, Boatmen's Preferred and Boatmen's New Preferred Depositary Shares."
The shares of the Boatmen's New Preferred underlying the Boatmen's New
Preferred Depositary Shares will be deposited under a separate Deposit
Agreement, dated as of February 24, 1992, (the
88
"Deposit Agreement") between Fourth Financial and BANK IV (the "Depositary") and
evidenced by Boatmen's New Preferred Depositary Receipts. Pursuant to the
Merger Agreement, the Depositary Agreement will, at the Effective Time, be
automatically assumed by Acquisition Sub, will be assigned by it to Boatmen's
and will, thereafter, relate to the shares of Boatmen's New Preferred issued in
the Merger. Subject to the terms of the Deposit Agreement, each owner of a
Boatmen's New Preferred Depositary Share will be entitled, in proportion to the
applicable fractional interest in a share of Boatmen's New Preferred underlying
such Boatmen's New Preferred Depositary Share, to all the rights and preferences
of the Boatmen's New Preferred underlying such Boatmen's New Preferred
Depositary Share (including dividend, voting, redemption, conversion, and
liquidation rights).
Upon consummation of the Merger and return of a properly completed transmittal
letter, Boatmen's New Preferred Depositary Receipts will be distributed by the
Exchange Agent in exchange for Fourth Financial Preferred Depositary Receipts.
See "MERGER -- Exchange of Stock Certificates and Depositary Receipts."
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash distributions
received in respect of the Boatmen's New Preferred to the record holders of
Boatmen's New Preferred Depositary Shares relating to such Boatmen's New
Preferred in proportion to the numbers of such Boatmen's New Preferred
Depositary Shares owned by such holders on the relevant record date. The
Depositary shall distribute only such amount, however, as can be distributed
without attributing to any holder of Boatmen's New Preferred Depositary Receipts
a fraction of one cent, and any balance not so distributed shall be added to and
treated as part of the next sum received by the Depositary for distribution to
record holders of Boatmen's New Preferred Depositary Receipts.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Boatmen's New
Preferred Depositary Shares entitled thereto, unless the Depositary determines
that it is not feasible to make such distribution, in which case the Depositary
may, with the approval of Boatmen's, sell such property and distribute the net
proceeds from such sale to such holders.
CONVERSION
A holder of Boatmen's New Preferred Depositary Receipts may participate in the
conversion of the Boatmen's New Preferred as discussed below under "-- Boatmen's
New Preferred -- Conversion Rights." If the Boatmen's New Preferred Depositary
Shares represented by a Boatmen's New Preferred Depositary Receipt are to be
converted in part only, a new Boatmen's New Preferred Depositary Receipt will be
issued by the Depositary for the Boatmen's New Preferred Depositary Shares not
to be converted. No fractional shares of Boatmen's Common will be issued upon
conversion, and if such conversion would result in a fractional share being
issued, an amount will be paid in cash by Boatmen's equal to the value of the
fractional interest, based upon the closing price of the Boatmen's Common on the
last business day prior to the date of conversion.
REDEMPTION OF BOATMEN'S NEW PREFERRED DEPOSITARY SHARES
If the Boatmen's New Preferred is redeemed, the Boatmen's New Preferred
Depositary Shares will be redeemed from the proceeds received by the Depositary
resulting from the redemption, in whole
89
or in part, of the Boatmen's New Preferred held by the Depositary. The
Depositary will mail notice of redemption not less than 30 and not more than 60
days prior to the date fixed for redemption to the record holders of the
Boatmen's New Preferred Depositary Shares to be so redeemed at their respective
addresses appearing in the books of the Depositary. The redemption price per
Boatmen's New Preferred Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to the Boatmen's
New Preferred. Whenever Boatmen's redeems shares of Boatmen's New Preferred
held by the Depositary, the Depositary will redeem as of the same redemption
date the number of Boatmen's New Preferred Depositary Shares relating to shares
of Boatmen's New Preferred so redeemed. If less than all the Boatmen's New
Preferred Depositary Shares are to be redeemed, the Boatmen's New Preferred
Depositary Shares to be redeemed will be selected by lot or pro rata as may be
determined by the Depositary.
After the date fixed for redemption, the Boatmen's New Preferred Depositary
Shares so called for redemption will no longer be deemed to be outstanding and
all rights of the holders of the Boatmen's New Preferred Depositary Shares will
cease, except the right to receive the moneys payable upon such redemption and
any money or other property to which the holders of such Boatmen's New Preferred
Depositary Shares were entitled upon such redemption upon surrender to the
Depositary of the Boatmen's New Preferred Depositary Receipts evidencing such
Boatmen's New Preferred Depositary Shares.
VOTING THE BOATMEN'S NEW PREFERRED
Upon receipt of notice of any meeting at which the holders of the Boatmen's
New Preferred are entitled to vote as discussed below under "-- Boatmen's New
Preferred -- Voting", the Depositary will mail the information contained in such
notice of meeting to the record holders of the Boatmen's New Preferred
Depositary Shares relating to such Boatmen's New Preferred. Each record holder
of such Boatmen's New Preferred Depositary Shares on the record date (which will
be the same date as the record date for the Boatmen's New Preferred) will be
entitled to instruct the Depositary as to the exercise of the voting rights
pertaining to the number of shares of Boatmen's New Preferred underlying such
holder's Boatmen's New Preferred Depositary Shares. The Depositary will
endeavor, insofar as practicable, to vote the number of shares of Boatmen's New
Preferred underlying such Boatmen's New Preferred Depositary Shares in
accordance with such instructions, and Boatmen's will agree to take all action
which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting shares of
Boatmen's New Preferred to the extent it does not receive specific instructions
from the holders of Boatmen's New Preferred Depositary Shares relating to such
Boatmen's New Preferred.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of Boatmen's New Preferred Depositary Receipt evidencing the
Boatmen's New Preferred Depositary Shares and any provision of the Deposit
Agreement may at any time be amended by agreement between Boatmen's, as assignee
of Acquisition Sub (successor by merger with Fourth Financial), and the
Depositary. Any amendment, however, which materially and adversely alters the
rights of the existing holders of Boatmen's New Preferred Depositary Shares will
not be effective unless such amendment has been approved by the record holders
of at least a majority of the Boatmen's New Preferred Depositary Shares then
outstanding. The Deposit Agreement may be terminated by Boatmen's or the
Depositary if, among other reasons, (i) all outstanding Boatmen's New Preferred
Depositary Shares have been redeemed or converted into Boatmen's Common, or (ii)
there has been a final distribution in respect of the Boatmen's New Preferred in
connection with any liquidation, dissolution or winding up
90
of Boatmen's and such distribution has been distributed to the holders of the
related Boatmen's New Preferred Depositary Shares.
CHARGES OF DEPOSITARY
Boatmen's will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Depositary Agreement. Boatmen's will
pay charges of the Depositary in connection with the initial deposit of the
Boatmen's New Preferred and any redemption of the Boatmen's New Preferred.
Holders of Boatmen's New Preferred Depositary Shares will pay other transfer and
other taxes and governmental charges and such other charges as are expressly
provided in the Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Boatmen's New Preferred
Depositary Shares all reports and communications from Boatmen's which are
delivered to the Depositary and which Boatmen's is required to furnish to the
holders of the Boatmen's New Preferred.
Neither the Depositary nor Boatmen's will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of Boatmen's and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Boatmen's New Preferred Depositary
Shares or Boatmen's New Preferred unless satisfactory indemnity is furnished.
They may rely upon written advice of counsel or accountants, holders of
Boatmen's New Preferred Depositary Shares or other persons believed to be
competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to Boatmen's notice of its
election to do so, and Boatmen's may at any time remove the Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment. Such successor Depositary
must be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
BOATMEN'S NEW PREFERRED
The shares of Boatmen's New Preferred, as described below, are substantially
similar to the shares of Fourth Financial Preferred. The shares of Boatmen's
New Preferred will rank prior to the shares of Boatmen's Series B Preferred and
the Boatmen's Series C Preferred as to dividends and upon liquidation.
DIVIDENDS
Holders of the Boatmen's New Preferred will be entitled to receive, when and
as declared by the Boatmen's Board, out of assets of Boatmen's legally available
for payment, cash dividends at the rate of
91
7.00% of the liquidation preference per annum (equivalent to $1.75 per annum per
Boatmen's New Preferred Depositary Share). Dividends will be calculated on the
basis of a 360-day year consisting of twelve 30-day months and will be payable
quarterly on March 1, June 1, September 1, and December 1 of each year.
Dividends on the Boatmen's New Preferred will be cumulative from the date of
original issue. Each dividend will be payable to holders of record as they
appear on the stock register of Boatmen's on the record dates fixed by the
Boatmen's Board.
If at any time there are outstanding shares of any other series of preferred
stock ranking junior to or on a parity with the Boatmen's New Preferred as to
dividends, no dividends will be declared or paid or set apart for payment on any
such other series for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Boatmen's New Preferred for
all dividend payment periods terminating on or prior to the date of payment of
such dividends. If dividends on the Boatmen's New Preferred and on any other
series of preferred stock ranking on a parity as to dividends with the Boatmen's
New Preferred are in arrears, in making any dividend payment on account of such
arrears, Boatmen's will make payments ratably upon all outstanding shares of the
Boatmen's New Preferred and shares of such other series of preferred stock in
proportion to the respective amounts of dividends in arrears on the Boatmen's
New Preferred and on such other series of preferred stock to the date of such
dividend payment. Holders of shares of the Boatmen's New Preferred will not be
entitled to any dividend, whether payable in cash, property or stock, in excess
of full cumulative dividends.
Unless full cumulative dividends on all outstanding shares of the Boatmen's
New Preferred will have been paid or declared and set aside for payment for all
past dividend payment periods, no dividends (other than a dividend in Boatmen's
Common or in any other stock ranking junior to the Boatmen's New Preferred as to
dividends and upon liquidation) will be declared upon the Boatmen's Common or
upon any other stock ranking junior to the Boatmen's New Preferred as to
dividends and upon liquidation, nor will any Boatmen's Common or any other stock
of Boatmen's ranking junior to or on a parity with the Boatmen's New Preferred
as to dividends or upon liquidation, be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by Boatmen's
(except by conversion into or exchange for stock of Boatmen's ranking junior to
the Boatmen's New Preferred as to dividends and upon liquidation). No interest,
or sum of money in lieu of interest, will be payable in respect of any dividend
payment or payments on the Boatmen's New Preferred which may be in arrears.
CONVERSION RIGHTS
Shares of the Boatmen's New Preferred will be convertible at any time at the
option of the holder into shares of Boatmen's Common at a conversion price of
$29 per share of Boatmen's Common (equivalent to a conversion rate of
approximately .862 share of Boatmen's Common for each Boatmen's New Preferred
Depositary Share), subject to adjustment as described below (except that a share
of Boatmen's New Preferred that has been called for redemption will be
convertible up to and including but not after the close of business on the tenth
day preceding the date fixed for redemption).
The conversion price is subject to adjustment upon certain events, including
the issuance of Boatmen's Common as a dividend or distribution on shares of
Boatmen's Common; subdivisions, splits, combinations or reclassifications of
outstanding shares of Boatmen's Common; the issuance to holders of Boatmen's
Common generally of rights or warrants to subscribe for Boatmen's Common at less
than the then current market price; or the distribution to holders of the
Boatmen's Common of evidences of
92
indebtedness, assets (excluding cash dividends or distributions payable out of
consolidated earnings or earned surplus), or rights or warrants to subscribe for
securities of Boatmen's other than those mentioned above.
In the case of (i) any consolidation or merger to which Boatmen's is a party
(other than one in which Boatmen's is the continuing corporation and the
outstanding shares of the Boatmen's Common are not changed into or exchanged for
stock or other securities of any other person or cash or other property as a
result of or in connection with the consolidation or merger), (ii) a sale or
conveyance of the properties and assets of Boatmen's as, or substantially as, an
entirety, or (iii) any statutory exchange of securities with another
corporation, there will be no adjustment of the conversion price, but the holder
of each share of Boatmen's New Preferred then outstanding will have the right
thereafter to convert such share into the kind and amount of securities, cash,
or other property that the holder would have owned or been entitled to receive
immediately after such consolidation, merger, statutory exchange, sale or
conveyance if such share had been converted immediately before the effective
date of such consolidation, merger, statutory exchange, sale or conveyance.
Upon conversion, no adjustments will be made for accrued dividends and,
therefore, Boatmen's New Preferred Depositary Shares surrendered for conversion
after the record date next preceding a dividend payment date for the Boatmen's
New Preferred and before the dividend payment date must be accompanied by
payment of an amount equal to the dividend thereon which is to be paid on such
dividend payment date (unless the Boatmen's New Preferred Depositary Shares
surrendered for conversion have been called for redemption prior to such
dividend payment date).
No adjustment of the conversion price will be required to be made in any case
unless the adjustment amounts to 1% or more of the conversion price, but any
adjustment not made by reason of this limitation will be required to be carried
forward cumulatively and taken into account in any subsequent adjustments.
If at any time Boatmen's makes a distribution of property to its shareholders
which would be taxable to such shareholders as a dividend for federal income tax
purposes (e.g., distributions of evidences of indebtedness or assets of
Boatmen's, but generally not stock dividends or rights to subscribe to capital
stock) and, pursuant to the antidilution provisions described above, the
conversion price of the Boatmen's New Preferred is reduced, such reduction may
be deemed to be the receipt of taxable income by holders of the Boatmen's New
Preferred Depositary Shares.
A holder may effect the conversion of any whole number of Boatmen's New
Preferred Depositary Shares (whether or not evenly divisible by sixteen) by
delivering the Boatmen's New Preferred Depositary Receipts evidencing such
shares to the Depositary. Boatmen's will issue to the Depositary a certificate
for any fractional share of Boatmen's New Preferred remaining unconverted.
Fractional shares of Boatmen's Common will not be delivered upon conversion.
Instead, a cash adjustment will be paid in respect of such fractional interest,
based on the then current market price of Boatmen's Common.
REDEMPTION
Shares of Boatmen's New Preferred will not be redeemable prior to March 1,
1997. Subject to obtaining the prior approval of the Board of Governors of the
Federal Reserve System, if required, the
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shares of Boatmen's New Preferred will be redeemable at the option of Boatmen's,
in whole or in part, at any time or from time to time, on and after March 1,
1997, on not less than 30 nor more than 60 days' notice by mail, at a redemption
price of $400 per share (equivalent to $25 per Boatmen's New Preferred
Depositary Share) plus accrued and unpaid dividends to the redemption date.
The Boatmen's New Preferred will not be subject to any sinking fund or other
obligation of Boatmen's to redeem or retire the Boatmen's New Preferred.
At its election, Boatmen's, before the redemption date, may deposit the funds
for such redemption, in trust, with a designated depositary and authorize such
depositary to complete the redemption notice, and, after such deposit, all
rights of the holders of Boatmen's New Preferred and related Boatmen's New
Preferred Depositary Shares so called for redemption will cease, except the
right to receive the redemption price. As and to the extent, however, that
Boatmen's or the Depositary is required or permitted under the abandoned
property laws of any jurisdiction to escheat any redemption funds held for the
benefit of any holder, Boatmen's and the Depositary will be absolved of any
further liability or obligation to such holder to the full extent provided by
law. Notwithstanding the foregoing, if any dividends on the Boatmen's New
Preferred are in arrears, no shares of Boatmen's New Preferred or Boatmen's New
Preferred Depositary Shares may be redeemed unless all outstanding shares of
Boatmen's New Preferred are simultaneously redeemed, and Boatmen's will not
purchase or otherwise acquire any shares of Boatmen's New Preferred or Boatmen's
New Preferred Depositary Shares; provided, however, that the foregoing will not
prevent the purchase or acquisition of shares of Boatmen's New Preferred or
Boatmen's New Preferred Depositary Shares by Boatmen's pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
Boatmen's New Preferred or Boatmen's New Preferred Depositary Shares.
If a notice of redemption has been given, from and after the redemption date
for the shares of Boatmen's New Preferred called for redemption (unless default
will be made by Boatmen's in providing money for the payment of the redemption
price of the shares so called for redemption), dividends on the Boatmen's New
Preferred so called for redemption will cease to accrue and such shares will no
longer be deemed to be outstanding, and all rights of the holders thereof as
shareholders of Boatmen's (except the right to receive the redemption price)
will cease. Upon surrender in accordance with such notice of the certificates
representing any shares so redeemed (properly endorsed or assigned for transfer,
if the Boatmen's Board will so require and the notice will so state), the
redemption price set forth above will be paid out of funds provided by
Boatmen's. If fewer than all of the shares represented by any such certificates
are redeemed, a new certificate will be issued representing the unredeemed
shares without cost to the holder thereof.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary dissolution, liquidation, or
winding up of Boatmen's, the holders of the Boatmen's New Preferred will be
entitled to receive and to be paid out of assets of Boatmen's available for
distribution to its shareholders, before any payment or distribution is made to
holders of Boatmen's Common or any other class of stock ranking junior to the
Boatmen's New Preferred upon liquidation, a liquidating distribution of $400 per
share of Boatmen's New Preferred (equivalent to $25 per Boatmen's New Preferred
Depositary Share) plus accrued and unpaid dividends. After payment of the full
amount of the liquidating distributions to which they are entitled, the holders
of the Boatmen's New Preferred will have no right or claim to any of the
remaining assets of Boatmen's. If, upon any voluntary or involuntary
dissolution, liquidation, or winding up of Boatmen's, the amounts payable with
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respect to the Boatmen's New Preferred and any other shares of stock of
Boatmen's ranking as to any such distribution on a parity with the Boatmen's New
Preferred are not paid in full, the holders of the Boatmen's New Preferred and
of such other shares will share ratably in any such distribution of assets of
Boatmen's in proportion to the full respective distributable amounts to which
they are entitled. Neither the sale of all or substantially all the property or
business of Boatmen's, nor the merger or consolidation of Boatmen's into or with
any other corporation will be deemed to be a dissolution, liquidation, or
winding up, voluntary or involuntary, of Boatmen's.
VOTING
Except as otherwise expressly required by applicable law or as described
below, holders of the Boatmen's New Preferred Depositary Shares or the Boatmen's
New Preferred will not be entitled to vote on any matter, including but not
limited to any merger, consolidation or transfer of assets, and will not be
entitled to notice of any meeting of shareholders of Boatmen's. Whenever the
approval or other action of holders of the Boatmen's New Preferred is required
by applicable law or by the Restated Articles of Incorporation of Boatmen's,
each share of the Boatmen's New Preferred will be entitled to one vote and,
except as described below, the affirmative vote of a majority of such shares at
a meeting at which a majority of such shares are present or represented will be
sufficient to constitute such approval or other action. Holders of Boatmen's
New Preferred Depositary Shares will be entitled to vote the shares of Boatmen's
New Preferred which their Boatmen's New Preferred Depositary Shares represent.
See "--Boatmen's New Preferred Depositary Shares -- Voting."
The affirmative vote of the holders of at least 66-2/3% of the outstanding
shares of Boatmen's New Preferred is required to amend the Restated Articles of
Incorporation of Boatmen's to create or authorize any class of stock ranking on
a parity with or prior to the Boatmen's New Preferred in respect of dividends or
distribution of assets on liquidation or otherwise adversely affect the
preferences, rights, powers or privileges, qualifications, limitations and
restrictions of the Boatmen's New Preferred.
If at any time Boatmen's falls in arrears in the payment of dividends on the
Boatmen's New Preferred in an aggregate amount at least equal to the full
accrued dividends for six quarterly dividend periods, the number of directors of
Boatmen's will be increased by two and the holders of the Boatmen's New
Preferred (and all classes of preferred stock ranking on parity thereto), voting
separately as a single class, will have the exclusive right to elect two
directors to fill the positions so created, and such right will continue
annually until all dividends in arrears for any past dividend period have been
paid in full or declared or set aside for payment. Immediately upon the
cessation of such special voting rights the terms of the directors so elected
will terminate.
OTHER ASPECTS
Holders of the Boatmen's New Preferred will have no preemptive rights. Shares
of Boatmen's New Preferred, when issued, will be validly issued, fully paid and
nonassessable.
The Boatmen's New Preferred Depositary Shares have been approved for quotation
on Nasdaq under the symbol "BOATZ."
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COMPARISON OF SHAREHOLDER RIGHTS
The rights of holders of shares of Boatmen's Common and Boatmen's New
Preferred are governed by the corporate law of Missouri, the state of Boatmen's
incorporation, and by the Restated Articles of Incorporation, Bylaws and other
corporate documents of Boatmen's. The rights of holders of shares of Fourth
Financial Common and Fourth Financial Preferred are governed by the Kansas
Corporate Law, and by the Articles of Incorporation, Bylaws and other corporate
documents of Fourth Financial. A summary of the material differences between
the respective rights of shareholders of Fourth Financial and Boatmen's is set
forth below.
SHAREHOLDER VOTE REQUIRED FOR CERTAIN TRANSACTIONS
BUSINESS COMBINATIONS
The Missouri Corporate Law provides that unless a corporation's
articles of incorporation or bylaws provide otherwise, certain business
combinations including mergers require the approval of the holders of at least
two-thirds of the outstanding shares entitled to vote on the subject
transaction.
The Restated Articles of Incorporation of Boatmen's provide that, in
addition to any affirmative vote required by law, any Business Combination (as
hereafter defined) will require the affirmative vote of the holders of not less
than 80% of the issued and outstanding shares of Boatmen's Common.
Notwithstanding the foregoing, however, the Restated Articles of Incorporation
of Boatmen's also provide that any such Business Combination may be approved by
the affirmative vote required by law if it has been approved by 75% of the
entire Boatmen's Board. As used in this paragraph, the term "Business
Combination" means (i) any merger or consolidation of Boatmen's or any
subsidiary of Boatmen's with (a) any individual or entity who, together with
certain affiliates or associates, owns greater than 5% of Boatmen's Common (a
"Substantial Shareholder"), or (b) any other corporation which, after such
merger or consolidation, would be a Substantial Shareholder, regardless of which
entity survives; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to or with
any Substantial Shareholder of all or substantially all of the assets of
Boatmen's or any of its subsidiaries; (iii) the adoption of any plan or proposal
for the liquidation of Boatmen's by or on behalf of a Substantial Shareholder;
or (iv) any transaction involving Boatmen's or any of its subsidiaries, if the
transaction would have the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of Boatmen's of which a Substantial Shareholder is the
beneficial owner.
The Kansas Corporate Law provides that certain business combinations
including mergers require the approval of a majority of the outstanding shares
of the corporation entitled to vote on the subject transaction.
The Restated Articles of Incorporation of Fourth Financial provide
that, except to the extent any higher vote may be required by law or the
Restated Articles of Incorporation of Fourth Financial, certain Business
Combinations (as hereafter defined) require the affirmative vote of the holders
of at least 80% of the voting power of the then outstanding shares of capital
stock of Fourth Financial entitled to vote generally in the election of
directors (the "Voting Stock"), voting together as a single class. As used in
this discussion, the term "Business Combination" means (i) any merger or
consolidation of Fourth Financial or any of its majority owned subsidiaries with
either an Interested Stockholder (as hereafter
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defined) or any other corporation which is, or after such merger or
consolidation would be, an Affiliate (as hereafter defined) of an Interested
Stockholder; (ii) any sale, lease, exchange, mortgage, pledge, transfer, or
other disposition to or with an Interested Stockholder or an Affiliate of any
Interested Stockholder of any assets of Fourth Financial or any of its majority
owned subsidiaries having an aggregate Fair Market Value (as determined in the
Restated Articles of Incorporation of Fourth Financial) of $10 million or more;
(iii) the issuance or transfer by Fourth Financial or any of its majority owned
subsidiaries of any securities of Fourth Financial or any of its majority owned
subsidiaries to an Interested Stockholder or an Affiliate of an Interested
Stockholder in exchange for cash, securities, or other property having an
aggregate Fair Market Value (as determined in the Restated Articles of
Incorporation of Fourth Financial) of $10 million or more; (iv) the adoption of
any plan or proposal for the liquidation of Fourth Financial proposed by or on
behalf of an Interested Stockholder or an Affiliate of an Interested
Stockholder; or (v) any reclassification of securities, or recapitalization of
Fourth Financial, or any merger or consolidation of Fourth Financial with any of
its majority owned subsidiaries or any other transaction which has the effect of
increasing the proportionate share of the outstanding shares of any class of
equity or convertible securities of Fourth Financial or any of its majority
owned subsidiaries which is directly or indirectly owned by an Interested
Stockholder or an Affiliate of an Interested Stockholder. As used in this
discussion, the term "Interested Stockholder" means any person who or which (a)
is the beneficial owner of 20% or more of the voting power of the outstanding
Voting Stock, (b) is an Affiliate of Fourth Financial and at any time within the
two-year period immediately prior to the date in question was the beneficial
owner of 20% or more of the voting power of the then outstanding Voting Stock of
Fourth Financial, or (c) is an assignee or has otherwise succeeded to any shares
of Voting Stock of Fourth Financial which were at any time within the two-year
period immediately prior to the date in question beneficially owned by an
Interested Stockholder if such assignment or succession occurred in the course
of a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act. As used in this paragraph, the term
"Affiliate" has the same meanings ascribed such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act as in effect January 1,
1985.
The foregoing 80% vote is not, however, required if (i) in the case of
a Business Combination that does not involve any cash or other consideration
being received by the shareholders of Fourth Financial solely in their capacity
of shareholders, the Business Combination has been approved by the majority of
the Disinterested Directors (as hereafter defined) of Fourth Financial, or (ii)
in the case of any other Business Combination, the Business Combination is
approved by a majority of the Disinterested Directors and the specific price and
procedure requirements set forth in the Restated Articles of Incorporation of
Fourth Financial are satisfied. As used in this paragraph, the term
Disinterested Director means any member of the Fourth Financial Board who is not
an Interested Stockholder, who is unaffiliated with any Interested Stockholder,
and who was a member of the Fourth Financial Board prior to the time at which
the Interested Stockholder became an Interested Stockholder, and any successor
of a Disinterested Director who is unaffiliated with the Interested Stockholder
and is recommended to succeed a Disinterested Director by a majority of the
Disinterested Directors then on the Fourth Financial Board.
Because of the differences between the Missouri Corporate Law and the
Kansas Corporate Law, it is more difficult for Boatmen's shareholders to cast
sufficient votes to approve certain business combinations than it is for Fourth
Financial shareholders.
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REMOVAL OF DIRECTORS
The Missouri Corporate Law provides that, unless otherwise provided in
a corporation's articles of incorporation or bylaws, one or more directors or
the entire board of directors may be removed, with or without cause, by a vote
of the holders of a majority of the shares then entitled to vote in an election
of the directors. Directors may be removed only at a meeting called expressly
for that purpose. If a corporation's articles of incorporation or bylaws
provide for cumulative voting in the election of directors and if less than the
entire board is to be removed, no one of the directors may be removed if the
votes cast against his removal would be sufficient to elect him if then
cumulatively voted at an election of the entire board of directors or, if there
are classes of directors, at an election of the class of directors of which he
or she is a part. Whenever the holders of the shares of any class are entitled
to elect one or more directors by the provisions of the articles of
incorporation, any references to a vote of the holders of outstanding shares are
to outstanding shares of that class and not to the vote of the outstanding
shares as a whole. Any director of a corporation may be removed for cause by an
action of a majority of the entire board of directors if the director fails to
meet the qualifications stated in the corporation's articles of incorporation or
bylaws for election as a director or is in breach of any agreement between such
director and the corporation relating to such director's services as a director
or employee of the corporation. Notice of the proposed removal by the directors
must be given to all directors of a corporation prior to action thereon.
The Restated Articles of Incorporation of Boatmen's provide that, at a
meeting called expressly for that purpose, a director or the entire Boatmen's
Board (other than directors elected by holders of preferred stock pursuant to
certain special rights) may be removed without cause only upon the affirmative
vote of the holders of not less than 80% of the shares entitled to vote
generally in an election of directors. Notwithstanding the foregoing, however,
if less than the entire Board of Directors is to be removed without cause, no
one of the directors may be removed if the votes cast against his removal would
be sufficient to elect him if then cumulatively voted at an election of the
class of directors of which he is a part. At a meeting called expressly for
that purpose, a director (other than those elected by holders of preferred
stock), may be removed by the shareholders for cause by the affirmative vote of
the holders of a majority of the shares entitled to vote upon his election.
The Kansas Corporate Law provides that any director, or the entire
board of directors, may be removed, with or without cause, by the holders of a
majority of the shares entitled to vote at an election of directors; provided,
however, that (i) unless the articles of incorporation of the corporation
otherwise provide, in the case of a corporation whose board of directors is
divided into classes, shareholders may effect such removal only for cause; or
(ii) in the case of a corporation having cumulative voting for directors, if
less than the entire board of directors is to be removed, no director may be
removed without cause if the votes cast against the removal of such director
would be sufficient to elect such director if then cumulatively voted at an
election of the entire board of directors or, if there are classes of directors,
at an election of the class of directors of which such director is a part.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the articles of incorporation of the corporation,
the above-referenced provision of the Kansas Corporate Law applies, with respect
to the removal without cause of a director or directors so elected, to the vote
of the holders of the outstanding shares of that class or series and not to the
vote of the outstanding shares as a whole. The Restated Articles of
Incorporation of Fourth Financial provide for three classes of directors.
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While the Restated Articles of Incorporation of Boatmen's make it
difficult to remove members of a board of directors divided into classes, as are
those of both Boatmen's and Fourth Financial, Kansas Corporate Law prevents such
removal without cause.
AMENDMENTS TO ARTICLES OF INCORPORATION
Under the Missouri Corporate Law, a corporation may amend its articles
of incorporation upon receiving the affirmative vote of the holders of a
majority of its voting shares and the affirmative vote the holders of a majority
of the outstanding shares of each class entitled to vote thereon as a class;
provided, however, that if the corporation's articles of incorporation or bylaws
provide for cumulative voting in the election of directors, the number of
directors of the corporation may not be decreased to less than three by
amendment to the corporation's articles of incorporation when the number of
shares voting against the proposal for decrease would be sufficient to elect a
director if the shares were voted cumulatively at an election of three
directors; and provided, further, that a proposed amendment which provides that
Section 351.407 of the Missouri Corporate Law does not apply to "control share
acquisitions" of shares of a corporation requires the affirmative vote of the
holders of two-thirds of such corporation's voting shares.
Article XII of the Restated Articles of Incorporation of Boatmen's
provides that Boatmen's may amend, alter, change or repeal provisions of the
Restated Articles of Incorporation in the manner provided by law, with the
exception, however, of the provisions of the Restated Articles of Incorporation
relating to the classification and number of directors, the approval of Business
Combinations (which provision is described above under "-- Shareholder Vote
Required for Certain Transactions -- Business Combinations"), and the
aforementioned exceptions to Article XII, which require the affirmative vote of
the holders of 80% of Boatmen's Common then entitled to vote at a meeting of
shareholders called for that purpose.
The Kansas Corporate Law provides that a corporation may amend its
articles of incorporation upon receiving the affirmative vote of the holders of
a majority of its outstanding voting shares and the affirmative vote of the
holders of a majority of the outstanding shares of each class entitled to vote
thereon as a class. Holders of outstanding shares of a class are entitled to
vote as a class upon a proposed amendment, whether or not entitled to vote
thereon by the provisions of the articles of incorporation of the corporation,
if the amendment changes the aggregate number of authorized shares of such
class, changes the par value of the shares of such class, or alters or changes
the powers, preferences or special rights of such class so as to affect such
shareholders adversely. Whenever any provision of the articles of incorporation
of a corporation require, for action by the board of directors, by holders of
any class or series of shares or by the holders of any other securities having
voting power, the vote of a greater number or proportion than is otherwise
required by the Kansas Corporate Law, then such provision of the articles of
incorporation requiring such greater vote may not be altered, amended or
repealed except by such greater vote.
The Restated Articles of Incorporation of Fourth Financial provide
that the affirmative vote of the holders of at least 80% of the voting power of
the then outstanding Voting Stock of Fourth Financial, voting together as a
single class, is required to amend or appeal or adopt any provisions
inconsistent with Article VIII of the Articles of Incorporation of Fourth
Financial (which Article is described above under "-- Shareholder Vote Required
for Certain Transactions -- Business Combinations") unless such amendment has
been approved by a majority of the Disinterested Directors of Fourth Financial
in which case only the usual vote is required to amend such Article.
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The rights of shareholders of Boatmen's and those of Fourth Financial
are not materially different in these respects.
NOTICE OF SHAREHOLDER NOMINATIONS OF DIRECTORS
Neither the Missouri Corporate Law nor the Kansas Corporate Law
contains any specific provisions regarding notice of shareholders' nominations
of directors.
The Bylaws of Boatmen's provide that a shareholder may nominate a
person for director only if he delivers notice of such nomination to the
Secretary of Boatmen's, accompanied or promptly followed by such supporting
information as the Secretary shall reasonably request, not less than 75 days
prior to the date of any annual meeting or more than seven days after the
mailing of notice of any special meeting. The Bylaws of Fourth Financial
provide that nominations, other than those made by the Fourth Financial Board,
must be in writing, must include the information prescribed in the Bylaws, and
must be delivered or mailed to the President of Fourth Financial not less than
fourteen days nor more than 50 days prior to any meeting of the shareholders
called for the election of directors, or, if less than 21 days' notice of the
meeting is given to shareholders, not later than the close of business on the
seventh day following the day on which notice of the meeting was mailed.
The rights of shareholders of Boatmen's and those of Fourth Financial
are not materially different in these respects.
SHAREHOLDER PROPOSAL PROCEDURES
The Missouri Corporate Law does not contain any specific provisions
regarding notice of shareholders' proposals.
The Bylaws of Boatmen's provide that in order for any business to be
transacted at any meeting of the shareholders, other than business proposed by
or at the direction of the Boatmen's Board, notice thereof must be received from
the proposing shareholder by the Secretary of Boatmen's, accompanied or promptly
followed by such supporting information as he reasonably requests, not less than
75 days prior to the date of any annual meeting or more than seven days after
the mailing of notice of any special meeting.
Neither the Kansas Corporate Law nor the Restated Articles of
Incorporation or Bylaws of Fourth Financial contain any specific provisions
regarding notice of shareholders' proposals.
The provisions of the Bylaws of Boatmen's make it more difficult for
the shareholders of Boatmen's than for those of Fourth Financial to present
proposals for business to be transacted at their meetings.
SHAREHOLDER RIGHTS PLAN
Boatmen's has adopted a shareholder rights plan pursuant to which
holders of a share of Boatmen's Common also hold one preferred share purchase
right which may be exercised upon the
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occurrence of certain "triggering events" specified in the Boatmen's Rights
Agreement (as hereafter defined). Shareholder rights plans such as Boatmen's
plan are intended to encourage potential hostile acquirors of a "target"
corporation to negotiate with the Board of Directors of the target corporation
in order to avoid occurrence of the "triggering events" specified in such plans.
Shareholder rights plans are intended to give the directors of a target
corporation the opportunity to assess the fairness and appropriateness of a
proposed transaction in order to determine whether or not it is in the best
interests of the corporation and its shareholders. Notwithstanding these
purposes and intentions of shareholder rights plans, such plans, including that
of Boatmen's, could have the effect of discouraging a business combination which
shareholders believe to be in their best interests. The provisions of the
Boatmen's Rights Agreement are discussed below.
On August 14, 1990, the Boatmen's Board declared a dividend, payable
on August 31, 1990 (the "Boatmen's Dividend Record Date"), of one preferred
share purchase right (a "Boatmen's Right") for each outstanding share of
Boatmen's Common. Each Boatmen's Right entitles the registered holder to
purchase from Boatmen's one one-hundredth of a share of Boatmen's Series C
Preferred at a price of $110 (the "Boatmen's Purchase Price"), subject to
adjustment. The description and terms of the Boatmen's Rights are set forth in
a Rights Agreement (the "Boatmen's Rights Agreement") between Boatmen's and
Boatmen's Trust Company, as Rights Agent (the "Rights Agent"), and the following
description is qualified in its entirety by the Boatmen's Rights Agreement.
Until the earlier to occur of (i) ten days following a public
announcement that a person or group of affiliated or associated persons (a
"Boatmen's Acquiring Person") has acquired beneficial ownership of 20% or more
of the outstanding shares of Boatmen's Common; or (ii) ten business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person becomes a Boatmen's Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender or exchange
offer the consummation of which would result in the beneficial ownership by a
person or group of 20% or more of such outstanding shares of Boatmen's Common
(the earlier of such dates being called the "Boatmen's Distribution Date"), the
Boatmen's Rights will be evidenced, with respect to any of the Boatmen's Common
share certificates outstanding as of the Boatmen's Dividend Record Date, by such
Boatmen's Common share certificates, with a copy of a Summary of Rights attached
thereto.
The Boatmen's Rights Agreement provides that until the Boatmen's
Distribution Date (or earlier redemption or expiration of the Boatmen's Rights)
the Boatmen's Rights will be transferred only with shares of Boatmen's Common.
New Boatmen's Common share certificates issued after the Boatmen's Dividend
Record Date, upon transfer or new issuance of Boatmen's Common, including
issuance of shares pursuant to the Merger, will contain a notation incorporating
the Boatmen's Rights Agreement by reference, and the surrender for transfer of
any certificates for Boatmen's Common outstanding as of the Boatmen's Dividend
Record Date, even without such notation or a copy of the Summary of Rights being
attached thereto, will also constitute the transfer of the Boatmen's Rights
associated with the Boatmen's Common shares represented by such certificate. As
soon as practicable following the Boatmen's Distribution Date, separate
certificates evidencing the Boatmen's Rights (the "Boatmen's Right
Certificates") will be mailed to holders of record of Boatmen's Common as of the
close of business on the Boatmen's Distribution Date and such separate Boatmen's
Right Certificates alone will evidence the Boatmen's Rights.
The Boatmen's Rights are not exercisable until the Boatmen's
Distribution Date. The Boatmen's Rights will expire on August 14, 2000 (the
"Final Expiration Date"), unless the Final Expiration Date
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is extended or unless the Boatmen's Rights are earlier redeemed by Boatmen's, in
each case as described below.
The Boatmen's Purchase Price payable, and the number of shares of
Boatmen's Series C Preferred or other securities or property issuable, upon
exercise of the Boatmen's Rights are subject to adjustment from time to time
upon the occurrence of certain events in order to prevent dilution. In
addition, the number of outstanding Boatmen's Rights and the number of one one-
hundredths of a share of Boatmen's Series C Preferred issuable upon exercise of
each Boatmen's Right are also subject to adjustment in the event of a stock
split of Boatmen's Common or a stock dividend on Boatmen's Common payable in
shares of Boatmen's Common or subdivisions, consolidations or combinations of
shares of Boatmen's Common occurring, in any such case, prior to the Boatmen's
Distribution Date.
Shares of Boatmen's Series C Preferred purchasable upon exercise of
the Boatmen's Rights will not be redeemable. Each share of Boatmen's Series C
Preferred will be entitled to a minimum preferential quarterly dividend payment
of $1.00 per share and will be entitled to an aggregate dividend of 100 times
the dividend declared on each share of Boatmen's Common. In the event of
liquidation, the holders of the Shares of Boatmen's Series C Preferred will be
entitled to a minimum preferential liquidation payment of $100 per share but
will be entitled to an aggregate payment of 100 times the payment made on each
share of Boatmen's Common. Each share of Boatmen's Series C Preferred will have
100 votes, voting together with the Boatmen's Common shares. Finally, in the
event of any merger, consolidation or other transaction in which shares of
Boatmen's Common are exchanged, each share of Boatmen's Series C Preferred will
be entitled to receive 100 times the amount received on each share of Boatmen's
Common. The Boatmen's Rights are protected by customary anti-dilution
provisions.
Because of the nature of the Boatmen's Series C Preferred dividend,
liquidation and voting rights, the value of the one-hundredth interest in a
share of Boatmen's Series C Preferred purchasable upon exercise of each
Boatmen's Right should approximate the value of one Boatmen's Common share.
In the event that Boatmen's is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Boatmen's
Right will thereafter have the right to receive, upon the exercise thereof at
the then current exercise price of the Boatmen's Right, that number of shares of
common stock of the acquiring company which at the time of such transaction will
have a market value of two times the exercise price of the Boatmen's Right. In
the event that (i) any person or group of affiliated or associated persons
becomes the beneficial owner of 20% or more of the outstanding shares of
Boatmen's Common (unless such person first acquires 20% or more of the
outstanding shares of Boatmen's Common by a purchase pursuant to a tender offer
for all of the Boatmen's Common for cash, which purchase increases such person's
beneficial ownership to 80% or more of the outstanding shares of Boatmen's
Common); or (ii) during such time as there is a Boatmen's Acquiring Person,
there is a reclassification of securities or a recapitalization or
reorganization of Boatmen's or other transaction or series of transactions
involving Boatmen's which has the effect of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities
of Boatmen's or any of its subsidiaries beneficially owned by the Boatmen's
Acquiring Person, proper provision will be made so that each holder of a
Boatmen's Right, other than Boatmen's Rights beneficially owned by the Boatmen's
Acquiring Person (which will thereafter be void), will thereafter have the right
to receive upon exercise that number of shares of Boatmen's Common having a
market value of two times the exercise price of the Boatmen's Right.
102
At any time after the acquisition by a Boatmen's Acquiring Person of
beneficial ownership of 20% or more of the outstanding shares of Boatmen's
Common, and prior to the acquisition by such Boatmen's Acquiring Person of 50%
or more of the outstanding shares of Boatmen's Common, the Boatmen's Board may
exchange the Boatmen's Rights (other than Boatmen's Rights owned by such person
or group which have become void), in whole or in part, at an exchange ratio of
one share of Boatmen's Common per Boatmen's Right (subject to adjustment).
With certain exceptions, no adjustment in the Boatmen's Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% of the Boatmen's Purchase Price. No fractional shares of Boatmen's Series C
Preferred will be issued (other than fractions which are integral multiples of
one one-hundredth of a share of Boatmen's Series C Preferred and which may, at
the election of Boatmen's, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
shares of Boatmen's Common on the last trading day prior to the date of
exercise.
At any time prior to the acquisition by a Boatmen's Acquiring Person
of beneficial ownership of 20% or more of the outstanding shares of Boatmen's
Common, the Boatmen's Board may redeem the Boatmen's Rights in whole, but not in
part, at a price of $0.01 per Boatmen's Right (the "Boatmen's Redemption
Price"). The redemption of the rights may be made effective at such time, on
such basis, and with such conditions as the Boatmen's Board in its sole
discretion may establish.
In addition, if a bidder who does not beneficially own more than 1% of
the shares of Boatmen's Common and all other voting shares of Boatmen's
(together the "Voting Shares") (and who has not within the past year owned in
excess of 1% of the Voting Shares and, at a time he held a greater than 1%
stake, disclosed, or caused the disclosure of, an intention which relates to or
would result in the acquisition or influence of control of Boatmen's) proposes
to acquire all of the Voting Shares for cash at a price which a nationally
recognized investment banker selected by such bidder states in writing is fair,
and such bidder has obtained written financing commitments (or otherwise has
financing) and complies with certain procedural requirements, then Boatmen's,
upon the request of the bidder, will hold a special shareholders meeting to vote
on a resolution requesting the Board of Directors to accept the proposal of the
bidder. If a majority of the outstanding shares entitled to vote on the
proposal vote in favor of such resolution, then for a period of 60 days after
such meeting the Boatmen's Rights will be automatically redeemed at the
Boatmen's Redemption Price immediately prior to the consummation of any tender
offer for all of such shares at a price per share in cash equal to or greater
than the price offered by such bidder; provided, however, that no redemption
will be permitted or required after the acquisition by any person or group of
affiliated or associated persons of beneficial ownership of 20% or more of the
outstanding shares of Boatmen's Common. Immediately upon any redemption of the
Boatmen's Rights, the right to exercise the Boatmen's Rights will terminate and
the only right of the holders of Boatmen's Rights will be to receive the
Boatmen's Redemption Price.
The terms of the Boatmen's Rights may be amended by the Boatmen's
Board without the consent of the holders of the Boatmen's Rights, including an
amendment to lower certain thresholds described above to not less than the
greater of (i) any percentage greater than the largest percentage of the
outstanding shares of Boatmen's Common then known to Boatmen's to be
beneficially owned by any person or group of affiliated or associated persons;
or (ii) 10%, except that from and after such time as any person becomes a
Boatmen's Acquiring Person no such amendment may adversely affect the interests
of the holders of the Boatmen's Rights.
103
Until a Boatmen's Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of Boatmen's, including, without
limitation, the right to vote or to receive dividends.
Fourth Financial does not have a shareholder rights plan. The
existence of the Boatmen's Rights Agreement makes it more difficult in its case
than in the case of Fourth Financial for a potential acquiror to effect a
business combination that has not been negotiated with the board of directors.
DISSENTERS' RIGHTS
Under the Missouri Corporate Law, a shareholder of a corporation is
entitled to receive payment for the fair value of his or her shares if such
shareholder dissents from a sale or exchange of substantially all of the
property and assets of the corporation or a merger or consolidation to which
such corporation is a party. A shareholder is also entitled to receive payment
for the fair value of his or her shares if such shareholder dissents from
according voting rights to "control shares" in a control share acquisition, as
further described below. Because Boatmen's is not merging directly with Fourth
Financial, Boatmen's shareholders will not be entitled to assert such rights in
connection with the Merger.
Pursuant to Kansas Corporate Law, a stockholder who files a written
objection to a merger or consolidation with a corporation and who either does
not vote or votes against said merger or consolidation and demands, in writing,
payment of the value of his shares of stock is entitled to receive payment for
the fair value of his or her shares. The foregoing provisions of the Kansas
Corporate Law are not, however, applicable to any class or series of a class of
stock which, at the record date fixed to determine the shareholders entitled to
receive notice of and to vote at the meeting of the shareholders at which the
agreement of merger or consolidation is to be acted upon, were either (i)
registered on a national securities exchange, or (ii) held of record by not less
than 2,000 shareholders unless the articles of incorporation of the corporation
issuing such stock provide otherwise. Under the Kansas Corporate Law, Nasdaq is
not deemed to be a national securities exchange for purposes of the foregoing
provisions. As the Fourth Financial Common is held of record by more than 2,000
shareholders and the Articles of Incorporation of Fourth Financial do not
provide for dissenters' rights in such cases, holders of Fourth Financial Common
do not have dissenters' rights in connection with the Merger. As the Fourth
Financial Preferred is held of record by less than 2,000 shareholders and such
shares are not registered on a national securities exchange, holders of Fourth
Financial Preferred will have dissenters' rights in connection with the Merger.
See "MERGER -- Appraisal Rights of Dissenting Shareholders."
Because of the differences between the Missouri Corporate Law and the
Kansas Corporate Law, there are more opportunities for Boatmen's shareholders to
exercise dissenters' rights than there are for those of Fourth Financial.
TAKEOVER STATUTES
The Missouri Corporate Law contains provisions regulating a broad
range of business combinations, such as a merger or consolidation, between a
Missouri corporation which is a "resident domestic corporation," as defined in
the statute with shares of its stock registered under the federal securities
laws or that makes an election by appropriate provisions in its articles of
incorporation, and an "interested shareholder" (which is defined as any owner of
20% or more of the corporation's stock) for five years after the date on which
such shareholder became an interested shareholder, unless, among other things,
the stock acquisition which caused the person to become an interested
shareholder was
104
approved in advance by the corporation's board of directors. This so-called
"five year freeze" provision is effective even if all the parties should
subsequently decide that they wish to engage in a business combination. The
Missouri Corporate Law also contains a "control share acquisition" provision
which effectively denies voting rights to shares of a Missouri corporation
acquired in control share acquisitions unless a resolution granting such voting
rights is approved at a meeting of shareholders by affirmative majority vote of
(i) all outstanding shares entitled to vote at such meeting voting by class if
required by the terms of such shares; and (ii) all outstanding shares entitled
to vote at such meeting voting by class if required by the terms of such shares,
excluding all interested shares. A control share acquisition is one by which a
purchasing shareholder acquires more than one-fifth, one-third, or a majority,
under various circumstances, of the voting power of the stock of an "issuing
public corporation." An "issuing public corporation" is a Missouri corporation
with (i) one hundred or more shareholders; (ii) its principal place of business,
principal office or substantial assets in Missouri; and (iii) either (a) more
than 10% of its shareholders resident in Missouri; (b) more than 10% of its
shares owned by Missouri residents; or (c) 10,000 shareholders resident in
Missouri. Boatmen's meets the statutory definition of an issuing public
corporation. If a control share acquisition should be made of a majority or
more of the corporation's voting stock, and those shares are granted full voting
rights, shareholders are granted dissenters' rights.
The Kansas Corporate Law also contains a "control share acquisition"
provision which effectively denies voting rights to shares of an issuing public
corporation acquired in control share acquisitions unless the articles of
incorporation or bylaws of the corporation provide that this provision of the
Kansas Corporate Law does not apply or a resolution granting voting rights is
approved by (i) the affirmative vote of a majority of all outstanding shares
entitled to vote at the election of directors voting by class if required by the
terms of the shares; and (ii) the affirmative vote of a majority of all
outstanding shares entitled to vote at the election of directors voting by class
if required by the terms of the shares, excluding all interested shares. As
used in this paragraph, a "control share acquisition" means the acquisition of
one-fifth, one-third or a majority of all voting power under various
circumstances of the issuing public corporation. "Issuing public corporation"
means a Kansas corporation which has (i) 100 or more shareholders; (ii) its
principal place of business, principal office, or substantial assets within
Kansas; and (iii) either (a) more than 10% of its shareholders resident in
Kansas, (b) more than 10% of its shares owned by Kansas residents, or (c) 2,500
shareholders resident in Kansas. The Bylaws of Fourth Financial provide that
(i) the foregoing control share acquisition provisions of the Kansas Corporate
Law do not apply to control share acquisitions of shares of Fourth Financial;
(ii) Fourth Financial does not have the right to call for redemption of shares
acquired in a control share acquisition; and (iii) an objecting shareholder does
not have dissenters' rights provided under the control share acquisition
provisions of the Kansas Corporate Law.
The Kansas Corporate Law prohibits, subject to certain exceptions set
forth therein, various business combinations with "interested stockholders" (as
hereafter described) including mergers or consolidations of the corporation, or
of any direct or indirect majority-owned subsidiary of the corporation, with an
interested stockholder for a period of three years following the date such
stockholder became an interested stockholder unless (a) prior to such date the
board of directors of the corporation approved either the business combination
or the transaction which resulted in the stockholder becoming an interested
stockholder; (b) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (determined in accordance with the Kansas Corporate Law);
or (c) on or subsequent to such date the business combination is approved by the
board of directors and authorized at an annual or special meeting of the
shareholders of the
105
corporation (but not by written consent of the shareholders), by the affirmative
vote at least 66-2/3% of the outstanding voting shares of the corporation which
are not owned by the interested stockholder. "Interested stockholder" means any
person, other than the corporation or any direct or indirect majority-owned
subsidiary of the corporation, that is (i) the owner of 15% or more of the
outstanding voting shares of the corporation; or (ii) an affiliate or associate
of the corporation and was the owner of 15% or more of the outstanding voting
stock of the corporation at any time within the three-year period immediately
prior to the date on which it is sought to be determined whether such person is
an interested stockholder, and the affiliates and associates of such person.
The rights of shareholders of Boatmen's and those of Fourth Financial
are not materially different in these respects.
LIABILITY OF DIRECTORS; INDEMNIFICATION
In accordance with the Missouri Corporate Law, and pursuant to the
Restated Articles of Incorporation of Boatmen's, Boatmen's will indemnify its
directors and certain of its executive officers, and may indemnify other
employees or agents as it deems appropriate, against reasonably incurred
liabilities arising from any actual or threatened, pending or completed action,
suit, or proceeding by reason of the fact that the indemnified person was a
director, officer, employee or agent of Boatmen's, or is or was serving at the
request of Boatmen's as a director, officer, employee, or agent of another
entity or enterprise, provided the indemnified person acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
Boatmen's. With respect to any criminal action or proceeding, the indemnified
person must have had no reasonable cause to believe his conduct was unlawful.
In the case of an action or suit by or in the right of Boatmen's, Boatmen's may
not indemnify any person against judgments or fines, or as to any claim, matter,
or issue as to which such person has been adjudged to be liable for negligence
or misconduct in the performance of his duty to Boatmen's, unless and only to
the extent that the court in which the action or suit was brought determines
upon application that such person is fairly and reasonably entitled to indemnity
for proper expenses. Unless ordered by a court, indemnification of a director,
officer, employee or agent of the corporation is only proper if a determination
is made that such person met the applicable standard of conduct required. Such
a determination must be made by the board of directors by a majority vote of a
quorum of non-party directors, or if such a quorum is not obtainable, or even if
obtainable, a quorum of disinterested directors directs, by independent legal
counsel in a written opinion, or by the shareholders. A corporation may pay
expenses incurred in defending a civil or criminal action, suit or proceeding in
advance of the final disposition of said action, suit or proceeding upon the
authorization of the board of directors which will so authorize upon the receipt
of an undertaking on behalf of the director, officer, employee or agent to repay
such amount unless it ultimately be determined that he or she is entitled to be
indemnified as authorized under the Missouri Corporate Law. The indemnification
and advancement of expenses is not deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any bylaw, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in a person's official capacity and as to an action
in another capacity while holding such office. A corporation has the power to
purchase and maintain insurance on behalf of any person against any liability
asserted against such a person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such liability under the
provisions of the Missouri Corporate Law. The Restated Articles of
Incorporation of Boatmen's also provide, as permitted by the Missouri Corporate
Law, for additional indemnification for persons indemnifiable under the Missouri
Corporate Law provided no such
106
person will thereby be indemnified against conduct which was finally adjudged to
have been knowingly fraudulent, deliberately dishonest, or willful misconduct.
The Missouri Corporate Law also provides that to the extent a director, officer,
employee or agent of a Missouri corporation has been successful in the defense
of any action, suit or proceeding or any claim, issue or matter therein, such
corporation must indemnify such person for expenses, including attorneys' fees,
actually and reasonably incurred in connection with such action, suit or
proceeding.
The Kansas Corporate Law is substantially similar to the Missouri
Corporate Law with respect to the indemnification of directors, officers and
employees. The Bylaws of Fourth Financial provide for indemnification of
directors, officers and employees of Fourth Financial to the fullest extent
permissible under the Kansas Corporate Law.
The Kansas Corporate Law also provides that a member of the board of
directors of a corporation is fully protected in the performance of his or her
duties in relying in good faith upon the records of the corporation and upon
such information, opinions, reports or statements presented to the corporation
by any officer or employee of the corporation, committees of the board of
directors or by any other person as to matters the member reasonably believes
are within the other person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the corporation. The Restated
Articles of Incorporation of Fourth Financial provide that no director of Fourth
Financial will be held personally liable to Fourth Financial or its shareholders
for monetary damages for breach of fiduciary duty as a director, provided that a
director will be liable for any breach of the director's duty of loyalty to
Fourth Financial or its shareholders, for acts and omissions not in good faith
which involve intentional misconduct or a knowing violation of law, under the
provisions of Kansas Statutes Annotated 17-6424 (regarding unlawful dividend
payments, stock purchases and redemptions), or for any transaction from which
the director derived an improper personal benefit.
The rights of shareholders of Boatmen's and those of Fourth Financial
are not materially different in these respects.
CONSIDERATION OF NON-SHAREHOLDER INTERESTS
The Missouri Corporate Law provides that in exercising business
judgment in consideration of acquisition proposals, a Missouri corporation's
board of directors may consider the following factors, among others (i) the
consideration being offered; (ii) the existing political, economic, and other
factors bearing on security prices generally, or the corporation's securities in
particular; (iii) whether the acquisition proposal may violate any applicable
laws; (iv) social, legal and economic effects on employees, suppliers, customers
and others having similar relationships with the corporation, and the
communities in which the corporation conducts its businesses; (v) the financial
condition and earning prospects of the person making the acquisition proposal;
and (vi) the competence, experience and integrity of the person making the
acquisition proposal.
Neither the Kansas Corporate Law nor the Restated Articles of
Incorporation or Bylaws of Fourth Financial contain provisions similar to those
described in the preceding paragraph. Accordingly, it is more difficult for
directors of Fourth Financial to consider interests other than those of its
shareholders than it is for directors of Boatmen's.
107
LEGAL OPINION
The legality of the securities offered hereby will be passed upon by
Lewis, Rice & Fingersh, L.C. Members of Lewis, Rice & Fingersh, L.C., and
attorneys employed by them owned, directly or indirectly, as of November 1,
1995, 76,995 shares of Boatmen's Common.
EXPERTS
INDEPENDENT AUDITORS FOR BOATMEN'S
The consolidated financial statements of Boatmen's incorporated by
reference in Boatmen's Annual Report (Form 10-K) for the year ended December 31,
1994 have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated balance sheets of Worthen Banking Corporation and
subsidiaries as of December 31, 1994 and 1993 and the related consolidated
statements of earnings, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1994 incorporated by reference
herein have been incorporated by reference herein in reliance upon the reports
of KPMG Peat Marwick LLP and Frost & Company, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firms as experts in accounting and auditing.
INDEPENDENT AUDITORS FOR FOURTH FINANCIAL
The consolidated financial statements of Fourth Financial Corporation
appearing in Fourth Financial Corporation's Annual Report (Form 10-K) for the
year ended December 31, 1994, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference which, as to the year 1992 is based in part on
the reports of Arthur Andersen LLP, Sartain Fischbein & Co., and GRA, Thompson,
White & Co., P.C., independent auditors. The financial statements referred to
above are included in reliance upon such reports given upon the authority of
such firms as experts in accounting and auditing.
SHAREHOLDER PROPOSALS
Shareholder proposals for the annual meeting of Boatmen's shareholders
to be held in April, 1996 must have been received by Boatmen's not later than
November 14, 1995 in order to have been considered for inclusion in the 1996
proxy statement. Shareholder proposals must also satisfy the requirements set
forth in the Bylaws of Boatmen's described under "COMPARISON OF SHAREHOLDER
RIGHTS -- Shareholder Proposal Procedures." Shareholder proposals for the 1997
annual meeting of Boatmen's must meet the requirements established by the S.E.C.
for shareholder proposals and must be received by Boatmen's on a date to be
determined and announced in Boatmen's proxy statement for its 1996 annual
meeting in order to be considered for inclusion in the 1997 proxy statement.
Upon receipt of any such proposal, Boatmen's will determine whether or not to
include such proposal in the proxy statement and proxy in accordance with the
S.E.C.'s regulations governing the solicitation of proxies.
108
If the Merger has not been consummated by then for any reason, Fourth
Financial expects that its 1996 Annual Meeting of Shareholders will be held in
April, 1996. Shareholder proposals for the annual meeting of Fourth Financial
to be held in April, 1996 (assuming that the Merger has not then been
consummated for any reason) must have been received by Fourth Financial not
later than November 15, 1995 in order to have been considered for inclusion in
the 1996 proxy statement of Fourth Financial.
---------------
109
APPENDIX A
===============================================================================
AGREEMENT AND PLAN OF MERGER
by and among
FOURTH FINANCIAL CORPORATION,
a Kansas corporation,
and
BOATMEN'S BANCSHARES, INC.,
a Missouri corporation,
and
ACQUISITION SUB, INC.,
a Kansas corporation,
Dated August 25, 1995.
===============================================================================
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE ONE TERMS OF THE MERGER AND CLOSING
Section 1.01. Merger................................................. A-1
Section 1.02. Merging Corporation.................................... A-1
Section 1.03. Surviving Corporation.................................. A-1
Section 1.04. Effect of the Merger................................... A-1
Section 1.05. Conversion of Fourth Common............................ A-1
Section 1.06. Conversion of Fourth Preferred......................... A-2
Section 1.07. Share Adjustments...................................... A-3
Section 1.08. Closing................................................ A-3
Section 1.09. Exchange Procedures; Surrender of Certificates......... A-3
Section 1.10. Closing Date........................................... A-4
Section 1.11. Closing Deliveries..................................... A-4
ARTICLE TWO REPRESENTATIONS OF FOURTH
Section 2.01. Organization and Capital Stock......................... A-5
Section 2.02. Authorization; No Defaults............................. A-6
Section 2.03. Subsidiaries........................................... A-6
Section 2.04. Financial Information.................................. A-6
Section 2.05. Absence of Changes..................................... A-7
Section 2.06. Regulatory Enforcement Matters......................... A-7
Section 2.07. Tax Matters............................................ A-8
Section 2.08. Litigation............................................. A-8
Section 2.09. Employment Agreements.................................. A-8
Section 2.10. Reports................................................ A-9
Section 2.11. Loan Portfolio......................................... A-9
Section 2.12. Investment Portfolio................................... A-9
Section 2.13. Interest Rate Risk Management Instruments.............. A-9
Section 2.14. Employee Matters and ERISA............................. A-10
Section 2.15. Title to Properties; Insurance......................... A-11
Section 2.16. Environmental Matters.................................. A-11
Section 2.17. Compliance with Law.................................... A-12
Section 2.18. Brokerage.............................................. A-12
Section 2.19. Non-Banking Activities of Fourth and its Subsidiaries.. A-12
Section 2.20. Trust Administration................................... A-12
Section 2.21. State Takeover Laws.................................... A-13
Section 2.22. Pooling of Interests; Tax-Free Reorganization.......... A-13
Section 2.23. Certain Contracts...................................... A-13
Section 2.24. No Undisclosed Liabilities............................. A-13
Section 2.25. Fair Lending; Community Reinvestment Act............... A-13
Section 2.26. Statements True and Correct............................ A-13
A-i
ARTICLE THREE REPRESENTATIONS OF BOATMEN'S AND ACQUISITION SUB
Section 3.01. Organization and Capital Stock......................... A-14
Section 3.02. Authorization.......................................... A-15
Section 3.03. Subsidiaries........................................... A-15
Section 3.04. Financial Information.................................. A-15
Section 3.05. Absence of Changes..................................... A-16
Section 3.06. Litigation............................................. A-16
Section 3.07. Reports................................................ A-16
Section 3.08. Compliance With Law.................................... A-16
Section 3.09. Pooling of Interests; Tax-Free Reorganization.......... A-16
Section 3.10. Tax Matters............................................ A-16
Section 3.11. Interest Rate Risk Management Instruments.............. A-17
Section 3.12. Brokerage.............................................. A-17
Section 3.13. Non-Banking Activities of Boatmen's and its
Subsidiaries......................................... A-17
Section 3.14. State Takeover Laws.................................... A-17
Section 3.15. Fair Lending; Community Reinvestment Act............... A-17
Section 3.16. Knowledge as to Certain Conditions..................... A-17
Section 3.17. Regulatory Enforcement Matters......................... A-17
Section 3.18. Statements True and Correct............................ A-18
ARTICLE FOUR AGREEMENTS OF FOURTH
Section 4.01. Business in Ordinary Course............................ A-18
Section 4.02. Breaches............................................... A-21
Section 4.03. Submission to Shareholders............................. A-21
Section 4.04. Consents to Contracts and Leases....................... A-21
Section 4.05. Consummation of Agreement.............................. A-21
Section 4.06. Environmental Reports.................................. A-21
Section 4.07. Restriction on Resales................................. A-22
Section 4.08. Subsidiary Bank Mergers................................ A-22
Section 4.09. Access to Information.................................. A-22
ARTICLE FIVE AGREEMENTS OF BOATMEN'S AND ACQUISITION SUB
Section 5.01. Regulatory Approvals and Registration Statement;
Submission to Shareholders........................... A-23
Section 5.02. Breaches............................................... A-24
Section 5.03. Consummation of Agreement.............................. A-24
Section 5.04. Stock Options.......................................... A-24
Section 5.05. Directors and Officers' Liability Insurance and
Indemnification...................................... A-25
Section 5.06. Employee Benefits...................................... A-25
Section 5.07. Board Composition...................................... A-26
Section 5.08. Other Agreements....................................... A-26
Section 5.09. Access to Information.................................. A-26
A-ii
ARTICLE SIX CONDITIONS PRECEDENT TO THE MERGER
Section 6.01. Conditions to Boatmen's Obligations.................... A-27
Section 6.02. Conditions to Fourth's Obligations..................... A-28
ARTICLE SEVEN TERMINATION OR ABANDONMENT
Section 7.01. Mutual Agreement....................................... A-29
Section 7.02. Breach of Agreements................................... A-29
Section 7.03. Environmental Reports.................................. A-30
Section 7.04. Failure of Conditions.................................. A-30
Section 7.05. Regulatory Approval Denial............................. A-30
Section 7.06. Shareholder Approval Denial............................ A-30
Section 7.07. Regulatory Enforcement Matters......................... A-30
Section 7.08. Termination Date....................................... A-30
Section 7.09. Due Diligence Review................................... A-30
Section 7.10. Fourth Option Agreement................................ A-31
ARTICLE EIGHT GENERAL
Section 8.01. Confidential Information............................... A-31
Section 8.02. Publicity.............................................. A-31
Section 8.03. Return of Documents.................................... A-31
Section 8.04. Notices................................................ A-31
Section 8.05. Liabilities............................................ A-32
Section 8.06. Nonsurvival of Representations, Warranties and
Agreements........................................... A-33
Section 8.07. Entire Agreement....................................... A-33
Section 8.08. Headings and Captions.................................. A-33
Section 8.09. Waiver, Amendment or Modification...................... A-33
Section 8.10. Rules of Construction.................................. A-33
Section 8.11. Counterparts........................................... A-33
Section 8.12. Successors and Assigns................................. A-33
Section 8.13. Severability........................................... A-34
Section 8.14. Governing Law; Assignment.............................. A-34
Section 8.15. Definition of Material Adverse Effect.................. A-34
EXHIBIT 4.07 - Form of Affiliate's Letter
A-iii
AGREEMENT AND PLAN OF MERGER
----------------------------
This is an AGREEMENT AND PLAN OF MERGER (this "Agreement") made August 25,
1995, by and among FOURTH FINANCIAL CORPORATION, a Kansas corporation
("Fourth"), BOATMEN'S BANCSHARES, INC., a Missouri corporation ("Boatmen's"),
and ACQUISITION SUB, INC., a Kansas corporation and wholly-owned subsidiary of
Boatmen's ("Acquisition Sub").
In consideration of the premises and the mutual terms and provisions set
forth in this Agreement, the parties agree as follows.
ARTICLE ONE
-----------
TERMS OF THE MERGER AND CLOSING
-------------------------------
SECTION 1.01. MERGER. Pursuant to the terms and provisions of this
------------ ------
Agreement and the General Corporation Code of Kansas (the "Corporate Law"),
Fourth shall merge with and into Acquisition Sub (the "Merger").
SECTION 1.02. MERGING CORPORATION. Fourth shall be the merging corporation
------------ -------------------
under the Merger and its corporate identity and existence, separate and apart
from Acquisition Sub, shall cease on consummation of the Merger.
SECTION 1.03. SURVIVING CORPORATION. Acquisition Sub shall be the
------------ ---------------------
surviving corporation in the Merger. No changes in the articles of
incorporation of Acquisition Sub shall be effected by the Merger.
SECTION 1.04. EFFECT OF THE MERGER. The Merger shall have all of the
------------ --------------------
effects provided by this Agreement and the Corporate Law.
SECTION 1.05. CONVERSION OF FOURTH COMMON.
------------ ---------------------------
(a) At the Effective Time (as defined in Section 1.10 hereof), each share of
common stock, par value $5.00 per share, of Fourth (the "Fourth Common") issued
and outstanding immediately prior to the Effective Time shall be converted into
the right to receive one (1) share of common stock, par value $1.00 per share,
of Boatmen's (together with any rights attached thereto under or by virtue of
the Rights Agreement, dated August 14, 1990, as amended, between Boatmen's and
the Rights Agent named therein, prior to the Distribution Date (as defined in
the Rights Agreement), the "Boatmen's Common"). The shares of Boatmen's Common
to be issued pursuant to the foregoing sentence, together with any cash payment
in lieu of fractional shares, as provided below, is referred to herein as the
"Common Merger Consideration." No fractional shares of Boatmen's Common shall
be issued and, in lieu thereof, holders of shares of Fourth Common who would
otherwise be entitled to a fractional share interest (after taking into account
all shares of Fourth Common held by such holder) shall be paid an amount in cash
equal to the product of such fractional share interest and the closing price of
a share of Boatmen's Common on the Nasdaq Stock Market's National Market
("Nasdaq") on the business day immediately preceding the date on which the
Effective Time occurs.
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(b) At the Effective Time, all of the shares of Fourth Common, by virtue of
the Merger and without any action on the part of the holders thereof, shall no
longer be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of any certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Fourth Common (the
"Common Certificates") shall thereafter cease to have any rights with respect to
such shares, except the right of such holders to receive, without interest, the
Common Merger Consideration upon the surrender of such Common Certificate or
Common Certificates in accordance with Section 1.09 hereof.
(c) At the Effective Time, each share of Fourth Common, if any, held in the
treasury of Fourth or by any direct or indirect subsidiary of Fourth (other than
shares held in trust accounts for the benefit of others or in other fiduciary,
nominee or similar capacities and shares held by Fourth or any of its
subsidiaries in respect of a debt previously contracted) immediately prior to
the Effective Time shall be canceled.
(d) Each share of common stock, par value $1.00 per share, of Acquisition
Sub outstanding immediately prior to the Effective Time shall remain outstanding
unaffected by the Merger.
SECTION 1.06. CONVERSION OF FOURTH PREFERRED.
------------ ------------------------------
(a) At the Effective Time, each share of Class A 7% Cumulative Convertible
Preferred Stock, par value $100 per share, liquidation preference $400 per
share, of Fourth (the "Fourth Preferred"), issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive one (1)
share of 7% cumulative convertible preferred stock, stated value $100 per share,
liquidation preference $400 per share, of Boatmen's (the "Boatmen's
Preferred")(and, as a result, each depositary share representing a one-sixteenth
(1/16) interest in a share of Fourth Preferred shall be converted into the right
to receive a one-sixteenth (1/16) share of Boatmen's Preferred). The terms of
the Boatmen's Preferred shall be substantially the same as the terms of the
Fourth Preferred (with such stock being convertible at the same conversion price
into the number of shares of Boatmen's Common included in the Common Merger
Consideration). The shares of Boatmen's Preferred to be issued pursuant to the
foregoing sentence are referred to herein as the "Preferred Merger
Consideration"; the Common Merger Consideration and the Preferred Merger
Consideration are referred to herein collectively as the "Merger Consideration."
(b) At the Effective Time, all of the shares of Fourth Preferred, by virtue
of the Merger and without any action on the part of the holders thereof, shall
no longer be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of any certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Fourth Preferred
("Preferred Certificates"; the Common Certificates and the Preferred
Certificates are referred to herein collectively as the "Certificates") shall
thereafter cease to have any rights with respect to such shares, except the
right of such holders to receive, without interest, the Preferred Merger
Consideration upon the surrender of such Preferred Certificate or Preferred
Certificates in accordance with Section 1.09 hereof.
(c) At the Effective Time, any deposit agreements pursuant to which shares
of Fourth Preferred are held subject to depositary receipts shall automatically,
and without further action on the part of Boatmen's or Acquisition Sub, be
assumed by Acquisition Sub.
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SECTION 1.07. SHARE ADJUSTMENTS. If between the date hereof and the
------------ -----------------
Effective Time a share of Boatmen's Common shall be changed into a different
number of shares of Boatmen's Common or a different class of shares (a "Share
Adjustment") by reason of reclassification, recapitalization, splitup, exchange
of shares or readjustment, or if a stock dividend thereon shall be declared with
a record date within such period, then the number of shares of Boatmen's Common
into which a share of Fourth Common shall be converted pursuant to Section
1.05(a) hereof shall be appropriately and proportionately adjusted so that each
shareholder of Fourth shall be entitled to receive such number of shares of
Boatmen's Common as such shareholder would have received pursuant to such Share
Adjustment had the record date therefor been immediately following the Effective
Time of the Merger.
SECTION 1.08. CLOSING. The closing of the Merger (the "Closing") shall
------------ -------
take place at a location mutually agreeable to the parties at 10:00 A.M. Central
Time on the Closing Date described in Section 1.10 hereof.
SECTION 1.09. EXCHANGE PROCEDURES; SURRENDER OF CERTIFICATES.
------------ ----------------------------------------------
(a) Boatmen's Trust Company shall act as Exchange Agent in the Merger (the
"Exchange Agent").
(b) As soon as reasonably practicable after the Effective Time, the Exchange
Agent shall mail to each record holder of any Certificate or Certificates whose
shares were converted into the right to receive the Merger Consideration, a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent and shall be in such form and have
such other provisions as Boatmen's may reasonably specify) (each such letter,
the "Merger Letter of Transmittal") and instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender to the Exchange Agent of a Certificate, together with a Merger Letter
of Transmittal duly executed and any other required documents, the holder of
such Certificate shall be entitled to receive in exchange therefor solely the
Merger Consideration. No interest on the Merger Consideration issuable upon the
surrender of the Certificates shall be paid or accrued for the benefit of
holders of Certificates. If the Merger Consideration is to be issued to a
person other than a person in whose name a surrendered Certificate is
registered, it shall be a condition of issuance that the surrendered Certificate
shall be properly endorsed or otherwise in proper form for transfer and that the
person requesting such issuance shall pay to the Exchange Agent any required
transfer taxes or other taxes or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
(c) Notwithstanding anything to the contrary contained herein, no Common
Merger Consideration shall be delivered to a person who is an "affiliate" (as
such term is used in Section 4.07 hereof) of Fourth unless such "affiliate"
shall have theretofore executed and delivered to Boatmen's the agreement
referred to in Section 4.07 hereof.
(d) No dividends that are otherwise payable on shares of Boatmen's Common
constituting the Merger Consideration shall be paid after the sixtieth (60th)
day after the Closing Date to persons entitled to receive such shares of
Boatmen's Common until such persons surrender their Certificates in exchange for
shares of such Boatmen's Common. Upon such surrender, there shall be paid to
the person in whose name the shares of Boatmen's Common shall be issued any
dividends which shall have become payable with respect to such shares of
Boatmen's Common (without interest and less the amount of taxes, if any,
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which may have been imposed thereon), between the sixtieth (60th) day after the
Closing Date and the time of such surrender.
(e) In the event that any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Boatmen's
in its sole discretion, the posting by such person of a bond in such amount as
Boatmen's may determine is reasonably necessary as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof pursuant to this Agreement.
(f) Notwithstanding anything in this Agreement to the contrary, for a period
of ninety (90) days after the Closing Date holders of Common Certificates
representing shares of Fourth Common shall be entitled to vote as holders of
shares of Boatmen's Common notwithstanding that such Common Certificates shall
not have been exchanged for shares of Boatmen's Common as provided in this
Section 1.09.
SECTION 1.10. CLOSING DATE. At Boatmen's election, the Closing shall take
------------ ------------
place on (i) the last business day of, or (ii) the first business day of the
month following, in each case, the month during which each of the conditions in
Sections 6.01(d) and 6.02(d) hereof is satisfied or waived by the appropriate
party or on such other date after such satisfaction or waiver as Fourth and
Boatmen's may agree (the "Closing Date"). The Merger shall be effective upon
the filing of a Certificate of Merger with the Secretary of State of the State
of Kansas (the "Effective Time"), which the parties shall use their best efforts
to cause to occur on the Closing Date.
SECTION 1.11. CLOSING DELIVERIES.
------------ ------------------
(a) At the Closing, Fourth shall deliver to Boatmen's and Acquisition Sub:
(i) a certified copy of the Restated Articles of Incorporation of
Fourth and each of its subsidiaries;
(ii) a Certificate signed by an appropriate officer of Fourth
stating that, to the best knowledge of such officer, all of the conditions
set forth in Sections 6.01(a) and 6.01(b) hereof have been satisfied or
waived as provided therein;
(iii) a certified copy of the resolutions of Fourth's Board of
Directors and shareholders, as required for valid approval of the execution
of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby;
(iv) Certificate of the Kansas Secretary of State, dated a recent
date, stating that Fourth is in good standing; and
(v) Certificate of Merger executed by Fourth, reflecting the terms
and provisions of this Agreement and in proper form for filing with the
Secretary of State of the State of Kansas in order to cause the Merger to
become effective pursuant to the Corporate Law.
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(b) At the Closing, Boatmen's and Acquisition Sub shall deliver to Fourth:
(i) a Certificate signed by an appropriate officer of Boatmen's and
Acquisition Sub, to the best knowledge of such officer, stating that all of
the conditions set forth in Sections 6.02(a), 6.02(b) and 6.02(d) hereof
(but excluding the approval of Fourth's shareholders) have been satisfied;
(ii) a certified copy of the resolutions of Boatmen's Board of
Directors and shareholders, as required for valid approval of the execution
of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby; and
(iii) a certified copy of the resolutions of Acquisition Sub's
Board of Directors and shareholder, as required for valid approval of the
execution of this Agreement and the consummation of the transactions
contemplated hereby.
ARTICLE TWO
-----------
REPRESENTATIONS OF FOURTH
-------------------------
Fourth hereby makes the following representations and warranties:
SECTION 2.01. ORGANIZATION AND CAPITAL STOCK.
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(a) Fourth is a corporation duly organized, validly existing and in good
standing under the laws of the State of Kansas and has the corporate power to
own all of its property and assets, to incur all of its liabilities and to carry
on its business as now being conducted. Fourth is a bank holding company
registered with the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") under the Bank Holding Company Act of 1956, as amended
(the "B.H.C.A.").
(b) The authorized capital stock of Fourth consists of (i) 50,000,000 shares
of Fourth Common, of which, as of the date hereof, 27,626,660 shares are issued,
2,099 are held as treasury shares, and 27,624,561 are issued and outstanding,
(ii) 250,000 shares of Fourth Preferred, of which, as of the date hereof,
248,666 shares are issued and outstanding, and (iii) 5,000,000 shares of Class B
preferred stock, of which, as of the date hereof, no shares are issued and
outstanding. All of the issued and outstanding shares of Fourth Common and
Fourth Preferred are duly and validly issued and outstanding and are fully paid
and non-assessable. None of the outstanding shares of Fourth Common or Fourth
Preferred has been issued in violation of any preemptive rights of the current
or past shareholders of Fourth. As of the date hereof, Fourth had reserved
2,964,510 shares of Fourth Common for issuance under Fourth's Stock Option Plans
(as defined in Section 5.04 hereof) and 3,447,121 shares of Fourth Common for
issuance pursuant to the conversion provisions of the Fourth Preferred. As of
the date hereof, Fourth had outstanding employee stock options representing the
right to acquire not more than 1,693,474 shares of Fourth Common pursuant to the
Stock Option Plans.
(c) Except as set forth in subsection 2.01(b) above and that certain Stock
Option Agreement to be entered into between Fourth and Boatmen's (the "Fourth
Option Agreement"), there are no shares of capital stock or other equity
securities of Fourth outstanding and no outstanding options, warrants,
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rights to subscribe for, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of Fourth Common or other capital stock of Fourth or contracts,
commitments, understandings or arrangements by which Fourth is or may be
obligated to issue additional shares of its capital stock or options, warrants
or rights to purchase or acquire any additional shares of its capital stock.
SECTION 2.02. AUTHORIZATION; NO DEFAULTS. Fourth's Board of Directors has,
------------ --------------------------
by all appropriate action, approved this Agreement and the Merger and authorized
the execution hereof and thereof on its behalf by its duly authorized officers
and the performance by Fourth of its obligations hereunder. Nothing in the
articles of incorporation or bylaws of Fourth, as amended, or any other
agreement, instrument, decree, proceeding, law or regulation (except as
specifically referred to in or contemplated by this Agreement) by or to which it
or any of its subsidiaries are bound or subject would prohibit Fourth from
consummating this Agreement and the Merger on the terms and conditions herein
contained. This Agreement has been duly and validly executed and delivered by
Fourth and constitutes a legal, valid and binding obligation of Fourth,
enforceable against Fourth in accordance with its terms and, except for the
requisite approval of the shareholders of Fourth, no other corporate acts or
proceedings are required to be taken by Fourth to authorize the execution,
delivery and performance of this Agreement. Fourth and its subsidiaries are
neither in default under nor in violation of any provision of their articles of
incorporation or association, as the case may be, bylaws, or any promissory
note, indenture or any evidence of indebtedness or security therefor, lease,
contract, insurance policy, purchase or other commitment or any other agreement
or arrangement, whether written or oral, which default or violation would have a
Material Adverse Effect (as defined in Section 8.15 hereof) on Fourth, and there
has not occurred any event that, with the lapse of time or giving of notice or
both, would constitute such a default or violation.
SECTION 2.03. SUBSIDIARIES. Each of Fourth's banking subsidiaries and its
------------ ------------
other direct or indirect subsidiaries (collectively, the "subsidiaries") the
name and jurisdiction of incorporation of which is disclosed in Section 2.03 of
that certain confidential writing delivered by Fourth to Boatmen's and executed
by both Fourth and Boatmen's concurrently with the delivery and execution of
this Agreement (the "Disclosure Schedule"), is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the corporate power to own its respective properties and assets, to incur
its respective liabilities and to carry on its respective business as now being
conducted. All of the issued and outstanding shares of capital stock of each
such subsidiary (except as may be otherwise specified in Section 2.03 of the
Disclosure Schedule) are owned by Fourth or Fourth's subsidiaries, as the case
may be, free and clear of all material liens, encumbrances, rights of first
refusal, options or other restrictions of any nature whatsoever, except for
directors' qualifying shares, assessibility under 12 U.S.C. (S)55 and comparable
state laws, if applicable, and as may be stated in Section 2.03 of the
Disclosure Schedule. There are no options, warrants or rights outstanding to
acquire any capital stock of any of Fourth's subsidiaries and no person or
entity has any other right to purchase or acquire any unissued shares of stock
of any of Fourth's subsidiaries, nor does any such subsidiary have any
obligation of any nature with respect to its unissued shares of stock. Except
as may be disclosed in Section 2.03 of the Disclosure Schedule, neither Fourth
nor any of Fourth's subsidiaries is a party to any partnership or joint venture
or owns an equity interest in any other business or enterprise.
SECTION 2.04. FINANCIAL INFORMATION. The consolidated balance sheets of
------------ ---------------------
Fourth and its subsidiaries as of December 31, 1994 and related consolidated
income statements and statements of changes in shareholders' equity and of cash
flows for the three (3) years ended December 31, 1994,
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together with the notes thereto, included in Fourth's Form 10-K for the year
ended December 31, 1994, as currently on file with the Securities and Exchange
Commission (the "S.E.C."), and the unaudited consolidated balance sheets of
Fourth and its subsidiaries as of March 31, 1995 and June 30, 1995 and the
related unaudited consolidated income statements and statements of changes in
shareholders' equity and cash flows for the three (3) months and six (6) months,
respectively, then ended included in Fourth's Quarterly Reports on Form 10-Q for
the quarters then ended, as currently on file with the S.E.C., and the year-end
and quarterly Reports of Condition and Reports of Income of BANK IV, National
Association and BANK IV Oklahoma, National Association (individually, a
"Subsidiary Bank"; collectively, the "Subsidiary Banks") for 1994 and June 30,
1995, respectively, as currently on file with the Office of the Comptroller of
the Currency (the "O.C.C.") (together, the "Fourth Financial Statements"), have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be disclosed therein and except for
regulatory accounting reporting differences required by the Subsidiary Banks'
reports) and fairly present in all material respects the consolidated financial
position and the consolidated results of operations, changes in shareholders'
equity and cash flows of the respective entity and its respective consolidated
subsidiaries as of the dates and for the periods indicated (subject, in the case
of interim financial statements, to normal recurring year-end adjustments, none
of which will be material).
SECTION 2.05. ABSENCE OF CHANGES. Since December 31, 1994, there has not
------------ ------------------
been any change in the financial condition, the results of operations or the
business of Fourth and its subsidiaries taken as a whole which would have a
Material Adverse Effect on Fourth, except as disclosed by Fourth since December
31, 1994 in its periodic reports filed with the S.E.C. under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Since the date of their
respective most recent O.C.C. examination report, there has been no change in
the financial condition, the results of operations or the business of either of
the Subsidiary Banks which would have a Material Adverse Effect on either of the
Subsidiary Banks, except as disclosed by such Subsidiary Banks since December
31, 1994 in their respective quarterly Reports of Condition and Reports of
Income filed with the O.C.C.
SECTION 2.06. REGULATORY ENFORCEMENT MATTERS. Except as may be disclosed
------------ ------------------------------
in Section 2.06 of the Disclosure Schedule, neither Fourth nor any Subsidiary
Bank or any other of its subsidiaries is subject or is party to, or has received
any notice or advice that it may become subject or party to, any cease-and-
desist order, agreement, consent agreement, memorandum of understanding or other
regulatory enforcement action, proceeding or order with or by, or is a party to
any commitment letter or similar undertaking to, or is subject to any directive
by, or has been since January 1, 1993, a recipient of any supervisory letter
from, or since January 1, 1993, has adopted any board resolutions at the request
of, any Regulatory Agency (as defined below in this Section 2.06) that currently
restricts in any material respect the conduct of its business or that in any
material manner relates to its capital adequacy, its credit policies, its
management or its business (each, a "Regulatory Agreement"), nor has Fourth or
any of its subsidiaries been advised since January 1, 1993, by any Regulatory
Agency that it is considering issuing or requesting any such Regulatory
Agreement. As used in this Agreement, the term "Regulatory Agency" means any
federal or state agency charged with the supervision or regulation of banks or
bank holding companies, or engaged in the insurance of bank deposits, or any
court, administrative agency or commission or other governmental agency,
authority or instrumentality having supervisory or regulatory authority with
respect to Fourth or any of its subsidiaries.
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SECTION 2.07. TAX MATTERS.
------------ -----------
(a) Each of Fourth and its subsidiaries has filed with the appropriate
governmental agencies all federal, state and local income, franchise, excise,
sales, use, real and personal property and other tax returns and reports
required to be filed by it. Except as set forth in Section 2.07(a) of the
Disclosure Schedule or except as it may relate to a Tax or Tax liability that
Fourth is in good faith contesting, neither Fourth nor its subsidiaries are (a)
delinquent in the payment of any Taxes (as defined below in this Section 2.07)
shown on such returns or reports or on any written assessments received by it
for such Taxes, (b) subject to any agreement extending the period for assessment
or collection of any Tax, or (c) a party to any action or proceeding with, nor
has any claim been asserted or threatened against any of them by, any
governmental authority for assessment or collection of Taxes. Except as set
forth in Section 2.07(a) of the Disclosure Schedule, the United States Federal
income tax returns of Fourth and its subsidiaries have been examined by the
Internal Revenue Service (the "I.R.S.") and any liability with respect thereto
has been satisfied for all years to and including 1990, and either no material
deficiencies were asserted as a result of such examination for which Fourth does
not have adequate reserves or all such deficiencies have been satisfied. The
reserve for Taxes in the financial statements of Fourth for the year ended
December 31, 1994, is adequate to cover all of the liabilities for Taxes of
Fourth and its subsidiaries that may become payable in future years with respect
to any transactions consummated prior to December 31, 1994. As used in this
Agreement, the term "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated or
other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or undisputed.
(b) Except as set forth in Section 2.07(b) of the Disclosure Schedule, any
amount that could be received (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by this Agreement
by any employee, officer or director of Fourth or any of its affiliates who is a
"Disqualified Individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Fourth Employee Plan (as defined in
Section 2.14(c) hereof) currently in effect would not be characterized as an
"excess parachute payment" (as such term is defined in Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) Except as set forth in Section 2.07(c) of the Disclosure Schedule,
Fourth has not been subject to any disallowance of a deduction under Section
162(m) of the Code nor does Fourth reasonably believe that such a disallowance
is reasonably likely to be applicable for any tax year of Fourth ended on or
before the Closing Date.
SECTION 2.08. LITIGATION. Except as may be disclosed in Section 2.08 of
------------ ----------
the Disclosure Schedule, there is no litigation, claim or other proceeding
pending or, to the knowledge of Fourth, threatened, against Fourth or any of its
subsidiaries, or of which the property of Fourth or any of its subsidiaries is
or would be subject, which would have a Material Adverse Effect on Fourth.
SECTION 2.09. EMPLOYMENT AGREEMENTS. Except as may be disclosed in Section
------------ ---------------------
2.09 of the Disclosure Schedule, neither Fourth nor any of its subsidiaries is a
party to or bound by any agreement, arrangement, commitment or contract (whether
written or oral) for the employment, election, retention
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or engagement, or with respect to the severance, of any present or former
officer or employee which, by its terms, is not terminable by Fourth or such
subsidiary on thirty (30) days written notice or less without the payment of any
amount in excess of $25,000 by reason of such termination. A true, accurate and
complete list of each such agreement and any and all amendments or supplements
thereto is included in Section 2.09 of the Disclosure Schedule.
SECTION 2.10. REPORTS. Except as may be disclosed in Section 2.10 of the
------------ -------
Disclosure Schedule, Fourth and each of its subsidiaries has filed all material
reports and statements, together with any amendments required to be made with
respect thereto, if any, that it was required to file with (i) the Federal
Reserve Board, (ii) the O.C.C., (iii) the Federal Deposit Insurance Corporation
(the "F.D.I.C."), (iv) the S.E.C., (v) any state securities authorities, (vi)
Nasdaq, and (vii) any other Regulatory Agency with jurisdiction over Fourth or
any of its subsidiaries. As of their respective dates, each of such reports and
documents, including any financial statements, exhibits and schedules thereto,
complied in all material respects with the relevant statutes, rules and
regulations enforced or promulgated by the regulatory authority with which they
were filed.
SECTION 2.11. LOAN PORTFOLIO. Except as may be disclosed in Section 2.11
------------ --------------
of the Disclosure Schedule, (i) the loans and discounts shown on the Fourth
Financial Statements or which were entered into after the date of the most
recent balance sheet included in the Fourth Financial Statements were and will
be made in all material respects in the ordinary course of the business of
Fourth and its subsidiaries, and are not subject to any material known defenses,
setoffs or counterclaims, including without limitation any such as are afforded
by usury or truth in lending laws, except as may be provided by bankruptcy,
insolvency or similar laws or by general principles of equity, (ii) the notes or
other evidences of indebtedness evidencing such loans and all forms of pledges,
mortgages and other collateral documents and security agreements are and will
be, in all material respects, enforceable, valid, true and genuine and what they
purport to be, and (iii) Fourth and its subsidiaries have complied and will
prior to the Closing Date comply with all laws and regulations relating to such
loans, or to the extent there has not been such compliance, such failure to
comply will not materially interfere with the collection of such loans.
SECTION 2.12. INVESTMENT PORTFOLIO. All United States Treasury securities,
------------ --------------------
obligations of other United States Government agencies and corporations,
obligations of States and political subdivisions of the United States and other
investment securities held by Fourth or its subsidiaries, as reflected in the
latest consolidated balance sheet of Fourth included in the Fourth Financial
Statements, are carried in the aggregate at no more than cost adjusted for
amortization of premiums and accretion of discounts in accordance with generally
accepted accounting principles, specifically including but not limited to FAS
115.
SECTION 2.13. INTEREST RATE RISK MANAGEMENT INSTRUMENTS. All interest rate
------------ -----------------------------------------
swaps, caps, floors, option agreements and other interest rate risk management
agreements with third parties, whether entered into for the account of Fourth or
its subsidiaries or for the account of a customer of Fourth or one of its
subsidiaries, were entered into in the ordinary course of business and in
accordance with prudent banking practice and applicable rules, regulations and
policies and with counterparties believed to be financially responsible at the
time and are legal, valid and binding obligations of Fourth or one of its
subsidiaries enforceable in accordance with their terms (subject to the
provisions of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting the enforceability of creditors' rights
generally from time to time in effect, and equitable principles relating to the
granting of specific performance and other equitable remedies as a matter of
judicial discretion), and are in full
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force and effect. Fourth and each of its subsidiaries have duly performed in
all material respects all of their material obligations thereunder to the extent
that such obligations to perform have accrued; and, to Fourth's knowledge, there
are no material breaches, violations or defaults or allegations or assertions of
such by any party thereunder.
SECTION 2.14. EMPLOYEE MATTERS AND ERISA.
------------ --------------------------
(a) Except as may be disclosed in Section 2.14(a) of the Disclosure
Schedule, neither Fourth nor any of its subsidiaries has entered into any
collective bargaining agreement with any labor organization with respect to any
group of employees of Fourth or any of its subsidiaries and to the knowledge of
Fourth there is no present effort nor existing proposal to attempt to unionize
any group of employees of Fourth or any of its subsidiaries.
(b) Except as may be disclosed in Section 2.14(b) of the Disclosure
Schedule, (i) Fourth and its subsidiaries are and have been in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including,
without limitation, any such laws respecting employment discrimination and
occupational safety and health requirements, and neither Fourth nor any of its
subsidiaries is engaged in any unfair labor practice, (ii) there is no material
unfair labor practice complaint against Fourth or any subsidiary pending or, to
the knowledge of Fourth, threatened before the National Labor Relations Board,
(iii) there is no labor dispute, strike, slowdown or stoppage actually pending
or, to the knowledge of Fourth, threatened against or directly affecting Fourth
or any subsidiary, and (iv) neither Fourth nor any subsidiary has experienced
any material work stoppage or other material labor difficulty during the past
five (5) years.
(c) Except as may be disclosed in Section 2.14(c) of the Disclosure
Schedule, neither Fourth nor any subsidiary maintains, contributes to or
participates in or has any liability under any employee benefit plans, as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or any nonqualified employee benefit plans or deferred
compensation, bonus, stock or incentive plans, or other employee benefit or
fringe benefit programs for the benefit of former or current employees of Fourth
or any subsidiary (the "Fourth Employee Plans"). To the knowledge of Fourth, no
present or former employee of Fourth or any subsidiary has been charged with
breaching nor has breached a fiduciary duty under any of the Fourth Employee
Plans. Neither Fourth nor any of its subsidiaries participates in, nor has it
in the past five (5) years participated in, nor has it any present or future
obligation or liability under, any multiemployer plan (as defined at Section
3(37) of ERISA). Except as may be separately disclosed in Section 2.14(c) of
the Disclosure Schedule, neither Fourth nor any subsidiary maintains,
contributes to, or participates in, any plan that provides health, major
medical, disability or life insurance benefits to former employees of Fourth or
any subsidiary.
(d) All liabilities of the Fourth Employee Plans subject to Title IV of
ERISA have been funded on the basis of consistent methods in accordance with
sound actuarial assumptions and practices. No actuarial assumptions have been
changed since the last written report of actuaries on such Fourth Employee
Plans. All insurance premiums (including premiums to the Pension Benefit
Guaranty Corporation) have been paid in full to the extent due, subject only to
normal retrospective adjustments in the ordinary course. Except as may be noted
on the Fourth Financial Statements, Fourth and its subsidiaries have no
contingent or actual liabilities under Title IV of ERISA as of December 31,
1994. No accumulated funding deficiency (within the meaning of Section 302 of
ERISA or Section 412 of the Code) has ever been incurred with respect to any of
the Fourth Employee Plans, whether or not waived.
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No reportable event (as defined in Section 4043 of ERISA) has occurred with
respect to any of the Fourth Employee Plans as to which a notice would be
required to be filed with the Pension Benefit Guaranty Corporation. No claim is
pending or, to the knowledge of Fourth, threatened or imminent with respect to
any Fourth Employee Plan (other than a routine claim for benefits for which plan
administrative review procedures have not been exhausted) for which Fourth or
any of its subsidiaries would be liable after December 31, 1994, except as is
reflected on the Fourth Financial Statements. After December 31, 1994, Fourth
and its subsidiaries have no liability for excise taxes under Sections 4971,
4975, 4976, 4977, 4979 or 4980B of the Code or for a fine under Section 502 of
ERISA with respect to any Fourth Employee Plan. All Fourth Employee Plans have
been operated, administered and maintained materially in accordance with the
terms thereof and in material compliance with the requirements of all applicable
laws, including, without limitation, ERISA.
(e) Except as may be disclosed in Section 2.14(e) of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby (either alone or upon the
occurrence of any additional acts or events) will (i) result in any material
payment (including, without limitation, severance, golden parachute or
otherwise) becoming due to any director, officer or employee of Fourth or any of
its affiliates from Fourth or any of its affiliates under any Fourth Employee
Plan or otherwise, (ii) materially increase any benefits otherwise payable under
any Fourth Employee Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefits to any material extent.
SECTION 2.15. TITLE TO PROPERTIES; INSURANCE. Except as may be disclosed
------------ ------------------------------
in Section 2.15 of the Disclosure Schedule, (i) Fourth and its subsidiaries have
marketable title, insurable at standard rates, free and clear of all liens,
charges and encumbrances (except taxes which are a lien but not yet payable and
liens, charges or encumbrances reflected in the Fourth Financial Statements and
easements, rights-of-way, and other restrictions which are not material) to all
of their real properties (except Other Real Estate Owned, as such real estate is
internally classified on the books of Fourth or its subsidiaries), (ii) all
leasehold interests for real property and any material personal property used by
Fourth and its subsidiaries in their businesses are held pursuant to lease
agreements which are valid and enforceable in accordance with their terms, (iii)
all such properties comply in all material respects with all applicable private
agreements, zoning requirements and other governmental laws and regulations
relating thereto and there are no condemnation proceedings pending or, to the
knowledge of Fourth, threatened with respect to such properties, (iv) Fourth and
its subsidiaries have valid title or other ownership rights under licenses to
all material intangible personal or intellectual property necessary to conduct
the business and operations of Fourth and its subsidiaries as presently
conducted, free and clear of any claim, defense or right of any other person or
entity which is material to such property, subject only to rights of the
licensors pursuant to applicable license agreements, which rights do not
materially adversely interfere with the use of such property, and (v) all
material insurable properties owned or held by Fourth and its subsidiaries are
adequately insured by financially sound and reputable insurers in such amounts
and against fire and other risks insured against by extended coverage and public
liability insurance, as is customary with bank holding companies of similar
size.
SECTION 2.16. ENVIRONMENTAL MATTERS.
------------ ---------------------
(a) As used in this Agreement, "Environmental Laws" means all local, state
and federal environmental, health and safety laws and regulations in all
jurisdictions in which Fourth and its subsidiaries have done business or owned,
leased or operated property, including, without limitation, the
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Federal Resource Conservation and Recovery Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act, the Federal Clean Water
Act, the Federal Clean Air Act, and the Federal Occupational Safety and Health
Act.
(b) Except as may be disclosed in Section 2.16 of the Disclosure Schedule,
neither the conduct nor operation of Fourth or its subsidiaries nor any
condition of any property presently or previously owned, leased or operated by
any of them violates or violated Environmental Laws in any respect material to
the business of Fourth and its subsidiaries and no condition has existed or
event has occurred with respect to any of them or any such property that, with
notice or the passage of time, or both, would constitute a violation material to
the business of Fourth and its subsidiaries of Environmental Laws or obligate
(or potentially obligate) Fourth or its subsidiaries to remedy, stabilize,
neutralize or otherwise alter the environmental condition of any such property
where the aggregate cost of such actions would be material to Fourth and its
subsidiaries. Except as may be disclosed in Section 2.16 of the Disclosure
Schedule, neither Fourth nor any of its subsidiaries has received any notice
from any person or entity that Fourth or its subsidiaries or the operation or
condition of any property ever owned, leased or operated by any of them are or
were in violation of any Environmental Laws or that any of them are responsible
(or potentially responsible) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or materials
at, on or beneath any such property.
SECTION 2.17. COMPLIANCE WITH LAW. Fourth and Subsidiary Banks have all
------------ -------------------
material licenses, franchises, permits and other governmental authorizations
that are legally required to enable them to conduct their respective businesses
in all material respects and are in compliance in all material respects with all
applicable laws and regulations.
SECTION 2.18. BROKERAGE. Except as may be disclosed in Section 2.18 of the
------------ ---------
Disclosure Schedule, there are no existing claims or agreements for brokerage
commissions, finders' fees, or similar compensation in connection with the
transactions contemplated by this Agreement payable by Fourth or its
subsidiaries.
SECTION 2.19. NON-BANKING ACTIVITIES OF FOURTH AND ITS SUBSIDIARIES.
------------ -----------------------------------------------------
Neither Fourth nor any of its subsidiaries that is neither a bank, a bank
operating subsidiary or a bank service corporation, directly or indirectly,
engages in any activity prohibited by the B.H.C.A. Without limiting the
generality of the foregoing, any equity investment of Fourth and each of its
subsidiaries that is not a bank, a bank operating subsidiary or a bank service
corporation, is not prohibited by the B.H.C.A.
SECTION 2.20. TRUST ADMINISTRATION. Each Subsidiary Bank and each other
------------ --------------------
subsidiary of Fourth which is a trust company or otherwise acts in a fiduciary
capacity has properly administered all accounts for which it acts as a fiduciary
or agent, including but not limited to accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the governing documents and
applicable state and federal law and regulation and common law, except where the
failure to do so would not, individually or in the aggregate, have a Material
Adverse Effect on Fourth. Neither Fourth, any subsidiary of Fourth, nor any
director, officer or employee of Fourth or any of its subsidiaries acting on
behalf of Fourth or any of its subsidiaries, has committed any breach of trust
with respect to any such fiduciary or agency account, and the accountings for
each such fiduciary or agency account are true and correct in all material
respects and accurately reflect the assets of such fiduciary or agency account,
except for such breaches and failures to be true, correct and accurate which
would not, individually or in the aggregate, have a Material Adverse Effect
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on Fourth. There is no investigation or inquiry by any Regulatory Agency
pending, or to the knowledge of Fourth, threatened, against or affecting Fourth
or any of its subsidiaries relating to the compliance by Fourth or any such
subsidiary with sound fiduciary principles and applicable regulations which
would have a Material Adverse Effect on Fourth.
SECTION 2.21. STATE TAKEOVER LAWS. The Board of Directors of Fourth has
------------ -------------------
approved the transactions contemplated by this Agreement and the Fourth Option
Agreement such that Article VIII of the Articles of Incorporation of Fourth and
the provisions of KAN. STAT. ANN. (S)(S) 17-1286 et seq. and 17-12,100 et seq.
will not apply to this Agreement or the Fourth Option Agreement or any of the
transactions contemplated hereby or thereby.
SECTION 2.22. POOLING OF INTERESTS; TAX-FREE REORGANIZATION. As of the
------------ ---------------------------------------------
date of this Agreement, Fourth has no reason to believe that the Merger will not
qualify as a "pooling of interests" for accounting purposes or a tax-free
reorganization within the meaning of Section 368(a) of the Code.
SECTION 2.23. CERTAIN CONTRACTS. Except as disclosed in Section 2.23 of
------------ -----------------
the Disclosure Schedule or filed or incorporated by reference in periodic
reports filed by Fourth with the S.E.C. under the Exchange Act, neither Fourth
nor any of its subsidiaries is a party to, or is bound by, (i) any material
contract as defined in Item 601(b)(10) of Regulation S-K of the S.E.C. or any
other contract not made in the ordinary course of business (other than loans or
loan commitments and funding transactions in the ordinary course of business of
Fourth's subsidiaries), (ii) any agreement restricting the nature or geographic
scope of any line of business or activity of Fourth or its subsidiaries, or
(iii) any agreement, indenture or other instrument relating to the borrowing of
money by Fourth or any of its subsidiaries or the guarantee by Fourth or any of
its subsidiaries of any such obligation, other than instruments relating to
transactions entered into in the ordinary course of business.
SECTION 2.24. NO UNDISCLOSED LIABILITIES. Fourth and its subsidiaries do
------------ --------------------------
not have any material liability, whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due (and there
is no past or present fact, situation, circumstance, condition or other basis
for any present or future action, suit or proceeding, hearing, charge,
complaint, claim or demand against Fourth or its subsidiaries giving rise to any
such liability), except (i) for liabilities set forth in the Fourth Financial
Statements, (ii) normal fluctuation in the amount of the liabilities referred to
in clause (i) above occurring in the ordinary course of business of Fourth and
its subsidiaries since the date of the most recent balance sheet included in the
Fourth Financial Statements, and (iii) as may be disclosed in Section 2.24 of
the Disclosure Schedule.
SECTION 2.25. FAIR LENDING; COMMUNITY REINVESTMENT ACT. As of the date
------------ ----------------------------------------
hereof, with the exception of routine investigation of consumer complaints,
neither Fourth nor any of its subsidiaries has been advised by any Regulatory
Agency that it is or may be in violation of the Equal Credit Opportunity Act or
the Fair Housing Act or any similar federal or state statute. As of the date
hereof, each of Fourth's depository institution subsidiaries received a
Community Reinvestment Act ("CRA") rating of "1" or "2" in its most recent CRA
examination.
SECTION 2.26. STATEMENTS TRUE AND CORRECT. None of the information
------------ ---------------------------
supplied or to be supplied by Fourth or its subsidiaries for inclusion in (i)
the Registration Statement (as defined in Section 4.05 hereof), (ii) the Joint
Proxy Statement/Prospectus (as defined in Section 4.03 hereof), and (iii) any
other
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documents to be filed with the S.E.C., Nasdaq or any banking or other regulatory
authority in connection with the transactions contemplated hereby will, at the
respective times such documents are filed, and, in the case of the Registration
Statement, when it becomes effective, and, with respect to the Joint Proxy
Statement/Prospectus, when first mailed to the shareholders of Boatmen's and
Fourth and at the time of the Boatmen's Shareholders' Meeting (as defined in
Section 5.01(c) hereof) and the Fourth Shareholders' Meeting (as defined in
Section 4.03 hereof), contain any untrue statement of a material fact, or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading. All documents that Fourth is responsible for filing with the
S.E.C., Nasdaq or any other regulatory authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable law and the applicable rules and regulations
thereunder.
ARTICLE THREE
-------------
REPRESENTATIONS OF BOATMEN'S AND ACQUISITION SUB
------------------------------------------------
Boatmen's and Acquisition Sub hereby make the following representations and
warranties:
SECTION 3.01. ORGANIZATION AND CAPITAL STOCK.
------------ ------------------------------
(a) Boatmen's is a corporation duly incorporated, validly existing, and in
good standing under the laws of the State of Missouri with full corporate power
and authority to carry on its business as it is now being conducted. Boatmen's
is a bank holding company registered with the Federal Reserve Board under the
B.H.C.A. Acquisition Sub is a corporation duly incorporated, validly existing,
and in good standing under the laws of the State of Kansas with full corporate
power and authority to carry on its business as it is now being conducted.
(b) The authorized capital stock of Boatmen's consists of (i) 200,000,000
shares of Boatmen's Common, of which, as of August 23, 1995, 129,350,750 shares
were issued and outstanding, and (ii) 10,300,000 Cumulative Preferred Shares, no
par value per share, of which 35,045 shares are designated "7% Cumulative
Redeemable Preferred Stock, Series B", $100.00 stated value per share (the
"Boatmen's Series B Preferred Stock"), and 2,000,000 shares are designated
"Junior Participating Preferred Stock, Series C", no par value per share (the
"Boatmen's Series C Preferred Stock"). No shares of the Boatmen's Series C
Preferred Stock are issued and outstanding and 11,321 shares of the Boatmen's
Series B Preferred Stock were issued and outstanding as of August 23, 1995. All
of the issued and outstanding shares of Boatmen's Common and Boatmen's Series B
Preferred Stock are duly and validly issued and outstanding and are fully paid
and non-assessable. None of the outstanding shares of Boatmen's Common has been
issued in violation of any preemptive rights of the current or past shareholders
of Boatmen's. As of August 23, 1995, Boatmen's had outstanding options and
other rights to acquire not more than 4,911,941 shares of Boatmen's Common and
no shares of the Boatmen's Series B Preferred Stock or the Boatmen's Series C
Preferred Stock.
(c) Acquisition Sub has authorized capital of 10,000 shares of common stock,
par value one dollar ($1.00) per share (the "Acquisition Sub Common"). As of
the date hereof, 1,000 shares of Acquisition Sub Common are issued and
outstanding, fully paid and non-assessable and owned by Boatmen's.
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(d) The shares of Boatmen's Common and Boatmen's Preferred that are to be
issued to the shareholders of Fourth pursuant to the Merger have been duly
authorized and, when so issued in accordance with the terms of this Agreement,
will be validly issued and outstanding, fully paid and non-assessable, free of
preemptive rights with no personal liability attaching to the ownership thereof.
SECTION 3.02. AUTHORIZATION. The Board of Directors of Boatmen's and the
------------ -------------
Board of Directors and sole shareholder of Acquisition Sub have, by all
appropriate action, approved this Agreement and the Merger and authorized the
execution hereof on their behalf by their respective duly authorized officers
and the performance by such respective entity of their obligations hereunder.
Nothing in the articles of incorporation or bylaws of Boatmen's or Acquisition
Sub, as amended, or any other agreement, instrument, decree, proceeding, law or
regulation (except as specifically referred to in or contemplated by this
Agreement) by or to which either of them or any of their subsidiaries are bound
or subject would prohibit Boatmen's or Acquisition Sub from entering into and
consummating this Agreement and the Merger on the terms and conditions herein
contained. This Agreement has been duly and validly executed and delivered by
Boatmen's and Acquisition Sub and constitutes a legal, valid and binding
obligation of Boatmen's and Acquisition Sub, enforceable against Boatmen's and
Acquisition Sub in accordance with its terms and, except for the requisite
approval of the shareholders of Boatmen's, no other corporate acts or
proceedings are required to be taken by Boatmen's or Acquisition Sub to
authorize the execution, delivery and performance of this Agreement. Boatmen's
and its subsidiaries are neither in default under nor in violation of any
provision of their articles of incorporation or association, as the case may be,
bylaws, or any promissory note, indenture or any evidence of indebtedness or
security therefor, lease, contract, insurance policy, purchase or other
commitment or any other agreement or arrangement, whether written or oral, which
default or violation would have a Material Adverse Effect on Boatmen's, and
there has not occurred any event that, with the lapse of time or giving of
notice or both, would constitute such a default or violation. Except for the
requisite approval of the Federal Reserve Board, the Oklahoma State Bank
Department and the Kansas State Banking Board, no notice to, filing with,
authorization by, or consent or approval of, any federal or state bank
regulatory authority is necessary for the execution and delivery of this
Agreement or consummation of the Merger by Boatmen's or Acquisition Sub.
SECTION 3.03. SUBSIDIARIES. Each of The Boatmen's National Bank of St.
------------ ------------
Louis, Boatmen's First National Bank of Kansas City, Boatmen's Sunwest, Inc. and
Boatmen's Arkansas, Inc. (collectively, "Boatmen's Significant Subsidiaries") is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power to own its
respective properties and assets, to incur its respective liabilities and to
carry on its respective business as now being conducted.
SECTION 3.04. FINANCIAL INFORMATION. The consolidated balance sheets of
------------ ---------------------
Boatmen's and its subsidiaries as of December 31, 1993 and 1994 and related
consolidated statements of income, changes in shareholders' equity and cash
flows for the three (3) years ended December 31, 1994, together with the notes
thereto, included in Boatmen's Form 10-K for the year ended December 31, 1994,
as currently on file with the S.E.C., and the unaudited consolidated balance
sheets of Boatmen's and its subsidiaries as of March 31, 1995 and June 30, 1995
and the related unaudited consolidated income statements and statements of
changes in shareholders' equity and cash flows for the three (3) months and six
(6) months, respectively, then ended included in Boatmen's Quarterly Reports on
Form 10-Q for the quarters then ended, as currently on file with the S.E.C.
(together, the "Boatmen's Financial Statements"), have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis (except
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as may be disclosed therein) and fairly present in all material respects the
consolidated financial position and the consolidated results of operations,
changes in shareholders' equity and cash flows of Boatmen's and its consolidated
subsidiaries as of the dates and for the periods indicated (subject, in the case
of interim financial statements, to normal recurring year-end adjustments, none
of which will be material).
SECTION 3.05. ABSENCE OF CHANGES. Since December 31, 1994, there has not
------------ ------------------
been any change in the financial condition, the results of operations or the
business of Boatmen's and its subsidiaries taken as a whole which would have a
Material Adverse Effect on Boatmen's, except as disclosed by Boatmen's since
December 31, 1994 in its periodic reports filed with the S.E.C. under the
Exchange Act.
SECTION 3.06. LITIGATION. There is no litigation, claim or other
------------ ----------
proceeding pending or, to the knowledge of Boatmen's, threatened, against
Boatmen's or any of its subsidiaries, or of which the property of Boatmen's or
any of its subsidiaries is or would be subject which would have a Material
Adverse Effect on Boatmen's.
SECTION 3.07. REPORTS. Boatmen's and each of Boatmen's Significant
------------ -------
Subsidiaries has filed all material reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with (i) the S.E.C., (ii) the Federal Reserve Board, (iii) the O.C.C., (iv)
the F.D.I.C., (v) any applicable state securities or banking authorities having
jurisdiction, (vi) Nasdaq, and (vii) any other Regulatory Agency with
jurisdiction over Boatmen's or any of Boatmen's Significant Subsidiaries. As of
their respective dates, each of such reports and documents, as amended,
including any financial statements, exhibits and schedules thereto, complied in
all material respects with the relevant statutes, rules and regulations enforced
or promulgated by the regulatory authority with which they were filed.
SECTION 3.08. COMPLIANCE WITH LAW. Boatmen's and Boatmen's Significant
------------ -------------------
Subsidiaries have all material licenses, franchises, permits and other
governmental authorizations that are legally required to enable them to conduct
their respective businesses in all material respects and are in compliance in
all material respects with all applicable laws and regulations.
SECTION 3.09. POOLING OF INTERESTS; TAX-FREE REORGANIZATION. As of the
------------ ---------------------------------------------
date of this Agreement, Boatmen's has no reason to believe that the Merger will
not qualify as a "pooling of interests" for accounting purposes or a tax-free
reorganization within the meaning of Section 368(a) of the Code.
SECTION 3.10. TAX MATTERS. Each of Boatmen's and its subsidiaries has
------------ -----------
filed with the appropriate governmental agencies all federal, state and local
income, franchise, excise, sales, use, real and personal property and other tax
returns and reports required to be filed by it. Except as it may relate to a
Tax or Tax liability that Boatmen's is in good faith contesting, neither
Boatmen's nor its subsidiaries are (a) delinquent in the payment of any Taxes
shown on such returns or reports or on any written assessments received by it
for such Taxes, (b) subject to any agreement extending the period for assessment
or collection of any Tax, or (c) a party to any action or proceeding with, nor
has any claim been asserted or threatened against any of them by, any
governmental authority for assessment or collection of Taxes. The United States
Federal income tax returns of Boatmen's and its subsidiaries have been examined
by the I.R.S. and any liability with respect thereto has been satisfied for all
years to and including 1989, and either no material deficiencies were asserted
as a result of such examination for which Boatmen's does not have adequate
reserves or all such deficiencies have been satisfied. The reserve for Taxes in
the financial statements of Boatmen's for the year ended December 31, 1994, is
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adequate to cover all of the liabilities for Taxes of Boatmen's and its
subsidiaries that may become payable in future years with respect to any
transactions consummated prior to December 31, 1994.
SECTION 3.11. INTEREST RATE RISK MANAGEMENT INSTRUMENTS. All interest rate
------------ -----------------------------------------
swaps, caps, floors, option agreements and other interest rate risk management
agreements with third parties, whether entered into for the account of Boatmen's
or its subsidiaries or for the account of a customer of Boatmen's or one of its
subsidiaries, were entered into in the ordinary course of business and in
accordance with prudent banking practice and applicable rules, regulations and
policies and with counterparties believed to be financially responsible at the
time and are legal, valid and binding obligations of Boatmen's or one of its
subsidiaries enforceable in accordance with their terms (subject to the
provisions of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting the enforceability of creditors' rights
generally from time to time in effect, and equitable principles relating to the
granting of specific performance and other equitable remedies as a matter of
judicial discretion), and are in full force and effect. Boatmen's and each of
its subsidiaries have duly performed in all material respects all of their
material obligations thereunder to the extent that such obligations to perform
have accrued; and, to Boatmen's knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
SECTION 3.12. BROKERAGE. Except for fees payable to Donaldson, Lufkin &
------------ ---------
Jenrette, there are no existing claims or agreements for brokerage commissions,
finders' fees, or similar compensation in connection with the transactions
contemplated by this Agreement payable by Boatmen's or its subsidiaries.
SECTION 3.13. NON-BANKING ACTIVITIES OF BOATMEN'S AND ITS SUBSIDIARIES.
------------ --------------------------------------------------------
Neither Boatmen's nor any of its subsidiaries that is neither a bank, a bank
operating subsidiary or a bank service corporation, directly or indirectly,
engages in any activity prohibited by the B.H.C.A. Without limiting the
generality of the foregoing, any equity investment of Boatmen's and each of its
subsidiaries that is not a bank, a bank operating subsidiary or a bank service
corporation, is not prohibited by the B.H.C.A.
SECTION 3.14. STATE TAKEOVER LAWS. The Board of Directors of Boatmen's has
------------ -------------------
approved the transactions contemplated by this Agreement such that the
provisions of Section 351.459 of the General and Business Corporation Law of
Missouri will not apply to this Agreement or any of the transactions
contemplated hereby.
SECTION 3.15. FAIR LENDING; COMMUNITY REINVESTMENT ACT. As of the date
------------ ----------------------------------------
hereof, with the exception of routine investigation of consumer complaints,
neither Boatmen's nor any of its subsidiaries has been advised by any Regulatory
Agency that it is or may be in violation of the Equal Credit Opportunity Act or
the Fair Housing Act or any similar federal or state statute. As of the date
hereof, each of Boatmen's depository institution subsidiaries as of the date
hereof received a CRA rating of "1" or "2" in its most recent CRA examination.
SECTION 3.16. KNOWLEDGE AS TO CERTAIN CONDITIONS. As of the date hereof,
------------ ----------------------------------
Boatmen's knows of no reason why the approvals, consents and waivers of
governmental authorities referred to in Section 6.01(d) hereof will not be
obtained in a timely manner or why the accountant's letter referred to in
Section 6.01(f) hereof cannot be obtained.
SECTION 3.17. REGULATORY ENFORCEMENT MATTERS. Neither Boatmen's nor any of
------------ ------------------------------
its subsidiaries is subject or is party to, or has received any notice or advice
that it may become subject or party to, any
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Regulatory Agreement that materially impairs the ability of Boatmen's to obtain
the regulatory approvals of the Merger.
SECTION 3.18. STATEMENTS TRUE AND CORRECT. None of the information
------------ ---------------------------
supplied or to be supplied by Boatmen's or Acquisition Sub for inclusion in (i)
the Registration Statement, (ii) the Joint Proxy Statement/Prospectus, and (iii)
any other documents to be filed with the S.E.C., Nasdaq or any banking or other
regulatory authority in connection with the transactions contemplated hereby
will, at the respective times such documents are filed, and, in the case of the
Registration Statement, when it becomes effective, and with respect to the Joint
Proxy Statement/Prospectus, when first mailed to the shareholders of Boatmen's
and Fourth and at the time of the Boatmen's Shareholders' Meeting and the Fourth
Shareholders' Meeting, contain any untrue statement of a material fact, or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading. All documents that Boatmen's is responsible for filing with the
S.E.C., Nasdaq or any other regulatory authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable law and the applicable rules and regulations
thereunder.
ARTICLE FOUR
------------
AGREEMENTS OF FOURTH
--------------------
SECTION 4.01. BUSINESS IN ORDINARY COURSE.
------------ ---------------------------
(a) Fourth shall not declare or pay any dividend or make any other
distribution to shareholders, whether in cash, stock or other property, after
the date of this Agreement, except that Fourth may declare and pay its regular
quarterly dividend on the Fourth Common not to exceed $0.29 per share and its
regular quarterly dividend on the Fourth Preferred at approximately the same
times during each quarter which it has historically declared and paid such
dividends; provided, however, that beginning in the fourth quarter of 1995 and
for each quarter thereafter Fourth may declare and pay a conforming quarterly
dividend on the Fourth Common not to exceed $0.37 per share and, in order to
take into account the fact that Boatmen's quarterly dividend is paid one month
later than Fourth's quarterly dividend, Fourth may pay an additional one time
conforming dividend in a per share amount equal to $0.10; provided, further,
that Fourth and Boatmen's shall cooperate with each other to coordinate the
record and payment dates of their respective dividends for the quarter in which
the Effective Time occurs such that the Fourth shareholders shall receive a
quarterly dividend from either Fourth or Boatmen's but not from both during or
with respect to such quarter.
(b) Fourth shall, and shall cause each of its subsidiaries to, continue to
carry on after the date hereof its respective business and the discharge or
incurrence of obligations and liabilities, only in the usual, regular and
ordinary course of business, and by way of amplification and not limitation,
Fourth and each of its subsidiaries will not, without the prior written consent
of Boatmen's (which shall not be unreasonably withheld):
(i) issue any Fourth Common or other capital stock or any options,
warrants, or other rights to subscribe for or purchase Fourth Common or any
other capital stock or any securities convertible into or exchangeable for
any capital stock of Fourth or any of its subsidiaries (except
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for the issuance of Fourth Common pursuant to the valid exercise of Fourth
Stock Options, as defined in Section 5.04(a) hereof, which are outstanding
on the date of this Agreement, or pursuant to the Fourth Option Agreement,
or pursuant to the conversion of the Fourth Preferred pursuant to the terms
thereof); or
(ii) directly or indirectly redeem, purchase or otherwise acquire
any Fourth Common or any other capital stock of Fourth or its subsidiaries;
or
(iii) effect a reclassification, recapitalization, splitup,
exchange of shares, readjustment or other similar change in or to any
capital stock or otherwise reorganize or recapitalize; or
(iv) change its certificate or articles of incorporation or
association, as the case may be, or bylaws; or
(v) grant any increase, other than ordinary and normal increases
consistent with past practices, in the compensation payable or to become
payable to officers or salaried employees, grant any stock options or,
except as required by law, adopt or make any change in any bonus, insurance,
pension, or other Fourth Employee Plan, agreement, payment or arrangement
made to, for or with any of such officers or employees; or
(vi) borrow or agree to borrow any amount of funds except in the
ordinary course of business, or directly or indirectly guarantee or agree to
guarantee any obligations of others except in the ordinary course of
business; or
(vii) make or commit to make any new loan or letter of credit or
any new or additional discretionary advance under any existing line of
credit, in principal amounts in excess of $6 million or that would increase
the aggregate credit outstanding to any one borrower (or group of affiliated
borrowers) to more than $6 million (excluding for this purpose any accrued
interest or overdrafts) (a "Pre-Approval Loan"), without the prior written
consent of Boatmen's, acting through its Executive Vice President-Loan
Administration or such other designee as Boatmen's may give notice of to
Fourth; provided, however, that if Boatmen's should not consent in writing
to a Pre-Approval Loan, neither Boatmen's nor its subsidiaries shall make or
commit to make such Pre-Approval Loan; or
(viii) purchase or otherwise acquire any investment security for
its own account having an average remaining life to maturity greater than
five (5) years or any asset-backed securities other than those issued or
guaranteed by the Government National Mortgage Association, the Federal
National Mortgage Association or the Federal Home Loan Mortgage Corporation;
or
(ix) enter into any agreement, contract or commitment out of the
ordinary course of business other than letters of credit, loan agreements,
deposit agreements, and other lending, credit and deposit agreements and
documents made in the ordinary course of business; or
(x) except in the ordinary course of business, place on any of its
assets or properties any mortgage, pledge, lien, charge, or other
encumbrance; or
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(xi) except in the ordinary course of business, cancel or
accelerate any material indebtedness owing to Fourth or its subsidiaries or
any claims which Fourth or its subsidiaries may possess or waive any
material rights with respect thereto; or
(xii) sell or otherwise dispose of any material real property or
any material amount of any tangible or intangible personal property other
than properties acquired in foreclosure or otherwise in the ordinary
collection of indebtedness to Fourth and its subsidiaries; or
(xiii) foreclose upon or otherwise take title to or possession or
control of any real property without first obtaining a phase one
environmental report thereon which indicates that the property is free of
pollutants, contaminants or hazardous or toxic waste materials; provided,
however, that Fourth and its subsidiaries shall not be required to obtain
such a report with respect to single family, non-agricultural residential
property of one acre or less to be foreclosed upon unless it has reason to
believe that such property might contain any such waste materials or
otherwise might be contaminated; or
(xiv) commit any act or fail to do any act which will cause a
breach of any agreement, contract or commitment and which will have a
Material Adverse Effect on Fourth; or
(xv) violate any law, statute, rule, governmental regulation, or
order, which violation might have a Material Adverse Effect on Fourth; or
(xvi) purchase any real or personal property or make any other
capital expenditure where the amount paid or committed therefor is in excess
of $500,000; or
(xvii) take any action which would adversely effect or delay the
ability of either Boatmen's or Fourth to obtain any necessary approvals of
any Regulatory Agency or other governmental authority required for the
transactions contemplated hereby or to perform its covenants and agreements
under this Agreement or the Fourth Option Agreement.
(c) Fourth and its subsidiaries shall not, without the prior written consent
of Boatmen's, engage in any transaction or take any action that would render
untrue in any material respect any of the representations and warranties of
Fourth contained in Article Two hereof, if such representations and warranties
were given as of the date of such transaction or action.
(d) Fourth shall promptly notify Boatmen's in writing of the occurrence of
any matter or event known to and directly involving Fourth, which would not
include any changes in conditions that affect the banking industry generally,
that would constitute a Material Adverse Effect on Fourth.
(e) Fourth shall not, on or before the earlier of the Closing Date or the
date of termination of this Agreement, solicit or encourage, or, subject to the
fiduciary duties of its directors as advised by counsel, hold discussions or
negotiations with or provide any information to, any person in connection with,
any proposal from any person for the acquisition of all or any substantial
portion of the business, assets, shares of Fourth Common or other securities of
Fourth and its subsidiaries. Fourth shall promptly (which for this purpose
shall mean within twenty-four (24) hours) advise Boatmen's of its receipt of any
such proposal or inquiry concerning any possible such proposal, the substance of
such proposal or inquiry, and the identity of such person.
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SECTION 4.02. BREACHES. Fourth shall, in the event it has knowledge of the
------------ --------
occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to Boatmen's and use its best efforts to prevent or
promptly remedy the same.
SECTION 4.03. SUBMISSION TO SHAREHOLDERS. Fourth shall cause to be duly
------------ --------------------------
called and held, on a date mutually selected by Boatmen's and Fourth, a special
meeting of its shareholders (the "Fourth Shareholders' Meeting") for submission
of this Agreement and the Merger for approval of such Fourth shareholders as
required by the Corporate Law. In connection with the Fourth Shareholders'
Meeting, (i) Fourth shall cooperate and assist Boatmen's in preparing and filing
a Joint Proxy Statement/Prospectus (the "Joint Proxy Statement/Prospectus") with
the S.E.C. and Fourth shall mail it to its shareholders, (ii) Fourth shall
furnish Boatmen's all information concerning itself that Boatmen's may
reasonably request in connection with such Joint Proxy Statement/Prospectus, and
(iii) the Board of Directors of Fourth (subject to compliance with its fiduciary
duties as advised by counsel) shall recommend to its shareholders the approval
of this Agreement and the Merger contemplated hereby and use its best efforts to
obtain such shareholder approval.
SECTION 4.04. CONSENTS TO CONTRACTS AND LEASES. Fourth shall use its best
------------ --------------------------------
efforts to obtain all necessary consents with respect to all interests of Fourth
and its subsidiaries in any material leases, licenses, contracts, instruments
and rights which require the consent of another person for their transfer or
assumption pursuant to the Merger, if any.
SECTION 4.05. CONSUMMATION OF AGREEMENT. Fourth shall use its best efforts
------------ -------------------------
to perform and fulfill all conditions and obligations on its part to be
performed or fulfilled under this Agreement and to effect the Merger promptly in
accordance with the terms and provisions hereof. Fourth shall furnish to
Boatmen's in a timely manner all information, data and documents in the
possession of Fourth requested by Boatmen's as may be required to obtain any
necessary regulatory or other approvals of the Merger or to file with the S.E.C.
a registration statement on Form S-4 (the "Registration Statement") relating to
the shares of Boatmen's Common and Boatmen's Preferred to be issued to the
shareholders of Fourth pursuant to the Merger and this Agreement and shall
otherwise cooperate fully with Boatmen's to carry out the purpose and intent of
this Agreement.
SECTION 4.06. ENVIRONMENTAL REPORTS. Fourth shall provide to Boatmen's, as
------------ ---------------------
soon as reasonably practical, but not later than sixty (60) days after the date
hereof, a report of a phase one environmental investigation on all real property
owned, leased or operated by Fourth or its subsidiaries as of the date hereof
(but excluding space in retail and similar establishments leased by Fourth for
automatic teller machines or bank branch facilities where the space leased
comprises less than 20% of the total space leased to all tenants of such
property) and within ten (10) days after the acquisition or lease of any real
property acquired or leased by Fourth or its subsidiaries after the date hereof
(but excluding space in retail and similar establishments leased by Fourth for
automatic teller machines or bank branch facilities where the space leased
comprises less than 20% of the total space leased to all tenants of such
property), except as otherwise provided in Section 4.01(b)(xiii) hereof. If
required by the phase one investigation in Boatmen's reasonable opinion, Fourth
shall provide to Boatmen's a report of a phase two investigation on properties
requiring such additional study. Boatmen's shall have fifteen (15) business
days from the receipt of any such phase two investigation report to notify
Fourth of any dissatisfaction with the contents of such report. Should the cost
of taking all remedial or other corrective actions and measures required
A-21
by applicable law or reasonably likely to be required by applicable law, in the
aggregate, exceed the sum of Twenty Million Dollars ($20,000,000) as reasonably
estimated by an environmental expert retained for such purpose by Boatmen's and
reasonably acceptable to Fourth, then Boatmen's shall have the right pursuant to
Section 7.03 hereof, for a period of fifteen (15) business days following
receipt of such estimate, to terminate this Agreement, which shall be Boatmen's
sole remedy in such event; provided, however, that for purposes of determining
the cost of all remedial or other corrective actions and measures as provided in
this sentence, there shall be excluded any such costs which arise from or are
attributable to the contamination of the ground water underneath the banking
facilities owned by Fourth in the downtown business district of Wichita, Kansas
provided (i) such contamination originated from sources other than such Fourth
owned property, and (ii) liability for the clean-up and remediation of such
contamination continues to be undertaken by the City of Wichita, Kansas or
another governmental entity.
SECTION 4.07. RESTRICTION ON RESALES. Fourth shall use its best efforts to
------------ ----------------------
obtain and deliver to Boatmen's, at least thirty-one (31) days prior to the
Closing Date, the signed agreement, in the form of Exhibit 4.07 hereto, of each
person who may reasonably be deemed an "affiliate" of Fourth within the meaning
of such term as used in Rule 145 under the Securities Act of 1933, as amended
(the "Securities Act"), regarding (i) compliance with the provisions of such
Rule 145, and (ii) compliance with the requirements of Accounting Principles
Board Opinion No. 16 regarding the disposition of shares of Fourth Common,
Fourth Preferred, Boatmen's Common or Boatmen's Preferred (or reduction of risk
with respect thereto) until such time as financial results covering at least
thirty (30) days of post-Merger combined operations have been published.
SECTION 4.08. SUBSIDIARY BANK MERGERS. Upon the request of Boatmen's,
------------ -----------------------
Fourth shall cause one or more of the Subsidiary Banks to enter into one or more
merger agreements with any wholly-owned banking subsidiary of Boatmen's, and
take all other actions and cooperate with Boatmen's in causing such merger or
mergers, as the case may be (the "Subsidiary Bank Mergers") to be effected.
Such subsidiary bank merger agreement or agreements shall provide, in addition
to customary terms for the combination of subsidiary bank operations in
transactions such as this: (i) for consummation of any such merger on a date on
or after the Closing Date, as may be selected by Boatmen's, and (ii) that the
obligations of the Subsidiary Bank thereunder are conditioned on the prior or
simultaneous consummation of the Merger pursuant to this Agreement. The Merger
shall not be conditioned upon the consummation of the Subsidiary Bank Mergers.
SECTION 4.09. ACCESS TO INFORMATION. Fourth shall permit Boatmen's
------------ ---------------------
reasonable access in a manner which will avoid undue disruption or interference
with Fourth's normal operations to its properties and shall disclose and make
available to Boatmen's, unless prohibited by applicable law, all books,
documents, papers and records relating to its assets, stock ownership,
properties, operations, obligations and liabilities, including, but not limited
to, all books of account (including the general ledger), tax records, minute
books of directors' and shareholders' meetings, organizational documents,
material contracts and agreements, loan files, filings with any regulatory
authority, accountants' workpapers (if available and subject to the respective
independent accountants' consent), litigation files (but only to the extent that
such review would not result in a material waiver of the attorney-client or
attorney work product privileges under the rules of evidence), plans affecting
employees, and any other business activities or prospects in which Boatmen's may
have a reasonable and legitimate interest in furtherance of the transactions
contemplated by this Agreement. Fourth shall deliver to Boatmen's within twenty
(20) business days after the date hereof a true, accurate and complete copy of
each written plan or program disclosed in Section 2.14(c) of the Disclosure
Schedule and, with respect to each such plan
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or program, all (i) amendments or supplements thereto, (ii) summary plan
descriptions, (iii) lists of all current participants and all participants with
benefit entitlements, (iv) contracts relating to plan documents, (v) actuarial
valuations for any defined benefit plan, (vi) valuations for any plan as of the
most recent date, (vii) determination letters from the I.R.S., (viii) the most
recent annual report filed with the I.R.S., (ix) registration statements on Form
S-8 and prospectuses, and (x) trust agreements. Boatmen's will hold any such
information which is nonpublic in confidence in accordance with the provisions
of Section 8.01 hereof.
ARTICLE FIVE
------------
AGREEMENTS OF BOATMEN'S AND ACQUISITION SUB
-------------------------------------------
SECTION 5.01. REGULATORY APPROVALS AND REGISTRATION STATEMENT; SUBMISSION
------------ -----------------------------------------------------------
TO SHAREHOLDERS.
- ---------------
(a) Boatmen's shall promptly file all regulatory applications required in
order to consummate the Merger, including but not limited to the necessary
applications for the prior approval of the Federal Reserve Board, the Oklahoma
State Bank Department and the Kansas State Banking Board. Boatmen's shall
provide Fourth a complete copy of such applications and any other submissions in
the form in which Boatmen's intends to submit such applications and submissions
for its review and comment prior to the filing thereof with the appropriate
Regulatory Agency. Boatmen's shall keep Fourth reasonably informed as to the
status of such applications and make available to Fourth copies of such
applications and any supplementally filed materials.
(b) Boatmen's shall promptly file with the S.E.C. the Registration Statement
relating to the shares of Boatmen's Common and Boatmen's Preferred to be issued
to the shareholders of Fourth pursuant to this Agreement, and shall use its best
efforts to cause the Registration Statement to become effective. At the time
the Registration Statement becomes effective, the Registration Statement shall
comply in all material respects with the provisions of the Securities Act and
the published rules and regulations thereunder, and shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not false or
misleading, and at the time of mailing thereof to the shareholders of Boatmen's
and Fourth, at the time of the Boatmen's Shareholders' Meeting and the Fourth
Shareholders' Meeting and at the Effective Time, the Joint Proxy
Statement/Prospectus included as part of the Registration Statement, as amended
or supplemented by any amendment or supplement, shall not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not false or misleading. Boatmen's shall timely
file all documents required to obtain all necessary Blue Sky permits and
approvals, if any, required to carry out the transactions contemplated by this
Agreement, shall pay all expenses incident thereto and shall use its best
efforts to obtain such permits and approvals on a timely basis. Boatmen's shall
promptly and properly prepare and file (i) any application required to list on
Nasdaq the shares of Boatmen's Common and Boatmen's Preferred to be issued
pursuant to the Merger, and (ii) any filings required under the Exchange Act
relating to the Merger and the transactions contemplated herein.
(c) Boatmen's shall cause to be duly called and held, on a date mutually
selected by Boatmen's and Fourth, a special meeting of its shareholders (the
"Boatmen's Shareholders' Meeting") for submission of the transactions
contemplated by this Agreement for approval of such Boatmen's shareholders. In
connection with the Boatmen's Shareholders' Meeting, (i) Boatmen's shall prepare
and file the Joint
A-23
Proxy Statement/Prospectus with the S.E.C. and mail it to its shareholders, and
(ii) the Board of Directors of Boatmen's shall (subject to compliance with its
fiduciary duties as advised by counsel) recommend to its shareholders the
approval of this Agreement and the Merger contemplated hereby and use its best
efforts to obtain such shareholder approval.
SECTION 5.02. BREACHES. Boatmen's shall, in the event it has knowledge of
------------ --------
the occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to Fourth and use its best efforts to prevent or promptly
remedy the same.
SECTION 5.03. CONSUMMATION OF AGREEMENT. Boatmen's and Acquisition Sub
------------ -------------------------
shall use their respective best efforts to perform and fulfill all conditions
and obligations on their part to be performed or fulfilled under this Agreement
and to effect the Merger promptly in accordance with the terms and conditions of
this Agreement.
SECTION 5.04. STOCK OPTIONS.
------------ -------------
(a) At the Effective Time, each outstanding option to purchase shares of
Fourth Common (a "Fourth Stock Option") issued pursuant to the Amended and
Restated Fourth Financial Corporation 1981 Incentive Stock Option Plan, the
Amended and Restated Fourth Financial Corporation 1986 Incentive Stock Option
Plan, the Fourth Financial Corporation 1993 Incentive Stock Option Plan, the
Fourth Financial Corporation Non-Employee Directors Stock Option Plan and the
Fourth Financial Corporation 1993 Employee Stock Purchase Plan (together, the
"Stock Option Plans") whether or not exercisable or vested, shall be assumed by
Boatmen's as hereinafter provided. Each Fourth Stock Option shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Fourth Stock Option, the same number of full shares of
Boatmen's Common as the holder of such Fourth Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised such option
in full immediately prior to the Effective Time, at a price per share equal to
(y) the aggregate exercise price for Fourth Common otherwise purchasable
pursuant to such Fourth Stock Option divided by (z) the number of full shares of
Boatmen's Common deemed purchasable pursuant to such Fourth Stock Option. In no
event shall Boatmen's be required to issue fractional shares of Boatmen's
Common.
(b) As soon as practicable after the Effective Time, Boatmen's shall deliver
to each holder of Fourth Stock Options appropriate notices setting forth such
holders' rights pursuant to the Stock Option Plans, and the agreements
evidencing the grants of such Fourth Stock Options shall continue in effect on
the same terms and conditions (subject to the conversion required by this
Section 5.04 after giving effect to the Merger and the assumption by Boatmen's
as set forth above). To the extent necessary to effectuate the provisions of
this Section 5.04, Boatmen's may deliver new or amended agreements reflecting
the terms of each Fourth Stock Option assumed by Boatmen's and amend the Stock
Option Plans to reflect the terms hereof.
(c) As soon as practicable after the Effective Time, Boatmen's shall file
with the S.E.C. a registration statement on an appropriate form with respect to
the shares of Boatmen's Common subject to such options and shall use its best
efforts to maintain the effectiveness of such registration statement
A-24
or registration statements (and maintain the current status of the prospectus or
prospectuses with respect thereto) for so long as such options remain
outstanding.
(d) The adjustment provided in this Section 5.04 with respect to any Fourth
Stock Options which are "incentive stock options" (as defined in Section 422 of
the Code) shall be and is intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
SECTION 5.05. DIRECTORS AND OFFICERS' LIABILITY INSURANCE AND
------------ -----------------------------------------------
INDEMNIFICATION.
- ---------------
(a) Following the Effective Time, Boatmen's will provide the directors and
officers of Fourth and its subsidiaries with the same directors' and officers'
liability insurance coverage that Boatmen's provides to directors and officers
of its other banking subsidiaries generally, and, in addition, for a period of
five (5) years will use its best efforts to continue Fourth's directors' and
officers' liability insurance coverage with respect to actions occurring prior
to the Effective Time to the extent that such coverage is obtainable for an
aggregate premium not to exceed 200% of the annual premium presently being paid
by Fourth. If the premium of such insurance would exceed such maximum amount,
Boatmen's shall use its best efforts to procure such level of insurance having
the coverage described above as can be obtained for a premium equal to such
maximum amount.
(b) For ten (10) years after the Effective Time, Boatmen's shall indemnify,
defend and hold harmless the present and former officers, directors, employees
and agents of Fourth and its subsidiaries (each, an "Indemnified Party") against
all losses, expenses, claims, damages or liabilities arising out of actions or
omissions occurring on or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement and the Fourth
Option Agreement) to the full extent then permitted under the Corporate Law and
by Fourth's Articles of Incorporation as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the defense of any
action or suit.
(c) If after the Effective Time Boatmen's or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or entity
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then and
in each such case, proper provision shall be made so that the successors and
assigns of Boatmen's shall assume any remaining obligations set forth in this
Section 5.05.
SECTION 5.06. EMPLOYEE BENEFITS. Boatmen's shall, with respect to each
------------ -----------------
employee of Fourth or its subsidiaries at the Closing Date who continues in
employment with Fourth, Boatmen's or any of their respective subsidiaries (each
a "Continued Employee"), provide the benefits described in this Section 5.06.
Subject to the right of subsequent amendment, modification or termination in
Boatmen's sole discretion, each Continued Employee shall be entitled, as a new
employee of a subsidiary of Boatmen's, to participate in such employee benefit
plans, as defined in Section 3(3) of ERISA, or any non-qualified employee
benefit plans or deferred compensation, stock option, bonus or incentive plans,
or other employee benefit or fringe benefit programs that may be in effect
generally for employees of all of Boatmen's subsidiaries (the "Boatmen's
Employee Plans"), if and as a Continued Employee shall be eligible and, if
required, selected for participation therein under the terms thereof and
otherwise shall not be participating in a similar plan maintained by Fourth
after the Closing Date. Fourth employees will be eligible to participate on the
same basis as similarly situated employees of other Boatmen's subsidiaries. All
such participation shall be subject to such terms of such plans as may be in
effect from
A-25
time to time and this Section 5.06 is not intended to give Continued Employees
any rights or privileges superior to those of other employees of Boatmen's
subsidiaries. Boatmen's may terminate or modify all Fourth Employee Plans
except insofar as benefits thereunder shall have vested on the Closing Date and
cannot be modified and Boatmen's obligation under this Section 5.06 shall not be
deemed or construed so as to provide duplication of similar benefits but,
subject to that qualification, Boatmen's shall, for purposes of vesting and any
age or period of service requirements for commencement of participation with
respect to any Boatmen's Employee Plans in which Continued Employees may
participate, credit each Continued Employee with his or her term of service with
Fourth and its subsidiaries.
SECTION 5.07. BOARD COMPOSITION. Boatmen's Board of Directors shall take
------------ -----------------
all requisite action to elect two (2) persons as directors of Boatmen's
effective as of the first meeting of Boatmen's Board of Directors after the
Effective Time, which persons shall be selected by Fourth subject to approval by
Boatmen's.
SECTION 5.08. OTHER AGREEMENTS. After the date hereof, (i) neither
------------ ----------------
Boatmen's nor any of its subsidiaries shall enter into any agreement to acquire
or merge with another company which results in the Federal Reserve Board
disapproving or materially delaying approval of the Merger, (ii) Boatmen's shall
not, without the prior written consent of Fourth, engage in any transaction or
take any action that would render untrue in any material respect any of the
representations and warranties of Boatmen's contained in Article Three hereof,
if such representations and warranties were given as of the date of such
transaction or action, (iii) Boatmen's shall promptly notify Fourth in writing
of the occurrence of any matter or event known to and directly involving
Boatmen's, which would not include any changes in conditions that affect the
banking industry generally, that would constitute a Material Adverse Effect on
Boatmen's, (iv) Boatmen's shall, in the event it has knowledge of the
occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to Fourth and use its best efforts to prevent or promptly
remedy the same, and (v) Boatmen's shall not declare or pay any extraordinary or
special dividend on the Boatmen's Common.
SECTION 5.09. ACCESS TO INFORMATION. Boatmen's shall permit Fourth
------------ ---------------------
reasonable access in a manner which will avoid undue disruption or interference
with Boatmen's normal operations to its properties and shall disclose and make
available to Fourth, unless prohibited by applicable law, all books, documents,
papers and records relating to its assets, stock ownership, properties,
operations, obligations and liabilities, including, but not limited to, all
books of account (including the general ledger), tax records, minute books of
directors' and shareholders' meetings, organizational documents, material
contracts and agreements, loan files, filings with any regulatory authority,
accountants' workpapers (if available and subject to the respective independent
accountants' consent), litigation files (but only to the extent that such review
would not result in a material waiver of the attorney-client or attorney work
product privileges under the rules of evidence), plans affecting employees, and
any other business activities or prospects in which Fourth may have a reasonable
and legitimate interest in furtherance of the transactions contemplated by this
Agreement. Fourth will hold any such information which is nonpublic in
confidence in accordance with the provisions of Section 8.01 hereof.
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ARTICLE SIX
-----------
CONDITIONS PRECEDENT TO THE MERGER
----------------------------------
SECTION 6.01. CONDITIONS TO BOATMEN'S OBLIGATIONS. Boatmen's and
------------ -----------------------------------
Acquisition Sub's obligations to effect the Merger shall be subject to the
satisfaction (or waiver by Boatmen's) prior to or on the Closing Date of the
following conditions:
(a) The representations and warranties made by Fourth in this Agreement
shall be true and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given on and as of
the Closing Date (except for any such representations and warranties made as of
a specified date which shall be true and correct as of such date); provided,
however, that (i) in determining whether or not the condition contained in this
Section 6.01(a) shall be satisfied, no effect shall be given to any exceptions
in such representations and warranties relating to materiality or Material
Adverse Effect, and (ii) the condition contained in this Section 6.01(a) shall
be deemed to be satisfied unless the failure of such representations and
warranties to be so true and correct shall constitute, individually or in the
aggregate, a Material Adverse Effect on Fourth;
(b) Fourth shall have performed and complied in all material respects with
all of its obligations and agreements required to be performed on or prior to
the Closing Date under this Agreement;
(c) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger shall be in effect, nor shall any proceeding by any bank regulatory
authority or other governmental agency seeking any of the foregoing be pending.
There shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal;
(d) All necessary regulatory approvals, consents, authorizations and other
approvals, including the requisite approval of this Agreement and the Merger by
the shareholders of Boatmen's and Fourth, required by law for consummation of
the Merger shall have been obtained and all waiting periods required by law
shall have expired; provided, however, that the condition contained in this
Section 6.01(d) shall be deemed to be satisfied notwithstanding the failure of
Fourth to receive any third-party non-Regulatory Agency consents provided (i)
Fourth used its reasonable efforts to obtain such consents, and (ii) the failure
to obtain such consents shall not constitute, individually or in the aggregate,
a Material Adverse Effect on Fourth;
(e) Boatmen's shall have received all documents required to be received from
Fourth on or prior to the Closing Date as set forth in Section 1.11 hereof, all
in form and substance reasonably satisfactory to Boatmen's;
(f) Boatmen's shall have received an opinion letter, dated as of the Closing
Date, from Ernst & Young, L.L.P., its independent public accountants, to the
effect that the Merger will qualify for pooling of interests accounting
treatment under Accounting Principles Board Opinion No. 16 if closed and
consummated in accordance with this Agreement;
A-27
(g) The Registration Statement shall be effective under the Securities Act
and no stop order suspending the effectiveness of the Registration Statement
shall be in effect or proceedings for such purpose pending before or threatened
by the S.E.C.; and
(h) Boatmen's shall have received an opinion of its counsel, Lewis, Rice &
Fingersh, L.C., to the effect that if the Merger is consummated in accordance
with the terms set forth in this Agreement (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code, (ii) no gain or
loss will be recognized by the holders of shares of Fourth Common or Fourth
Preferred upon receipt of Merger Consideration (except for cash received in lieu
of fractional shares), (iii) the basis of shares of Boatmen's Common and
Boatmen's Preferred received by the shareholders of Fourth will be the same as
the basis of shares of Fourth Common or Fourth Preferred, as the case may be,
exchanged therefor, and (iv) the holding period of the shares of Boatmen's
Common and Boatmen's Preferred received by such shareholders will include the
holding period of the shares of Fourth Common or Fourth Preferred, as the case
may be, exchanged therefor, provided such shares were held as capital assets as
of the Effective Time.
SECTION 6.02. CONDITIONS TO FOURTH'S OBLIGATIONS. Fourth's obligation to
------------ ----------------------------------
effect the Merger shall be subject to the satisfaction (or waiver by Fourth)
prior to or on the Closing Date of the following conditions:
(a) The representations and warranties made by Boatmen's and Acquisition Sub
in this Agreement shall be true and correct on and as of the Closing Date with
the same effect as though such representations and warranties had been made or
given on the Closing Date (except for any such representations and warranties
made as of a specified date which shall be true and correct as of such date);
provided, however, that with the exception of the representation and warranty
set forth in Section 3.01(d) hereof, which shall be true and correct in all
respects on and as of the Closing Date, (i) in determining whether or not the
condition contained in this Section 6.02(a) shall be satisfied, no effect shall
be given to any exceptions in such representations and warranties relating to
materiality or Material Adverse Effect, and (ii) the condition contained in this
Section 6.02(a) shall be deemed to be satisfied unless the failure of such
representations and warranties to be so true and correct shall constitute,
individually or in the aggregate, a Material Adverse Effect on Boatmen's;
(b) Boatmen's and Acquisition Sub shall have performed and complied in all
material respects with all of their obligations and agreements hereunder
required to be performed on or prior to the Closing Date under this Agreement;
(c) No Injunction preventing the consummation of the Merger shall be in
effect, nor shall any proceeding by any bank regulatory authority or other
governmental agency seeking any of the foregoing be pending. There shall not be
any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger which makes the consummation of the
Merger illegal;
(d) All necessary regulatory approvals, consents, authorizations and other
approvals, including the requisite approval of this Agreement and the Merger by
the shareholders of Boatmen's and Fourth, required by law for consummation of
the Merger shall have been obtained and all waiting periods required by law
shall have expired; provided, however, that the condition contained in this
Section 6.02(d) shall be deemed to be satisfied notwithstanding the failure of
Boatmen's to receive any third-party non-
A-28
Regulatory Agency consents provided (i) Boatmen's used its reasonable efforts to
obtain such consents, and (ii) the failure to obtain such consents shall not
constitute, individually or in the aggregate, a Material Adverse Effect on
Boatmen's;
(e) Fourth shall have received all documents required to be received from
Boatmen's on or prior to the Closing Date as set forth in Section 1.11 hereof,
all in form and substance reasonably satisfactory to Fourth;
(f) The Registration Statement shall be effective under the Securities Act
and no stop order suspending the effectiveness of the Registration Statement
shall be in effect or proceedings for such purpose pending before or threatened
by the S.E.C.;
(g) Fourth shall have received an opinion letter, dated as of the Closing
Date, from Ernst & Young, L.L.P., independent public accountants for Boatmen's,
to the effect that the Merger will qualify for pooling of interests accounting
treatment under Accounting Principles Board Opinion No. 16 if closed and
consummated in accordance with this Agreement;
(h) Fourth shall have received an opinion of its counsel, Sullivan &
Cromwell, to the effect that if the Merger is consummated in accordance with the
terms set forth in this Agreement (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code, (ii) no gain or
loss will be recognized by the holders of shares of Fourth Common or Fourth
Preferred upon receipt of Merger Consideration (except for cash received in lieu
of fractional shares), (iii) the basis of shares of Boatmen's Common and
Boatmen's Preferred received by the shareholders of Fourth will be the same as
the basis of shares of Fourth Common or Fourth Preferred, as the case may be,
exchanged therefor, and (iv) the holding period of the shares of Boatmen's
Common and Boatmen's Preferred received by such shareholders will include the
holding period of the shares of Fourth Common or Fourth Preferred, as the case
may be, exchanged therefor, provided such shares were held as capital assets as
of the Effective Time; and
(i) No "Shares Acquisition Date" or "Distribution Date" (as such terms are
defined in Boatmen's Rights Agreement) shall have occurred under the Rights
Agreement prior to the Effective Time.
ARTICLE SEVEN
-------------
TERMINATION OR ABANDONMENT
--------------------------
SECTION 7.01. MUTUAL AGREEMENT. This Agreement may be terminated by the
------------ ----------------
mutual written agreement of Boatmen's and Fourth at any time prior to the
Closing Date, regardless of whether approval of this Agreement and the Merger by
the shareholders of Fourth shall have been previously obtained.
SECTION 7.02. BREACH OF AGREEMENTS. In the event that there is a material
------------ --------------------
breach in any of the representations and warranties or agreements of Boatmen's
or Fourth, which breach would entitle the non-breaching party to not consummate
the Merger and which breach is not cured within thirty (30) days after notice to
cure such breach is given to the breaching party by the non-breaching party,
then the non-breaching party, regardless of whether shareholder approval of this
Agreement and the Merger shall have
A-29
been previously obtained, may terminate and cancel this Agreement by providing
written notice of such action to the other party hereto.
SECTION 7.03. ENVIRONMENTAL REPORTS. Boatmen's may terminate this
------------ ---------------------
Agreement to the extent provided by Section 4.06 hereof by giving written notice
thereof to Fourth.
SECTION 7.04. FAILURE OF CONDITIONS. In the event any of the conditions to
------------ ---------------------
the obligations of either party are not satisfied or waived on or prior to the
Closing Date, and if any applicable cure period provided in Section 7.02 hereof
has lapsed, then such party may, regardless of whether approval of this
Agreement and the Merger by the shareholders of Boatmen's or Fourth shall have
been previously obtained, terminate and cancel this Agreement by delivery of
written notice of such action to the other party on such date.
SECTION 7.05. REGULATORY APPROVAL DENIAL. If any regulatory application
------------ --------------------------
filed pursuant to Section 5.01(a) hereof should be finally denied or disapproved
by the respective regulatory authority, then this Agreement thereupon shall be
deemed terminated and canceled.
SECTION 7.06. SHAREHOLDER APPROVAL DENIAL. If this Agreement or the
------------ ---------------------------
relevant transactions contemplated hereby are not approved by the requisite vote
of the shareholders of Fourth at the Fourth Shareholders' Meeting or the
shareholders of Boatmen's at the Boatmen's Shareholders' Meeting, then either
party may terminate this Agreement.
SECTION 7.07. REGULATORY ENFORCEMENT MATTERS. In the event that Fourth or
------------ ------------------------------
any of its subsidiaries shall become a party or subject to any new or amended
written agreement, memorandum of understanding, cease and desist order,
imposition of civil money penalties or other regulatory enforcement action or
proceeding with any Regulatory Agency, which would have a Material Adverse
Effect on Fourth after the date of this Agreement, then Boatmen's may terminate
this Agreement. In the event that Boatmen's or any of its subsidiaries shall
become a party or subject to any new or amended written agreement, memorandum of
understanding, cease and desist order, imposition of civil money penalties or
other regulatory enforcement action or proceeding with any Regulatory Agency,
which would have a Material Adverse Effect on Boatmen's after the date of this
Agreement, then Fourth may terminate this Agreement.
SECTION 7.08. TERMINATION DATE. If the Closing Date does not occur on or
------------ ----------------
prior to the first anniversary of the date of this Agreement, then this
Agreement may be terminated by either party by giving written notice thereof to
the other.
SECTION 7.09. DUE DILIGENCE REVIEW. In accordance with Section 4.09
------------ --------------------
hereof, Fourth shall provide Boatmen's full and complete access to its books,
records and staff and those of its subsidiaries to facilitate Boatmen's due
diligence review of the asset quality of Fourth and its subsidiaries. On or
before September 25, 1995, Boatmen's may terminate this Agreement by giving
written notice thereof to Fourth if: (i) Fourth's allowance for credit losses
is inadequate by more than $50,000,000 based upon loan grading and reserve
methodologies utilized by the O.C.C., or (ii) Fourth's credit administration
practices vary materially from accepted industry standards such that they are
either inadequate to reasonably achieve their intended function or to permit a
reasonably accurate assessment of the level of risk inherent in Fourth's credit
portfolio.
A-30
SECTION 7.10. FOURTH OPTION AGREEMENT. Boatmen's may terminate this
------------ -----------------------
Agreement if the Fourth Option Agreement shall not have been executed and
delivered by Fourth on the day following the execution of this Agreement.
ARTICLE EIGHT
-------------
GENERAL
-------
SECTION 8.01. CONFIDENTIAL INFORMATION. The parties acknowledge the
------------ ------------------------
confidential and proprietary nature of the "Information" (as herein described)
which has heretofore been exchanged and which will be received from each other
hereunder and agree to hold and keep the same confidential. Such Information
will include any and all financial, technical, commercial, marketing, customer
or other information concerning the business, operations and affairs of a party
that may be provided to the other, irrespective of the form of the
communications, by such party's employees or agents. Such Information shall not
include information which is or becomes generally available to the public other
than as a result of a disclosure by a party or its representatives in violation
of this Agreement. The parties agree that the Information will be used solely
for the purposes contemplated by this Agreement and that such Information will
not be disclosed to any person other than employees and agents of a party who
are directly involved in evaluating the transaction. The Information shall not
be used in any way detrimental to a party, including use directly or indirectly
in the conduct of the other party's business or any business or enterprise in
which such party may have an interest, now or in the future, and whether or not
now in competition with such other party.
SECTION 8.02. PUBLICITY. Boatmen's and Fourth shall cooperate with each
------------ ---------
other in the development and distribution of all news releases and other public
disclosures concerning this Agreement and the Merger and shall not issue any
news release or make any other public disclosure without the prior consent of
the other party, unless it reasonably believes such is required by law upon the
advice of counsel or is in response to published newspaper or other mass media
reports regarding the transaction contemplated hereby, in which such latter
event the parties shall give reasonable notice, and to the extent practicable,
consult with each other regarding such responsive public disclosure.
SECTION 8.03. RETURN OF DOCUMENTS. Upon termination of this Agreement
------------ -------------------
without the Merger becoming effective, each party, to the extent permitted by
applicable law, (i) shall deliver to the other originals and all copies of all
Information made available to such party, (ii) will not retain any copies,
extracts or other reproductions in whole or in part of such Information, and
(iii) will destroy all memoranda, notes and other writings prepared by any party
based on the Information.
SECTION 8.04. NOTICES. Any notice or other communication shall be in
------------ -------
writing and shall be deemed to have been given or made on the date of delivery,
in the case of hand delivery, or three (3) business days after deposit in the
United States Registered Mail, postage prepaid, or upon receipt if transmitted
by facsimile telecopy or any other means, addressed (in any case) as follows:
A-31
(a) if to Boatmen's or Acquisition Sub:
Boatmen's Bancshares, Inc.
One Boatmen's Plaza
800 Market Street
St. Louis, Missouri 63102
Attention: Mr. Gregory L. Curl
Facsimile: 314/466-5645
with a copy to:
Lewis, Rice & Fingersh, L.C.
500 North Broadway, Suite 2000
St. Louis, Missouri 63102
Attention: Thomas C. Erb, Esq.
Facsimile: 314/241-6056
and
(b) if to Fourth:
Fourth Financial Corporation
100 North Broadway
Wichita, Kansas 67202
Attention: Mr. Darrell G. Knudson
Facsimile: 316/261-4595
with a copy to:
Foulston & Siefkin L.L.P.
700 Fourth Financial Center
Broadway at Douglas
Wichita, Kansas 67202
Attention: Benjamin C. Langel, Esq.
Facsimile: 316/267-6345
- and -
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: H. Rodgin Cohen, Esq.
Facsimile: 212/558-3588
or to such other address as any party may from time to time designate by notice
to the others.
SECTION 8.05. LIABILITIES. In the event that this Agreement is terminated
------------ -----------
pursuant to the provisions of Article Seven hereof, no party hereto shall have
any liability to any other party for costs, expenses, damages or otherwise;
provided, however, that, notwithstanding the foregoing, in the event that
A-32
this Agreement is terminated pursuant to Section 7.02 hereof on account of a
willful breach of any of the representations and warranties set forth herein or
any breach of any of the agreements set forth herein, then the non-breaching
party shall be entitled to recover appropriate damages from the breaching party.
SECTION 8.06. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
------------ ---------------------------------------------------------
Except for, and as provided in, this Section 8.06, no representation, warranty
or agreement contained in this Agreement shall survive the Effective Time or the
earlier termination of this Agreement; provided, however, that no such
representation, warranty or covenant shall be deemed to be terminated or
extinguished so as to deprive Boatmen's, Acquisition Sub or Fourth (or any
director, officer or controlling person thereof) of any defense in law or equity
which otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either Boatmen's or
Fourth, the aforesaid representations, warranties and covenants being material
inducements to the consummation by Boatmen's, Acquisition Sub and Fourth of the
transactions contemplated herein. The agreements set forth in Article One, and
Sections 5.04, 5.05, 5.06 and 5.07 hereof shall survive the Effective Time and
the agreements set forth in Sections 8.01, 8.02, 8.03, 8.05 and 8.06 hereof
shall survive the Effective Time or the earlier termination of this Agreement.
SECTION 8.07. ENTIRE AGREEMENT. This Agreement and the Fourth Option
------------ ----------------
Agreement constitute the entire agreement between the parties and supersede and
cancel any and all prior discussions, negotiations, undertakings, agreements in
principle or other agreements between the parties relating to the subject matter
hereof.
SECTION 8.08. HEADINGS AND CAPTIONS. The captions of Articles and Sections
------------ ---------------------
hereof are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
SECTION 8.09. WAIVER, AMENDMENT OR MODIFICATION. The conditions of this
------------ ---------------------------------
Agreement which may be waived may only be waived by notice to the other party
waiving such condition. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. This Agreement may be amended or modified
by the parties hereto, at any time before or after shareholder approval of the
Agreement; provided, however, that after any such approval no such amendment or
modification shall alter the amount or change the form of the Merger
Consideration contemplated by this Agreement to be received by shareholders of
Fourth. This Agreement may not be amended or modified except by a written
document duly executed by the parties hereto.
SECTION 8.10. RULES OF CONSTRUCTION. Unless the context otherwise
------------ ---------------------
requires: (i) a term has the meaning assigned to it, (ii) an accounting term
not otherwise defined has the meaning assigned to it in accordance with
generally accepted accounting principles, (iii) "or" is not exclusive, and (iv)
words in the singular may include the plural and in the plural include the
singular.
SECTION 8.11. COUNTERPARTS. This Agreement may be executed in two or more
------------ ------------
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument.
SECTION 8.12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
------------ ----------------------
and inure to the benefit of the parties hereto and their respective successors
and assigns. There shall be no third party beneficiaries hereof except with
respect to Sections 5.04 and 5.05 hereof.
A-33
SECTION 8.13. SEVERABILITY. In the event that any provisions of this
------------ ------------
Agreement or any portion thereof shall be finally determined to be unlawful or
unenforceable, such provision or portion thereof shall be deemed to be severed
from this Agreement, and every other provision, and any portion of a provision,
that is not invalidated by such determination, shall remain in full force and
effect. To the extent that a provision is deemed unenforceable by virtue of its
scope but may be made enforceable by limitation thereof, such provision shall be
enforceable to the fullest extent permitted under the laws and public policies
of the State whose laws are deemed to govern enforceability. It is declared to
be the intention of the parties that they would have executed the remaining
provisions without including any that may be declared unenforceable.
SECTION 8.14. GOVERNING LAW; ASSIGNMENT. This Agreement shall be governed
------------ -------------------------
by the laws of the State of Missouri, except to the extent that the Corporate
Law must govern the Merger procedures, and applicable federal laws and
regulations. This Agreement may not be assigned by either of the parties
hereto.
SECTION 8.15. DEFINITION OF MATERIAL ADVERSE EFFECT. As used in this
------------ -------------------------------------
Agreement, the term "Material Adverse Effect," with respect to either Boatmen's
or Fourth, means any condition, event, change or occurrence that has or will
have a material adverse effect upon (A) the financial condition, business or
results of operations of Boatmen's or Fourth and their respective subsidiaries
taken as a whole (other than as a result of changes in federal laws or
regulations and other than changes in accounting rules of general
applicability), or (B) the ability of Boatmen's or Fourth to perform its
respective obligations under, and to consummate the transactions contemplated
by, this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
FOURTH FINANCIAL CORPORATION
By /s/ Darrell G. Knudson
---------------------
Darrell G. Knudson
Chairman and Chief Executive Officer
BOATMEN'S BANCSHARES, INC.
By /s/ Gregory L. Curl
------------------
Gregory L. Curl
Vice Chairman
ACQUISITION SUB, INC.
By /s/ Gregory L. Curl
------------------
Gregory L. Curl
President
A-34
EXHIBIT 4.07
------------
___________________, 199__
________________________
________________________
________________________
________________________
Attention: __________________
__________________
Re: Agreement and Plan of Merger, dated August 25, 1995 (the "Merger
Agreement"), by and among Fourth Financial Corporation ("Fourth"),
Boatmen's Bancshares, Inc. ("Boatmen's"), and Acquisition Sub, Inc.
("Acquisition Sub")
Gentlemen:
I have been advised that I may be deemed to be an affiliate of Fourth, as
that term is defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule
145") of the Rules and Regulations of the Securities and Exchange Commission
(the "Commission") promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
Pursuant to the terms and conditions of the Merger Agreement, each share of
common stock of Fourth owned by me as of the effective time of the merger
contemplated by the Merger Agreement (the "Merger") may be converted into the
right to receive shares of common stock of Boatmen's and cash in lieu of any
fractional share and each share of preferred stock of Fourth owned by me as of
the effective time of the Merger may be converted into the right to receive
preferred stock of Boatmen's. As used in this letter, the shares of common
stock and preferred stock of Fourth owned by me as of _________________________
(the date 30 days prior to the anticipated effective time of the Merger) are
referred to as the "Pre-Merger Shares" and the shares of common stock and
preferred stock of Boatmen's which may be received by me in the Merger in
exchange for my Pre-Merger Shares are referred to as the "Post-Merger Shares."
This letter is delivered to Boatmen's pursuant to Section 4.07 of the Merger
Agreement.
A. I represent and warrant to Boatmen's and agree that:
1. I shall not make any sale, transfer or other disposition of the
Post-Merger Shares I receive pursuant to the Merger in violation of the
Securities Act or the Rules and Regulations of the Commission promulgated
thereunder.
2. I understand that the issuance of the Post-Merger Shares to me
pursuant to the Merger will be registered with the Commission under the
Securities Act. I also understand that, because I may be deemed an
"affiliate" of Fourth and because any distributions by me of the Post-Merger
Shares will not be registered under the Securities Act, such Post-Merger
Shares must be held by me unless (i) the sale, transfer or other
distribution has been registered under the Securities Act, (ii) the sale,
transfer or other distribution of such Post-Merger Shares is made in
A-Ex.-4.07-1
________________________
________________________, 19__
Page 2
accordance with the provisions of Rule 145, or (iii) in the opinion of
counsel acceptable to Boatmen's some other exemption from registration under
the Securities Act is available with respect to any such proposed
distribution, sale, transfer or other disposition of such Post-Merger
Shares.
3. In no event will I sell the Pre-Merger Shares or the Post-Merger
Shares, as the case may be, or otherwise transfer or reduce my risk relative
to the Pre-Merger Shares or Post-Merger Shares, as the case may be, during
the period beginning 30 days prior to the date on which the Merger is
consummated and ending on the date that Boatmen's has published financial
results covering at least 30 days of the combined operations of Boatmen's
and Fourth.
B. I understand and agree that:
1. Stop transfer instructions will be issued with respect to the
Post-Merger Shares and there will be placed on the certificates representing
such Post-Merger Shares, or any certificate delivered in substitution
therefor, a legend stating in substance:
"The shares represented by this Certificate were issued in a
transaction to which Rule 145 under the Securities Act of 1933, as
amended, applied. The shares represented by this certificate may be
transferred only in accordance with the terms of a letter agreement
dated _________________, 1994, by the registered holder in favor of
Boatmen's Bancshares, Inc., a copy of which agreement is on file at the
principal offices of Boatmen's Bancshares, Inc."
2. Unless the transfer by me of Post-Merger Shares is a sale made in
compliance with the provisions of Rule 145(d) or made pursuant to an
effective registration statement under the Securities Act, Boatmen's
reserves the right to place the following legend on the certificates issued
to my transferee:
"The shares represented by this Certificate have not been registered
under the Securities Act of 1933, as amended, and were acquired from a
person who received such shares in a transaction to which Rule 145
under the Securities Act of 1933, as amended, applied. The shares have
not been acquired by the holder with a view to, or for resale in
connection with, any distribution thereof within the meaning of the
Securities Act of 1933, as amended, and may not be sold or otherwise
transferred unless the shares have been registered under the Securities
Act of 1933, as amended, or an exemption from registration is
available."
I understand and agree that the legends set forth in paragraphs 1 and 2
above shall be removed by delivery of substitute certificates without any legend
if I deliver to Boatmen's a copy of a letter from the staff of the Commission,
or an opinion of counsel in form and substance satisfactory to Boatmen's, to the
effect that no such legend is required for the purpose of the Securities Act.
A-Ex.-4.07-2
______________________
______________________, 19__
Page 3
I have carefully read this letter and the Merger Agreement and understand
the requirements of each and the limitations imposed upon the distribution,
sale, transfer or other disposition of Pre-Merger Shares or Post-Merger Shares
by me.
Very truly yours,
A-Ex.-4.07-3
APPENDIX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated August 26, 1995 (the "Agreement"), by and
between FOURTH FINANCIAL CORPORATION, a Kansas corporation ("Issuer"), and
BOATMEN'S BANCSHARES, INC., a Missouri corporation ("Grantee").
RECITALS
(A) MERGER AGREEMENT. Grantee and Issuer have, on a date prior to the date
hereof, entered into an Agreement and Plan of Merger, dated August 25, 1995 (the
"Merger Agreement"), providing for, among other things, the merger of Issuer
with and into a wholly owned subsidiary of Grantee, with such subsidiary being
the surviving corporation.
(B) CONDITION TO MERGER AGREEMENT. As a condition and inducement to
Grantee's pursuit of the transactions contemplated by the Merger Agreement, and
in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Issuer and
Grantee agree as follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined herein
shall have the meanings ascribed to such terms in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
a number of shares of common stock, par value $5.00 per share ("Issuer Common"),
of Issuer up to 5,500,000 of such shares (as adjusted as set forth herein, the
"Option Shares", which shall include the Option Shares before and after any
transfer of such Option Shares, but in no event shall the number of Option
Shares for which this Option is exercisable exceed 19.9% of the issued and
outstanding shares of Issuer Common) at a purchase price per Option Share (as
adjusted as set forth herein, the "Purchase Price") equal to $33.50.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of the agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, the Holder may exercise the Option, in whole or in part, at
any time and from time to time following the occurrence of a Purchase Event (as
hereinafter defined); provided that the Option shall terminate and be of no
further force or effect upon the earliest to occur of (A) the Effective Time,
(B) termination of the Merger Agreement in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event (as
hereinafter defined) other than a termination thereof by Grantee pursuant to
Section 7.02 of the Merger Agreement (but only if the breach of Issuer giving
rise to such termination was willful) (a termination of the Merger Agreement by
Grantee pursuant to Section 7.02
B-1
thereof as a result of a willful breach by Issuer being referred to herein as a
"Default Termination"), (C) fifteen (15) months after a Default Termination, or
(D) fifteen (15) months after termination of the Merger Agreement (other than by
reason of a Default Termination) following the occurrence of a Purchase Event or
a Preliminary Purchase Event; provided, however, that any purchase of shares
upon exercise of the Option shall be subject to compliance with applicable law.
The term "Holder" shall mean the holder or holders of the Option from time to
time, and which initially is Grantee. The rights set forth in Section 8 hereof
shall terminate when the right to exercise the Option terminates (other than as
a result of a complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) Without Grantee's prior written consent, Issuer shall have
recommended, publicly proposed or publicly announced an intention to
authorize, recommend or propose, or entered into an agreement with any
person (other than Grantee or any subsidiary of Grantee) to effect (A) a
merger, consolidation or similar transaction involving Issuer or any of its
significant subsidiaries (other than transactions solely between Issuer's
subsidiaries that are not violative of the Merger Agreement), (B) the
disposition, by sale, lease, exchange or otherwise, of assets or deposits of
Issuer or any of its significant subsidiaries representing in either case
25% or more of the consolidated assets or deposits of Issuer and its
subsidiaries, or (C) the issuance, sale or other disposition by Issuer of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities representing 25% or more of the voting power of
Issuer or any of its significant subsidiaries, other than, in each case of
(A), (B), or (C), any merger, consolidation or similar transaction involving
Issuer or any of its significant subsidiaries in which the voting securities
of Issuer outstanding immediately prior thereto continue to represent (by
either remaining outstanding or being converted into the voting securities
of the surviving entity of any such transaction) at least 65% of the
combined voting power of the voting securities of the Issuer or the
surviving entity outstanding immediately after the consummation of such
merger, consolidation, or similar transaction (provided any such transaction
is not violative of the Merger Agreement)(each of (A), (B), or (C), an
"Acquisition Transaction"); or
(ii) any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in Rule
13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined in Section
13(d)(3) of the Exchange Act), other than a group of which Grantee or any
subsidiary of Grantee is a member, shall have been formed which beneficially
owns, or has the right to acquire beneficial ownership of, 25% or more of
the voting power of Issuer or any of its significant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act) or shall have filed a registration statement under the
Securities Act, with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common such that, upon consummation of such
offer, such person would own or control 15% or more of the then outstanding
shares of Issuer Common (such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer," respectively); or
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(ii) the shareholders shall not have approved the Merger Agreement
by the requisite vote at the Fourth Shareholders' Meeting, the Fourth
Shareholders' Meeting shall not have been held or shall have been canceled
prior to termination of the Merger Agreement, or Issuer's Board of Directors
shall have withdrawn or modified in a manner adverse to Grantee the
recommendation of Issuer's Board of Directors with respect to the Merger
Agreement, in each case after it shall have been publicly announced that any
person (other than Grantee or any subsidiary of Grantee) shall have (A)
made, or disclosed an intention to make, a bona fide proposal to engage in
an Acquisition Transaction, (B) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect to an Exchange
Offer, or (C) filed an application (or given a notice), whether in draft or
final form, under the Home Owners' Loan Act, as amended, the B.H.C.A., the
Bank Merger Act, as amended, or the Change in Bank Control Act of 1978, as
amended, for approval to engage in an Acquisition Transaction; or
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have made a bona fide proposal to Issuer or its shareholders
by public announcement, or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction; or
(iv) after a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, or such third party
states its intention to the Issuer to make such a proposal if the Merger
Agreement terminates, Issuer shall have breached any representation,
warranty, covenant or agreement contained in the Merger Agreement and such
breach would entitle Grantee to terminate the Merger Agreement under Article
Seven thereof (without regard to the cure period provided for therein unless
such cure is promptly effected without jeopardizing consummation of the
Merger pursuant to the terms of the Merger Agreement); or
(v) any person (other than Grantee or any subsidiary of Grantee),
other than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with any
Regulatory Agency for approval to engage in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Purchase Event or Purchase Event, it being understood that
the giving of such notice by Issuer shall not be a condition to the right of
Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three (3) business days nor later than fifteen (15) business days from the
Notice Date for the closing (the "Closing") of such purchase (the "Closing
Date"); provided that the first notice of exercise shall be sent to Issuer
within one hundred eighty (180) days after the first Purchase Event of which
Grantee has been notified. If prior notification to or approval of any
Regulatory Agency is required in connection with such purchase, Issuer shall
cooperate with the Holder in the filing of the required notice or application
for approval and the obtaining of such approval and the Closing shall occur
immediately following such
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regulatory approvals (and any mandatory waiting periods). Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 12(f).
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a), (i)
Issuer shall deliver to Holder (A) a certificate or certificates representing
the Option Shares to be purchased at such Closing, which Option Shares shall be
free and clear of all liens and subject to no preemptive rights, and (B), if the
Option is exercised in part only, an executed new agreement with the same terms
as this Agreement evidencing the right to purchase the balance of the shares of
Issuer Common purchasable hereunder, and (ii) Holder shall deliver to Issuer a
letter agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be endorsed
with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF AUGUST 26,
1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the portion of the above legend relating to the
Securities Act shall be removed by delivery of substitute certificate(s) without
such legend if Holder shall have delivered to Issuer a copy of a letter from the
staff of the S.E.C., or an opinion of counsel in form and substance reasonably
satisfactory to Issuer and its counsel, to the effect that such legend is not
required for purposes of the Securities Act.
(d) Upon the giving by Holder to Issuer of the written notice of
exercise of the Option provided for under Section 3(e), the tender of the
applicable purchase price in immediately available funds and the tender of this
Agreement to Issuer, Holder shall be deemed to be the holder of record of the
shares of Issuer Common issuable upon such exercise, notwithstanding that the
stock transfer books of issuer shall then be closed or that certificates
representing such shares of Issuer Common shall not then be actually delivered
to Holder. Issuer shall pay all expenses, and any and all United States
federal, state, and local taxes and other charges that may be payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section in the name of Holder or its assignee, transferee, or
designee.
(e) Issuer agrees (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Issuer Common so that the Option may be
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exercised without additional authorization of Issuer Common after giving effect
to all other options, warrants, convertible securities and other rights to
purchase Issuer Common, (ii) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer, (iii) promptly to take all action as may from time to time
be required (including (A) complying with all premerger notification, reporting
and waiting period requirements, and (B) in the event prior approval of or
notice to any Regulatory Agency is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or notices and
providing such information to such Regulatory Agency as it may require) in order
to permit Holder to exercise the Option and Issuer duly and effectively to issue
shares of the Issuer Common pursuant hereto, and (iv) promptly to take all
action provided herein to protect the rights of Holder against dilution.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents and
warrants to Grantee (and Holder, if different than Grantee) as follows:
(a) Corporate Authority. Issuer has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer, and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement or
to consummate the transactions so contemplated; this Agreement has been duly and
validly executed and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge of Issuer, as of the
date of this Agreement, no person or group has beneficial ownership of more than
10% of the issued and outstanding shares of Issuer Common.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof through the termination of this Agreement in
accordance with its terms, will have reserved for issuance upon the exercise of
the Option, that number of shares of Issuer Common equal to the maximum number
of shares of Issuer Common at any time and from time to time purchasable upon
exercise of the Option, and all such shares, upon issuance pursuant to the
Option, will be duly authorized, validly issued, fully paid and nonassessable,
and will be delivered free and clear of all claims, liens, encumbrances, and
security interests (other than those created by this Agreement) and not subject
to any preemptive rights.
(d) No Violations. The execution, delivery and performance of this
Agreement does not or will not, and the consummation by Issuer of any of the
transactions contemplated hereby will not, constitute or result in (A) a breach
or violation of, or a default under, its certificate of incorporation or by-
laws, or the comparable governing instruments of any of its subsidiaries, or (B)
a breach or violation of, or a default under, any agreement, lease, contract,
note, mortgage, indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of time or both)
or under any law, rule, ordinance or regulation or judgment, decree, order,
award or governmental or non-governmental permit or license to which it or any
of its subsidiaries is subject, that would, in any case give any other person
the ability to prevent or enjoin Issuer's performance under this Agreement in
any material respect.
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6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby represents
and warrants to Issuer that Grantee has full corporate power and authority to
enter into this Agreement and, subject to obtaining the approvals referred to in
this Agreement, to consummate the transactions contemplated by this Agreement;
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee; and this Agreement has been duly
executed and delivered by Grantee.
7. ADJUSTMENT UPON CHANGES IN ISSUER CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common by reason of a stock
dividend, stock split, split-up, recapitalization, combination, exchange of
shares or similar transaction, the type and number of shares or securities
subject to the Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Holder shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Holder would
have received in respect of Issuer Common if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this Section 7(a), upon exercise of any option to purchase Issuer Common
outstanding on the date hereof or upon conversion into Issuer Common of any
convertible security of Issuer outstanding on the date hereof), the number of
shares of Issuer Common subject to the Option shall be adjusted so that, after
such issuance, it, together with any shares of Issuer Common previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer Common then
issued and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option. No provision of this Section 7 shall be deemed to
affect or change, or constitute authorization for any violation of, any of the
covenants or representations in the Merger Agreement.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common shall be changed into or exchanged for stock or other
securities of Issuer or any other person or cash or any other property or the
outstanding shares of Issuer Common immediately prior to such merger shall after
such merger represent less than 50% of the outstanding shares and share
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets or deposits to any person, other than Grantee or
one of its subsidiaries, then, and in each such case, the agreement governing
such transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Holder, of either (x) the Acquiring Corporation (as
hereinafter defined), (y) any person that controls the Acquiring Corporation, or
(z) in the case of a merger described in clause (ii), Issuer (such person being
referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided, that, if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer shall also enter
into an agreement with Holder in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
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(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common (as hereinafter defined) as is equal to the Assigned
Value (as hereinafter defined) multiplied by the number of shares of Issuer
Common for which the Option was theretofore exercisable, divided by the Average
Price (as hereinafter defined). The exercise price of Substitute Option per
share of Substitute Common (the "Substitute Option Price") shall then be equal
to the Purchase Price multiplied by a fraction in which the numerator is the
number of shares of Issuer Common for which the Option was theretofore
exercisable and the denominator is the number of shares of the Substitute Common
for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, or (iii) the transferee of all or substantially all of
Issuer's assets (or a substantial part of the assets of its subsidiaries
taken as a whole).
(2) "Substitute Common" shall mean the shares of capital stock (or
similar equity interest) with the greatest voting power in respect of the
election of directors (or persons similarly responsible for the direction of
the business and affairs) of the Substitute Option Issuer.
(3) "Assigned Value" shall mean the highest of (w) the price per
share of Issuer Common at which a Tender Offer or an Exchange Offer therefor
has been made, (x) the price per share of Issuer Common to be paid by any
third party pursuant to an agreement with Issuer, (y) the highest closing
price for shares of Issuer Common within the six (6) month period
immediately preceding the consolidation, merger, or sale in question and (z)
in the event of a sale of all or substantially all of Issuer's assets or
deposits an amount equal to (i) the sum of the price paid in such sale for
such assets (and/or deposits) and the current market value of the remaining
assets of Issuer, as determined by a nationally recognized investment
banking firm selected by Holder divided by (ii) the number of shares of
Issuer Common outstanding at such time. In the event that a Tender Offer or
an Exchange Offer is made for Issuer Common or an agreement is entered into
for a merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in
exchange for Issuer Common shall be determined by a nationally recognized
investment banking firm selected by Holder.
(4) "Average Price" shall mean the average closing price of a
share of Substitute Common for the one year immediately preceding the
consolidation, merger, or sale in question, but in no event higher than the
closing price of the shares of Substitute Common on the day preceding such
consolidation, merger or sale; provided that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to a
share of common stock issued by Issuer, the person merging into Issuer or by
any company which controls such person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common outstanding prior to exercise of the Substitute
Option. In the event that the Substitute Option would be exercisable for more
than 19.9% of the aggregate of the shares of Substitute Common but for the
limitation in the first sentence of this Section 7(f), Substitute Option Issuer
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in the first
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sentence of this Section 7(f) over (ii) the value of the Substitute Option after
giving effect to the limitation in the first sentence of this Section 7(f).
This difference in value shall be determined by a nationally-recognized
investment banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in Section
7(b) unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder and take
all other actions that may be necessary so that the provisions of this Section 7
are given full force and effect (including, without limitation, any action that
may be necessary so that the holders of the other shares of common stock issued
by Substitute Option Issuer are not entitled to exercise any rights by reason of
the issuance or exercise of the Substitute Option and the shares of Substitute
Common are otherwise in no way distinguishable from or have lesser economic
value (other than any diminution in value resulting from the fact that the
Substitute Common are restricted securities, as defined in Rule 144 under the
Securities Act or any successor provision) than other shares of common stock
issued by Substitute Option Issuer).
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to the last sentence of Section 3(a), at the request of
Holder at any time commencing upon the first occurrence of a Repurchase Event
(as defined in Section 8(d)) and ending twelve (12) months immediately
thereafter, Issuer shall repurchase from Holder (i) the Option, and (ii) all
shares of Issuer Common purchased by Holder pursuant hereto with respect to
which Holder then has beneficial ownership. The date on which Holder exercises
its rights under this Section 8 is referred to as the "Request Date". Such
repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares of
Issuer Common acquired pursuant to the Option with respect to which Holder
then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common over (y) the Purchase Price (subject
to adjustment pursuant to Section 7), multiplied by the number of shares of
Issuer Common with respect to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for each
share of Issuer Common with respect to which the Option has been exercised
and with respect to which Holder then has beneficial ownership, multiplied
by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
within ten (10) business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment, Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common purchased thereunder
with respect to which Holder then has beneficial ownership, and Holder shall
warrant that it has sole record and beneficial ownership of such shares and that
the same are then free and clear of all liens. Notwithstanding the foregoing,
to the extent that prior notification to or approval of any Regulatory Agency is
required in connection with the payment of all or any portion of the Section 8
Repurchase
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Consideration, Holder shall have the ongoing option to revoke its request for
repurchase pursuant to Section 8, in whole or in part, or to require that Issuer
deliver from time to time that portion of the Section 8 Repurchase Consideration
that it is not then so prohibited from paying and promptly file the required
notice or application for approval and expeditiously process the same (and each
party shall cooperate with the other in the filing of any such notice or
application and the obtaining of any such approval). If any Regulatory Agency
disapproves of any part of Issuer's proposed repurchase pursuant to this Section
8, Issuer shall promptly give notice of such fact to Holder. If any Regulatory
Agency prohibits the repurchase in part but not in whole, then Holder shall have
the right (i) to revoke the repurchase request, or (ii) to the extent permitted
by such Regulatory Agency, determine whether the repurchase should apply to the
Option and/or Option Shares and to what extent to each, and Holder shall
thereupon have the right to exercise the Option as to the number of Option
Shares for which the Option was exercisable at the Request Date less the sum of
the number of shares covered by the Option in respect of which payment has been
made pursuant to Section 8(a)(ii) and the number of shares covered by the
portion of the Option (if any) that has been repurchased. Holder shall notify
Issuer of its determination under the preceding sentence within five (5)
business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's rights
under this Section 8 shall terminate on the date of termination of this Option
pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common paid for any such
share by the person or groups described in Section 8(d)(i), (ii) the price per
share of Issuer Common received by holders of Issuer Common in connection with
any merger or other business combination transaction described in Section
7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest closing sales price per
share of Issuer Common on Nasdaq (or if Issuer Common is not traded on Nasdaq,
the highest bid price per share as quoted on the principal trading market or
securities exchange on which such shares are traded as reported by a recognized
source chosen by Holder) during the forty (40) business days preceding the
Request Date; provided, however, that in the event of a sale of less than all of
Issuer's assets, the Applicable Price shall be the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
Issuer as determined by a nationally recognized investment banking firm selected
by Holder, divided by the number of shares of the Issuer Common outstanding at
the time of such sale. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii) shall be other than in
cash, the value of such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm selected by Holder and
reasonably acceptable to Issuer, which determination shall be conclusive for all
purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any subsidiary of Grantee) shall have acquired beneficial
ownership of (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act), or the right to acquire beneficial ownership of, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 50% or
more of the then outstanding shares of Issuer Common, or (ii) any of the
transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) shall be
consummated.
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9. REGISTRATION RIGHTS.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of Section 9(c) below, if requested by any Holder, including Grantee
and any permitted transferee ("Selling Shareholder"), as expeditiously as
possible prepare and file a registration statement under the Securities Act if
such registration is necessary in order to permit the sale or other disposition
of any or all shares of Issuer Common or other securities that have been
acquired by or are issuable to the Selling Shareholder upon exercise of the
Option in accordance with the intended method of sale or other disposition
stated by the Selling Shareholder in such request, including without limitation
a "shelf" registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer shall use its best efforts to qualify such
shares or other securities for sale under any applicable state securities laws.
(b) Additional Registration Rights. If Issuer at any time after the
exercise of the Option proposes to register any shares of Issuer Common under
the Securities Act in connection with an underwritten public offering of such
Issuer Common, Issuer will promptly give written notice to the Selling
Shareholders of its intention to do so and, upon the written request of any
Selling Shareholder given within thirty (30) days after receipt of any such
notice (which request shall specify the number of shares of Issuer Common
intended to be included in such underwritten public offering by the Selling
Shareholder), Issuer will cause all such shares for which a Selling Shareholder
requests participation in such registration, to be so registered and included in
such underwritten public offering; provided, however, that Issuer may elect to
not cause any such shares to be so registered (i) if the underwriters in good
faith object for valid business reasons, or (ii) in the case of a registration
solely to implement an employee benefit plan or a registration filed on Form S-4
of the Securities Act or any successor Form; provided, further, however, that
such election pursuant to (i) may only be made two times. If some but not all
the shares of Issuer Common, with respect to which Issuer shall have received
requests for registration pursuant to this Section 9(b), shall be excluded from
such registration, Issuer shall make appropriate allocation of shares to be
registered among the Selling Shareholders desiring to register their shares pro
rata in the proportion that the number of shares requested to be registered by
each such Selling Shareholder bears to the total number of shares requested to
be registered by all such Selling Shareholders then desiring to have Issuer
Common registered for sale.
(c) Conditions to Required Registration. Issuer shall use all
reasonable efforts to cause each registration statement referred to in Section
9(a) above to become effective and to obtain all consents or waivers of other
parties which are required therefor and to keep such registration statement
effective; provided, however, that Issuer may delay any registration of Option
Shares required pursuant to Section 9(a) above for a period not exceeding ninety
(90) days provided Issuer shall in good faith determine that any such
registration would adversely affect an offering or contemplated offering of
other securities by Issuer, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to Section 9(a) above:
(i) prior to the earliest of (a) termination of the Merger
Agreement pursuant to Article Seven thereof, (b) failure to obtain the
requisite shareholder approval pursuant to Sections 6.01(d) and 6.02(d) of
the Merger Agreement, and (c) a Purchase Event or a Preliminary Purchase
Event;
(ii) on more than one occasion during any calendar year;
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(iii) within ninety (90) days after the effective date of a
registration referred to in Section 9(b) above pursuant to which the Selling
Shareholder or Selling Shareholders concerned were afforded the opportunity
to register such shares under the Securities Act and such shares were
registered as requested; and
(iv) unless a request therefor is made to Issuer by Selling
Shareholders that hold at least 25% or more of the aggregate number of
Option Shares (including shares of Issuer Common issuable upon exercise of
the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain
the effectiveness of any registration statement after the expiration of nine (9)
months from the effective date of such registration statement. Issuer shall use
all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares; provided, however, that Issuer
shall not be required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so consent to such
jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits such
payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses (including the
fees and expenses of counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are being registered,
printing expenses and the costs of special audits or "cold comfort" letters,
expenses of underwriters, excluding discounts and commissions but including
liability insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to Section 9(a) or 9(b) above (including the
related offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to Section 9(a) or 9(b)
above.
(e) Indemnification. In connection with any registration under Section
9(a) or 9(b) above, Issuer hereby indemnifies the Selling Shareholders, and each
underwriter thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement of a material fact contained in any registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Shareholders, or by such underwriter, as the case
may be, for all such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by issuer in any
such registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to issuer by such holder or
such underwriter, as the case may be, expressly for such use.
B-11
Promptly upon receipt by a party indemnified under this Section 9(e) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 9(e), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 9(e). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been advised by counsel
that one or more legal defenses may be available to the indemnifying party that
may be contrary to the interest of the indemnified party, in which case the
indemnifying party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such counsel. No
indemnifying party shall be liable for any settlement entered into without its
consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 9(e) is unavailable
to a party otherwise entitled to be indemnified in respect of any expenses,
losses, claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be indemnified,
shall contribute to the amount paid or payable by such party to be indemnified
as a result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative benefits received by
issuer, the Selling Shareholders and the underwriters from the offering of the
securities and also the relative fault of Issuer, the Selling Shareholders and
the underwriters in connection with the statements or omissions which resulted
in such expenses, losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The amount paid or payable by a party as a
result of the expenses, losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim, provided, however, that in no case shall any Selling Shareholder be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Any obligation by any holder
to indemnify shall be several and not joint with other holders.
In connection with any registration pursuant to Section 9(a) or 9(b)
above, Issuer and each Selling Shareholder (other than Grantee) shall enter into
an agreement containing the indemnification provisions of this Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Selling Shareholders
thereof in accordance with and to the extent permitted by any rule or regulation
promulgated by the S.E.C. from time to time, including, without limitation, Rule
144A. Issuer shall at its expense provide the Selling Shareholders with any
information necessary in connection with
B-12
the completion and filing of any reports or forms required to be filed by them
under the Securities Act or the Exchange Act, or required pursuant to any state
securities laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in connection with
the issuance and the sale of the Option Shares and in connection with the
exercise of the Option, and will save the Selling Shareholders harmless, without
limitation as to time, against any and all liabilities, with respect to all such
taxes.
10. QUOTATION; LISTING. If Issuer Common or any other securities to be
acquired in connection with the exercise of the Option are then authorized for
quotation or trading or listing on any securities exchange, Issuer, upon the
request of Holder, will promptly file an application, if required, to authorize
for quotation or trading or listing the shares of Issuer Common or other
securities to be acquired upon exercise of the Option on such securities
exchange and will use its best efforts to obtain approval, if required, of such
quotation or listing as soon as practicable.
11. DIVISION OF OPTION. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. MISCELLANEOUS.
(a) Expenses. Each of the parties hereto shall bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement: No Third-Party Beneficiaries; Severability. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof, and (ii) is not intended to confer upon any person other
than the parties hereto (other than the indemnified parties under Section 9(e)
and any transferees of the Option Shares or any permitted transferee of this
Agreement pursuant to Section 12(h)) any rights or remedies hereunder. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or Regulatory Agency to be invalid, void or
unenforceable, the remainder of the terms, provisions,
B-13
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. If for any
reason such court or Regulatory Agency determines that the Option does not
permit Holder to acquire, or does not require Issuer to repurchase, the full
number of shares of Issuer Common as provided in Section 3 (as may be adjusted
herein), it is the express intention of Issuer to allow Holder to acquire or to
require Issuer to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Missouri without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Merger Agreement (or
at such other address for a party as shall be specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed and
delivered, it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Holder may assign this Agreement
to a wholly-owned subsidiary of Holder and Holder may assign its rights
hereunder in whole or in part after the occurrence of a Purchase Event. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
(i) Further Assurances. In the event of any exercise of the Option by
the Holder, Issuer and the Holder shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
B-14
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
FOURTH FINANCIAL CORPORATION
By /s/ Darrell G. Knudson
---------------------
Darrell G. Knudson
Chairman and Chief Executive Officer
BOATMEN'S BANCSHARES, INC.
By /s/ Gregory L. Curl
------------------
Gregory L. Curl
Vice Chairman
B-15
APPENDIX C
[ON LETTERHEAD OF DLJ]
November 13, 1995
Board of Directors
Boatmen's Bancshares, Inc.
One Boatmen's Plaza
800 Market Street
St. Louis, Missouri 63101
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the outstanding shares of common stock, par value $1.00
per share (the "Boatmen's Common Stock"), of Boatmen's Bancshares, Inc.
("Boatmen's") of the exchange ratio for the exchange of common shares in the
merger (the "Merger") of Fourth Financial Corporation ("Fourth Financial") with
and into Acquisition Sub, Inc., a wholly-owned subsidiary of Boatmen's
("Acquisition Sub"), pursuant to the Agreement and Plan of Merger, dated August
25, 1995, among Fourth Financial, Boatmen's and Acquisition Sub (the "Merger
Agreement").
Pursuant to the Merger Agreement, in the Merger each share of common stock,
par value $5.00 per share, of Fourth Financial ("Fourth Financial Common Stock")
shall be converted into the right to receive 1 fully paid and nonassessable
share of Boatmen's Common Stock (the "Exchange Ratio"). In addition, in the
Merger each share of Class A 7% Cumulative Convertible Preferred Stock, par
value $100 per share, of Fourth Financial (the "Fourth Financial Preferred")
shall be converted into the right to receive 1 share of 7% cumulative
convertible preferred stock, stated value $100 per share, of Boatmen's (the
"Boatmen's Preferred"), the terms of which are described in the Merger
Agreement. We understand that the Merger is conditioned upon, among other
things, receipt of opinions to the effect that the Merger will qualify for
treatment as a tax-free reorganization and as a pooling of interests for
accounting purposes. In connection with the Merger, the parties have also
entered into an agreement (the "Stock Option Agreement") pursuant to which
Fourth Financial has irrevocably granted Boatmen's an option to purchase
5,500,000 shares of Fourth Financial Common Stock (subject to adjustment in
certain circumstances but in no event to exceed 19.9% of the then outstanding
shares of Fourth Financial Common Stock), at a price and on the terms and
conditions set forth in the Stock Option Agreement. The terms of the Merger are
more fully set forth in the Merger Agreement.
For purposes of this opinion and in connection with our review of the
proposed transaction, we have, among other things:
1. Reviewed the Merger Agreement and the Stock Option Agreement;
C-1
Board of Directors
Boatmen's Bancshares, Inc.
Page 2
2. Reviewed the joint proxy statement/prospectus dated the date hereof
relating to the Merger to be sent to the holders of Boatmen's Common
Stock and Fourth Financial Common Stock;
3. Reviewed certain publicly available financial statements, both audited
and unaudited, of Fourth Financial and Boatmen's, including those
included in their respective Annual Reports on Form 10-K for the five
years ended December 31, 1994 and the respective Quarterly Reports on
Form 10-Q for the periods ended March 31, 1995, June 30, 1995 and
September 30, 1995;
4. Reviewed certain financial statements and other financial and operating
data concerning Fourth Financial and Boatmen's prepared by their
respective managements;
5. Reviewed certain financial forecasts of Fourth Financial and Boatmen's
prepared by their respective managements and certain financial
forecasts of Fourth Financial and Boatmen's on a combined basis
prepared by management of Boatmen's;
6. Discussed certain aspects of the past and current business operations,
financial condition and future prospects of Fourth Financial and
Boatmen's with certain members of their respective managements;
7. Reviewed reported market prices and historical trading activity of
Fourth Financial Common Stock and Boatmen's Common Stock;
8. Reviewed certain aspects of the financial performance of Fourth
Financial and Boatmen's and compared such financial performance of
Fourth Financial and Boatmen's, together with the stock market data
relating to Fourth Financial Common Stock and Boatmen's Common Stock,
with similar data available for certain other financial institutions
and certain of their publicly traded securities;
9. Reviewed certain of the financial terms, to the extent publicly
available, of certain recent business combinations involving other
financial institutions; and
10. Conducted such other studies, analyses, and examinations as we deemed
appropriate.
We have relied upon and assumed without independent verification the
accuracy and completeness of all of the financial and other information that has
been provided to us by Fourth Financial, Boatmen's and their respective
representatives and of the publicly available information that was reviewed by
us. At your direction, we have also relied upon the managements of both Fourth
Financial and Boatmen's as to the reasonableness and achievability of the
financial and operating forecasts provided to us (and the assumptions and bases
therefor). In that regard, we have assumed with your permission that such
forecasts, including without limitation projected cost savings and operating
synergies resulting from the Merger, reflect the best currently available
estimates and judgments of such respective managements and
C-2
Board of Directors
Boatmen's Bancshares, Inc.
Page 3
that such forecasts will be realized in the amounts and in the time periods
currently estimated by the managements of Fourth Financial and Boatmen's. We
have not independently verified and have relied on and assumed that the
aggregate allowances for loan losses set forth in the balance sheets of each of
Fourth Financial and Boatmen's at September 30, 1995 are adequate to cover such
losses and complied fully with applicable law, regulatory policy and sound
banking practice as of the date of such financial statements. We were not
retained to and we did not conduct a physical inspection of any of the
properties or facilities of Fourth Financial or Boatmen's, and we did not make
any independent evaluation or appraisal of the assets, liabilities or prospects
of Fourth Financial or Boatmen's, were not furnished with any such evaluation or
appraisal, and did not review any individual credit files. In rendering our
opinion, we have been advised by Fourth Financial and Boatmen's and have assumed
with your permission that there are no other factors that would delay or subject
to adverse conditions any necessary regulatory or governmental approval for the
Merger, and we have assumed that all conditions to the Merger will be satisfied
and not waived.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking business is regularly engaged, with respect to bank holding
companies and other corporations, 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 corporate and other
purposes. DLJ has performed investment banking services for Boatmen's in the
past and has been compensated for such services. In the ordinary course of our
business we actively trade the debt and equity securities of companies,
including Fourth Financial and Boatmen's, for our own account and for the
accounts of customers and may hold a long or short position in such securities
at any time.
Our opinion is based solely upon the information available to us and the
economic, market, and other circumstances as they exist as of the date hereof.
Events occurring after the date hereof could materially affect the assumptions
used in preparing this opinion. We have not undertaken to reaffirm or revise
this opinion or otherwise comment upon any events occurring after the date
hereof.
We are not expressing any opinion herein as to the prices at which shares of
Boatmen's Common Stock issued in the Merger may trade if and when they are
issued or at any future time. Our opinion as expressed herein is limited to the
fairness, from a financial point of view, of the Exchange Ratio to the holders
of Boatmen's Common Stock and does not address Boatmen's underlying business
decision to proceed with the Merger. We have been retained on behalf of
Boatmen's Board of Directors, and our opinion does not constitute a
recommendation to any holder of Boatmen's Common Stock as to how such holder
should vote with respect to the Merger Agreement at any meeting of holders of
Boatmen's Common Stock.
Subject to the foregoing and based on our experience as investment bankers,
our activities as described above, and other factors we have deemed relevant, we
are of the opinion as of the date hereof
C-3
Board of Directors
Boatmen's Bancshares, Inc.
Page 4
that the Exchange Ratio is fair, from a financial point of view, to the holders
of Boatmen's Common Stock.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
By /s/ Douglas Mercer II
--------------------------------
C. Douglas Mercer II
Managing Director
C-4
APPENDIX D
PERSONAL AND CONFIDENTIAL
- -------------------------
November 13, 1995
Board of Directors
Fourth Financial Corporation
100 North Broadway
Wichita, Kansas 67202
Gentlemen and Madame:
You have requested our opinion as to the fairness (i) to the holders of the
outstanding shares of Common Stock, par value $5.00 per share (the "Shares"), of
Fourth Financial Corporation (the "Company") of the exchange ratio of 1.00
shares of Common Stock, par value $1.00 per share ("Boatmen's Common Stock") of
Boatmen's Bancshares, Inc. ("Boatmen's") to be received for each Share (the
"Exchange Ratio"), and (ii) to the holders of the outstanding shares of Class A
7% Cumulative Convertible Preferred Stock, par value $100 per share, liquidation
value $400 per share (the "Preferred Shares"), of the Company of the exchange
ratio of 1.00 shares of 7% Cumulative Convertible Preferred Stock, stated value
$100 per share, liquidation value $400 per share, of Boatmen's to be received
for each Preferred Share (the "Preferred Exchange Ratio") in the merger (the
"Merger") pursuant to the Agreement and Plan of Merger dated August 25, 1995,
among Boatmen's, Acquisition Sub, Inc., a wholly-owned subsidiary of Boatmen's,
and the Company (the "Agreement").
Goldman, Sachs & Co. ("Goldman Sachs"), as part of its investment banking
business, is continually 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 are familiar with the Company having acted as its financial
advisor in connection with, and having participated in certain of the
negotiations leading to, the Agreement. We also have provided certain
investment banking services to Boatmen's, for which we have received customary
compensation, including the rendering of a fairness opinion in connection with
Boatmen's acquisition of Worthen Banking Corp. and may provide in the future
investment banking services to Boatmen's. Goldman Sachs is a full service
securities firm and in the course of its trading activities it may from time to
time effect transactions and hold positions in securities of the Company and
Boatmen's.
D-1
Board of Directors
November 13, 1995
Page 2
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Stock Option Agreement dated August 26, 1995 between the Company
and Boatmen's; the Registration Statement on Form S-4, including the Joint Proxy
Statement/Prospectus relating to the Special Meeting of Stockholders of the
Company to be held in connection with the Agreement; Annual Reports to
Stockholders and Annual Reports on Form 10-K of the Company and Boatmen's for
the five years ended December 31, 1994; certain interim reports to stockholders
and Quarterly Reports on Form 10-Q of the Company and Boatmen's; certain other
communications from the Company and Boatmen's to their respective stockholders;
and certain internal financial analyses and forecasts for the Company and
Boatmen's prepared by their respective managements. We also have held
discussions with members of the senior management of the Company and Boatmen's
regarding the past and current business operations, regulatory relationships,
financial conditions and future prospects of their respective companies. In
addition, we have reviewed the reported price and trading activity for the
Shares and Boatmen's Common Stock, compared certain financial and stock market
information for the Company and Boatmen's with similar information for certain
other companies the securities of which are publicly traded, reviewed the
financial terms of certain recent business combinations in the banking industry
and performed such other studies and analyses as we considered appropriate.
We have relied, without assuming responsibility for independent verification,
upon the accuracy and completeness of all of the financial and other information
reviewed by us for purposes of this opinion. In that regard, we have assumed,
with your consent, that the financial forecasts, including, without limitation,
projected cost savings and operating synergies resulting from the Merger have
been reasonably prepared on a basis reflecting the best currently available
judgments and estimates of the respective managements of the Company and
Boatmen's and will be realized in the amounts and at the times contemplated
thereby. We are not experts in the evaluation of loan portfolios for purposes
of assessing the adequacy of the allowances for losses with respect thereto and
have assumed, with your consent, that such allowances for each of the Company
and Boatmen's are in the aggregate adequate to cover all such losses. In
addition, we have not reviewed individual credit files nor have we made an
independent evaluation or appraisal of the assets and liabilities of the Company
or Boatmen's or any of their respective subsidiaries and we have not been
furnished with any such evaluation or appraisal. We have assumed, with your
consent, that the Merger will be accounted for as a pooling of interests under
generally accepted accounting principles.
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 (i) the Exchange Ratio
pursuant to the Agreement is fair to the holders of Shares and (ii) the
Preferred Exchange Ratio pursuant to the Agreement is fair to the holders of
Preferred Shares.
Very truly yours,
/s/ Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
D-2
APPENDIX E
GENERAL CORPORATION CODE OF KANSAS
K.S.A. 17-6712
PAYMENT FOR "STOCK" OF "STOCKHOLDER" OBJECTING TO MERGER OR CONSOLIDATION;
"STOCKHOLDER", "STOCK" AND "SHARE" DEFINED; NOTICE TO OBJECTING STOCKHOLDERS;
DEMAND FOR PAYMENT; APPRAISAL AND DETERMINATION OF VALUE BY DISTRICT COURT,
WHEN; TAXATION OF COSTS; RIGHTS OF OBJECTING STOCKHOLDERS; STATUS OF STOCK;
SECTION INAPPLICABLE TO CERTAIN SHARES OF STOCK.
(a) When used in this section, the word "stockholder" means a holder of
record of stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is ordinarily
meant by those words and also membership or membership interest of a member of a
nonstock corporation.
(b) The corporation surviving or resulting from any merger or consolidation,
within 10 days after the effective date of the merger or consolidation, shall
notify each stockholder of any corporation of this state so merging or
consolidating who objected thereto in writing and whose shares either were not
entitled to vote or were not voted in favor of the merger or consolidation, and
who filed such written objection with the corporation before the taking of the
vote on the merger or consolidation, that the merger or consolidation has become
effective. If any such stockholder, within 20 days after the date of mailing of
the notice, shall demand in writing, from the corporation surviving or resulting
from the merger or consolidation, payment of the value of the stockholder's
stock, the surviving or resulting corporation shall pay to the stockholder,
within 30 days after the expiration of the period of 20 days, the value of the
stockholder's stock on the effective date of the merger or consolidation,
exclusive of any element of value arising from the expectation or accomplishment
of the merger or consolidation.
(c) If during a period of 30 days following the period of 20 days provided
for in subsection (b), the corporation and any such stockholder fail to agree
upon the value of such stock, any such stockholder, or the corporation surviving
or resulting from the merger or consolidation, may demand a determination of the
value of the stock of all such stockholders by an appraiser or appraisers to be
appointed by the district court, by filing a petition with the court within four
months after the expiration of the thirty-day period.
(d) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the corporation, which shall file with the clerk of
such court, within 10 days after such service, a duly verified list containing
the names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the corporation. If the petition shall be filed by the corporation,
the petition shall be accompanied by such duly verified list. The clerk of the
court shall give notice of the time and place fixed for the hearing of such
petition by registered or certified mail to the corporation and to the
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-1
(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.
(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 of 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.
E-2
(j) The shares of the surviving or resulting corporation into which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
(k) This section shall not apply to the shares of any class or series
of a class of stock, which, at the record date fixed to determine the
stockholders entitled to receive notice of and to vote at the meeting of
stockholders at which the agreement of merger or consolidation is to be acted
on, were either (1) registered on a national securities exchange, or (2) held of
record by not less than 2,000 stockholders, unless the articles of incorporation
of the corporation issuing such stock shall otherwise provide; nor shall this
section apply to any of the shares of stock of the constituent corporation
surviving a merger, if the merger did not require for its approval the vote of
the 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.
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